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October 19, 2003
Iraq: Reconstruction and Jobs - foreign labor, a time bomb [edit addition]
I wanted to bring to your attention the following on Iraq, reconstruction and jobs.
Iraqi business
Jobs for the boys—and for foreigners
Oct 9th 2003 | BAGHDAD
From The Economist print edition
"Iraqis are worried that outsiders are getting too many jobs"
http://www.economist.com/World/africa/displayStory.cfm?story_id=2126088
And The Financial Times follow on:
MIDDLE EAST & AFRICA:
"Contractors in Iraq accused of importing labour and exporting profit"
By Nicolas Pelham
Financial Times
Oct 14, 2003
From which I quote extensively insofar as I don't have a weblink for this:
The article opens noting "US sub-contractors are importing cheap migrant labour from south Asia to Iraq, despite high local unemployment and complaints from Iraqi contractors that they are being overlooked by the US-led administration in Baghdad."
Make no mistake about this, while I am not sure how extensive the labor importation actually is (is it significant? No numbers to tell.), this is a serious political issue.
It runs into a number of underlying sensitivities.
(a) Iraqis no longer feeling in control of their own country
(b) Iraqis feeling reconstruction efforts are not directed towards their priorities
(c) Iraqis feeling their country is being sold out from underneath them without their input
(d) Iraqis feeling they are not benefitting from these efforts (note for example the WB estimate that the already pitiful per capita GDP estimate of ~1000 USD has fallen -as I predicted back in what, May?- by half to a sub-Saharan African level of 400-500 USD.).
These are explosive sentiments, sentiments that will generate more opposition if not addressed.
Now, here is the root of the problem, from CPA-Iraq officials themselves: "US officials in the Iraqi capital say that six months into their occupation of Iraq, security conditions have forced companies to turn to south Asian labour to implement contracts, from prison-building to catering for US troops."
Insecurity and lack of trust requires imported labor, that lives in cantonments like the Americans, which in turn breeds... more insecurity and lack of trust as recent job demos in Baghad and Basra indicate.
Ah, but let us not forget the CPA-Iraq getting off message, you know all is well. Except they fear hiring Iraqis.
What does that tell you?
The article continues to note: "Recent weeks have seen unrest in several major cities, including the capital Baghdad, amid rising anger at Iraq's high unemployment rate. "We don't want to overlook Iraqis, but we want to protect ourselves," says Colonel Damon Walsh, head of the Coalition Provisional Authority's procurement office. "From a force protection standpoint, Iraqis are more vulnerable to a bad guy influence."" Emphasis added.
I hesitate to observe that the bolded statement highlights the problems of this approach - and the idiotic thinking. Bad guy influence, white hat, black hat.
As Martin Wolf observed in The Financial Times and I do not tire or repeating: occupations are by their nature incentive incompatible. Here we see the clear tension between the protect yourself needs of the occupier in the short term, and the reality of what the resistance generates in terms of self-defeating security responses.
However, the article also notes: "US troops and some companies under contract to the US government nevertheless seem prepared to take the "risk". Iraqis form the bulk of the workforce for reconstructing Iraq's prisons. General Janis Karpinski, who is overseeing the prison programme, says she has had "no single security incident" involving Iraqi contractors. "You find other [non-Iraq] nationalities in out-of-the-way corners taking 15 minute naps," she says. "Iraqis see work as a way of getting the country on its feet." and adds that "Bechtel, which is handling a $680m (577m, £408m) reconstruction programme for USAid, has meanwhile held open days for Iraqi contractors and intends to spend $215m of $300m on Iraqi sub-contracts."
This last I have heard directly from Bechtel people but I confess over time I have come to doubt it. By the way, their initial representations, in June, had the number at 90 percent of the program financing, I see we are down to less than half and working towards a third. I predict that Bechtels Iraq spending numbers will look more anemic as time goes on. I also note, however, I don't really like the Bechtel people I have met on the ground here (in the region) - I am sure they are competent, but...
The article later notes:
"But a number of businesses based in Saudi Arabia and other Gulf states that have contracts to supply the US army are wary of employing indigenous labour. "Iraqis are a security threat," says a Pakistani manager in Baghdad for the Tamimi Company, based in the Saudi city of Dammam, which is contracted to cater for 60,000 soldiers in Iraq. "We cannot depend on them." The company, which has 12 years' experience feeding US troops in the Gulf, employs 1,800 Pakistanis, Indians, Bangladeshis and Nepalese in its kitchens. It uses only a few dozen Iraqis for cleaning. ..... A Tamimi manager says the company pays an average salary of one Saudi riyal ($3) a day and grants leave once every two years. The contracts are awarded by Kellogg Brown and Root (KBR), a subsidiary of Halliburton ... [whose] Iraqi share is worth "in excess of $2bn", according to officials of the Defence Contract Management Agency in Baghdad."
Well, two items here.
First, one can see something of Gulf issues arising here.
In the Gulf, in its wierd little world of "gastarbeiter" - the foreign 'guest workers' who make the Gulf work but can never settle there - is a clannish place, where other than the free floating Westerners, each nationality or regional grouping tries to hire and look out for its own. Lebanese try to hire Lebanese or at least other Shami Arabs, Egyptians, Egyptians, Indo-Pak sub-Continental, etc. etc.
Regrettably you see no small underlying tensions between the groups, and mutual accusations of distrust. Part of the nature of the strange, distorted labor markets in the Gulf, which in part depend on the clientellage of the Emirs and Sheikhs.
Second, of course, the isssue of inter-regional distrust.
The article notes ""The US military have never outsourced resources on this scale," says the DCMA's Colonel Damon Walsh. "If it weren't for this service support we would have needed at least 20,000 more troops." KBR officials in Baghdad declined to provide details of their employment policy in Iraq, or the size of their Asian workforce."
I might note that the appearance, the sense of injustice as as important as the reality, above all insofar as the CPA-Iraq seems, to date, largely secretive and incapable of communicating in an effective convincing manner with Iraqis. For example from the article: "The potential for ill-feeling nevertheless remains. "US contractors are importing labour and expatriating the benefits," says Hakim Awad, an Iraqi construction manager who queues for contracts outside Baghdad Airport every day. "Where's the benefit accruing to Iraq?""
A further note, on the historical tone-deafness and indeed illiteracy of American efforts:
"The recourse to an Urdu-and Bengali-speaking workforce has historical echoes for Iraqis, who recall the south Asian workers the India Office imported to maintain the British army following their invasion of Iraq during the first world war. Some also fear the replication of labour patterns from Gulf states, whose economies are dependent on Arab and Asian migrants."
I believe the last is likely exagerated, but the political implications of the first are deep, and deeply felt.
[edit added]
I note also of interest is this article from The Financial Times
US companies to be big gainers from Iraq outlay
By Alan Beattie in Washington
October 17 2003
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1059480693215&p=1031119383196
The article notes "Much of the US financial contribution to Iraqi reconstruction will be earmarked for American companies, according to the top international official at the US Treasury."
The article notes that most of the aid will be 'bilateral' and that under "tied aid" rules of the US AID, "which have repeatedly been criticised as unfair and inefficient by most development experts" such aid is reserved for US bidders. This opposed to putting aid through an international trust fund open to all bidders at the most competitive rates.
I believe we can count on pork rather than efficiency driving appropriations.
Posted by The Lounsbury at October 19, 2003 01:18 PM
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Jan-Dec 2003
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