War veterans make Iraq their business
- FT - By Roula Khalaf and Kevin Sieff
- 10/11/2009 00:00:00
Adam Such fought in Iraq from 2003 to 2006, when his helicopter was shot down over the city of Fallujah. Three back operations later, the former colonel is now executive vice-president of C3 Invest, a Los Angeles-based private equity firm that is planning to build an amusement park in Baghdad.
“The relationships I forged with Iraqis – in many cases on the battlefield – go a long way in establishing credibility,” he says. “That’s absolutely essential.”
Mr Such is one of a growing group of former military officers and diplomats who were involved in the Iraq war under the administration of George W. Bush and are returning to do business.
Three other retired US officers, two of them former development officers in Iraq – are behind the Marshall Fund, another private equity group that has already invested in a tomato paste plant in the northern region of Kurdistan.
The business prospects have attracted some higher-profile diplomats too. One is Zalmay Khalilzad, a proponent of the 2003 invasion who served as US ambassador in Baghdad from 2005 to 2007.
He has established Khalilzad Associates, which advises private companies on business opportunities in Iraq and other parts of the Middle East.
The company declined requests by the Financial Times for interviews but a spokesperson confirmed that it had set up offices in Baghdad and the northern Iraqi city of Erbil and that Mr Khalilzad had made several trips to the country this year.
Jay Garner, a retired general who was, in effect, the American governor of Iraq immediately after the war, was on the board of directors of Vast Exploration, a Canadian company, when it bought a 37 per cent stake in the Qara Dagh oil block in Kurdistan two years ago. He is now an adviser to Vast.
“Jay is very well known in Kurdistan and Iraq and it was useful to the company,” says a spokesman. “It’s a dangerous area and we needed a military guy with connections internally.”
It is a typical path for government officials to move into business activities or consultancies after leaving office.
The US experience in Iraq, however, has been fraught with suspicion, with many ordinary Iraqis, and Arabs, convinced that the objective was to control the country’s oil resources. Moqtada al-Sadr, the radical Shia cleric, has spoken against American involvement in the Iraqi economy.
Joost Hiltermann, Middle East analyst at the International Crisis Group, says those who are getting into Iraq are mostly focusing their energies on Kurdistan. “This [the focus on the north] could reinforce the dual perception, prevalent in non-Kurdish Iraq, that the war was about oil and that the Kurds are in cahoots with the US to extract as much of it as possible,” he says.
In spite of repeated US efforts to promote western investment in Iraq, until recently violence and political instability had kept most investors away. Those who ventured into the violent regions of the country have tended to come from neighbouring nations, including Iran and some Arab states.
The exception has been the autonomous Kurdish region, which has enjoyed relative stability since the 2003 war and has moved forward in establishing its own investment and oil laws, attracting dozens of small foreign companies to develop its resources.
Former US officials say perceptions of American abuse of Iraq’s resources are misguided – the businessmen working on Iraq projects are, after all, helping to develop a country in desperate need of expertise and foreign capital.
One former official who asked to remain anonymous argues that as the security relationship between the US and Iraq comes to an end, an economic relationship is inevitably being established and that many Iraqis appreciate the ability of former officials to draw in much-needed foreign investment.
He says there will be pockets of discontent but that so far the most hostile areas, in the Sunni heartland, have not been a main target of American private sector involvement.
Iraq has the world’s third-largest oil reserves but dictatorship, international sanctions and wars have devastated its economy and infrastructure. According to a report by the UN and several aid agencies, the unemployment rate among young men is 28 per cent.
In a fresh attempt to encourage investment in Iraq as sectarian violence has been reduced, the US organised a conference this month that brought together 900 American and Iraqi businesspeople at a hotel on Capitol Hill, including telecom executives, defence contractors and representatives from oil companies.
Designed to connect businesspeople with interests in the same sector, it included high-level officials from both sides, all of whom gave optimistic speeches about Iraq, though only days later bomb blasts in Baghdad took the lives of more than 160 people.
“Business can play a vital role in supporting Iraq’s economy,” said Hillary Clinton, US secretary of state. “We need to develop new industries for infrastructure and launch new ventures.”
Col Such, whose fund has bought a 50-year lease on land in Baghdad and also wants to develop a cancer centre and a business centre, insists that he is not in Iraq for the profit.
“I realised early on in Iraq that the key to stability was to focus on development,” he says. “I felt the desire to repair what had been done over the last six years.”
Robert Kelley, a former adviser on legislative affairs to top American diplomats in Iraq who later became chief counsel to the national security subcommittee of the US House of Representatives, has no qualms about making money in Iraq. He is chief executive officer of the Summit group which is building a $100m (€67m, £60m) hotel in Baghdad.
Speaking on the sidelines of the Washington conference, he said: “Look around . . . In this room alone there are 900 people looking to do business in Iraq. They’re going to have to stay somewhere.”
- FT - By Roula Khalaf and Kevin Sieff
- 10/11/2009 00:00:00