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About The Battalion. (College Station, Tex.) 1893-current | View Entire Issue (June 17, 2003)
Tuesday, June 17, 2003 In search of a quick dinar Nil THE BATTAl! Iraqi businessmen embracing shot at unrestricted capitalism By Warren Vieth LOS ANGELES TIMES BAGHDAD, Iraq — Inside the mar ble-tiled lobby of the Hotel Ekal, investors carrying side arms are negoti ating business deals. A mile or so away, two brothers are installing one of this capital’s first Internet cafes. Above the entrance to the House of Elegant Bodies, a poster of a pumped-up Arnold Schwarzenegger lures potential U.S. patrons. The reconstruction gold rush has begun. While the Pentagon-run Office of Reconstruction and Humanitarian Assistance gradually gets a grip on Iraq’s postwar needs eight weeks after Baghdad fell to allied forces, the pri vate side of rebuilding is proceeding at breakneck speed — without much in the way of govern ment involvement, offi cial supervision or inter national approval. “Get ORHA out of the way,” said Rubar Sandi, an Iraqi-American investment banker who A lot of people see they can sell their property, get cash, buy some products and sell them ,make quick money. began leasing property and launching commercial ven tures almost as soon as the smoke cleared. “Let the business community do this. They know what to do and how to rebuild.” The reconstruction effort of offi cials, consultants and contractors affili ated with ORHA, which recently changed its name to the Coalition Provisional Authority, is expected to consume tens of billions of dollars over a period of several years. But for the untold number of inde pendent businesses, investors and would- be entrepreneurs operating independent ly of ORHA, a deal can be negotiated, approved and put into effect between afternoon tea and 11 p.m. curfew. “A lot of people see they can sell their property, get cash, buy some prod ucts and sell them, make quick money,” said 37-year-old Karam Hasan, who is trying to sell his A1 Arz barbershop — if the price is right. Sometimes the two tracks of recon struction collide. Sandi, a merchant banker, came to Iraq with plans to install a cellular tele phone network and launch a commer cial airline. He said he had a telecom vendor ready to start installing towers and relay stations. He had arranged to lease several jetliners and hire former Iraqi Airways pilots, crews and ground personnel to begin twice-weekly flights from New York to Baghdad. But ORHA had other ideas, said Sandi, who founded the U.S.-Iraq Business Council in Washington, D.C., and participated in the State Department’s pre-war Future of Iraq rebuilding project. Sandi quoted ORHA officials as telling him that they would confis cate any telecommuni cations equipment that he tried to install. If he tried to launch commer cial air service, his planes would be grounded, they said. Those areas of recon struction are subject to high-level approval, and remain off-limits to upstarts for now. They are not facilitators,” he said of — Karam Hasam Iraqi businessman VoluIHL The pei admitted ir cent, Texa; those adm confirmed While tl from last concerned. “It’s n number of President F ing thing i we admit v We want tl ORHA officials. “They are not helpful. They are nothing but a bunch of bureau cracy.” Sandi put his telephone and airline plans on hold. Instead, he teamed up with a local partner, hired about 300 Iraqis and began providing security, transportation, catering, translation and professional services to visiting execu tives. He leased four hotels, including the 280-room A1 Sadir and 200-room Hotel Baghdad, which he plans to devel op into full-service business centers. Sandi greets visitors in the Ekal, a smaller hotel that has become the tem porary nerve center of his reconstruc tion network. Armed guards check IDs and issue passes. Above the elevators are two clocks, each bearing a new sign: One says “Baghdad,” the other “Texas.” Life in reconstruction’s fast lane is not without risk. Business schemes that appeared flawless might grow warts on closer inspection. Competition can be Hundreds of televisions are unloaded outside a store in Baghdad, Iraq. Prices are falling, particularly for those carrying CAROLYN COLE • LOS ANGELES TIMif wads of Iraqi dinars. Some sets sell for 280,000 dinars $200), down from 350,000 dinars before the war. cutthroat. Capital can dry up. Vendors and purchasers can renege on agree ments. Trusted partners can turn out to be thieves. Hasan, the barber, thought he could turn a quick dinar by purchasing what was described to him as a solid silver jewelry box from the palace of Saddam Hussein’s son Uday. He bought the box, but it turned out to be a plated product of dubious origin, worth considerably less than he paid. Hareth Zahawi, a subcontractor who has been attempting to line up recon struction work for native Iraqis, was dis cussing a possible alliance with a Kuwaiti firm, only to learn that the com pany was using information obtained from Zahawi to cut its own deal with the coalition. “They tried to sideline us,” Zahawi said. “It’s a serious risk.” Some experts express concern that free-market capitalism, while efficient at channeling money to its most pro ductive use, might be too much, too soon for a country struggling to emerge from decades of failed central planning. Nearly 500,000 Iraqis are losing government paychecks as the coalition dismisses Saddam’s military forces, dissolves his Information Ministry and removes Baath Party loyalists from other agencies. Thousands more might join them as inefficient state-operated industries fall by the wayside. Iraq’s emaciated private sector will suffer casualties too. Some experts pre dict that home-grown merchants, traders, builders and service providers will be squeezed out by foreigners with more experience, deeper pockets and closer ties to the United States and its allies. Still, for every economic hi wringer, there is at least one cowto capitalist ready to tame the newfrontia “It’s like Texas in 1879,” saidte Hussein AM, who was not sure chose to cite that year in particulai “There are no rules.” Hussein AM and his youngerbrofc Ghassan, both engineers, are r< escort fellow Iraqis from the 19 tury to the 21st. They are preparinjio open three Baghdad Internet cafe where patrons ready to spend$3toSi an hour will be able to cruise the® and catch up on e-mails. They were planning to hookfl PCs to satellite receivers inside thw cafe, a small outlet affixed to it Baghdad Hotel. See Capitalism on Renovati Memorial S a ceiling spi an asbestos Manager De The repa the state fin systems be according tc When th of asbestos- ceiling bein on the metal wing. 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