Sunday, February 22, 2004

BAGHDAD - Standing 6-foot-5 in pale snakeskin boots, Rubar Sandi’s personal security guard brings a touch of the Wild West to “the Bag,” as Iraq’s capital is known. Anonymous but rarely inconspicuous, the guard towers over Mr. Sandi, a wealthy Iraqi-American banker. The guard, his eyes constantly moving, stands ready to block any bullet aimed at his boss, and the caution cuts both ways.

“Shoot first, don’t think,” Mr. Sandi shouts, half-jokingly, as his five-car armed convoy bursts across the border from Kuwait into Iraq.

Doing business in Iraq takes hefty flak jackets with anti-bullet and anti-shrapnel ceramic plates and armed guards toting AK-47s, MP5s and 9 mm pistols.

It also takes guts and knowledge, family ties, good connections and a lot of money.

Mr. Sandi — a millionaire who grew up in Iraq, lived in the United States for decades and invested all over the world — has all of those.

A Kurd who escaped to the United States after years of fighting Saddam’s regime — with the scars to prove it — he moves easily between U.S. authorities and his fellow Iraqis, of whom he has employed more than 3,000 since the ouster of Saddam Hussein.

His burgeoning businesses here requires many trips away from his comfortable Maryland home to “the Bag.”

Despite the dangers, Mr. Sandi keeps coming back to join and deal with other investors who also want to take the plunge into Iraq.

“At this point, I still see it as a very high-risk market,” said Doug Hartman, U.S. representative for the Turkish contracting group Alarko-Dogus J.V.

“There is no legal system you can rely on not changing before June, no court system, no conflict resolution in place” — apart from the end of a gun — “and the financial and banking system is not functioning. It’s absurd having someone walking around with $100,000 in a suitcase,” he said.

The confusion, Mr. Hartman said, “has happened in every country after a war.”

“It’s an inevitable stage of the reorganization of society after a war.

“All prime facilities, factories, hotel sites are available and the first one to make the move will secure the best of each.

“You can cherry-pick right now, and it is feasible to secure an arrangement with these facilities. … It is far too early for foreign direct investment. But you can start making alliances and securing sites, getting access to facilities without actually putting substantial amounts at risk,” Mr. Hartman said.

Nothing left to chance

After hundreds of miles of treeless, flat brown countryside, Mr. Sandi’s convoy hardly slows down before coming to an abrupt stop at a roadside black-market gasoline stand.

The guards, all dressed in black, jump out, backs to the cars, popping the safety off their weapons, eyeing the area warily as dealers pour gasoline through funnels.

Minutes later, the head guard gives the order, “Ya’ala” — “Let’s go” — and everyone jumps back into the cars.

Nothing is left to chance. Just months before, Mr. Sandi’s convoy came under attack in Basra and escaped only after a heavy gunfight.

But the banker seems in his element. He has abandoned his Bally shoes and Italian suits for blue jeans, a Kevlar vest and an automatic rifle, and is elated that he is in Iraq at all.

“I am free,” he said. “I can breathe now. I would rather die like this than live with Saddam alive. You have to understand this from the view of those who lived here. That man tortured my mother, my father and my brothers and sisters. I was only 16 when I was taken and beaten.”

Since the end of the war, things have improved in Baghdad. During daylight hours, small businesses are open, cafes and juice bars are working, street stands selling meat sandwiches and fruit are crowded, and domestic appliances are readily available.

There are supermarkets, bakeries, sweets shops, restaurants and antique stores. Couples are getting married, and people are back on the streets.

But come 5 p.m., everyone scurries home. Police checkpoints go up, and by nightfall most of the streets are deserted. The tension in the cars driving at night is almost palpable.

There are other small signs of positive change. Months ago, Mr. Sandi would have had to send money to pay his employees in wads of cash through Turkey in the north.

Now Citibank, which has a branch in Baghdad that can receive wire transfers, has eased that burden. On the other hand, the District-based merchant banker is no longer as comfortable walking down Baghdad streets as he was last June.

“It’s not safe,” he said. “I’m going to stay in the office, talking, directing.”

One of his seven hotels took a huge bomb hit just a few months ago. It left a wide, black crater, shattered windows, torn walls and seven dead guards.

A few days into his visit last month, though, he was venturing out onto the streets, eager to reconnect with the city he was forced to leave 30 years ago because of his anti-Saddam activities.

A mixed picture

According to the U.S.-led Coalition Provisional Authority (CPA), the number of armed attacks is down and petty crime has been reduced since Iraqi police have been returned to the streets.

But U.S. pronouncements that things are improving here still seem optimistic.

