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U.S. Restoring Iraqi Factories

By Sgt. Sara Wood, USA
American Forces Press Service

WASHINGTON, Jan. 18, 2007 – In an effort to bolster Iraq’s economy and employ thousands of Iraqis, the United States is working to restart operations at several factories around the country.

A team from the Defense Department’s Office of Business Transformation has been visiting Iraq since May to evaluate the situations at the country’s roughly 200 former state-owned factories and determine what is needed to restart operations.

So far, the team has visited and done detailed assessments of almost 40 factories, and has a list of 10 priority facilities it will focus on, Paul Brinkley, deputy undersecretary of defense for business transformation, told reporters in Iraq today.

“Our intent is to get these factories started, re-employ the Iraqi people, creating viable enterprises that have customers (and) that make goods or deliver services that can then be engaged by private-sector investors,” Brinkley said.

The 10 priority factories are geographically distributed throughout Iraq and represent a variety of industries, Brinkley said. They were chosen because they will employ the most people quickly and will require less investment up front to get started, he said.

The overall U.S. investment for these Iraqi factories will be relatively low, about $10 million for all 10 factories, Brinkley said. The United States is partnering with the Iraqi government, which will make the bulk of the initial investments, he explained. This is important symbolically, because it shows action and commitment by the Iraqi government, he noted.

“The core effort right now is to restore employment to as many of the Iraqi people as we can, to encourage stability, and to return to normalcy areas that have waited for economic stimulus and prosperity to take hold,” he said.

The 200 factories once employed more than 300,000 people, who now don’t work but receive stipend checks from the government for about 30 or 40 percent of their former pay, Brinkley said. When the initial 10 factories are restored completely, they will employ about 11,000 people -- a welcome boost to a country where 48 percent of the population works less than 15 hours a week.

Brinkley emphasized that the reopening of these factories won’t happen instantaneously, but he said the first 10 should be nearing their full employment capacity in the next two or three months. One factory is already up and running, supplying products to the U.S. Defense Department, Brinkley said. Using Iraqi companies for DoD contracts is an easy way the U.S. can stimulate Iraq’s economy and drive down its own costs, as well, he said.

“Our first and foremost priority is the security and the well-being of our armed forces, but as long as we have assurances -- and our assessments do that -- then we will buy directly from Iraqis, and that will stimulate demand,” he said.

One of the biggest challenges in restarting these factories is transitioning them to a privatized financial system, Brinkley said. The Iraq ministries used to pool all the annual profit, which was then distributed among the factories. Now each factory will need a privatization strategy that will give it financial autonomy, based on its needs and situation, he said.

The United States also is working to encourage private-sector investment in Iraq’s factories, Brinkley said. In the last two weeks, the DoD team took a large group of international business executives to Iraq to talk about how interest in investment can be stimulated, he said. In cases where the factories have been damaged by military operations, the United States will invest to fix the problems, he added.

Brinkley stressed that economic restoration in Iraq involves a lot more than restarting factories. U.S. funds have gone to restoring sewer, water and power services, reconstruction projects, and many other activities to stimulate the economy, he pointed out. As these factories are reopened, they will stimulate further economic growth, he added.

“Every factory is not an independent entity,” he said. “Not only do the workers employed spend money in the local community and stimulate economic activity, but the goods it (sells) and (acquires) stimulate economic activity.”

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