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
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Memorial S
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