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Iraq: Contractors Accused of Importing Labor and Exporting Profit

by Nicolas PelhamFinancial Times/UK
October 14th, 2003

US sub-contractors are importing cheap migrant labor 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. 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 lab our to implement contracts, from prison-building to catering for US troops.

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."

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 program, 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."

Bechtel, which is handling a $680m (&euro577m, 408m) reconstruction program for USAid, has meanwhile held open days for Iraqi contractors and intends to spend $215m of $300m on Iraqi sub-contracts.

"If the work can be done by an Iraqi firm at a competitive price that's who's going to do it," says Francis Caravan, Bechtel spokesman in Baghdad. 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 labor. "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.

In the dusty backyard of the US administrators' Baghdad palace, south Asians, housed 12 to a Saudi-made temporary cabin, organize 180,000 meals a day for US troops and administrators.

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, which in 2001 won its second Logistics Civil Augmentation Program, or Logcap, contract to sub-contract the supply of US military provisions. The Logcap is open-ended and its Iraqi share is worth "in excess of $2bn", according to officials of the Defense Contract Management Agency in Baghdad.

"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.

However, Patrice Mingo, a KBR spokesman in Houston, says: "We buy as much as can locally and if we are unable to buy locally we go the Middle East. We look at Iraqis first, but we don't track our employees by ethnicity." The potential for ill-feeling nevertheless remains. "US contractors are importing labor. 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?"

Under a new Iraqi investment law, foreigners can own companies in full and export all the profits. US officials say they encourage firms to employ Iraqis but do not stipulate a minimum percentage for Iraqi employees. 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 labor patterns from Gulf states, whose economies are dependent on Arab and Asian migrants.

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