For some firms, rebuilding Iraq provides a lucrative opportunity but it is not without risk and as yet the bonaza may be more apparent than real, writes Lara Marlowe
As he watched the Iraq war unfold last spring, Mr Dermot Greene had the inspiration that could make him a millionaire or be his undoing. When US warplanes bombed Iraqi power plants, the 38 year-old Dubliner knew there would be plenty of work for him.
"The market is enormous," says Mr Greene, who trained as an electrician with ESB and became an independent contractor a decade ago. "If we get 5 per cent of it, we'll be very rich." The Iraqi capital still endures power cuts for 12 out of every 24 hours.
When I spoke to him, Mr Greene was on his way to Baghdad to open the first Irish business office in postwar Iraq. "The reconstruction of the grid and power stations will take years," he says. In the meantime, prospects for Mr Greene's new company TES (Total Engineering Solutions) are boundless.
In June, Mr Greene contacted Mr Falah al-Haidary, an Iraqi businessman who has lived in Dublin for 19 years.
Armed with Mr Greene's knowledge of all things electrical and Mr al-Haidary's contacts, the men persuaded an Irish company to send them to Baghdad in July.
But the violence there frightened Mr Greene's sponsor and he decided to go it alone. TES is now the agent in Iraq for Puma (British-manufactured) and Visa (Italian-manufactured) electrical generators. They range from apartment-sized models to two-megawatt systems that can power a medium-sized hospital.
"They can be put on trailers and synchronised with whatever power there is," Mr Greene explains. He will ship the generators to the Jordanian port of Aqaba, then overland through bandit country to Baghdad. He also hopes to open a service facility for spare parts and maintenance.
It is a measure of the risks involved that two Irish engineering firms now supporting Mr Greene's venture did not wish to be named. He did not want the location of his office in central Baghdad revealed - he's not certain whether it survived a recent car-bombing. Nor did he want me to write about his accommodation. "There are a lot of ex-regime people still out there, even in Ireland," he says. In addition to supporters of Saddam Hussein who are trying to sabotage reconstruction, the Irish entrepreneur must contend with thieves and the threat of kidnapping.
Good local contacts are essential to doing business in Baghdad. "I would never dream of going without," Mr Greene says. "You wouldn't last 10 minutes." In July, he opted for an Iraqi driver and a maximum of three Iraqi bodyguards, with one revolver to defend five men. "I'd say we'll have more weapons than last time," he says of his present journey.
There are a plethora of unregulated security firms like Olive, Armor and Custer Battles, staffed by former British and US special forces and intelligence agents. "Personally I wouldn't use a foreign security company," Mr Greene says. "It just attracts attention."
Using Iraqi guards also keeps costs down. Mr Greene has an operating budget of $30,000 (€25,689) per month for himself and Mr al-Haidary in Baghdad, including security and accommodation. It would cost twice as much if they used Western bodyguards.
"The costs become astronomical," says Mr Nick Marmion, the Dubai-based regional manager for the Irish trade board Enterprise Ireland. Mr Marmion's "Second Interim Report on the Iraqi Market" mentions insurance fees of $100 per day - if it can be obtained. "You're going to look for a much higher return than you would on normal projects," he adds. "You'd be looking at substantially inflated jobs."
Mr Marmion calls TES and Petrel Resources "two Irish success stories" in post-war Iraq. Mr David Horgan, Petrel's managing director, says his oil company has invested $2 million exploring its 2.6 million acre "Block 6" in the western Iraqi desert.
"The fact they're still there is a success," says Mr Marmion. "You have to admire a certain dogged determination."
Mr Horgan has travelled to Iraq 15 times since 1999. He even celebrated his 44th birthday in Baghdad last month. "I think we were the first oil company back in on the ground," he says of Petrel's return. "As soon as we could get hold of people with Thurayas (mobile satellite telephones), we were talking. Baghdad was still being fought over."
