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Sat 6 Oct 2007 04:00 AM

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Caught in the line of fire

You have to have seen Iraq to believe it and Jayne Harris has seen it all. Arabian Business meets the woman who is on the front line of the security issues that Iraq so desperately needs.

For Jayme C. Harris, general manager of Iraq-based, Unity Logistics and Security Services (ULSS), a big part of what's taking place in Iraq is like a caatch 22 situation. For example, "although they [Americans] want to create jobs for Iraqis they are not letting them into all [military] base camps," she says, where there are many job opportunities in supporting the huge US military effort in Iraq. This wasn't the case, Harris explains, until a suicide bomber walked into a building on a US base camp full of thousands of people and blew it up. In order to alleviate this threat, most camps have stopped letting Iraqis in.

This, however, is not the only problem when it comes to business in Iraq. "The contracts are supposed to be won through a competitive bid with tenders and companies bidding for the projects. You're not supposed to just give a contract to somebody," Harris says. With government contracts, companies should bid on the website, put together a package, show their past performance, legitimacy of the company, explain how they're going to perform, give their dollar amount and then, based on different categories such as price, technical ability, past performance, and mobilisation plans, the companies are rated. In reality, this is not always the case.

"What's happening now with the Iraqis, the government is just a facade. They do it legally but then they're still doing the bribes on the side and making it look like it is legal."

In conventional project contracting, says Harris, companies are entitled to a certain sum of money in the early stages of a contract called "mobilisation costs" to help get the job going. This however, is not the case in many business contracts in Iraq.

"What these guys do is say here's all the money for the project. Then they have the money, they don't care and there goes the funding for that project. This has not happened once but a lot. Additionally, people are finding out that a lot of the areas are very dangerous and they don't have the materials or the skills to do it. People get shot and they are not going to go back to finish the project," she says.

ULSS started as a security company but was expanded by Harris who secured an Iraqi sponsor to help form an Iraqi company.

"We had financial backers, the sponsor and Iraqi citizens, and we did everything by the law from registering with the government and paying all the required money for that. We used our past performance and helped support other sub-contractors," she says.

The company has its main office in Basra and operations in several US military camps. According to Harris, one of the big businesses in Iraq at the moment, also handled by ULSS, is transporting gravel.

"We employ Iraqi drivers. The military keeps losing vehicles and you always have to put gravel down so it's a big business. We get gravel from within Iraq but the prices are crazy."

Gravel per cubic meter can range from US$30-US$180. At the lower end of the price range you can get the same amount for a dollar somewhere else.
The landscape of the private security community in Iraq has changed enormously since the end of the war in 2003, explains Harris. Back then big security contractors had little presence. All it needed was a security licence for smaller companies to operate.

Things have changed with the recent outbreak of the Blackwater scandal. The private security company is accused of opening fire on Iraqi civilians killing 17 people. The investigation into the incident is shedding light on the role of private security contractors in Iraq.

"The Blackwater issue is very bad," states Harris. "The US has a lot of negative connotations now just by being in Iraq. It's such a sensitive subject. Blackwater is saying it was a provoked thing, while the Iraqis say it wasn't. Regardless, 17 people are dead and there are no Blackwater people dead. It's just an ugly product of war." If any good can come from this situation, Harris believes it is creating more transparent regulation of private security contractors in Iraq. But the Blackwater scandal reveals another conundrum. Blackwater originally had its licence withdrawn by the Iraqi authorities; it has since been reinstated.

"The Iraq government pulled their contract; they were no longer there. Then Condolezza Rice made a phone call, and apologised. Now they are back on the street because the national reaction is to get rid of them but the Iraqis are thinking ‘we have to replace them somehow, we can't just leave a gap with nobody there' so they're in a catch 22 situation too," she says.

Security is big business in Iraq admits Harris, even for the US military. She is not surprised that a big portion of reconstruction money is spent on keeping foreign security. It started with the military guarding their own base camps; now private security is in all the bigger base camps, she explains."There are four or five big companies with the multi-billion dollar contracts and they are everywhere: in the camps and at the checkpoints. They have a big presence."

So where has Iraq's reconstruction funds gone? Harris says there's a lot of finger-pointing, but she doesn't have the answers.

She believes it will take at least 10 years to rebuild the country, and pouring in billions of reconstruction dollars is not a solution.

"There's not even a stable judicial system in place so why would you throw all that money in. It has to be under control." While positive things are being done, this is "on the smaller scale". The picture seen by Harris is one featuring "fraud, waste and abuse".

For Harris, however, it is important that the basic needs of the Iraqi people are provided for first and foremost, starting with employing people, improving water and electricity, putting a judicial system in place and building schools and hospitals.

Business for the braveThe reality of operating in Iraq David Claridge, managing director of Janusian, a British security contractor operating in Iraq for four years, on doing business in the war-torn country:

"The investment law introduced is favourable to foreign investors, but that is about where it stops. It's theoretical. The application of the law is quite uneven and the cost of establishing even the simplest roots in Iraq is quite significant given the security demands, the demands of knowing who is working for you and those of managing a business in the normal sense. To come in completely cold as a Western company the environment is too hostile before you even start thinking about the realities of personal security. It's possibly different for a regional company. It may be more acceptable in terms of the range of risk. It may be more simple given their understanding of local markets and legal processes in the region.

It's important to remember that Iraq is not one country in a sense. Investing in Kurdistan is something which a lot of companies are doing and the area has been witnessing a boom in the last couple of years. To some extent in the south as well there are many opportunities. One has to appreciate that conditions here can't be measured by Western standards in terms of investment and expectations. The local power players may want a part of the business which you wouldn't expect in the West, but that is a much more open business environment because you can actually go for a meeting without having to bring a security team with you.

But Iraq is a massively unpredictable environment. You are faced with almost an arbitrary application of the law in every sense and constantly changing authorities. The business costs are highly unpredictable. It's very difficult to implement any business plan. One has to come back to the basic principle: Iraq is one of the largest untapped oil reserves in the world. Eventually the situation must become stable enough to exploit that. Until Iraq arrives at a position where that is possible it's going to continue to underperform. The Iraq oil law is still relatively undecided, but assuming the it's free market orientated, Iraq will prosper."

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