Gold Rush National business group’s Maine conference seeks to lure investors into post-war Iraq’s new economy

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Some of the world’s largest corporations will meet in Maine this month to talk about how to take advantage of the growing economic opportunities in post-war Iraq.

Although hesitant to make a move while car bombs continue exploding in the streets of Baghdad, many of the largest U.S. companies reportedly are lining up for membership in the U.S.-Iraq Business Alliance, a group backed by the Bush administration that hopes to get American companies into Iraq before the best business opportunities are gone.

“We have support from the executive branch of government, and I would like to leave it at that,” Bar Harbor businessman Dennis Sokol, one of four founders of the alliance, said in recent interviews. “The fact is, they’ve been very supportive.”

The alliance was formed eight months before the U.S. declared war on Iraq and has been influential in getting the Coalition Provisional Authority in Iraq, led by the United States, to create business-friendly laws meant to spawn economic development in the war-ravaged nation.

“[Iraqis] want help. They need more help than most, and they want it as soon as it can be provided,” James Burrows, executive director of the alliance, said Tuesday. “How well we do in Iraq will affect the rest of our lives and our children’s lives in a very real way.”

The Iraqi people are starved for American goods after being deprived and oppressed for 30 years under the Saddam Hussein regime, Sokol said last week from his Bar Harbor office, just days after returning from his latest visit to Baghdad.

And they’re hungry for more than just Big Macs, Cokes and Levis, he said.

There is money to be made, lots of money, in virtually every economic sector in Iraq, said Sokol, who also founded the U.S.-Russia Business Council when the Soviet Union threw off communism and embraced a free market economy in 1992.

Sokol has made a fortune running for-profit hospitals in Russia and other foreign countries, so when he speaks, other businesses listen.

“When there are diamonds and gold out in the street, you don’t wait a couple of years to go pick it up,” Sokol said of his group’s efforts to get American investment and business into Iraq as soon as possible.

“They like Americans, believe it or not,” Sokol said. “They don’t want America to manage their country, but they like our products, our goods, and our way of life.”

International attention

The alliance plans to hold conferences for businesses around the globe in the coming year. The Scarborough meeting was preceded in mid-October by a conference in London and will be followed by conferences in Philadelphia and Chicago later this year.

In London last month, Sokol and other conference organizers were greeted by protesters who carved up a cake representing Iraq to illustrate how they think American corporations plan to divide up the country.

Although the alliance apparently has received scant attention in the U.S. media, it has engendered anger and suspicion in Europe, where most citizens have opposed the U.S.-led invasion of Iraq.

“For centuries, pillage by invading armies was a normal part of warfare,” the Guardian newspaper of London wrote as the two-day conference opened on Oct. 13. “Nowadays, at least in more civilized countries, we do not let armies rampage for booty. We leave the pillaging to men in suits and we don’t call it pillaging any more. We call it economic development.”

The Guardian concluded, “The invasion – with its phony goals of removing Saddam Hussein and disarming him of weapons that he didn’t possess – may just be a prelude to the real battle for Iraq yet to come.”

Sokol gets impatient with such criticism. He calls critics’ concerns that America will westernize Iraq “poppycock.”

“There’s no way in God’s world that we’re going to Americanize [Iraq],” the businessman said.

Several academic and congressional sources contacted about the alliance declined to comment, saying they were unfamiliar with the organization and its mission.

The Maine conference

The Nov. 13 conference in Scarborough, sponsored by the alliance and the University of Maine Business School, will discuss how American companies can get into the new Iraqi economy on the ground floor.

The alliance chose Maine because of Sokol, who moved his investment business from Boston earlier this year to Bar Harbor so he could live year round in his Mount Desert Island home.

Topics for the Maine conference will include investment opportunities, the privatization of the country’s rich oil fields, security needs and priority development such as communications and health care.

For $850, company representatives also will hear speeches by former Secretary of Defense Caspar Weinberger and two key members of the new Iraqi Governing Council, among other business and political speakers. Sokol also promises a special guest speaker whom he declined to name.

Conference organizers decided to take one item off the agenda – the one in which multinational corporations draft an economic development plan for Iraq. It seemed presumptuous and unwise, according to organizers, to undertake that task at a time when war critics, both domestic and foreign, still insist that the U.S. invaded the country for mass business opportunities rather than weapons of mass destruction.

“That was beyond the scope of what we could and should do” at the conference, Daniel Innis, dean of the UM College of Business, said Tuesday.

“There are people who are going to take pot shots at this [conference], but the bottom line is that Iraq cannot do this alone,” said Innis, who attended the London conference to prepare for the Maine event.