Mr Horgan has made a calculated decision to deal with Iraqi officials, not US occupation authorities. "The ministry people are fantastic," he says. "They couldn't be more co-operative or professional." Knowing much of their seismic data had been destroyed, he copied files the Iraqis gave him before the war and returned the originals. "They almost cried," he says. "It was the first time someone brought something back."
Iraqis, Mr Horgan says, "see the Irish as friendly neutrals" - a big advantage. "They just don't want to deal with the Americans. They talk to KBR (Kellogg Brown & Root, a subsidiary of the US oil company Halliburton) consultants who appear in the ministry, but there is zero co-operation. It's so easy for a bureaucrat to slow things up. You misunderstood them, or there's a mistranslation, or 'you thought I meant metric; no, I was talking imperial'.
"When all is said and done, there really are no short-cuts in the Middle East," Mr Horgan says. "You have to get on with them and they have to respect you. You can so easily offend people." Mr Horgan believes the risk from bandits is "manageable", and that Saddam loyalists want to attack US oil companies, not Irish. "Even though there are political risks, the geological and engineering risks are so low that it more than compensates for it," he says.
Petrel's investors are mainly pension funds "who want a piece of the action". The company is taking samples from its plot in the western desert, updating its tender on another plot near the Saudi border, and has been invited by the ministry to tender for part of the huge development in Kirkuk.
The lack of oil rigs and security mean there will be no drilling well into next year. "In the meantime, we have six months of heavy work in the field," Mr Horgan says. "Our investors are happy getting rich slowly."
As Ireland's minister for industry, trade and commerce in 1987-88, Mr Albert Reynolds oversaw hundreds of millions of pounds worth of contracts with Saddam Hussein's Iraq, including an Aer Lingus subsidiary that managed hospitals. "We used to supply them with food, medicines, a lot of beef," he recalls. "During the Iran-Iraq war, we supplied both sides with food and medicine, and they both knew it."
Mr Reynolds' contacts in the regime, including the former foreign minister, Mr Tariq Aziz, are in disgrace now. Life Energy Technology & Holdings (LETH), of which the 70 year-old former Taoiseach is chairman, has tendered for a $700 million contract to provide 100 mobile waste-processing machines to the new Iraq.
But LETH deals only with the US construction giant Bechtel and the State Department in Washington. Being a publicly-quoted US company is an advantage, Mr Reynolds says.
LETH's machines "process all the waste that's piled up all over the place and turn it into electricity", Mr Reynolds says. "The third part of the process is to produce clean water." The technology is already operating in Beirut and Damascus, he adds, and will soon be used to clean up the sugar cane industry in Louisiana and mountains of tyres in upstate New York.
LETH could do wonders for Iraq's blighted landscape, even removing radioactive waste left by US depleted uranium weapons, Mr Reynolds says. But security is the problem. "We have let them know that even if we got a contract at the moment, until the safety thing is sorted out, we wouldn't be asking people to go in and install machines there."
A beef debt of more than €100 million is one legacy of the cosy trade relations Mr Reynolds helped to establish in the 1980s. The money, owed to Goodman Holdings, is just a drop in Iraq's $200 billion foreign debt and, with the US campaigning for debt forgiveness, there is little chance that it will be repaid.
For companies like Mr Reynolds', long-term reconstruction contracts will be decided in Washington. But as the Irish telecommunications firms Digicel and the Ganley Group learned this month when they failed to gain mobile licences in Iraq, the bidding system set up by the US can be a lottery.
A few daring companies like TES and Petrel are willing to take risks but for the most part, despite the temptation of a market of 26 million Iraqis, Irish businesses are waiting.
ESB International, for example, helped manage the Iraqi electricity network under UN contracts in the 1990s. Mr Kevin MacDermott, a spokesman for ESB, says: "We don't see ourselves being involved in the short term. Naturally, we'll watch and see how things develop."
"I've seen between 10 and 15 Irish companies - telecommunications, construction, services, mechanical and electrical engineering - express interest and then back away," says Mr Marmion.
"The Iraqi bonanza is less real and less imminent than it appeared. The dangers on the streets are forcing the time frame further and further out."
