German Business Shuns Iraq | Business| Economy and finance news from a German perspective | DW | 20.09.2004
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German Business Shuns Iraq

After Berlin's firm opposition to the US-led war in Iraq, German companies largely lost out in the awarding of contracts for the reconstruction of Iraq. But surprisngly few businesses saw it as a missed opportunity.


Iraq offers plenty of business oportunities for foreign investors.

Gelan Khulusi, President of "Midan," the Cologne-based German-Iraqi association for midsize companies, wipes the dust off his lap-top. The businessman explains that his Baghdad office was recently devastated by an explosion. But, he adds, he's determined to stay.

Midan was set up to promote business ties between Germany and Iraq. Despite the turbulent security situation, Iraqi-born Khulusi plans to continue traveling to Baghdad on a regular basis, with a view to cultivating his existing contacts and looking for new partners.

Modest German interest

"Our goal was to set up a bridge between German and Iraqi companies," he said. "We were under the impression there was a lot of interest on the German side." As it turned out, "there was much greater interest on the Iraqi side."

Khulusi's office contains several thick files of detailed information on some 600 Iraqi companies interested in working with German partners. Midan, however, has managed to attract just 18 German companies to invest in Iraq. Many, it seems, are scared off by the risk of violence and abductions.

Khulusi says he has little patience with German reluctance to pursue business in the war-torn country. Import tax is just five percent and the sales market is booming -- not least in the construction business.

Germany: Conspicuous in its absence

Khulusi says Iraqi chambers of commerce can't understand why the Germans are staying away. "They're all here -- Indians, Pakistanis, Turks and Chinese -- only the Germans aren't here. Why not?" is a constant refrain.

"I'm running out of arguments," he sighs. As far as Khulusi is concerned, German midsize businesses have let themselves be frightened off by international media coverage of the situation. He sees much of it as scare-mongering, and argues that these days, many regions enjoy relative stability, including the country's Kurdish north.

He also points out that German businessmen don't actually need to be on site. "We have Iraqi partners with Iraqi chairmen who speak excellent English," he explains. "In today's electronic era, German partners don't need to be there in person." The Iraqi companies canvas the various ministries and find out what contracts are up for grabs, then e-mail the tender to German headquarters. Once the contract has been awarded, German trucking companies can transport freight to Iraq.

Safety concerns

Interestingly, none of Midan's 18 German members were willing to be interviewed. They're concerned that their Iraqi staff may be kidnapped. For the same reason, vacancies are only advertised through Midan.

According to Gelan Khulusi, safety is set to improve. He hopes that in the future, he'll be able to attract more German companies with concrete offers. "If an Iraqi company comes along and says it's interested in a bulk purchase, then we'll arrange that," he says. "If Mohammed won't go to the mountain, the mountain will have to go to Mohammed."

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