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US-led administration in Iraq ready to unveil privatization plan in the spring

US soldiers ride on Humvees through the grounds of Saddam Hussein's Republican Palace in Baghdad, at sunset on Wednesday. The palace is now used as the headquarters of the Coalition Provisional Authority. PHOTO: AP

The US-led administration in Iraq will present a plan to privatize the country's state-owned industries by the spring, the official in charge of the effort said Wednesday.

Iraqis will make the final decisions on how to manage the sales, said Thomas Foley, director of private sector development for the American-led Coalition Provisional Authority. He said he would give suggestions for detailed privatization plans to the US-appointed Iraqi Governing Council, which then would name a commission to oversee the process.

Foley said he would recommend that the state-owned companies not be simply sold to the highest bidder but be turned over using criteria such as the experience and solvency of the proposed owners and how the privatization plan would affect workers.

Foley, a Harvard-trained businessman who calls himself a corporate turnaround specialist, oversees operations of about 150 of the 200 state-owned businesses in Iraq. He does not oversee the oil industry and related businesses or financial institutions such as banks and insurance companies.

About 250,000 Iraqis work for the businesses under his oversight, Foley said, including workers in phosphate and sulfur mining operations, pharmaceutical plants and car factories.

Foley said he had no idea how much the companies are worth because there is no reliable financial information about them.

Saddam Hussein's government owned and ran all large industries in Iraq under programs similar to the centrally controlled economies of the former Soviet Union. Lessons learned from the privatization of companies in Russia and Eastern European companies will help in the Iraqi process, Foley said.

Foley said he expected that most state-owned Iraqi companies would end up in the hands of Iraqis, not foreign owners. There is high interest in foreign investment in Iraq, however, particularly from companies in the Middle East, Foley said.

The biggest economic challenge in Iraq, Foley said, is not privatizing companies but creating enough of a new economy to absorb the workers who will be displaced in the privatization process.

"Those jobs will be the mechanism for making privatization work," Foley said in a conference call with reporters while on a visit back to the US.

An additional priority is developing and implementing business laws to crack down on the corruption that flourished under Saddam, Foley said.

"Under the old regime, bribes and kickbacks were a successful strategy," he said. "The key to turning that around is having a good set of commercial laws and a well-functioning judicial system so bad behavior is punished."

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