- The Washington Times - Tuesday, December 9, 2003

BAGHDAD — What to do with the spoils of war? That is the question troubling Kamel Abed, who sells fresh apples, oranges and bananas outside the gates of a vast palm-oil plantation that, until early this year, was the sole possession of Saddam Hussein’s daughter Hala.

Its palatial white marble floors are now occupied by America’s finest. Mr. Abed dreams of owning a small plot of his own while watching U.S. helicopters and Humvees patrol the plantation in their hunt for insurgents, some of whom remain loyal to the deposed dictator.

But, with four children and still living with his own father, Mr. Abed, 47, has a plan he would like everyone to consider: “Divide the land up in small plots for poor Iraqis like myself who were disenfranchised by the former regime.”

His is not an idea likely to be realized anytime soon.

Uncertainty over what is to be done with the Hussein family’s vast real estate holdings — which extend hundreds of miles up and down the Tigris and Euphrates rivers north and south of the capital — underlies a looming debate over how to rewrite Iraq’s antiquated property laws.

The country’s U.S.-appointed Governing Council, which still lacks a democratic mandate to change the property laws, has restricted itself to surveying the ex-dictator’s family tracts and trying to keep squatters and thieves at bay. Baghdad’s housing authority is trying to learn how many deeds were destroyed in the looting and fires that followed the U.S. invasion. Meanwhile, attacks on American forces and private security firms have frightened away nearly all would-be land buyers.

Now, a growing number of American and foreign economic observers are warning that Iraq needs a “revolution” in property rights. They recommend an overhaul of the country’s economic laws and an accounting for the black market that holds a key to Iraq’s rapid economic growth.

“Without titled property of their own, or the opportunity to leverage capital that comes with property, poor and midsize entrepreneurs will stand on the sidelines and watch old Ba’athist elites [as well as Americans] prosper,” said Frances B. Johnson, formerly with the U.S. Agency for International Development and now co-chairman of the International Property Rights Working Group in Washington, which is lobbying for more U.S. help in rewriting Iraqi property laws.

Mrs. Johnson insists that without a revamping of property laws, “this corps of unhappy Iraqis will be prey to the call of some evil, ambitious new leader — one who promises either spiritual rewards for suicide bombers or material rewards for a compliant constituency.”

Missing the chance to create a new property code could spell an end to the Bush administration’s goal of showing Iraqis that they can aspire to owning their own homes and businesses, say other economists.

Three out of four Iraqis do not hold formal title to their assets, according to a preliminary surveys by Peruvian economist Hernando De Soto, author of “The Mystery of Capital” and whose ideas are helping revamp economies from South America to the South Pacific.

Mr. De Soto, whose thinking is in vogue among economic conservatives as well as liberals, says poor inhabitants in the Third World and former communist countries — five-sixths of humanity — possess real property but lack deeds to it.

Without titles, Iraqis are left like many of their Arab neighbors in poor states such as Egypt and Morocco, with no legal standing to leverage their assets into wealth, said Mrs. Johnson. It can take years in many Arab states just to incorporate a business or buy a house.

Yet the future for Iraq’s small entrepreneurs, like the soft-spoken Mr. Abed, rests also on hopes of a legal system that prevent speculators — both foreign and domestic — from buying up vast swaths of Iraq’s fertile farmland and open desert.

While property sales are frozen by a lack of laws and security, the same real estate brokers who worked within Saddam Hussein’s corrupt system are seeking out foreign partners with enough capital to obtain control of key properties and later to resell them to the highest bidder.

One of these, Ramzi Abbas, known as “the king of realty” in Baghdad’s wealthy Karada commercial district, is already considering an offer from a British venture capitalist as a step to buy up land for resale to Japanese investors.

L. Paul Bremer, the Bush administration’s proconsul in Iraq, opened the door to free-wheeling real estate brokers in September when he issued a decree that overturned Iraqi laws prohibiting exiles and foreigners from buying Iraqi land and companies. Property values have nearly doubled, but business is still moving at a snail’s pace due to security concerns.

“There are thousands of returning exiles who would buy land right now but can’t, due both to the confusion over a legal code and their own security fears,” said Mr. Abbas.

“Before, business was done with money under the table every step of the way, and government officials on the take wherever you went,” he said. He now stands ready to advise Iraq’s fledgling government.

“What we need now are flexible laws and the elimination of bureaucracy,” he said. “I thought the Americans were coming to revolutionize Iraq, but this is still just a dream.”

Mukhalid Sa’aedi, a real estate broker in one of Baghdad’s poorer districts, hands a visitor a list of 217 Hussein family properties now under the control of Iraq’s Governing Council. No one in Baghdad can say whether these properties will be returned to their pre-Saddam owners, given or sold to influential people, or put up for public auction.

“Saddam’s cousins obviously feel they are being treated unfairly,” said Mr. Sa’aedi, who still regularly dines with some of them. “I don’t know what will happen now, but whatever this new government does, I think it will be fairer than what we had before. These relatives of Saddam robbed this country of its best lands for decades.

“What we need now is more openness, lower taxes and less corruption — and for the American forces to go home and leave the security of this country to Iraqis,” he said.

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