Global investors keeping eye on Iraq

The international donors' conference in Spain was organized primarily for governments to assess Iraq's needs, as outlined by aid agencies and the US-led authority in Iraq. But alongside the ministers and functionaries assembled in the mammoth Madrid conference center were executives from 332 companies and business organizations who hope that international donations will help stabilize Iraq and open the country to private investment.

"The exciting thing is that we are here to hear from the Iraqis themselves, not officials from the ruling coalition," said Daniel Christman, senior vice president for international affairs at the Washington-based US Chamber of Commerce. "They're the ones that can speak about the reality in the country."

Attendees will not know until later today how much money donors will add to the modest amounts promised by a few countries in recent weeks to various reconstruction funds. But US and Iraqi officials yesterday also strove to drum up investment from the private sector by convincing corporate delegates that the conference will succeed in getting at least part of the money needed to help kickstart the Iraqi economy.

"I'm confident that tomorrow you will see a major commitment," Treasury Secretary John Snow said at a cocktail reception at the US Embassy for businesspeople, Iraqi officials, and members of the governing coalition. "But those monies won't be sufficient. The rebuilding of Iraq will need the talents, resources, and skills of the private sector."

The Spanish government organized the one-day gathering on Iraqi business opportunities in a hall within the conference center where the larger two-day donors' meeting was taking place. The companies included US giants like Coca-Cola and Motorola and European multinationals such as DaimlerChrysler AG of Germany and French bank BNP Paribas. Scores more companies attended from as far as Australia, Brazil, China, Japan, Korea, and Russia.

In addition to hearing sector-by-sector briefings by Iraqi ministers, the executives mingled with Iraqi businesspeople, many of whom had returned to the country after the fall of Saddam Hussein.

Enthusiasm was tempered by concerns about security and future stability in Iraq. Beyond physical security, corporations also are wary about the long-term security of any financial investments in a country that had little reputation for financial stability even before war and sanctions ravaged its economy.

Because sanctions imposed after the first Gulf War kept most countries from doing business in Iraq, many newcomers to the Iraqi business world are plying their trades from neighboring countries. DaimlerChrysler, for instance, has been selling light trucks in Kuwait and Jordan to customers who needed them for work in Iraq. But the growing need for vehicles in the reconstruction means the company hopes to set up a distribution network in Iraq before long.

"We'd like our customers there to know we can sell and service in Iraq, but first, we have to evaluate opportunities in the context of the country's future stability," said Timothy McBride, vice president for corporate strategy at the automaker's headquarters in Stuttgart.

The United States also is touting a trade bank for Iraq, a body that with funding from international lenders is designed to help insure investments by foreign companies. "The trade bank is nearly established, and that will help confidence" of foreign investors, said L. Paul Bremer III, the US administrator of the interim authority in Iraq.

Snow and other US and Iraqi officials acknowledged the security concerns but tried to allay doubts by noting legislation drafted last month by the provisional government that is intended to make investments more secure. The rules include provisions allowing foreign corporations to set up fully-owned subsidiaries in the country and also guaranteeing the withdrawal of capital.

But companies are likely to take it slowly. "The changes sound promising, but we're going to have to let our legal folks take a long look," said John Disharoon, a Brussels-based director of public affairs for Caterpillar Inc., the US maker of construction machinery.

A few companies are poised to build upon existing operations in Iraq, primarily those that were allowed to conduct business in the country under the auspices of the United Nations' oil-for-food program. CNH Global NV, the agricultural and construction equipment manufacturer better known as Case New Holland, has over 6,000 pieces of heavy equipment in Iraq. Spurred by the promise of even more lucrative contracts, the company hoped the conference would shed light on how the reconstruction will progress.

"We want to meet Iraqi business men and women because we've got a lot of experience there," said Joseph Samoro, a senior vice president for the Illinois-based company.

Despite the political instability, investment and commercial activity in Iraq have gained steam over the last month, said businesspeople and analysts. Tom Valentine, vice president of Control Risks Group based in London, which offers security assessments and services for government officials, international agencies, and companies operating in hostile areas, said interest in Iraq has recovered from its low point two months ago when the UN headquarters in Baghdad was hit by a truck bomb. "In the last two weeks, inquiries have increased both from the commercial and government side of our client base," he said. "And we've had two firm commitments."

Some companies, particularly Arab-owned ones, have already established a presence in Iraq. Orascom Group of Egypt, having won a contract to build and manage a cellphone system in Iraq, has a team in Baghdad pursuing a franchise to rehabilitate and expand Iraq's cement sector. Iraq is humming, businesspeople and investors said, with traders pursuing supply contracts with the US-led occupation force. Ali Alissa, an Iraqi merchant based in Amman, Jordan, said he recently delivered 112 vehicles for Iraqi ministries in a $1.4 million deal ordered through the Coalition Provisional Authority: "They want everything from trucks to pumps."