A Washington-based merchant banker who just returned from Baghdad, where he invested $1 million in several new businesses, says the U.S.-led occupation authority has become an obstacle to private entrepreneurs with the cash, ideas and expertise to quickly rebuild Iraq.
Rubar Sandi, chief executive of Washington-based CorporateBank Business Group, described the Pentagon’s Office of Reconstruction and Humanitarian Affairs (ORHA) as a bureaucratic web hobbled by infighting and misinformation.
“In 10 days, I managed to do more than ORHA has done in two months,” he said in an interview. “ORHA is a stumbling block,” he said.
During his first trip, Mr. Sandi purchased four hotels and started a company to provide security and translation services for would-be investors.
ORHA blocked him from flying commercial airlines in and out of Iraq and from opening a cellular telephone company.
ORHA has since changed its name to the Coalition Provisional Authority (CPA).
The organization’s staff, made up of American and Iraqi-American advisers, was barricaded behind the walls of one of Saddam Hussein’s former palaces and not particularly helpful, Mr. Sandi said.
“The Iraqis who came from the United States have imprisoned themselves in Saddam’s palaces,” Mr. Sandi said. “It’s pathetic.”
Mr. Sandi, who hired 300 Iraqis on his first visit last month, plans to return later this month and plans to invest an additional $10 million dollars.
U.S. officials disagreed with Mr. Sandi’s view that coalition bureaucrats are hampering private investment in Iraq.
“That assessment is simply not true,” said Cmdr. Chris Isleib, a public affairs officer at the Pentagon.
Mr. Isleib noted that in addition to a recently announced $100 million building initiative, CPA Chief L. Paul Bremer “is pumping money into the hands of Iraqi citizens through salary payments” and getting the oil industry moving.
He also said Mr. Bremer and former ORHA leader Jay Garner had helped appropriate more than $2 billion for Iraqi efforts. Much of that money is to go to contractors.
Struck by the level of insecurity and disorganization as well as numerous business opportunities within that chaos, Mr. Sandi hired a number of armed guards and established a security company. He bought a fleet of cars and sport utility vehicles and created a transportation company.
He found a number of bilingual Iraqis and set up a translation company. And he’s renovating hotels trashed by looters shortly after the war ended.
He is also in negotiations to buy a private bank with 20 branches across the country.
The idea, he said, is to supply incoming businesses with all the services the U.S. authority has not been able to provide: security, transportation, language services, decent lodging and a way to move money.
But Mr. Sandi ran into resistance when he tried to obtain permission from the CPA to enter the telecom world. That, he was told, was impossible despite the fact that the telephone system in Iraq has all but collapsed.
He registered his security company in the Kurdish north, which has been largely self-governing since the end of the Gulf war in 1991.
Mr. Sandi, an Iraqi exile who made his fortune in the United States, said he has the help of an extended family and network of friends who never left the country.
He also has a number of significant backers and investors who, like him, are willing to take a calculated risk to get in on the bottom floor.
Holding photographs of himself in Baghdad as a teenager, at school and with his arms draped around his friends dancing at a wedding, Mr. Sandi talked in a shocked voice of how decayed the capital looked.
“It’s like a Dumpster, a junkyard,” he said, blaming not just deteriorated services, but also decades of mismanagement and corruption under Saddam.
But business is beginning to flourish, and not everyone is bad off. Mr. Sandi, chairman of the U.S.-Iraq Business Council, stayed with a wealthy trader in his brownstone mansion in one of the tonier parts of Baghdad.
Mr. Sandi said he has been deluged with phone calls from U.S. engineering, construction, telecom, automobile and beverage corporations keen on investing in Iraq — including General Motors Corp., Urban Retail Properties Co. — as well as Japanese, Korean and Singaporean investors.
“I think it’s good to see this beginning,” World Bank President James Wolfensohn said of the growing private-sector interest in Iraq.
“Countries interested to participate [stretch] from Brazil to India, and they are all ready to come in,” he added. Suddenly, Mr. Wolfensohn said, “everyone is the best friend of Iraq.”
The heads of 15 U.S. companies — including McDonald’s Corp., Motorola Inc., Bank One Corp., Kepner-Tregoe Inc. and Farley Inc. — recently attended a luncheon in Chicago, where they listened to Mr. Sandi speak on business opportunities in Iraq.
But the level of private-sector interest is matched by businesses’ apprehension about Iraq’s lack of legal frameworks.
“They are looking for safety, security, information on how to register, taxes, intellectual property rights, how to repatriate their money, labor laws,” he said, all “unanswerable questions.”
Mr. Sandi, who fled Iraq after joining the failed Kurdish uprising against Saddam in 1976, said he is convinced that given the CPA’s inability to swiftly sort through the tangled web of Iraqi politics and culture, private investors are the key to putting the country back on its feet.
“The business community will force the emergence of stability and policy,” he said in an interview. “Let’s start the private initiative. I think that will solve a lot of problems.”