India edges back into IraqNEW DELHI - Quietly but surely, India is reopening its diplomatic contacts with the new Iraqi administration. In the first official contact with the new Iraqi government, Prime Minister Manmohan Singh's special envoy for West Asia, C R Gharekhan, met Iraqi Prime Minister Ibrahim Jaafari earlier this week. While India has offered to help in rebuilding the war-ravaged country and in the drafting of its new constitution, it is also seeking to cut into the estimated US$100 billion reconstruction business. India hopes to garner as much as $10 billion.
During his meeting with Jaafari, Gharekhan handed over a personal letter from Singh emphasizing India's commitment to cooperate with Iraq on the task of national reconstruction. In the letter, Singh invited Jaafari to visit India, a gesture that Jaafari reciprocated by inviting the Indian premier to Iraq. Gharekhan suggested that Jaafari assign the Iraqi oil minister to lead a delegation to India for the next meeting of the India-Iraq Joint Commission. Jaafari, who has studied Mahatma Gandhi's life and teachings, spoke warmly about Indo-Iraq ties and said he supported UN reforms including the expansion of the Security Council while emphasizing India's "important position" in world affairs.
The new government in Baghdad has already indicated that it is more than willing to welcome back Indian businessmen, in order to re-establish thriving Indo-Iraq economic ties that took a hit after the US-led invasion in 2003. Apart from warm relations, there is a healthy respect for quality services rendered for projects delivered by Indian companies in Iraq. According to reports, more than 100 Iraqi businessmen are currently visiting India each month, the number having doubled from last year, and the Indian mission in Baghdad is inundated with inquiries from Indians wanting to do business in a new Iraq.
Indeed, India and Iraq go back a long way. Before the Gulf War, in 1990-91, Iraq, which has the world's third-largest oil reserves, was one of the major sources of India's oil imports and one of the biggest markets for India's project exports, mostly in the construction sector. With the Gulf crisis in 1990 and the imposition of UN sanctions, India's trade with Iraq declined considerably. In line with UN resolutions, India decided to partially lift the ban on trade with Iraq in June 1991, with relations expanded further in 1996. After the overthrow of the Ba'athist regime by coalition forces in 2003, the UN sanctions were lifted and trade between Iraq and other countries began to normalize. The new government has been stressing the need for immediate reconstruction of Iraq and has been floating tenders. As the time required for the submission of bids is rather small, Indian firms are looking for local representation in the country.
It is expected that with the new dispensation, the US will have a reduced role in handing out contracts, which will make the dealings fair, even biased toward non-US countries friendly to Iraq. Until now, the most sought after reconstruction contracts have gone to US multinationals such as Kellogg Brown and Root, a subsidiary of Halliburton, and Bechtel. Indian firms are looking for a chunk of business through sub-contracts as well as fresh tenders that are being put out by the Iraqi government.
It may be recalled that the US had pegged construction contracts in Iraq to troop deployment to assist beleaguered US soldiers in Iraq. In December 2003 the US had barred Indian companies from bidding for a primary share of Iraqi reconstruction contracts. Other countries blocked from bidding for main contracts - they could still be handed sub-contract work - included France, Germany, Russia and Canada, all of whom have opposed the US-led war against Iraq and refused to send troops to enforce the US occupation there.
With the changed scenario, more than 50 Indian companies now are looking to garner a share of the massive reconstruction pie, which will include the building of schools, hospitals, airports, roads, bridges and power infrastructure. Essar Telecom, Essar Construction, Bharat Heavy Electricals Ltd, Rites, Somdatt Builders, Larsen & Toubro, National Building Construction Company of India, Gamon India, Bharat Earth Movers, Cosmos International and PCP International are some of the corporations in the picture. Representatives of these companies have also been visiting Washington to ensure their participation in the Iraq reconstruction program as well as ink sub-contracts.
In keeping with the new requirements, the Federation of Indian Chamber of Commerce and Industry (FICCI) has been coordinating some of the activities between the governments of the two countries as well as businessmen and corporations. A recent FICCI paper highlights the trade and economic relations between India and Iraq that traditionally have been close.
"It is high time that India and Iraq start talks on galvanizing trade ties and open a new chapter in our economic cooperation. There is a very big room for India to participate in the reconstruction of Iraq. India must re-establish its previous position, as it was before the outbreak of the war two years ago, in the Iraqi market," Muayad Hussain, charge d' affaires in the Iraqi mission in India, said.
H S Meiji, special adviser (Iraq cell) with the FICCI said: "The situation is improving in Iraq. There is a big momentum building up on the business front in Baghdad. India must catch up with vast opportunities in store for it."
According to C M Mehra, president of BB Overseas, which has been engaged in business in Iraq for more than two decades, "Iraq is on the brink of a major business revival. Indian companies eyeing the Iraqi market can expect a lot of support from the Iraqi government."
However, security remains a major issue as Iraq continues to be racked by the internecine battle between the Shi'ites, the Kurds and the Sunnis, who ruled under Saddam Hussein and refuse to accept the current arrangement. Last year, in April, the Indian government banned workers from going to Iraq, for security reasons - although it seemed the government, as well as US authorities, were prepared to turn a blind eye to the illegal transit of Indians through Kuwait or Jordan on their way to Iraq.
However, matters changed quickly when in August last year three Indian truck drivers illegally operating in Iraq were kidnapped for ransom and released only after protracted negotiations with New Delhi, with reports of huge sums of money having been paid by the employers of the drivers. After the episode, the government issued instructions to crack down on recruiting agencies that were issuing Indian workers, whether ex-servicemen, drivers, cooks or menial hands, visas to Jordan or Kuwait and illegally transporting them to Iraq, to work mostly as help to US troops.
About 1.3 million Indians work in Saudi Arabia and 100,000 in Kuwait, while some 3 million Indians are said to be working in the Gulf region as a whole, contributing to the bulk of foreign-money transactions in the form of inward remittances. Thousands have returned to India because of instability in the region.
So while Indian firms will be looking to seal contracts for future implementation, the work on the ground can begin in earnest only when peace returns to Iraq. This is by far the bigger challenge.
Siddharth Srivastava is a New Delhi-based journalist.