German Companies Pin Hopes on Sovereignty

German firms - excluded so far from U.S.-awarded contracts as punishment for Berlin's anti-war stance - are hopeful that the handover of power to the Iraqi interim government will result in lucrative business deals. By Andreas Becker

After the handover of power, the Iraqi authorities will increasingly be able to decide for themselves which companies should be awarded contracts. The money will come from Iraqi oil profits which so far has gone into a reconstruction fund that was controlled by the United States and Britain.

But now German companies have greater chances to bid for tenders. Hans-Jürgen Müller from the German wholesale and foreign trade association BGA reckoned that, above all, local firms would benefit from the contracts awarded by the Iraqi authorities. But German companies' good reputation in Iraq would open doors for them, too.

"When Iraqi companies participate in tenders, they can bring in German firms as sub-contractors. And they are sure to do that in technical fields that initially concern spare parts and later machine supplies, too," Müller told Deutsche Welle.

German companies exported products worth €200 million ($243 million) to Iraq in 2003. The German Chambers of Trade and Commerce (DIHK) has predicted that the volume will increase beyond that this year, though it hasn't released estimates. That's peanuts compared to the past. In 1982, before the war between Iran and Iraq, Germany exported products worth €4 billion to Iraq.

Mere crumbs

At the moment, the money is to be had from projects to rebuild the infrastructure, one of the country's first priorities. The most lucrative tenders involve building streets and bridges, telecommunication networks and water and energy utilities.

Very few German companies are active in Iraq yet, and those that are are at most sub-contractors for American companies, which have acquired the lion's share of the contracts.

"The Europeans are supposed to help with rebuilding Iraq, but the fact is that all big Iraq contracts have long gone via the political route and via the financial power of the Americans," the head of the Association of German Construction Industry, Ignaz Walter, criticized at a press conference in Berlin on Tuesday.

"The crumbs are now being portioned out, and the Europeans get to make losses. In return though, they have to build for which they have to make losses - an inconceivable procedure," Reuters quoted him as saying.

In March, the U.S. government awarded construction contracts worth around $5 billion to companies from countries that backed the Iraq war. That's not likely to change soon, Müller indicated, commenting that German firms have poor chances winning contracts in the U.S.-influenced system of international tenders.

In the past, German companies have tried to get involved in business in Iraq as sub-contractors for firms from Kuwait or the United Arab Emirates. Then at least they are not subject to the Americans' goodwill, Müller pointed out. Since mid-June an office set up by the DIHK in Amman, Jordan aims to put German firms in touch with business partners in Iraq and other Persian Gulf countries. The DIHK also plans to establish a German-Iraqi chamber of commerce.

Security situation hampers business

But the instable security situation in Iraq remains the greatest hindrance to business endeavors. Around 40 soldiers and civilians are the victims of attacks each day. "Thus, the inclination to operate business directly in Iraq - that is, not via foreign partners, that usually supply personnel, too - is still low," Müller said.

German engineering giant Siemens, which is involved in constructing a mobile phone network and in building nuclear plants, only deploys its personnel for very short stints in Iraq and only after carrying out exhaustive security checks.

Fewer than 20 employees from German companies were working in Iraq in late June, according to the DIHK. By comparison, U.S. oil company Halliburton alone has lost 40 of its employees in Iraq since beginning operations there.

Andreas Becker