- The Washington Times - Friday, August 1, 2003

A second wave of private-sector opportunities is swelling in Iraq as the U.S.-led Coalition Provisional Authority looks for outside bidders to help restructure and reinvigorate the country’s economy.

Airline, banking and wireless telecommunications service companies have the first opportunity get a toehold in the Iraqi economy.

The CPA is the operating authority in Iraq, and one of its goals is to restore the country’s economy and help create jobs.

The private-sector work comes after a series of contract awards by the U.S. Agency for International Development to get basic services operational.

“Following several decades of centralized economic control, Iraq’s economy has been weakened but maintains significant growth potential owing to its abundant natural and human resources. Oil production will account for an important part of Iraq’s future gross domestic product. However, Iraq’s non-oil sectors, including tourism, agriculture, and small enterprise, also represent potentially vibrant sectors of Iraq’s economy with strong growth prospects,” the CPA said yesterday in a statement.

The statement seeks proposals for management of Iraq’s two largest commercial banks — Rafidain Bank and Rasheed Bank. The two are likely to play key roles in Iraq’s economic reconstruction, the CPA said.

“Reliable data about the financial condition of both banks, however, remain scarce,” the CPA noted, underlying one concern for companies that work in the country. Security is of paramount concern.

Earlier in the week, the CPA sought proposals from companies to establish wireless telephone networks in Iraq.

“We hope to have the wireless contracts awarded, say, by early September,” Linton Wells, principal deputy assistant secretary for defense said yesterday at a Pentagon briefing.

The USAID contracts drew criticism because they were largely closed to all but a small number of companies, some with apparent ties to the Republican Party. The CPA bids are open to wider competition but complaints have arisen that they are slanted to benefit U.S. firms.

To bid on the telecommunication networks, for example, firms cannot be more than 5 percent government owned, essentially excluding wireless companies from Iraq’s neighbors but clearly allowing U.S. companies.

Mr. Wells said that the request for proposals was not designed to exclude or favor particular technologies or firms.

“Quite expressly it was designed to allow the maximum flexibility in bidding,” he said.

The CPA also has established a Trade Bank of Iraq to support the reconstruction of Iraq through trade finance activities, and intends to procure the services of an international commercial bank or consortium of banks to provide technical expertise.

The CPA contracting offers a unique, but high-risk opportunity, experts said.

“It is difficult to define or distinguish the second wave from the long-term establishment of commercial relations in the country of Iraq. Now we’re talking about banks, telecommunications, all kinds of opportunities that are necessary to build on the very modest infrastructure,” said William Goodrich, a Washington lawyer advising several clients on business opportunities in Iraq.

Companies should be cautious and take a long-term view of any investment in Iraq, he said.

“We’re going to see the return or creation of normal commerce to the country over the next several years,” Mr. Goodrich predicted.

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