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Iraq: Contractors Put Reconstruction On Hold

by Nicolas PelhamFinancial Times
April 11th, 2004

Many of Iraq's reconstruction projects are being put on hold after a spate of foreign kidnappings and attacks on convoys in Baghdad grounded foreign and Iraqi contractors.

"We'll give it another week. If it doesn't improve, we'll have to leave," says Trevor Holborn of the Amman-based Shaheen Group, one of hundreds of foreign workers who have suspended their operations and headed for shelter inside the walls of the Green Zone, the heavily fortified enclave where the occupation has its headquarters.

"We still have people in Iraq, but we may not able to work on a day to day basis," said a contractor with a big US energy company. "Right now Iraq is not a safe place to work, and the safety of our staff comes first."

The kidnapping of at least 10 foreigners, and according to some reports as many as 30, has shaken the already fragile confidence of contractors. The hostages included an employee of the Houston-based company, Kellogg, Brown & Root, which handles supplies and logistics for US forces and the occupation administration and is reputed to be one of the best defended companies in the country. Thomas Hamill, 43, of Macon, Mississippi, was captured on Friday during a convoy ambush.

Coalition officials say they have contingency plans for an evacuation of civilians, but remain fully staffed. One said it was a "miracle" that none of the scores of mortars and rockets which have so rocked the enclave have hit their targets.

British diplomats and some contractors are bunkered down in an underground car-park inside the Green zone, dubbed the "Batcave". But many American contractors are housed in trailer accommodation. Their sides have been bolstered with sandbags but the soft-top roofs are singularly vulnerable to mortar attack.

Amid continuing negotiations for a ceasefire, insurgents have continued torching convoys carrying food and fuel to Baghdad.

Coalition authority officials deny the attacks on their supply lines have interrupted the delivery of vital goods, but contractors say Iraqi drivers are shying away from work with the coalition leaving ports clogged with containers.

"Try to lease a truck now, no one will give you one," said Faisal Khudairy, an Iraqi contractor with a large deal to build a military base north of Baghad.

The coalition's Project Management Office (PMO), which oversees $8bn (4.7bn) of US reconstruction funds, says it remains committed to rebuilding Iraq and is intent on finding Iraqi partners to assist the primary US contractors it named last month. "We've got our prime contractors on the ground. It will not halt reconstruction," said John Procter, an official with the project Management Office in Baghdad.

He said that the reconstruction effort was vital if the coalition was to soak up Iraq's millions of unemployed malcontents who are a breeding ground for the insurgency.

But it was not clear if the coalition would meet its target of employing 50,000 Iraqis by 30 June, when the US governor of Iraq, Paul Bremer, is scheduled to relinquish control of Iraq.

Mr Procter said that Iraq's trade fair, postponed last week because of the risk of attack, was being relocated from Baghdad to Suleimaniya, a city in the former Kurdish haven, and would open on April 30.

Another conference on oil exploration scheduled to take place next week in the British-administered Gulf port of Basra is reported to have been indefinitely postponed. Several foreign companies and aid agencies say they are also providing for the evacuation of non-essential staff.

"We gave our staff the freedom to go home to whoever would like to do so," said Mohammed Moneim, chief operating officer of the Kuwaiti-based Kharafi group, which has over 100 foreign staff in Iraq working in the oil and construction sectors. But Mr Moneim said that the company was also committed to fulfilling its responsibilities to its 1,500 Iraqi staff.

At least two of the three banks that received their licences last January have yet to begin operations inside Iraq. Officials at HSBC, the UK bank, said it was unlikely services would be available until at least the end of the year. Baghdad bank has also temporarily closed three of its 20 branches, said its chief operating officer, Mahmood Muwaffaq. Some contractors complained that their contracts prevented them from pulling out of Iraq.

"Many companies have given control over the evacuation procedure to the US Department of Defence, so we cannot leave even if we want to," said a security company director. He said insurgents are now targeting mercenaries in Iraq, aware that foreign contractors win more headlines than soldiers. But the director stressed that under their contracts, companies would still be compensated in full for any days lost as a result of insecurity.

Seven Chinese were seized in central Iraq on Sunday, China's Xinhua news agency said, Reuters reports. In a separate incident, eight foreign men described as truck drivers who had been held hostage were released, according to a videotape aired by al-Jazeera television on Sunday. The men included three from Pakistan, two Turks, an Indian, a Nepali and one from the Philippines.

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