Sun, Jul 06, 2003 - Page 11 News List

Baghdad's traders sample free market

GOLDEN OPPORTUNITY Iraqi merchants are cashing in on the removal of trade barriers by the interim US-led administration, but long-term economic questions remain

BLOOMBERG

Arrested Iraqis, picked up for curfew or weapons violations, sit masked in a guarded compound as one is brought to be checked for illness at a US Army base in the Iraqi capital of Baghdad, yesterday. Coalition efforts aimed at providing security in Iraq are coming under criticism from human rights groups, while most Iraqis simultaneously complain about the lack of security and the presence of US-led forces. Iraqi businesspeople, especially, cite the security situation as a major obstacle to rebuilding Iraq.

PHOTO: REUTERS

On a dusty lot in Baghdad's bustling Karadah district is a fleet of polished second-hand sedans and decade-old BMWs. This is car dealer Abdullah Radi's makeshift showroom, which he dismantles every day at sundown to escape gangs of looters. He stows the cars in a faraway garage.

With customs duties now eliminated in Iraq, Radi ships the autos he sells from Dubai to the southern port of Basra and trucks them in. He sells as many as seven a week and says profits, which he won't disclose, are up 50 percent. Customers include government employees who are now being paid in dollars. Business is good enough that his five sons also sell used cars.

"With no tax and no customs, things are good, very good," says the 58-year-old father of 11, as he stands by the road in a flowing robe and headdress, clutching a satellite phone. The only drawbacks: looters, he says.

Last month's decision by the US-led Coalition Provisional Authority to eliminate all import duties until the end of the year to boost trade is spawning a new breed of Iraqi traders importing cars, electric fuses, nightgowns and fridges from Turkey, Syria, Jordan, the Gulf states and Egypt.

Paul Bremer, Iraq's chief US administrator, says it's only a matter of time before a free market takes hold.

"I am optimistic that the coalition will succeed in transforming the Iraqi economy from a closed, dead-end system to an open, vibrant place to do business," he told participants at the World Economic Forum at the Dead Sea near Amman, Jordan on June 22.

With the red tape gone, Iraqis are swarming the Baghdad Chamber of Commerce, where they register and pay as much as US$8 for a cross-border import license to show at foreign border posts.

The Chamber building is open for business -- even though looters stole the furniture and computers, slashed the door frames, ripped out the toilets and wrecked the fountains.

In the lobby, behind a few salvaged desks, officials hand out some 400 licenses a day to applicants, 50 percent more than in prewar days, according to general manager Abdulmalik Hussein. The US decision to lift customs tariffs is "the principal reason" behind the flurry, he says.

"Before, it wasn't easy to trade," adds trademark manager Sohad Ahmad, her head covered in a multicolored shawl, as she scrawls her signature across dozens of licenses brought to her by underlings. "This is a golden opportunity for merchants."

Standing with his license in hand is 39-year-old Adnan Al-Khozai, who has just separated from his trading partner and set himself up as an independent importer of car parts and clothing.

Adnan flashes a thumbs-up sign when asked about business.

"If there is safety and no taxes, then business is good," he says.

Safety is, however, lacking. At dawn the day before, near the Jordanian border, a hooded gang in a Nissan pickup truck sidled up to Al-Khozai's car, which carried US$60,000 worth of spare parts and women's clothing. They brandished Kalashnikovs, a Russian-made assault rifle.

While he managed to speed away, a convoy of trucks carrying 22 cars behind him was overtaken and the driver has since gone missing. Al-Khozai says he keeps a Kalashnikov and one other gun at home to protect his wife and three children.

In fact, Kalashnikovs are a common sight in Baghdad. One vendor's weapon leans behind two large boxes of air-conditioning units he is selling on the sidewalk.

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