German Industry Confident of Role in Iraqi Reconstruction

Experts from diverse sectors of German industry met with Iraqi contacts old and new at a one-day business conference in Bonn on Tuesday to discuss future possibilities for German small- to medium-sized enterprises (SMEs) in post-war Iraq. Representatives from around 100 German companies and members of the Iraqi Chamber of Commerce and Industry were present at the German-Iraqi Business Day discussion to assess ways of opening up trade and business relations once again.

Prior to the first Gulf War and the imposition of a trading embargo in 1990, Germany was Iraq’s most important trading partner. Initial signs from the meeting in Bonn indicated optimism on both sides that the business relationship can flourish once more -- as soon as Iraq's painful process of economic and industrial reconstruction gets underway in earnest.

But getting Iraq to a level of stability where trade and industry can begin to grow will be neither quick nor easy. While officials from both sides seem agreed on the resurrection of German-Iraqi business links and the commitment to restart trade between the two countries, some feel that they face a powerful obstacle: the business interests of the United States and its coalition partners.

U.S. barrier to business in Iraq

“With the Americans as the occupying force, there are no great business deals to make,” said Gelan Khulusi, the chief of the German-Iraqi association for SMEs. “That is, until there’s a new Iraqi government in the saddle.”

But Khulusi did see the silver lining on the Iraqi business cloud, viewing the ever-changing hazards in his country as a possibility for less U.S. influence on Iraq’s industrial future. "The chances have increased enormously," he said, referring to the prospects for German industry in Iraq's rebuilding contracts.

The trade relations of the past have left a deep impression on the Iraqi people who have great respect for their country’s business links with Germany. “The reputation of the Germans in Iraq is still very good,” said Abdul Satar El Bagdadi, vice president of the Chamber of Commerce and Industry in Iraq. “As soon as the Iraqi government has more autonomy, there will be more possibilities of new business with Germany.”

Washington may need business partners

With the situation in Iraq continuing to deteriorate as coalition forces and the Iraqi administration struggle to get the country back on its feet, Washington may now welcome offers of industrial support. Regular attacks on occupation forces, terrorist bombings and sabotage of important utilities across the country have added to the impression that the economic and industrial transformation of Iraq, on top of the security and stability of the country, appears to be beyond what the United States can handle on its own.

It was originally believed within German industry, as in Iraq, that companies from the United States and its coalition partners would have the inside track on business deals within the war-torn country. But as the huge scale and cost of rebuilding becomes apparent, opportunities for German businesses in the areas of energy, construction, sewage systems and the development of new IT services are likely to present themselves.

Germany offers expertise

“Motorways, roads, building construction, the airport at Basra or the electrical dam at Mosul, all these projects could be handled by German businesses,” said Hans-Dieter Spohn, who responsible for Arab states in the German Economics Ministry.

German companies are determined to get involved if opportunities arise. More than 200 have signed up for a business conference in Baghdad penciled in for November. It is likely that the conference will address the opportunities arising from subcontracting work and the negotiations over the 40 large state-owned Iraq authorities the U.S. authorities have earmarked for privatization.

Improving ties

The change in climate has set the wheels of German industry turning in preparation for a possible Washington approved drive into Iraq. Indeed, Chancellor Gerhard Schröder is expected to meet U.S. President George W. Bush at the United Nations in New York later this month for their first private talks in a year. Industry experts in Germany are confidently hoping that these talks will lead to a possible thawing of German-American relations -- a development which could trigger a raft of contracts in Iraq for German business.

However, necessity may prove to be the mother of intervention. By handing the Germans lucrative business opportunities which will in turn help the United States get a grip on areas of reconstruction, Washington would have some serious bargaining power with Berlin over a new United Nations resolution on Iraq as well as a base for pushing for support for a possible NATO deployment in the Gulf.