War Economy

Advantageously Backward

German entrepreneurs are hoping that the German foreign minister's visit to Baghdad will lead to a considerable expansion of their business activities in Iraq. According to Berlin, the Iraqi government has generated a budget surplus of approximately US $13 billion in 2008, not only because of the high cost of oil, but also because of the "low absorption capacity of the authorities,"[1] meaning that the government authorities in Baghdad are transferring financial means to the population far below the average. German entrepreneurs are ready to take on infrastructure contracts in the billions that are now open to western bidders. Iraq is not affected by the global financial crisis - an "advantage of backwardness" characteristic of the battered Iraqi banking sector, writes the German foreign ministry.[2] Another advantage is the "generous tax breaks" for foreign investors. A ten year tax exemption, as well as duty-free imports and free transfer of profits overseas are insured, explains the foreign ministry in Berlin.

Front Companies

German business dealings in Iraq are still at a low level - officially. German foreign trade statistics indicate exports worth only 300 Million Euros for 2008. In the 1980s, before the wars and economic sanctions on Iraq, the West German export volume was ten times higher. Germany recently opened a "Commercial Service Office" in Baghdad, offering information and advice, aimed at stimulating business. But, according to business managers, German firms are already much more active in Iraq than these official statistics show. All major German enterprises are already doing business, often under pseudonyms to dissimulate their origin. Siemens has in fact accepted two telecommunication contracts without appearing under its official name. Especially companies listed on the stock exchange are, according to the business press, operating via front companies in the United Arab Emirates,[3] a method already used by the German Bundeswehr for arming and training the Iraqi army.[4]

Local Personnel

German companies, because of the virtual state of war, are mainly hiring local specialists. At the end of 2004, German businesses initiated their own program for personnel recruitment - "Rebuild Iraq Recruitment Program" - which accepts the applications from Iraqi specialists to place them at the disposal of German employers. Already three years ago, the director of the program, Arndt Fritsche, reported that there were around 17,000 Iraqis registered, another 40,000 engineers were available through "cooperation with the government in Baghdad."[5] Baghdad's interior ministry is helping to screen the political backgrounds of the candidates.

High Profile

Program director Fritsche is the head of the Capital Executive Consulting (CEC) company in Berlin, that specializes in rendering support to businesses in "crisis areas." "Crisis areas could be war zones" describes the CEC, as well as countries "suffering a natural catastrophe or a violent change of government (revolutions)."[6] Fritsche's activities in Iraq, including the local working conditions, could serve as an exemplary model. "We move around exclusively in 'high profile'," says the head of CEC, "with visible professional security." On-sight appointments "are deliberately often postponed or only made at short notice." Traveling by car in town "we are with an escort, a 'scout' vehicle in front doing reconnaissance, a 'gunship' vehicle, with a machinegun permanently installed in the back window, covering the rear."[7] In the Iraqi capital, Fritsche maintains an office in the "Green Zone," the innermost security ring, in the direct vicinity of western embassies.

Security

In spite of local employees and a personnel agency, German executives' business trips to Iraq are inevitable. "A German must make the contacts to Baghdad's ministries and finalize contracts in Iraq," explains Fritsche about the hierarchic structure.[8] This requires "elaborate security arrangements." And this is also taken care of. A security company in Bielefeld stands ready to assist in business trips to Iraq. The Praetoria Beratung GmbH ("Full Service Provider and Security Partner in Iraq and Worldwide") boasts of being active in "regions with feeble forms of government and deficient infrastructures" - as in Iraq, its main area of operations.[9] Accepting this company's services, the dangers of "your personnel's presence in Iraq (...) will be reduced to a minimum." Praetoria employs about 800 bodyguards throughout Iraq, many of them former members of the special GSG 9 (police) and the KSK (military) units.[10]

Business Success

Praetoria Beratung GmbH's motto is "We escort your success in crisis areas." Together with agencies such as Arndt Fritsche's Capital Executive Consulting (CEC), they are making it possible for German business to assure maximum profits in foreign countries even under the extreme conditions of riots, insurgency and war.

[1], [2] Irak: Wirtschaftspolitik; www.auswaertiges-amt.de
[3] Klinkenputzen in Bagdad; Financial Times Deutschland 23.12.2008
[4] see also Partner in Occupation
[5] "Man darf sich nicht wegducken"; Spiegel Online 02.02.2006
[6], [7] Experten/Spezialisten-Suche für Krisenregionen; www.capital-executive-consulting.de
[8] Die gefährlichen Geschäfte der Deutschen; Handelsblatt 30.10.2007
[9] Willkommen bei Praetoria; www.praetoria-beratung.com
[10] Die gefährlichen Geschäfte der Deutschen; Handelsblatt 30.10.2007