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Businessmen in Iraq look to capitalize on change

From major players to the modest entrepreneur, businessmen are looking to make their fortune as Iraq tries to recover from three wars, nearly 13 years of UN sanctions and 35 years of strangling state control.

Few are waiting for the US-led Coalition Provisional Authority to deliver incentives in order to make a start.

A week after the rule of former president Saddam Hussein collapsed on April 9 Aysar Abdullah swapped a shoe business for a booming trade in electronics and satellite dishes.

"We used to sell shoes and as soon as Baghdad fell we realized that would not be so profitable and we went into satellite dishes instead," said Abdullah, sitting in his bustling showroom in the Karrada business district.

Abdullah and his two partners are using the nimble techniques that allowed them to thrive during the years when UN sanctions choked off their access to the outside world and the state dominated the economy.

Deals are done with large bundles of cash.

Abdullah said he buys US$250,000 worth of electronics and satellite dishes every week or so, compared with the US$100,000 in shoes he used to bring in every three months.

"We just hand over the cash in dollars here and they hand it to our suppliers in Dubai, Syria or Jordan," he said.

Abdullah is looking to expand. All he needs, he says, is for Washington and London, the occupying powers, to improve security.

"I don't even need a banking system, we've survived without one for years," he said, turning aside to count wads of dollars and dinars handed over by the new owner of a Japanese television set.

Iraq now operates as a cash economy with only some of its banks open for simple transactions. US civilian administrator Paul Bremer last month started discussing ways to revamp the economy with Iraqi politicians and experts.

Bremer has said Iraq should start loosening restrictions on foreign ownership and investment before a sovereign elected government takes over.

Duty free imports and the lifting of the embargo have already unleashed pent up business activity, favouring small merchants like Abdullah.

But big business needs longer term measures to create the sustained economic activity and jobs Iraq requires to rebuild.

These are the kinds of changes awaited by Mahmood al-Bunnia sitting nearly a mile down the road from Abdullah's shop in an office at the company founded by his grandfather in 1910 when the Ottoman Empire still ruled Iraq.

"We need a stable political system, a stable currency, and things like insurance and letters of credit," said Bunnia, a member of a board of directors that reads like a family tree.

The family, which made tomato paste in Bulgaria in the 1940s, is looking to restore some of the businesses ties and partnerships it lost when the UN imposed sanctions in 1990.

"We had licenses from Nestle, Danone, United Biscuits and others," Bunnia said. "We are already making contact with many companies to see if we can have a relationship as manufacturers or distributors."

The Bunnia empire comprises about 40 companies in Iraq, including one awarded the first in-country sub-contract by the US contractor Bechtel.

But the scale of business Bunnia is eyeing cannot be adequately served by the informal money-transfer system that Abdullah still relies on or served efficiently from the satellite offices used by his family in Jordan and Dubai in the Saddam years.

"When we talk now about business in the tens and hundreds of millions, this system cannot continue," Bunnia said.

Some details of the US-led administration's economic plans are available and officials say they have revised a blueprint that emerged earlier this year envisioning privatization, tax reform and electronic stock market trading.

A framed sheet of cream paper hangs on a wall in Bunnia's office with a simple Arabic phrase advocating patience to overcome the "obstacles history can throw in your path."

That philosophy appears to have served the Bunnias. They survived British mandate rule, a monarchy and the bloody turbulence that culminated in the entrenchment of Saddam's Baath party.

It could be that they will need to persevere a little longer as Iraq's US and British occupiers deliver what they promise to be the best business environment in the Middle East.
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