By Pauline Jelinek
The Associated Press, 04 January 2007
WASHINGTON - As President Bush ponders how to salvage the Iraq military campaign, business minds at the Pentagon are moving ahead with a part of the equation — fighting Iraq's unemployment and trying to boost its economy.
Under a new program, the Defense Department is already helping reopen factories that were owned by Saddam Hussein's government and abandoned by occupation authorities shortly after the 2003 U.S.-led invasion. The Pentagon may also start providing them with contracts to support U.S. troops.
One factory restarted operations in the last two weeks, and nine more are to open by the end of this month, adding some 11,000 Iraqis to employment rolls, a Pentagon official said Wednes0sday. The official spoke on condition of anonymity because the information had not been released yet.
Pentagon officials declined to identify the facilities for fear they or their employees could be attacked amid the country's increasing violence.
Reopening factories that produced everything from cement to buses for Saddam's regime is among the ideas that have been discussed by Bush as he struggles to find the way forward in Iraq after nearly four years of war.
Bush is expected to announce a new Iraq strategy next week. He is widely expected to say he wants to send additional U.S. troops there.
Military commanders have long seen employment as one of the keys to slowing the violence. The idea of restarting factories differs from some previous reconstruction efforts that have had limited success in that it's aimed at providing long-term employment for factory workers as opposed to short-term jobs that came with individual rebuilding projects.
The Pentagon formed a task force six months ago that has identified some 200 factories — producers of textiles, industrial equipment and other goods — that could be restarted.
Paul Brinkley, deputy undersecretary of defense in charge of business modernization efforts, said in a recent interview that putting idle Iraqis back to work should help calm violence because it will leave fewer disgruntled men willing to plant bombs or commit other crimes for money.
"I believe there's an indisputable correlation between peoples' livelihoods ... and unrest, civil unrest, social unrest," he said.
Iraqi unemployment is thought to be from 20 percent to 60 percent, with inflation above 50 percent. More than 1.5 million Iraqis, mostly professionals, are believed to have fled abroad, according to the U.N. and the bipartisan Iraq Study Group, which recommended a new Iraq strategy to Bush last month.
Officials hope the factory reopenings will be the first wave in a series of restarts that will stretch throughout the next year to restore jobs lost after the 2003 invasion. At that time, occupation officials of the U.S.-led Coalition Provisional Authority decided to do nothing with the government facilities, hoping they would quickly be taken over by the private sector.
Privatization of the businesses never happened as violence gripped the country and disrupted the economy. But if the factories start producing and become well-functioning enterprises, that could be a step toward any privatization effort the new officials may decide upon.
Under the new program, private as well as government factories would be restarted. The American military expects to be among the customers for some of the restarted operations.
"We buy a lot of items, all kinds of items," such as cement and furniture, Brinkley said. "We import a portion of that. But if there are Iraqis who make things that we can buy, it just makes lots of good sense to buy it from Iraqis ... to stimulate the economy, build good will."
The U.S. military is spending more than $100 billion annually for the war. Brinkley said he hopes to spark the Iraqi economy by funneling some of it to newly restarted factories.
While the average worker in American supports four people, the average Iraqi workers supports 13, Brinkley said.
"For every Iraqi you put back to work, it has a huge cascading effect," he said.
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Citation: Pauline Jelinek. "Pentagon helping restart Iraqi factories," The Associated Press, 04 January 2007.
Original URL: http://news.yahoo.com/s/ap/20070104/ap_on_go_ca_st_pe/us_iraq_economy_2
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