The politics of reconstruction

07 March 2003
It is no surprise that many non-US contractors are worried they might be shut out of reconstruction work in post-Saddam Iraq - it has happened before. The reconstruction of Kuwait after the 1991 Gulf war was carved up by the US Army Corps of Engineers (USACE) and US prime contractor Bechtel, which awarded the bulk of the juiciest contracts to US firms.

The news that the US Agency for International Development (USAID) and USACE have already started lining up US contractors for reconstruction work in Iraq has provoked fears that history is about to repeat itself.

By mid-March, USAID will announce which out of Bechtel, Fluor Daniel, Kellogg Brown & Root (KBR), Perini International, Parsons Engineering Corporation and Louis Berger International will have the contract to manage $900 million of 'first-phase infrastructure reconstruction work to allow people to go home'.

Meanwhile, details are leaking out that USACE is concurrently 'sounding out' contractors about work in Iraq. USACE confirms it is soliciting interest for work in post-war Iraq and admits to having carried out a 'market survey' of companies in the US Central Command area of operations. Industry sources say USACE is talking to a number of US contractors about specific packages of work, at least one of which relates to the dredging of the port of Basra.

In the past USACE has used a number of US-based contractors in the region, including Dillingham Construction Corporation, Chicago Bridge & Iron Company, Morrison Knudson - now called the Washington Group, Bechtel, Fluor Corporation, Perini Corporation and JA Jones. This list is not exhaustive but MEED understands that USACE is already talking to some of these firms about working in Iraq.

The exclusive use of US firms could be counterproductive. 'It is very politically incorrect to do this,' warned one Saudi Arabian contractor. 'Look at the Gulf war. Bechtel said that because the Saudis had been good to Kuwait it would source everything locally. Then it had everything flown in from Houston. A lot of Saudis remember that, and Bechtel is not flavour of the month here because of that.'

Colin Adams, chief executive of the British Consultants & Construction Bureau (BCCB), agrees: 'The Americans have got to be very careful how they go about it. The Iraqis are highly capable and have a highly competent workforce. It is a similar situation to Serbia, where 10 years of sanctions resulted in a severely neglected infrastructure, but because they had a strong indigenous capability they were able to pick themselves up quickly. It is remarkable what has been done there.'

Because of the UK's role as chief ally to the US there are hopes that UK contractors will benefit, and the UK government's export arm, Trade Partners UK, is already starting to identify companies willing to work in Iraq. 'The difficulty last time was that it was a fait accompli worked out in advance in Washington by the Kuwait government-in-exile and the Americans. So by the time we came in, a plan had already been drawn up,' says Adams. 'In Iraq, the emphasis is on making sure we don't get in the Kuwait situation again. But the UK is much better now at getting its ducks in a row, if you look at the post-conflict situations in Kosovo, Serbia and Afghanistan. But there is still a certain British diffidence about getting involved too early, because it looks like ambulance chasing. That makes me not as confident as I'd like to be.'

The picture is likely to be more difficult for French companies. After the Gulf war, in a bid to secure work in Kuwait the French and UK governments both led trade missions to Kuwait to present their countries' respective capabilities to the Kuwaiti authorities. This time round France's strong resistance to the US approach to Iraq is likely to result in French firms missing out. 'I think the French will struggle,' said one senior British contractor. 'I imagine there will be strong pressure once the UK and US are in-country to keep the French out.'

Richard Thompson

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