War-torn Iraq presents one of world's largest emerging markets

To reach Iraq these days, you might have to fly in through a cargo airplane, and it may cost you three bottles of booze.

That is how retired U.S. Marine Corps Lt. Gen. Michael DeLong, vice president of global operations for The Shaw Group Inc. in Baton Rouge, got into the country recently.

Seven more contracts are pending, DeLong said.

The opportunity to do business in Iraq is not as hard as the logistics, say international trade officials.

It's easily the largest emerging market of our time, said William Lash III, chairman of the Iraq and Afghanistan reconstruction task forces and assistant secretary of commerce for market access compliance for the U.S. Dept. of Commerce.

Lash, DeLong and Gregory Rusovich, president and chief executive officer of TransOceanic Shipping Company Inc. in Kenner, explained the nuances of working in a war zone last week to a crowd of trade and business executives at the World Trade Center.

International investment is estimated between $55 billion and $75 billion, with more than $18 billion coming from the United States and $17 billion from donor nations.

Rusovich's project cargo forwarding company won contracts last year to do port and electrical work in Iraq and is working on securing two more Iraqi project contracts.

New contracts come out regularly and companies need to reply with a full bid proposal within five days and have the work done within 60 to 120 days, DeLong said. Ten more U.S. construction contracts will be announced by the end of the month, Lash said.

Roads, rail, airports and electricity are in dire need of repair and restoration. The infrastructure has been deteriorating after years of neglect.

Iraq is not poor. It was made poor by years of mismanagement, Lash said. You can't be poor if you have the second-largest oil reserve in the world.

Ninety-five percent of Iraq's economy is oil based, producing 2.5 million barrels a day, DeLong said.

The Department of Commerce has formed a task force to offer business counseling for rebuilding Iraq's infrastructure and constructing new private sector business.

But companies must have a presence in Iraq to win contracts and The Shaw Group and TransOceanic have established offices in the country. Without it, the best way to get in is as a subcontractor for an already established prime contractor, such as Bechtel Corp., Fluor or The Shaw Group, Lash said.

Contracts through the U.S. Deptartment of Defense, Army Corps of Engineers and other agencies are open to any of the 64 Coalition Provisional Authority countries.

Putting Iraqis to work is also one of President Bush's quests. Iraq has about a 50 percent unemployment rate, DeLong said. His company has put 5,000 Iraqis to work.

But security is a top priority, DeLong and Rusovich said. Contracts for work in Iraq are cost-plus, meaning a $60-million contract could increase based on costs from bombings, lootings or other terrorist acts.

Security costs are factored in with his contracts, Rusovich said. The company places armed security guards on every convoy traveling in the region.

TransOceanic also tries to buy cargo insurance, looks for the safest points of entry into the country and avoids night travel, Rusovich said.

According to the Department of Commerce, many insurance companies offer war premium policies and some companies in the region can arrange policies for personnel working in Iraq.

Companies often must buy Defense Base Act insurance to cover workers injured on the job. It costs an average of half an employee's hourly wage per day, DeLong said.

The Coalition Provisional Authority formed the Trade Bank of Iraq to serve as an international trade finance bank for Iraq to issue new letters of credit. J.P. Morgan Chase leads a consortium of international banks that provides assistance and market knowledge.

J.P. Morgan Chase is undergoing a merger with Bank One. Bill Cummins, first vice president of Global Trade Sales for Bank One, said he's received numerous inquiries about investing in Iraq.

Assistance is also available through the U.S. Export-Import Bank.

Several companies in Louisiana are exploring opportunities in Iraq.

Cameco, a John Deere Co. in Thibodaux, sells road-building equipment. The company used to do business in the Middle East years ago but pulled out due to tension. It would like to get back in with a major contractor, said Jeff Freyou, manager for parts marketing.

Oil Mop LLC, a Belle Chasse company that handles oil and chemical spills, has worked in the Middle East as well, but not Iraq, said President Shaw Thompson. He's looking to see what's available in Iraq.

Lash also recommended attaining an Iraqi guide for help with Iraqi language and culture. Muntadhir Hussan, a Baghdad native and 18-year U.S. resident, is offering such assistance. Hussan owns an African art shop and gas station in New Orleans.

It's time for Louisiana to put its footprint further into Iraq, Rusovich said.