Almost everyone has a weapon, gunfire regularly splits the night silence. Heavy weapons are said to be coming into the country from neighboring Syria, and bombs explode almost daily.

On any given day, there can be a bombing or an attack on U.S. soldiers, with helicopters swooping low overhead. Any Western hotel or project is a target — and the hotels are frequently hit by mortar fire.

Hassan Sinjari, an Iraqi business manager of the Al-Katin business group Mr. Sandi has invested in, reported repeated attacks in cities outside the capital.

In Baghdad, Mr. Sandi rarely travels without an armed guard or unarmed himself.

Hotels housing U.S. nationals and Iraqi officials are surrounded by towering 5-ton concrete barriers, barbed wire, armed guards and sharpshooters sitting in sandbagged turrets above the street.

There are basically two different levels of crime: day-to-day banditry, which is becoming more organized as the Iraqi police develop a stronger street presence, and politically motivated attacks against any U.S.-related targets or persons.

“This is the Olympics of terrorism — you have to participate,” said one diplomat based in Baghdad. Suicide bombings causing large numbers of dead and injured are on the increase.

For most Iraqis, life goes on: There are traffic jams; most shops, albeit rundown, are open; there is plenty of food, and Turkish, Korean and Chinese goods cover the shelves.

Business, says trader Fuad al-Watter, is excellent.

“I have industrial interests which are at a standstill, but as far as trading is concerned, we have never been so active — there is no customs, no taxes, and a hungry consumer and spending money,” he said.

Mr. al-Watter, 70, a graduate of Loyola University in Chicago, added that the real moneymaker now is security.

“Foreign businesses are afraid. If I say I will get you a guard, they will jump over and start kissing me,” he said. One drawback, he added, is that guards “announce the presence of foreigners.”

Although the streets are bustling and at least the informal economy is booming, many residents here are struggling to find steady jobs and trying not to get killed while they readjust to the power void left after the fall of Saddam.

Demonstrations against the lack of jobs are becoming more common, and the level of frustration at the lack of security and services is high.

Tough love

As Iraq struggles to get out of its violent swamp, investors such as Mr. Sandi are looking to the future. Households are going to need domestic appliances, demand will increase for housing, food and other light manufactured goods, he insists, and others agree.

“It’s a gold rush sort of situation. Everyone is dreaming of hitting the bonanza,” the diplomat said.

Doing business in Iraq requires a tough-love approach, says Mr. Sandi. In spite of the U.S. military presence and local police on the street, the city runs on the survival of the strongest.

Mr. Sandi’s coterie of heavily armed and highly trained guards guarantees him a level of respect. And he is treated like a demigod by his employees in a country where unemployment is said to be as high as 70 percent.

“When I got my job, I grabbed it tooth and nail,” said one employee, who had been out of work for months trying to support his family on rapidly dwindling savings.

As Mr. Sandi walks into his latest venture, the Al-Sadeer hotel, workers flock to shake his hand. Distant cousins try to catch him for a moment. Workers plead for his help to get a new apartment, help pay for a wedding, get their old jobs back.

“Jobs are what is going to bring this country security,” he said. But knowing how to develop business to provide those jobs takes a special approach in Iraq.

“It’s a combination of guns and roses: Your enemy has to know you’ve got the gun, and your friend has to know you’ve got the roses. People have to understand that when you need to take action, you will do so without hesitation,” he said.

On the tennis courts next to the half-empty swimming pool of the newly refurbished hotel, about 50 new guards punch and kick in unison as four black-belt teachers drill them in fighting techniques.

“He’s a warlord,” Mr. Hartman, who also serves on the American Turkish Council, said of Mr. Sandi after meeting him in Baghdad.


Global interest

Investors from the United States, Europe, Russia, Turkey, South Korea and the Persian Gulf states are all looking for opportunities in Iraq, either through CPA contracts drawing on the reconstruction money approved by the U.S. Congress, monies promised to individual ministries or in the private sector.

Over the past nine months, Mr. Sandi has joined with local Iraqi businessmen and bought several hotels. He is also working with DynCorp, based in Virginia, to provide security around the country and is beginning to branch out into other private-sector areas.

Many security forces, national and expatriate, are former military. Cropped hair, sunglasses, caps or keffiyeh scarves, an arsenal of weapons and a toughness born of experience, these forces fill the enormous power vacuum in civilian areas, which the military cannot reach and the police are not ready to take on.

Selim Edes, an American businessman with interests in Turkey, arrived in Baghdad to check on the possibilities of working on U.S.-funded infrastructure-reconstruction projects, as well as branching out into the private sector to make concrete.

