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November 11, 2003
Iraq: Phone Licenses (bis) - I questioned the Orascom award, well take a look here
Well, as those of you who have been reading my comments for a while know, I found the Iraq phone license awards, in particular the Central region award peculiar. I know the Orascom group well and I found it very strange indeed that these folks, who had severe cash flow problems with severe debt issues that led them to dispose, mere months before, of their Jordanian license, won a difficult contract for central Iraq, the demographic heartland.
In The Financial Times we have the following story:
US authorities in Iraq probe phone contracts
By Demetri Sevastopulo in Washington
Published: November 11 2003 0:32
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1066565782112&p=1012571727088
Quoting the essentials:
"US authorities in Iraq have put on hold hundreds of millions of dollars worth of mobile telephone contracts, while they investigate allegations that the bidding process was hijacked by associates of the new Iraqi governing council."
Okay, not surprising really.
Is it worth the delay? I don't know, certainly I would have grave performance concerns in re Orascom - and I don't trust the group.
"When the Iraqi Ministry of Communications last month awarded three Middle Eastern consortia two-year licences to build and operate wireless phone networks, the deals were heralded as a breakthrough for regional operators willing to invest in the new Iraq.
But the US-led Coalition Provisional Authority in Iraq has been advised to postpone signing the contracts, according to a US administration official speaking on condition of anonymity. CPA lawyers in Iraq made the recommendation to delay signing the contracts for 10 days to allow time to investigate claims of cronyism by the Iraqi authorities in awarding the licences, the official said."
Now here is the part which is the most interesting - and may I say, well, you heard my doubts first?
"The request is understood to focus on the role of Nadhmi Auchi, the Iraqi-born billionaire businessman, in the Orascom group, one of the successful consortia."
Well, I know my market. I was surprised, however to find the implication that the Governing Council people had such influence over the process.
"The CPA has become concerned that evidence of corruption would reflect badly on the US authority, which played a central role in evaluating the bids."
No kidding, it rather seems perhaps they were duped? Not surprising. They have few people with regional experience, and fewer people with regional business experience.
Now this part I find amusing:
"The delay to the signing of the mobile phone licences comes amid broader US concern about the workings of the Iraqi governing council. Senior US officials have voiced frustration that the interim body of 25 hand-picked Iraqis is putting their own political and economic interests first."
Welcome to the Middle East kiddies, and welcome to the workings of a society that has not put much weight in highly theoretical national level identification, despite the facile appeals on the part of Iraqis themselves to "Iraqi people" and the like - they usually mean, "My Family, and then the rest of the guys."
And I was amused by this too:
"Another senior CPA official said the US occupying authorities have been struck by the resilience of corrupt business practices in Baghdad, where members of the new Iraqi regime have used power for personal gain."
Again, welcome to the Middle East my little innocents. Transformation indeed, all this talk of transformation is blather for the pre-fooled and the starrey eyed Neo Con dupes.
Finally: "Commenting on the Iraqi ministry's award of the licences, a US official said on Monday: "The question is who did what due diligence, and when?" Amid increasing suggestions of cronyism in handing out contracts, the CPA is preparing to establish a new Iraq Infrastructure Reconstruction Office to oversee how contracts are awarded."
Indeed, and yet what level of due diligence is really possible? I have done plenty of due diligence in this region, and it is in fact a deep pain in the ass. Lies, opaquesness, a sense that foreigners are naturally screwable out of their money.
However, at the same time, as I have noted many times, expectting contracting in Iraq to be like in the states, expecting one can impose "best practices" uniformly across the country is to engage in "transformation" fantasies.
I do expect and hope CPA will do its best to limit corruption, but frankly, getting things rolling is more important than making things perfect. Indeed I was more encouraged by this article from The Washington Post on some Iraqi efforts to ge their cement factory up and running.
Success, Traced in Cement
Iraqis Rebuild Factory at a Fraction of Estimate
By Ariana Eunjung Cha
Washington Post Staff Writer
Monday, November 10, 2003; Page A01
http://www.washingtonpost.com/ac2/wp-dyn/A20273-2003Nov9?language=printer
I would not want to hold up the no doubt half assed reconstruction effort on the cheap as the model for getting things done in general, but rather suggest that compromises are going to be necessary early on. Enabling Iraqis to get things sort of kind of running and then, as economic activity recovers, go for the nice new reconstruction - to the extent one can seperate the activities of course - is likely a better bet. Unfortunately this also suggests tolerating in the short term all kinds of bad practices that really do need to be changed or at least to see some degree of movement for the economy to truly become the "beacon" the simpletons speak of.
Posted by The Lounsbury at November 11, 2003 09:40 AM
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Jan-Dec 2003
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