washingtonpost.com
To Stem Iraqi Violence, U.S. Aims to Create Jobs

By Josh White and Griff Witte
Washington Post Staff Writers
Tuesday, December 12, 2006

As Iraq descends further into violence and disarray, the Pentagon is turning to a weapon some believe should have been used years ago: jobs.

Members of a small Pentagon task force have gone to the most dangerous areas of Iraq over the past six months to bring life to nearly 200 state-owned factories abandoned by the Coalition Provisional Authority after the U.S.-led invasion in 2003. Their goal is to employ tens of thousands of Iraqis in coming months, part of a plan to reduce soaring unemployment and lessen the violence that has crippled progress.

Defense officials and military commanders say that festering unemployment -- at 70 percent in some areas -- is leading Iraqi men to take cash from insurgents to place bombs on roads or take shots at U.S. troops. Other Iraqis are joining sectarian attacks because their quality of life has slipped dramatically, officials say.

Army Lt. Gen. Peter W. Chiarelli, the top U.S. field commander in Iraq, said that tackling unemployment could do far more good than adding U.S. combat troops or more aggressively pursuing an elusive enemy. He said the project to open the factories and stimulate local economies is long overdue and was born "of desperation."

"We need to put the angry young men to work," Chiarelli said in a phone interview from Baghdad. "One of the key hindrances to us establishing stability in Iraq is the failure to get the economy going. A relatively small decrease in unemployment would have a very serious effect on the level of sectarian killing going on."

The CPA initially hoped private investors would buy or lease the state factories, but that did not happen as security faltered and much of Iraq became inaccessible. As privatization hopes failed, the factories languished; some were in pristine form and others had been looted when the Pentagon task force examined them this fall. The tens of thousands of Iraqis who used to make them run -- the country's second-largest employment group, after the army -- remained out of work.

Pentagon officials say the vast majority of former Iraqi factory workers are still unemployed and are bringing in no pay. A small portion of the workforce receives government stipends, akin to welfare, but the pay system is badly flawed and provides about 20 percent of what the workers would make if fully employed, the officials said.

Economic development is a departure from the military's usual missions, but officials think the Defense Department's heft as a consumer of goods and services can boost the effort. The department has been reaching out to U.S. companies that can place large orders for products from Iraq.

Deputy Defense Secretary Gordon England set the task force in motion in June after Paul A. Brinkley, deputy undersecretary of defense, returned from a visit to Iraq the month before.

Brinkley, who returned last night from a trip to Iraq with his team, said thousands of Iraqis lost their jobs and the ability to support their families when CPA projections dimmed. Unrest followed the absence of work.

"After three years of unemployment in excess of 50 percent, there are no people in the world that wouldn't be undergoing violence and militias," Brinkley said. "That's human nature. And I think we have to do whatever we have to do to alleviate that problem if we are going to create stability."

So far, members of the task force have visited 26 factories in some of the worst areas of the country, traveling to Baghdad, Fallujah, Mosul, Najaf and Ramadi to inspect facilities that make cement, tile, rubber and textiles. They have identified 10 factories -- their "hot list" of facilities in both Sunni and Shiite areas -- that they think could be open and employing more than 11,000 Iraqis within the next month.

The task force hopes to have a rolling system of factory openings spanning 2007. Part of that effort, its members said, is to reevaluate how the Defense Department spends nearly $4 billion each year to support troops in Iraq.

Brinkley said he hopes that at least 25 percent of that total -- about $1 billion -- could be spent on orders from Iraqi companies that previously have gone to firms in neighboring countries, such as Jordan and Kuwait. "We're not seeking to invest in Iraq, but to buy from Iraq," Brinkley said.

Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, whose office has been critical of the rebuilding effort, said that defense officials are "right on target in pushing this."

"It's about stimulating interest and getting contracts going between U.S. firms and Iraqi firms. That's the goal," he said. "The solution in Iraq is not primarily a military one. It is primarily an economic and political solution."

Bowen said defense officials recently met with about two dozen key business leaders at the U.S. Chamber of Commerce to gauge private industry's interest in the program. He acknowledged that corruption and lack of security remain major obstacles to U.S. commercial investment in Iraq but said he is impressed that business leaders "recognize that and are still interested in moving forward."

Caterpillar Inc., a $36 billion construction equipment firm, is one of the first U.S. companies to show interest. Gerald L. Shaheen, a Caterpillar group president and chairman of the U.S. Chamber of Commerce, said he probably would be looking for low-tech supplies, such as hinges, but said the program dovetails with the company's interest in expanding opportunities in the Middle East.

"But I can't look at this solely as a business proposition. I've already got suppliers," Shaheen said. "I'm doing this because I think there's a social responsibility not only to the Iraqi people but to our troops."

Dow Chemical Co., a $46 billion firm that sells plastics and other products in more than 175 countries, is also considering what supplies it can purchase from Iraq.

"We see this as a positive initiative and very much hope that we can find the appropriate opportunities to support business activity in the country," a Dow spokesman said.

U.S. businesses were looking at Iraq as a significant opportunity before the war began. With vast oil resources, an underserved population and a strategic location, that nation had all the markings of a place for U.S firms to expand. But few have found success there.

Major American companies that went into Iraq on U.S. government contracts, including Bechtel, Parsons and Halliburton subsidiary KBR, had hoped reconstruction work would serve as a natural bridge to private-sector deals in Iraq. Instead, they found rampant violence, with many U.S.-funded projects coming under attack and workers being targeted. The firms also received bad publicity when projects did not go as planned.

Now, with their contracts expiring, Parsons and Bechtel are closing up shop in Iraq and returning home. KBR is doing the same with its reconstruction work, though it continues to hold a major contract supporting the U.S. Army.

"We're pleading with the companies to give Iraq a second or third look," said retired Lt. Gen. Daniel Christman, senior vice president for international affairs at the Chamber of Commerce. "This is very different from asking that they go into Fallujah and build a plant. That's not the intent."

Rep. William D. Delahunt (D-Mass.), incoming chairman of the oversight and investigations subcommittee of the House International Relations Committee, said part of the CPA "disaster" was that obvious ideas, such as creating employment for Iraqis, were ignored.

"It's a concept that common sense would dictate to pursue," Delahunt said. "I think the key question is: Is it too late?"

Chiarelli said unemployment is daunting because many working Iraqis support up to 13 family members, meaning unemployment has exponential effects on the country.

"There's no doubt in my mind that it has the potential to turn the tide," he said. "I find it unbelievable after four years that we haven't come to that realization. . . . To me, it's huge. It's as important as just about any other part of the campaign plan."

View all comments that have been posted about this article.

© 2006 The Washington Post Company