Iraq Business Environment Difficult to Navigate

Doing business in Iraq under current conditions is no easy task. One of Iraq's most prominent businessmen describes some of the obstacles he encounters daily as he attempts to import a generator from Jordan.

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RENEE MONTAGNE, host:

Time now for business news.

(Soundbite of music)

MONTAGNE: The U.S. government is quietly winding down its main reconstruction programs in Iraq. Within a few months, they will all be officially ended. When reconstruction started just after the major fighting ended, there were major goals: new hospitals and schools, rebuilt electricity and water sanitation systems. Three years and more than $20 billion later, very few of those initial goals have been met.

NPR's Adam Davidson has his story about one man and his effort to get at least some of the reconstruction finished.

ADAM DAVIDSON reporting:

Aziz Kudari(ph) is an Iraqi businessman. He owns several companies in a bunch of different industries. But these days, his main focus is on one contract for one customer. Kudari was hired by the U.S. firm Parsons to install generators at 142 health clinics all over Iraq. It's one of the most highly publicized U.S. reconstruction projects. Today, Kudari has one small thing to do: he needs to get one generator, just one, from Jordan to Baghdad.

Mr. AZIZ KUDARI (Iraqi Businessman): I mean, this should be a simple task, you know? Putting this on a truck and doing the right papers, and driving. I've been struggling with this for the past, I would say, two or three weeks.

DAVIDSON: Here's the problem: the normal highway through Iraq's western desert is too dangerous, so Kudari is trying a roundabout route through Saudi Arabia and Kuwait. But nobody seems to know how to make that happen. The generator is stuck now on the Jordan/Saudi border, waiting for the right paperwork.

Kudari and his Baghdad office director, Deride Hussein(ph), are constantly moving. Kudari spends a lot of time in Houston, in Dubai, and Copenhagen. Today, he's in an apartment he owns in Amman, Jordan. Hussein is visiting from Baghdad. They've turned the dining room into a messy office. As always, the phones don't stop ringing. Hussein says the constant calls are killing him.

Mr. DERIDE HUSSEIN (Iraqi Businessman): They're killing me with their phone calls. They don't know what to do.

DAVIDSON: They've worked out a way to run the whole operation just with international cell phones and laptop computers. They have teams all over Iraq who go to sites and e-mail photos and progress reports. Kudari and Hussein are constantly trouble shooting every aspect of the project. Another of today's jobs: find someone who can get them the right kinds of electrical cables into Iraq. Kudari reaches just such a man on the phone.

Mr. KUDARI: This guy specializes in cables and electrical stuff. He has some inventory in Baghdad, so we'll try to cooperate with him.

DAVIDSON: He hands the cell phone to Hussein, who sets up a meeting. Kudari says he shouldn't have to spend hours just trying to find some cables. Anywhere else in the world, this would be a quick and trivial task. But everything about working in Iraq is frustrating, he says.

Hussein says that brings up another problem: bribes. Ministry of Electricity linemen demand under-the-table payments, or they won't hook the generators up to the power grid.

Mr. HUSSEIN: Yeah, it is like taxes. Now you have to pay for this if you want to do business. You can't do business without paying these tips. They're calling this tips, but it's a blackmail.

DAVIDSON: Kudari is a sub-contractor to Parsons, but other Iraqis want contracts themselves. Hussein got a call this morning from one of his engineers working on the health clinic in Mosul. A local competitor showed up.

Mr. HUSSEIN: And he was shouting, you're traitors. You are working with the Americans, and blah, blah, blah. And then he said, I'm going to call some people. They're going to come and cut your heads.

DAVIDSON: Hussein says this sort of thing happens all the time, all over Iraq. Local contractors come to the clinic worksites and demand to be given a contract or they'll get the insurgents to kill members of the construction crew. Hussein says many insurgents are really just shakedown artists, as Hussein knows all too well.

Mr. HUSSEIN: I was kidnapped on the fourteenth of December, last year.

DAVIDSON: Hussein was taken from his home, forced into the trunk of a car, and driven somewhere near Fallujah, the Iraqi city considered the heart of the anti-American insurgency. A few months earlier, Iraqi insurgents and American troops fought some of the bloodiest battles in Fallujah.

The group holding Hussein told him they would kill him.

Mr. HUSSEIN: They told me that this is for what you've done in Fallujah. I said, what I've done in Fallujah? I've never done anything. I've never been in Fallujah at all. They said, you're working with the U.S. Army, with the U.S. government, so you're supporting what they did to Fallujah.

DAVIDSON: Hussein suspects the kidnappers had a plant in his office. They knew all sorts of details about his work as a contractor for the U.S. government. It also turned out that this was just another shakedown. He eventually got the gang $160,000 and they let him go. Since then, Hussein and his family have lived in hiding. Several other employees have been kidnapped. Neither he, nor Kudari, nor the Americans who are paying for and overseeing the project ever visit the health clinic sites.

Mr. KUDARI: No, I don't go to sites. It's not safe for me to go to sites.

DAVIDSON: Originally, the U.S. planned about 150 clinics all over Iraq. But only 20 have been completed, and the rest probably won't be built. At the clinics that were built, there's no indication that America paid for them. Everyone involved agrees that plaques or markers of some kind would only turn the clinics into targets for the insurgents. Kudari hopes the U.S. commits more money to finishing all of the clinics. If they don't, he says, the tragedy is that the insurgents managed to destroy most of this project without the need for a direct attack.

Adam Davidson, NPR News.

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Correction May 17, 2006

In this story, Adam Davidson describes the Khudairi Group as a subcontractor to Parson's on the health clinic project. This was not correct. The Khudairi Group received its own separate contract from the U.S. government to install generators. The Khudairi Group had no direct relationship with Parsons. The Khudairi Group has recently been awarded a new contract from the U.S. government to complete several of the health clinic sites. NPR regrets the error.

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