“Because of geography, and because Turkey has everything and Iraq has nothing, they are ready to invest here,” Mr. Edes said, adding that the rewards of getting in on the ground floor could be great.

International businesses are lining up to fill requests for proposals to rebuild Iraq, which were due this month. A final decision on many of the bids is expected in the first half of March. Six new banks are already ready to set up shop.

“In the next six months, if some of the government infrastructure projects go through, like water and power, if those are provided, then there will be a big change of attitude on the part of the bad guys,” said Mr. Edes, referring to the violence that wracks the country daily.

An hour later, two powerful explosions rocked the hotel where Mr. Edes was staying as mortar rounds crashed into the earth nearby.

Daily challenges

Accountant Osama Ahmed Ali of Mosul acknowledges that working in Iraq today has its daily challenges. Because there is no checking system, at times he has to walk around with $50,000 in cash to pay company bills.

“I take with me guards and I have my God also,” he said. “I take sometimes four guards. If I have to go to a bad area, I take a lot of guards.”

Communications also are a problem. If Mr. Ali needs something, he can’t just pick up a phone and order it. He has to get in a car and go get it. Despite a budding cell phone system, many people still don’t have access to a phone.

There are other challenges, too: Corruption, inherited from the Saddam regime, is a way of life, affecting everything from trucking in goods from outside Iraq to essential “repairs” on things such as telephone and electricity lines.

Local Iraqis say the rule of law in Baghdad is determined by who has the largest gun and the toughest and best-armed guards.

The Iraqi company Mr. Sandi has created with a lifelong friend as a partner seems to have worked out. Employees are treated well, paid well and have benefits generally unheard of in post-war Iraq. The company even sponsors a local soccer team and has set up a fund to help young couples pay for weddings.

“If you care for the local people, work with them, provide them with know-how, finance and expertise, they will respond,” said Mr. Sandi. “By winning the hearts and minds of the people, you will make a profit.”

He quickly adds that his passion to succeed transcends any monetary reward.

“This is my birthplace. I want to rebuild this country. I am here in the interest of my country and the United States. I’m here because I care.”

The portraits of seven guards killed trying to defend a hotel attacked by a bomber hang in gold-colored frames above the door of one of the offices. On one visit, Mr. Sandi stood and stared at them, tilting his head in a gesture of mourning before moving on with his inspection of the hotel premises.

He cried publicly when the black body bags carrying the burned corpses of six guards of his Al-Katin company — victims of a car bombing outside the gates of one of Saddam’s palaces — were brought to his hotel.

The gestures are not missed by the crowds following him, in a country where family and loyalty are paramount.

One official in the company also made it clear that those who attack the company or its employees will be dealt with swiftly. “We will punish them and their whole family,” the official said, on the condition of anonymity.

Playing the game

Dressed alternately in dark suits and Dolce & Gabbana green fatigues, beige combat boots and Cartier watch, Mr. Sandi discusses multimillion-dollar deals easily in Arabic and Kurdish in a hotel lounge, or in English at the heavily fortified CPA. He works both like a politician, shaking hands, cracking jokes, listening carefully and laying on generous dinners.

“He’s going out and playing the game. It’s all politics, all doing each other favors,” said Mr. Hartman. “I saw the same kind of guys in Vietnam. They seem to come out of nowhere. They are opportunists and usually don’t last.”

Part of Mr. Sandi’s mantra is that providing jobs to Iraqis will defuse much of the sharp resentment among Iraqis who first welcomed U.S. troops into their country but are now struggling to cope with sporadic supplies of water, electricity and jobs as gunfire shakes the streets.

“Iraqi people thought the U.S. could do anything at any time. They thought the Americans were like a light switch, that they could turn things off and on,” Mr. Ali said.

The United States, on the other hand, has done a poor job marketing itself, a situation aggravated by U.S. soldiers who understand little of local cultural mores, many Iraqis say.

Many here are also fed up with having to get permission from the U.S. authorities to operate in their own country.

American glue

Privately, Iraqis will say that their own ministers are powerless figureheads standing in front of the U.S. advisers, and they dismiss the U.S.-appointed Iraqi Governing Council as a rubber stamp to CPA decisions.

Others accuse both Iraqi and U.S. authorities of doing nothing but advancing their own interests before the planned handover of power June 30.

But nearly everyone involved in business agrees the United States is the glue holding the multiethnic and multireligious country together, and they insist it should stay in some form or another after July.

“Baghdad will burn if the United States pulls out,” said Mr. Ali, warning that intense religious and ethnic rivalries are ever ready to explode.

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