US pushes for early privatization in Iraq

By Shino Yuasa


The US-led coalition plans to privatize the first of Iraq's 100 or so state-owned firms within a year as it begins overhauling the centralized economy of Saddam Hussein without waiting for a new government, a top US official said Thursday.

Tim Carney, senior adviser to the Iraqi ministry of industry and minerals, said the coalition had decided to go back on an earlier pledge to leave any decision to an elected Iraqi government, and planned to start privatizations as soon as an interim administration was in place.

"Privatization is the right direction for 21st century Iraq," Carney said. "Yes, it could happen certainly with the creation of some sort an interim Iraqi authority."

He admitted the change of heart could spark suspicions among some Iraqis that their national assets were being sold off for the benefit of foreigners, particularly as the coalition has now said it plans to lead the consultations that will appoint the promised interim administration.

"That's why the issue of privatization has to be totally transparent and broadly discussed because there are suspicions that foreigners are just coming to rip the country off," he said.

"The way to allay their suspicion is to make sure the facts are all out."

Carney insisted that it had been Iraqis who had pressured the coalition to bring forward the rationalization of the bloated and moribund state sector here.

"The discussion of privatization is being driven by Iraqis. Iraqis are genuine entrepreneurs and traders," he said.

"I think they see privatization as a means towards prosperity ... They've lived with this command economy and they know that it doesn't work."

Of some 100 state-owned enterprises (SOEs) in Iraq, the industry ministry controls 48 - which employ some 96,000 people - in eight sectors including food, textiles, engineering and chemicals.

To kick off the privatization process, the coalition plans to divide SOEs into three categories - fast-track, medium-track and long-track.

Some fast-track SOEs would be sold off "within a year," he said, adding that the privatization of medium-track firms would not begin for at least a year.

"I think it is the right direction. I don't have any doubt about it," the US advisor said.

Among the SOEs likely to be regarded as fast-track, Carney cited glass and ceramics firms because their output was high-quality and competitive with other firms around the region, and they had no debts.

Money-losing firms, regarded as long-track candidates, were likely to be dissolved, merged or sold into foreign ownership, he said.

Iraqi textile companies were also seen as unlikely to survive because of China's domination of the global market, he added.

Carney gave no details of foreign interest in buying up Iraqi SOEs, but he said the coalition had already received a string of inquiries from overseas companies wanting to set up joint ventures with Iraqi businesses.

Requests for information had been received from Saudi Arabia, Japan and Jordan, he said.

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