Economic Improvements Needed to Stabilize Iraq

by Peter Kenyon

Weekend Edition Sunday, February 24, 2008 · U.S. and Iraqi officials hail improvements in Iraq's security, but they say economic improvements — especially job creation — are urgently needed. Government and military spending are picking up, but the private sector still has much catching up to do.

Reliable figures are elusive, but according to the U.S. Embassy in Baghdad, the official unemployment rate in the city is 18 percent, and underemployment may be as high as 50 percent.

For years, officials and analysts have pointed to high unemployment as an economic and a security problem, since it leaves a large pool of idle men available for recruitment by insurgents, militias and other armed groups.

With the daily violence well down in many parts of the country, people say jobs programs are finally beginning to gain momentum.

At the edge of a huge U.S. military base near Tikrit, north of Baghdad, an Iraqi carpenter-in-training tries his hand at the power saw as an American adviser looks on.

Under a program called "I-Biz," the military is beginning, nearly five years after the invasion of Iraq, to train Iraqis to be plumbers, electricians and carpenters.

Once certified, they can either set up shop in the hometowns or get a job with KBR, the major U.S. contractor. Most choose the latter option.

Munif Munawer, 29, says the pay isn't great, but when a neighborhood leader known as a mukhtar told him the Americans would help him learn a trade, he seized the opportunity.

"I was unemployed for a long time. We used to be shepherds. This is much better. When the mukhtar said there were jobs for Iraqis on the base, I said yes," Munawer says.

In Baghdad's massively fortified Green Zone this weekend, the Iraqi-American Chamber of Commerce and Industry finally launched its "Buy Iraqi First" initiative. A previous attempt in 2004 had to be cancelled due to insurgent violence.

Chamber CEO Raad Omar says "the sky's the limit" in terms of needs in Iraq, but the atmosphere is better than it has been in years.

Omar's goal is to create $500 million in new Iraqi business activity and 10,000 jobs this year. He says that is not as ambitious as it sounds when you consider how much work is currently being outsourced.

Take KBR, for example. The company does about $500 million worth of business in material for the coalition forces. All of it is imported from Dubai. This is work that Iraqis could do, he says.

Kais Ghazi, 30, owns Al-Eban Construction with his brother. The company has rebuilt police stations, hospitals and offices shattered during the invasion or its anarchic aftermath.

Ghazi says the challenges include working around roadside bombs and getting loans from dysfunctional banks, but the worst problem by far is corruption.

The civil society group Transparency International ranks countries according to a series of corruption criteria. Last year, Iraq came in 178th, out of 179.

Ghazi says the Planning Ministry was a nightmare under Saddam Hussein and not much has changed.

"Unfortunately, the problem is still happening, even after the fall of the old regime — the first thing is always the payoff. The official says how much are you going to pay me, then we can discuss the contract," Ghazi says.

Abd Alzahra al-Hindawy, a spokesman for the Planning Ministry, says corruption is a problem, but it's a two-way street.

"I will not deny these problems; for sure there are corruption cases. Unfortunately, there are some contractors who also want to get contracts illegally, so there is corruption from that side as well," he says.

The Chamber of Commerce's Omar says right now, the needs vastly outweigh the resources. But he takes heart from developments over the past few years, including those in Kurdish northern Iraq, where security is better.

Anxious American politicians, homesick U.S. forces and their families, and millions of Iraqis are hoping that Omar is right, and that Iraq's future holds — if not peace and prosperity — at least basic services and jobs for the able-bodied Iraqis now sitting at home or on street corners, waiting for anyone to pay them to work.