THE WALL STREET JOURNAL: Selling Iraq — Abroad and at Home

Baghdad Emissary Woos Foreign Investment,
Pushes Peers to Take It
By GINA CHON
February 7, 2008; Page A6

BAGHDAD — Finance Minister Bayan Jabr is traveling abroad to convince deep-pocketed foreigners that it is now safe enough to invest in Iraq. But a tougher sell these days is persuading his colleagues in government that foreign investment is a good idea in the first place.

•  The Players: Bayan Jabr, former interior minister, has become a chief spokesman for drumming up foreign-investor interest in Iraq.

•  The Stakes: With violence seeming to ebb, Mr. Jabr and his government have made economic development a focus this year. He and others think foreign investment is key.

•  The Test Case: Iraq’s stalled petroleum law is shaping up to be the best measure of how far Iraqi politicians are willing to go.

The Iraqi government says economic development will be its focus this year, attempting to take advantage of a lull in violence to show meaningful improvement in the quality of life here. But so far, the government has failed to improve basic services. Many functions have actually gotten worse this year, with less power and erratic water supply.

“I know our problems with sewage, water supply, electricity will not be solved by the government budget,” says Mr. Jabr, a slight but confident gray-haired man with a civil-engineering degree. He and many others in Baghdad think privatization and foreign investment are part of the cure for Iraq’s ailments.

Mr. Jabr is an unlikely figure for the job of wooing foreign investment. A former interior minister, he is associated in many people’s minds with some of the sectarian excesses of post-Saddam Hussein Iraq.

He is considered by many Iraqis to have been a former member of the Badr Brigade, the Iranian-trained militia arm of the Supreme Islamic Iraqi Council party that conducted operations with the government’s tacit approval. During his time as interior minister from 2005 to 2006, he headed what many said was Iraq’s most sectarian government agency. The ministry was accused of being used to carry out death-squad hits against Sunnis; tortured prisoners were found in the ministry office in late 2005.

Mr. Jabr acknowledges that some of the criticisms are accurate, but he also says that overall, the accusations were exaggerated. He blamed the violence on militia groups not under his control. As for the Badr Brigade, he says he wasn’t involved in the militia’s activities but he did participate in its political wing.

His past makes for uneasy relations with Sunni lawmakers in a government dominated by Shiite religious parties. “He is responsible for the sectarian tension that exists today inside the Ministry of Interior,” says Saleh Mutlak, a prominent member of the Sunni National Dialogue Front.

But Mr. Jabr says he is well suited for his current job of cheerleading for foreign investment. His family owned two textile factories before he fled Iraq in 1982 and that taught him the benefits of the private sector.

A top priority for Iraqis looking for foreign investment is the country’s oil sector. A long-stalled petroleum law is shaping up to be a key test of whether politicians here — many of whom toiled for years in a closely guarded state-controlled economy — will warm up to the idea of foreign involvement.
 
The Oil Ministry has signed technical and training agreements with several major companies, such as BP PLC and Royal Dutch Shell PLC. But without a law spelling out the legal and financial details of investing in the oil sector, exploration and production — which make up the most lucrative segment of the oil business — are essentially off-limits.

Early last year, Iraq’s sects appeared near a deal on oil legislation, but a draft is still stuck at the Parliament’s Oil and Gas Committee, frustrating many inside Iraq who worry foreigners will only wait so long. “Iraq could miss the boat,” says government spokesman Ali Dabbagh.

Iraqi Kurds and the central government are bickering over control of oil resources in the legislation. But there is another big sticking point in Baghdad: Many politicians don’t want to appear as if they are handing over the country’s oil patrimony to foreigners.

Mr. Hussein’s nationalization of Iraqi oil fields still ranks as a historical high point in many Iraqis’ minds. Many of Mr. Jabr’s colleagues, who have grown up in a state-run economy where oil and nationalism have long been intertwined, are deeply suspicious of foreign investment. “It is our culture,” Mr. Jabr says.

Even officials in the Oil Ministry, who have led the push for foreign investment through several post-Hussein governments, have shown reluctance in some cases recently, Mr. Jabr says. Oil Ministry spokesman Asim Jihad said the ministry strongly encourages foreign investment, especially now that security has improved, and it hopes that the oil law is passed soon. Iraq’s current oil minister says he expects foreign companies to bid for projects by next year.

Mr. Jabr says he is working with other colleagues in the government, like Deputy Prime Minister Barham Salih, a key figure in economic-overhaul efforts, to try to change the minds of his skeptical colleagues. Exhibit A in his pitch: the Iraqi cellphone industry.

Last year, the government auctioned three new national cellphone licenses, which went for $1.25 billion each. In addition to receiving almost $4 billion for the licenses, Iraq now also receives tax revenue and 18% of the companies’ profit in a revenue-sharing deal.

The licenses went to two private Kurdish companies, Asiacell Telecom and Korek Telecom, and Kuwaiti company MTC Atheer. Although the network can be spotty, cellphone service is more reliable than on government-operated land lines, and mobile phones are a booming business. Ordinary citizens didn’t have access to cellphones under Mr. Hussein.

The oil sector is Iraq’s most important, but there are other industries that need foreign investment as well. In January, three joint ventures between European and Iraqi companies were awarded bids to refurbish and operate three state-owned cement factories.

The contracts state that the companies must give the Iraqi government between 30% and 45% of their cement production, free of charge. Currently, Iraq and the U.S. import cement for reconstruction from Kuwait, Turkey and other countries.

Although the Iraqi government lauded that step as important for Iraq’s economic revitalization, Mr. Jabr said that in a private cabinet meeting more than two weeks ago, some government officials grumbled about the cement deal. “Foreign investors are not our enemies,” Mr. Jabr says. “We need education for the officials to teach them that.”

Write to Gina Chon at [email protected]

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.