Saturday, December 04, 2004


By William Fisher

Somewhere between Haliburton and CARE, there is a cadre of contractors in Iraq that is far less publicized, but just as vital to the country’s future. These are the consulting firms that help Iraqis create jobs by promoting entrepreneurism, improving agricultural and manufacturing efficiency, privatizing loss-making state-owned companies, building stronger private sector institutions, stimulating investment, developing information technology skills, and encouraging an independent judiciary and greater transparency in business and government.

The US government – principally the US Agency for International Development (USAID) -- is currently spending some $ 3.3 billion annually on contracts with these kinds of firms and their expert consultants. But these men and women are finding it increasingly frustrating to get anything done.

Their problem – like that of everyone else in Iraq -- is security. They are spending some 25-30 percent of their contract revenues hiring armored cars and small private armies. But even then they are constantly at risk, often unable to move around the country to work with the people they have been hired to help, and frequently forced to leave Iraq for periods for the relative safety of Jordan or Kuwait.

“I think it is almost impossible to do good work there right now, but the optimist in me hopes that will change”, said a senior executive for one contracting firm. Said another: “There is really very little getting done in Iraq these days, for obvious reasons.” Like almost all the firms contacted for this article, they spoke on condition on anonymity.

One contractor described her company’s elaborate security set-up. “We had to hire a militia, 80 Kurdish pesh merghas, to protect us. These are mountain fighters from the north of Iraq who were trained by US and British paramilitary during the time of the sanctions. Each fighter has an AK-47, many of them have pistols, grenades, and RPGs, and none of them would hesitate to use their weapons.”

But the “rules of engagement” have changed as the insurrection became more intense. Says the head of one program, “In April, when the Mehdi Brigade revolted in the south and overran some compounds of American contractors, we told our fighters that if a mob threatened the compound they should shoot to maim, wound people as necessary, but do not kill. Now, the situation is quite different, and our fighters will shoot to kill.”

Getting around has also become a far more serious problem – limiting the consultants’ opportunities to work with their Iraqi clients “When I go outside the compound in Baghdad”, says one consultant, “I have two cars and eight guards, all heavily armed. The cars are low profile. I sit in the back in the middle, squeezed in between two guards, and in the front seat are a driver and guard. The second car, filled with guards, follows directly behind my car. This is what Mrs. Hassan of CARE did not have. Her lightly or unarmed guard and driver could not overpower the people who abducted her. We have known for some time that women are considered high value targets for kidnapping, and it is a shame she did not assume that she was a potential target.” Margaret Hassan, a British-Iraqi who had worked in Iraq for thirty years, was kidnapped and murdered by insurgents last month.

Finding skilled consultants presents a mixed picture. Despite the considerable risks, some contractors are finding no shortage of Americans eager to work in Iraq, as well as many Iraqi experts. Most of them appear to like their work and many return for additional assignments. Other consulting firms tell IPS, “It has become very difficult to recruit skilled American consultants during these last few months. This does not negate the statement that there are many highly skilled consultants there, and that many of them return. But there is a greatly diminished number willing to go under current conditions.”

Asks one consultant rhetorically: “How I can possibly like my job?” There are days when I love it, and days when I am frustrated. It is compelling and the people are great. Every consultant I have had wants to return to Baghdad. Today, one of my good consultants returned with great delight for his fourth trip to Baghdad. And there are plenty of others like him, just as crazy as I am.”

But some consulting firms with experience in Iraq have declined to bid a second time as prime contractors, since prime contractors are responsible for costly security arrangements. One major consulting firm told IPS, “We have taken the position that in the long run we want to work in Iraq. But last May, as conditions started to deteriorate, we predicted they would continue to worsen. We were correct. Until security and operating conditions improve we will not be a prime bidder on any contract. And we will only bid as a subcontractor if we are relatively confident that the prime contractor has an effective security apparatus.”

Unlike these consulting organizations, many not-for-profit humanitarian aid groups have left Iraq. Tiziana Dearing, executive director of the Hauser Center for Nonprofit Organizations at Harvard's Kennedy School of Government, wrote in the Boston Globe, “of the dozens of international [aid] organizations that entered Iraq in 2003, fewer than 10 remain. CARE withdrew its operations from Iraq earlier this month. The perception is fading that relief is independent, neutral, and exclusively for humanitarian ends.”

One of the major challenges facing consulting firms – and all those seen to be associated with the US-led coalition -- is the reality that the Iraqi economy is being restructured by what is widely perceived to be an occupying force, and with little input from Iraqi society.

Nevertheless, few consulting firms have left Iraq permanently and most say they are managing to get their work done, though usually far more slowly than they planned. Says one: “I know of no contractors who have left Iraq permanently. Some go to Amman for periods, others travel to Arbil in the Kurdish area, as we do. For the first time in a year we closed our Baghdad office last week, just before the Falluja assault, and placed our local staff on administrative leave. We work through email with staff from their homes, and even with the conflict going on now they are able to conduct a reduced level of business.”

Typical of the major projects being carried out by consulting firms is USAID’s $20 million Economic Governance contract with Bearing Point, Inc., a giant consulting firm headquartered in McLean, Virginia. Its mission is to develop and implement international economic practices aimed at improving economic governance in Iraq and developing a policy-enabling environment for private sector-led growth in the country. The three-year contract is expected to assist in reforming tax, fiscal and customs policies as well developing an IMF-acceptable monetary policy through building the capacity of Iraq's Central Bank.

USAID Administrator Andrew Natsios is aware of the difficulties of working in Iraq’s hostile environment, but points to solid achievements. He recently told Congress that “Iraqis are good businessmen, and economic activity is picking up significantly despite the violence. But jobs remain a vital issue.” He says USAID grants “have put more than 77,000 people to work on public programs.”

Natsios also points to achievements in commercial banking, commercial law, agricultural reconstruction and development, micro-credit, restoration of the country's wetlands, democracy and governance, and helping human rights organizations.

One major contractor acknowledges that “there indeed is a lot of good going on in Iraq, but the fact that I cannot go to Baghdad because I might get my head cut off by a Zarqawi terrorist is not made better because Texas A&M brought in 1000 pounds of wheat seed.”