Task Force helps revitalize Iraq's industries
January 8, 2007
WASHINGTON (American Forces Press Service, Jan. 5, 2007) - A team of 25 industrial leaders and business analysts is headed to Iraq today to join 35 others already there working to get almost 200 idle Iraqi factories up and running.
The industrial revitalization initiative is part of a sweeping plan to get Iraqis back to work, restore their livelihoods and jump-start Iraq's economic base, Paul Brinkley, deputy undersecretary of defense for business transformation, told Pentagon reporters yesterday.
Brinkley said the effort has another equally important objective: to ensure that Iraqis don't turn to terrorism simply because they see no other way to feed their families.
Lt. Gen. Peter Chiarelli, commander of Multinational Corps Iraq, told reporters in Baghdad last month there's strong evidence that rampant unemployment is fueling the insurgency. He pointed to the example of a former factory worker who had turned to planting improvised explosive devices for the insurgency so he could feed and care for his family.
Reopening industries and improving job satisfaction among Iraqis would go a long way toward neutralizing the forces giving rise to sectarian violence, Chiarelli told reporters.
"Putting young men and middle-aged men to work would have a tremendous impact on this level of violence we're seeing in and around Baghdad and also in the other provinces," he said.
Operating under the auspices of the Task Force for Improved Business and Stability Operations in Iraq, DoD and other U.S. agencies, Iraqi officials and the corporate world are working to reopen 193 industrial operations once owned by the Iraqi government.
These businesses, which have sat idle since Saddam Hussein's fall in 2003, once employed 10 percent of the Iraqi population, Brinkley said. But their impact on the Iraqi economy was even greater, because private-sector companies provided goods and services to the government-run factories. So when the factories closed their doors, the private companies' customer bases dried up and they, too, were forced to close.
The U.S. government's economic effort in Iraq initially focused on reconstruction, with an assumption that Iraq's private sector would eventually take over the idle government-owned businesses, Brinkley explained. But that never happened.
So the Task Force for Improved Business and Stability Operations in Iraq, which was working to improve DoD contracting operations in Iraq, shifted its focus in May to stepping up the process.
"We quickly came to the conclusion that we had a huge near-idle industrial base, that, reengaged, could put a lot of people back to work and restore normalcy to a sizeable amount of the population," Brinkley said. "So we immediately embarked on turning that industrial base back on."
Initial plans call for opening the first 10 factories quickly, with the estimated $5 million in start-up costs to be paid by the Iraqi government, he said.
Many of those 10 companies, which provide goods and services ranging from building materials to industrial products to clothing and textiles to drugs and medical supplies, are expected to open within the next six months, Brinkley said.
"Our expectation is that every month in 2007, we should be putting thousands of Iraqis back to work across the country," he said. "And if we do that, we will create a whole cascading series of beneficial impacts."
The challenges the task force faces are enough to stump even the most visionary Harvard Business School graduate.
"The work involved is (a) hard, roll-up-your sleeves" effort that requires getting on factory floors with plant mangers to determine what's needed to get it restarted, Brinkley said. "What are the constraints' Does it have supply' Does it have customers' Are the customers ready to buy things' If they don't have customers, how can we generate demand for them' Do they have working capital' Are the ministries ready to infuse working capital into the operation' Those are all the things you deal with in business."
Task force members are rotating into Iraq two weeks out of every month to address these issues and help get the factories running.
"What we are doing is assessing these factories," Brinkley said. "We are bringing in expertise. We are bringing international industry to bear to create demand for these factories."
But Brinkley emphasized that the goal is for the Iraqi government, not the United States, to fund the effort. "We want this to have an Iraqi face. This is Iraq's industry," Brinkley said. "And we want Iraq to be involved in getting it restarted, and they are extremely supportive of this."
Once the factories are opened, Brinkley said the U.S. military will contract with them as much as possible for goods and services supporting U.S. military operations in Iraq. Most of this business, which amounts to about $4 billion a year, currently goes to companies outside Iraq.
This will enable the United States to continue supporting its deployed troops in a way that reduces the logistical burden but also stimulates economic growth in Iraq, he said.
"We've set a collective objective that we would like to see 25 percent of that $4 billion flowing into the Iraqi economy within a year," he said.
As this effort moves forward, Brinkley acknowledged that newly reopened factories have the potential to become terrorist targets. Task force members, however, are optimistic that newly reemployed local workers will help prevent violence that threatens their livelihoods.
Brinkley noted that even in the most violent areas of Iraq, many of the empty factories went untouched by insurgents and looters alike. In some cases, new equipment, computers and inventory remained in place, a sign, he said, that local leaders protected them against damage or theft because they recognized their value to the community.
"That's a good story because what we think is chaotic is actually controlled," he said. "Somebody has made it clear, 'Don't touch that factory.' That's a good sign. We can get that factory turned back on."
This initial effort will have "a huge cascading effect" in Iraq, where a single breadwinner supports 13 other people. By comparison, the average U.S. worker supports four people, he said.
Ultimately, Brinkley said economic progress in Iraq will help drive other forms of progress forward. Reopening factories isn't the full answer, he said, but it is an important part of the overall strategy for success. "It's a piece of the puzzle," he said.
When Iraqis have the opportunity to return to their jobs and provide for their families, no longer will terrorism appear to be their only financial option, he said. When this happens, "an insurgent (will) become a zealot, not just someone trying to make a living," he said.