The university, which is working with Sokol to develop a graduate level international business program, has paid $1,500 to become one of 40 members of the alliance. For-profit enterprises must pay $5,000 to $25,000 to join the alliance.

Anonymous members

Sokol said this week he expects to recruit 150 companies by year’s end, including some of America’s biggest firms. He named an international fast-food corporation as the alliance’s newest member.

In a show of sensitivity, the corporation lambasted the alliance for identifying it and denied membership in the organization when contacted by the Bangor Daily News.

A spokesman for the corporation this week said the fast-food business has been asked to join the alliance, “but no decision has been made.”

On Friday, he denied the company was a member, though two alliance representatives said the corporation had joined.

He also called reports that the company planned to build in Iraq “an urban legend.”

“We have no plans to open any restaurants in Iraq. None,” the spokesman said Wednesday from his corporate headquarters.

“They don’t want that publicity now,” Thomas Miner of Chicago, another of the four alliance founders, said Friday.

Miner was recruited by the corporation to contact the BDN and ensure its identity was not revealed.

When asked why alliance members were so reluctant to be identified, Sokol offered a quick answer: “This war effort is not popular you know.”

Burrows, speaking from the alliance’s headquarters in Washington, D.C., would not identify members of the alliance because “there is a great deal of political fuss here in town” over business activities of some alliance members in Iraq – including oil giant Halliburton, which is operating the Iraqi oil sector for now.

The new Iraqi business laws, promoted by the alliance, were created to encourage swift reconstruction, according to officials. They include allowing foreign companies 100 percent business ownership in Iraq, foregoing the need to form partnerships with Iraqis; and permitting foreign companies to buy former state-run businesses, which constitute 75 percent of all businesses in Iraq.

A big problem

There’s just one problem, but it’s a big one: Baghdad is “in an absolute mess,” and American companies won’t make serious investments until the violence stops and they are satisfied their investments won’t be confiscated by some rogue new government, Sokol said.

The alliance has postponed a trade mission to Iraq planned for December until February because of the serious new attacks in the Iraqi capital this week.

While alliance organizers plan the Scarborough conference, such stalwart organizations as the United Nations, Red Cross and Doctors Without Borders were planning to leave Baghdad this week because of the intensifying violence.

Among the services the alliance tries to provide to members is safe passage in and out of Iraq.

“We’re in an absolute mess over there, I won’t deny it,” Sokol said. “We have to fix this. We have no choice. We are accountable and responsible to the world, and to freedom, to fix it.”

Despite the abject poverty in some regions of Iraq, Sokol said 15 percent of Iraqis can afford to buy anything they need. He thinks the consumer demand in Iraq will be staggering once a new government is installed and relative safety returns to the country.

“They’ve got appliances on the sidewalk because there’s too much demand and the shops aren’t big enough” to hold the inventory, he said.

“If you walked down Main Street in Baghdad, you’d see a Super Wal-Mart out on the street,” Sokol said.

Sokol understands American companies’ timidity about opening shop in Iraq right now, but he will caution the upcoming conference that many other countries – Japan, Germany, Korea, Russia – already have set up shop in Baghdad.

He lamented that American firms waited so long to enter the new Russian economy in the 1990s and will urge a different tack with Iraq.

“There is a great opportunity to focus on this market,” Sokol said. “Everyone wants brands. Western brands. European brands.

“This will take a leap of faith” by business investors, he said, “but American companies have always enjoyed a lot of their success and wealth in new international markets.”

The alliance, initially named the U.S.-Iraq Business Council, was authorized by the Department of Treasury in June 2002 when the Pentagon was “trying to figure out how this thing needed to go” in a post-war rebuilding effort, Burrows, the alliance executive director, said.

“The alliance is really aimed at being the home of the great American corporate names, for them to take their position in supporting the rebuilding of the Iraqi economy and protecting their interests in the region,” Burrows said.

“It’s the American private sector that will restore Iraq’s greatness,” he said, later adding, “and the world’s” private sector.”

Efforts made this week to reach a spokesman for the treasury department were unsuccessful.

Burrows acknowledged that some people will argue that the alliance is premature and will only give political fodder to those who think the war was really about America’s corporate interests, particularly the oil industry – the only sector of the Iraqi economy that will not be privatized for the time being.

“Certainly there is sensitivity” about how deeply involved American companies should be in rebuilding Iraq, Burrows said.

“I think we need to respect Iraq’s sovereignty. Iraq seeks to have a free, fair and open democratic society that will make its own decisions,” he said. “We just think the private sector has an important role to play in that process, particularly to help stand up the economy.”