Chaos spurs Iraq small business

Many entrepreneurs are pouncing on opportunities, even as a lack of regulation has stymied larger firms

The sun was beating down, and even at 10 a.m. the temperature was hitting 100 degrees F. at a checkpoint outside the Coalition Provisional Authority headquarters in Baghdad. Mohammed al-Kubaisi was trying to find a piece of shade as he waited, hoping to make a business deal.

Mr. Kubaisi is chief executive of the Ahllia Insurance Co., and he'd already been waiting 45 minutes for an escort inside, he said, despite a previously scheduled appointment. The meeting would be considered simple in the US - a preliminary discussion of insurance rates, qualifications, and services - but nothing is simple in Iraq these days.

Whether Kubaisi got in or gave up after a longer wait in the blistering heat, a bigger issue still hangs in the air like the haze over Baghdad. What laws will govern business here?

"The question is, what will our role be?" in drafting a commercial code for an entire nation, asks George Handy, a senior fellow at the Center for Strategic and International Studies in Washington.

Mr. Handy helped coordinate the activities of government leaders and major corporations in Eastern Europe and Russia during the 1990s, and served 24 years in the US Army.

But, he says, Iraq "is a totally unique situation in comparison." For all the corruption and inefficiency of the former Soviet Bloc, there were still laws on the books and judges in courts, trying to work through the mess.

"We don't have a system in place in Iraq," Handy says. "We have a totally blank sheet of paper."

Kubaisi has a suggestion for the US occupation forces. "We have the training, we have the skills," to do administrative work and draft laws, he says. "Let us do it."

US officials and Iraqis agree that simple service deals are moving ahead, such as contracts to supply a certain amount of ice to coalition headquarters each month, or contracts for new uniforms for civil workers.

But if the task of drafting an entire commercial code in the midst of violence seems daunting, a partial answer is emerging at a more grassroots level - one that doesn't require approval from the Americans, Hussein, or anyone else.

Small businesses in Baghdad are stepping into the void, helped by the very lack of formal regulations and customs fees that multinational corporations consider part of all deals.

In the formal business sector, every step of any decision is slowed by the enormous difficulties of communication and translation. It's one thing to hold a casual conversation or even argue over politics, but quite another to draft legal contracts that both sides truly understand and are comfortable with.

A common experience for Westerners is having people earnestly plead for help in getting access to CPA officials. A casual meeting and conversation in a hotel lobby between this reporter and a Jordanian seeking a written permit to take used machinery out of Iraq led the man to spend much of the night "dreaming" of his good fortune, he later said, and of the wonderful help his new "friend" would be able to deliver - in setting up a meeting with L. Paul Bremer, head of the CPA.

Told that reporters themselves can't expect individual meetings with Mr. Bremer, the man was crestfallen.

But some small businessmen are finding success amongst the chaos. Although Baghdad still suffers from power outages, crime, and an economy that is in shambles, Ghassan Muktar expanded his shop on Karrada Street about three weeks ago to include an Internet cafe. He started working on the idea right after Hussein's government fell in early April, and finally took the plunge.

"People are very happy. They didn't expect a shop like this to open now," he says, adding that for the first few days of the Internet service [which uses a satellite link] he didn't install all the computers he had bought, for fear of looting.

People from all walks of life are coming to the shop - students, government employees, and women, some dressed in full-length black hijabs and some in stylish Western dress and makeup, gladly paying 4500 dinars (about $3) an hour for access to fairly up-to-date computers, but slow online access.

Some people who come in still think the Internet access must be controlled by a security agency, and are surprised to learn the use is open, Muktar says.

"Now the Iraqis are free to think, free to speak, free to learn," he says. "After five years you will come to Baghdad and it will be a different place. We were living in the Middle Ages - we're now trying to get to a new era."

Taha Salih, a Kurd who was visiting Baghdad, came to the shop to have some pictures printed off a CD. He was happy to find the service, he said, but the rates were double what he pays in Kurdistan, where the equipment is also much faster.

And in the Kurdish city of Sulaymaniyah, there are signs of what reliable contact with the outside world can mean to a community. Dozens of Internet cafes line the main street, and the one with the fastest connection is popular with American troops based there, as well as Iraqis. It charges the equivalent of $1.50 an hour.

Parwin Salih, head of the projects department for the Women's Union of Kurdistan, says: "The Internet has played a big role in progress for women here."

"Visit some of the centers, and you will see the majority [of people] are women. They try to get information about women from all over the world," and compare their own hopes and problems to those in other countries.

Handy says an Internet and telecommunications boom could be a great boost to the small and medium-size business sector in Iraq, and to society in general. In Eastern Europe, he says, the expansion of cellphone and wireless service has gone more quickly than expected in rural areas.

But while the technology is readily available and multinational companies are eyeing business potential in Iraq in many sectors, major investment won't happen without a system of commercial codes in place, Handy says.

CPA officials here have said they're making business development a major priority, but one of the most prevalent rumors in Baghdad is that Western companies will get the sweetheart deals, and Iraqis the leftovers.

As Kubaisi stood waiting in the hot sun, he wondered about that, too.

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