There’s Still Room For Europeans In Iraq Reconstruction

Until the downfall of Saddam Hussein – and for a long time before that – Europeans were among Iraq’s traditional trade partners. Germany, France and Russia, in particular, were Iraq’s most important trade partners outside of the Gulf region. And despite US efforts to block companies from countries opposed to the war from bidding on reconstruction contracts funded by US dollars, European businesses will be well represented in Iraq, according to the head of the Association of the German Chambers of Industry and Commerce.

More than $100 billion will be needed to finance the reconstruction, but until now the US Congress has only approved $18.6 billion. Indeed, the Americans can and will decide how to spend their own money, and US President George W. Bush has made it perfectly clear that he’ll only accept bids from those among the “coalition of the willing”.

European Know-How

But that still leaves a funding hole of more that $80 billion, which Germany and other European countries are free to plug. Considering the long history of the trade relationship between Europe and Iraq, it#s likely many German, French and Russian firms will opt to do so, and transitional Iraqi leaders are eager to court their investment. During a recent meeting with Germany’s foreign minister Joschka Fischer, Abdel Azis Al-Hakim, the governing council’s president, said that Germany had the “experience and the capacity necessary for Iraq’s reconstruction”.

In a recent interview with Deutsche Welle, Jochen Münker, the head of the Association of the German Chambers of Industry and Commerce, said countries with a history of exporting equipment and systems to Iraq will certainly be sought after partners in the reconstruction.

Failing to secure European help could result in failure, according to Franz Reichwein, the Federal Agency for Foreign Trade and Payments correspondent responsible for the Gulf region. At a conference in September, he pointed out that a number of the reconstruction projects already undertaken by the Americans may fail because the technicians involved don’t know enough about the systems. For example, the telecommunications network is based on European technology, which isn’t compatible with that of the Americans.

A long history of trade ties

Germany, France and Russia, the three countries most likely to be affected by the American decision to restrict contracts to partners in the war, all have a history of strong trade ties to Iraq.

In the cement, steel, telecommunications and energy industry, Germany has long had a strong presence in Iraq. And even if US firms get the contracts to rebuild the power network, for example, they’ll still need to turn to the German firms that originally installed the equipment for help. The Russians, even during the 1990’s embargo, were particularly engaged in the Iraqi oil industry, and now, post war, are claiming entitlement to recoup their investments. And as for the French, they have fostered a so-called “special relationship” with Arab nations, including Iraq, for decades. In 2001, France exported goods worth more than €660 million ($816 million) to Iraq.

As the reconstruction effort progresses in Iraq, it may prove difficult to separate the “coalition of the willing” from the coalition of willing reconstruction partners.