Monday, August 13, 2007

U.S. Market Seen For Iraqi-Made Clothes

By Stephen Farrell
New York Times
August 13, 2007

BAGHDAD, Aug. 12 — Iraqi and American officials think Iraq’s ailing economy could get a kick-start from American consumers interested in giving Iraqi-made clothes as Christmas presents.

“We are hoping if everything goes well, by Thanksgiving and Christmas we will have from the Mosul factory teenage clothing, and from the Najaf factory ready-made suits, and from the leather industries here, leather jackets, and so on,” Sami Al-Araji, the deputy industry minister, said Sunday during the announcement of a plan to put state industries back to work.

Mr. Al-Araji said an American team led by Paul A. Brinkley, the deputy under secretary of defense for business transformation in Iraq, was in discussions with major American retailers like Sears and Wal-Mart to have the clothing on sale in a limited number of major cities by the holiday season.

The first move into American markets would be mainly symbolic, he said, involving 10,000 to 12,000 leather jackets, 20,000 to 25,000 suits priced around $80 to $90, and a similar number of garments for teenagers.

“We could go higher, but we thought we would start modestly,” he added.

Mr. Brinkley, a proponent of the theory that getting Iraq’s state-owned industries back to work will revitalize the economy and lure unemployed Iraqis away from the insurgency, would not comment on discussions “that are under way with any specific retailers.”

However, he confirmed that negotiations were taking place with some American retailers. He also said that Shelmar Inc., a Memphis-based chain with 60 stores in eight states, had placed an order with an Iraqi state-owned clothing factory to buy a “few thousand” units of children’s clothes.

Restarting Iraq’s state-owned companies, regarded by some critics as an inefficient throwback to Saddam Hussein’s era, would be a reversal of the privatization model championed by L. Paul Bremer III, the American proconsul who governed Iraq from May 2003 to June 2004.

Speaking Sunday in the fortified Green Zone alongside Mr. Al-Araji and Bayan Jabr, the finance minister, Mr. Brinkley insisted that privatization remained the ultimate goal, but said urgent revitalization of the economy was a crucial part of the counterinsurgency plan of Gen. David H. Petraeus, the commander of American forces in Iraq.

“Economic development,” Mr. Brinkley said, “is at the core of his vision of how we bring political, economic and security restoration as a three-pronged effort here to create stability and enable the eventual drawdown of our presence here and the establishment of a stable government.”

The Iraqi ministers insisted that industry was the “core” of the Iraqi economy, and that restarting it would have a “cascade” effect.

Despite the ministers’ enthusiasm, some American officials urged caution. A senior United States Embassy official said last week: “You have to look on a case-by-case basis. One of the interesting trade-offs that we face in looking at these enterprises is that they all tended to be very large consumers of electricity, and this is one of the real tensions.”

He added: “I don’t think anybody has a problem in principle with the idea that if you can put people back to work that is a good thing. That is not in this situation an idea that people would argue with, but the question is at what cost are you going to be doing that? And if the cost is taking a lot of electricity from the grid, maybe you want to look at what the alternative uses of that might be.”

The effort to restart factories is by no means the first indication that Prime Minister Nuri Kamal al-Maliki’s government aims to pump cash into the economy. There are also plans for $30 million in microloans to small businesses, agriculture and government welfare programs.

Last month, at the start of an initiative to provide state subsidies to farmers, Talib Aziz, an American-educated economic adviser to Mr. Maliki, said: “The idea in the beginning was that unless security is provided in the country, the economy won’t move. The prime minister thinks the reverse, that the economy needs to improve in order to improve security. So he is going to use the public funds, public investment and government investment to jump-start the economy.”

He added, “The economy now is stalled, so he is doing just what F.D.R. did in the Great Depression.”

Damien Cave contributed reporting from Diyala.


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