INTERNATIONAL

Poor response to reconstruction projects

MANAMA AUG. 10. Unabated violence and availability of business opportunities elsewhere in the region is dissuading investors to participate in Iraq's reconstruction programme.

Forces opposed to the U.S. have in the past specially targeted foreigners who planned to get directly involved in reconstruction activity in Iraq.

In June, Indian workers recruited by a Kuwaiti contractor had to be evacuated from southern Iraq because of the hostility of the local population. Given the high level of insecurity, few foreign firms on the lookout for business are, at this moment, willing to establish their offices inside Iraq. The U.S. approach to reconstruction in Iraq is also dampening the enthusiasm of major contractors in the region. For instance, most of the subcontracts offered so far by the U.S. giant Bechtel — the prime contractor for Baghdad's $680-million reconstruction— has not exceeded $1 million.

The prospect of only modest early gains in Iraq is, therefore, also encouraging major firms to lose focus. But the most significant reason for keeping investors away from Iraq is arguably the boom in construction activity elsewhere in the region.

Powered by sustained oil prices, investors are chasing lucrative construction projects, which are on the anvil especially in Dubai, Qatar, Bahrain, Oman and Lebanon. With Dubai permitting expatriates to own property, there has been a surge of activity on the island. Dubai has recently begun the construction of 38 highrise towers at a cost of around $1.4 billions. Bidding for the around $400-million Souq-al-Nakheel scheme which envisages construction of an ultra-modern leisure and shopping complex, including an artificial ski-slope is expected to begin soon. Work for building the Palm islands — the world's two largest artificial islands — in Dubai is also in full swing. The 2006 Asian games are generating feverish building activity in Qatar.

The construction of a sports village and a $150-million sports hall in Doha has already been a big draw.

The momentum for construction is likely to be sustained as Qatar is planning to build a state-of-the-art national library, an Islamic centre and a broadcasting hub.