Messy Business In Iraq
By Rory McCarthy
08 October, 2004
For 29 years Mohsin Awad has worked as
a mechanic at the May 1 plant of the State Company for Woollen Industries.
It is a menial but respectable job that pays a comfortable salary and
comes with a small house nearby at a peppercorn rent. Like the 150,000
employees of Iraq's state-owned industries, he presumed it was a job
Then came the war
last year. A wave of looting, electricity shortages and the cumulative
effect of 10 years of sanctions and two decades of war have dragged
Iraq's industries virtually to a halt. The 59 state-owned firms make
up nearly all Iraq's industrial output but they are barely running at
Mr Awad's six-day
working week has been cut to just three days, but he still receives
a full salary. "I'm pretty happy about it," he said. "It
means I can spend time with my family and the salary is reasonable enough.
But we worry about privatisation. We know it is coming but we wonder
whether the new owner of our factory will succeed in making a profit
and paying all our salaries."
Changes are coming
already. Staff have been told that those living in company housing will
have to pay 18% of their salaries on rent.
"We have a
lot of unemployment already. If the government privatises there will
be even more unemployed and that will bring protests in the streets,"
said Mr Awad, 50.
For all the talk
of the rapid reconstruction of Iraq, this is the central dilemma facing
Hajim al-Hassani, the man now in charge of Iraq's industry. Most of
the industries he oversees are hugely inefficient and over-staffed,
but sacking thousands of workers would only worsen the already dangerous
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"I have close to 150,000 employees but you really only need half
of those people. But because of security and humanitarian reasons you
need to keep them. These people need to be taken care of," he said.
From his office
window, Dr Hassani overlooks the rest of the industry ministry, which
is still burnt out and in ruins after the looting that followed the
war last year. His voice is almost drowned out by the drilling of builders
next door. He admits he was not expecting to become minister. For the
past two decades he had lived in Los Angeles, running an investment
and trading company and an internet firm that eventually collapsed ("It
failed miserably and we lost a lot of money. We sold it for pennies,"
he said.) He returned to Iraq after the war to a senior position in
a moderate Sunni political party that sat on the governing council.
Last year there
was great pressure from the US occupation authorities to press ahead
with privatisation, he said. "They wanted to privatise from the
beginning but we thought it would be rushing things. I believe in a
market economy but how you do it is where we differ. It is going to
take some time and you have to qualify the factories and you have to
get the private sector ready to compete."
agreed that privatisation should wait until an elected government comes
next year. In the meantime, Dr Hassani has been trying to encourage
foreign investors to help rebuild his industries. The industry ministry
has received no donor money and spends more on salaries each month than
it receives in sales from the state companies. Only the petrochemical,
cement and steel industries bring any profit. Last year the ministry
was allocated $66m to rebuild factories. He estimates he needs at least
"We had no
money to improve our factories and it put us in a very difficult position,"
he said. "There are many firms who want to come but the security
situation is making people hesitate. I told them the courageous ones
Some deals have
been signed. Leasing agreements will allow Iraqi and western firms to
invest in around eight industrial plants for periods of up to 20 years.
Each contract will stipulate that employees cannot be sacked.
One firm that investors
have shown interest in is the State Company for Construction Industries,
which produces bricks, plastic piping and gravel and should have plenty
of orders as Iraq is rebuilt. But the firm's director, Ali Salim Omar,
paints a bleak picture of his company's health.
the cost of fuel and poor security have badly affected his factories.
Around 700 of his staff of more than 3,000 are at home being paid for
not working. Last year the Americans gave his firm $500,000 to help
repair its 18 factories but it cost him $400,000 just to install one
power supply at just one of them.
At the same time
the Americans doubled the salaries of his staff last year. His balance
sheet is heavily in the red.
"All our companies
are suffering, it is not just us," he said. "There are many
promises and projects that have been proposed but we really cannot do
anything yet." He attended a business conference in Kuwait where
many foreign firms talked of investing in the future. "People were
rushing to take part in our firm but the biggest problem is security.
I told them Iraq is a gold mine. But nothing has changed yet."