Iraq looks to restart the rebuild

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Instability has forced many international contractors to leave Iraq. But in a shake-up of the investment laws and the development of long-term project leases, the authorities are hoping that global and local firms can work together.

Calls for returning Iraq to a civilised and safe place to live emerged pretty much as soon as the US-led coalition declared victory in ousting former president, Saddam Hussein, back in 2003.

But despite almost US $18.4 billion (IQD24.3 trillion) being spent on reconstruction projects across the country since, efforts have been blighted by continued insurgency, alleged corruption and complex bureaucracy.

US-based Bechtel was one company involved in the early reconstruction process, which pulled out in November after witnessing the death of 52 workers and the wounding of 49.

Other problems hampering progress have been due to poor construction management: Parsons Corporation and Halliburton subsidiary Kellogg, Brown and Root were among the US companies exposed last year by the Special Inspector General for Iraq Reconstruction (SIGIR) for undertaking sub-standard work.

Now almost four years on, the Iraqi authorities are looking to regain control of reconstruction across the country by relaxing laws on international investment, as well as enforcing stricter vetting procedures when it comes to putting projects out to tender and supervising their construction.

For the next three to five years, the mandate for the Ministry of Construction and Housing is to re-establish the country’s basic infrastructure. This will entail building thousands of new homes, bridges and roads, setting up water, power and sewage treatment plants and modernising Baghdad airport.

“The aim of the first stage will be to increase the calibre of infrastructure to the minimum acceptable level,” says Dr Alaa Al Tamimi, former Mayor of Baghdad.

“We currently have a shortage of potable water and need around one million m³ a day. We also need 400,000 homes, more than 100 road interchanges and bridges, and around 600,000m³ for waste treatment plants.”

The second stage in the process will be to increase the capacity of infrastructure to match what would be considered as a ‘normal’ standard in other major cities in the Middle East.

“When we say we need 400,000 homes, it doesn’t mean we want to build luxury villas. What we’re looking to do is provide a suitable home for each citizen,” he adds.

From 2012 onwards, the plan is to turn Iraq into the type of place that’s driving its own economy and effectively competing with other established countries in the region.

“After the basic work has been done, we will look towards our dream of turning Baghdad, for example, into somewhere similar to Dubai. We will be looking to embed our culture into any future development and recapturing what Baghdad was once like.

“At the end of the last century, for example, we had things like opera, music and dancing in the clubs – but currently there is nothing here that represents any of that, although this is something temporary.”

To achieve this a law has been introduced making Iraq a more attractive place for international investors. The law will mean better financial privileges, as well as flexibility in the way projects are designed and constructed.

The driving factors behind the law are to promote the transfer of modern technologies – particularly as most offices of construction companies were burned and looted, with equipment stolen during the war – as well as create long-term employment for Iraqis within a more competitive economic environment.

“From a human perspective, we have very skilled people who are capable of covering all construction aspects,” adds Al Tamimi.

“But what we need from international companies is high-tech equipment for more complex projects. Maybe in the first stage of development joint ventures could be formed between Iraqi companies and international investors – Iraqi companies could provide the labour, while international companies could provide the machinery.”

Until now, international contractors’ involvement in the reconstruction process has been at a ‘superficial’ level, says Al Tamimi, who believes this has been a major factor contributing to mismanagement of projects undertaken so far.

“Bechtel, for example, worked more like a ‘skeleton’ company in the country, because at the end of the day the Iraqis did the work as subcontractors in order to cut down on costs.”

With a plethora of local contractors, and an estimated 100,000 Iraqi engineers, Al Tamimi adds that the most crucial requirement from international contractors to push construction forward is modern equipment, especially if the proposed Metro Baghdad gets underway.

“This project could possibly be done as a build-operate-transfer (BOT),” he says.

“And I think a joint venture between Iraqi and international companies could work well for this – the work could be done by the Iraqis, and the underground digging machinery could be brought in by the international companies.”

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