Contractors cut operations in Iraq

2 U.S.

Actions by Siemens, GE slow rebuilding of about two dozen power plants


The insurgency in Iraq has driven two major contractors, General Electric and Siemens, to suspend most of their operations there, raising new doubts about the American-led effort to rebuild the country while hostilities continue.

Spokesmen for the contractors declined to discuss their operations in Iraq, but the shutdowns were confirmed by officials at the Iraqi Ministry of Electricity, the Coalition Provisional Authority and other companies working directly with GE and Siemens in Iraq.

"Between the GE lockdown and the inability to get materials moved up the major supply routes, about everything is being affected in one way or another," said Jim Hicks, a senior adviser for electricity at the coalition authority.

The suspensions and travel restrictions are delaying work on about two dozen power plants as occupying forces press to meet an expected surge in demand for electricity before the summer. Hicks said plants that had been expected to produce power by late April or early May might not be operating until June 1. "While it's being affected, it's not shutting down," he said of the work. "I think we're still in good shape as far as getting our equipment back up before the summer really hits us."

Several government and company officials said reconstruction had rebounded recently after the intense violence of the past few weeks, but experts said they were concerned the delays might affect ordinary Iraqis.

"What worries me is that, are the insurgents, the terrorists, are they winning the battle this way?" asked Isam al-Khafaji, an Iraqi who is director of Iraq Revenue Watch, an initiative of the Open Society Institute, an organization backed by the billionaire George Soros. Electricity "is the most important sector for the Iraqis after security."

The Coalition Provisional Authority regards the rehabilitation of the country's water, sewage, transportation, oil and electrical infrastructure as a linchpin in the effort to create a functioning democracy and persuade ordinary Iraqis of America's good will.

A spokeswoman for the authority said that discussions involving security issues with GE had led to an agreement that could result in a resumption of operations. The spokeswoman said Siemens and the authority were "working out their differences" but she had no information about whether the company would begin working again.

GE booked $450 million in orders in 2003 in Iraq, mostly for subcontracts to the large prime contractors in Iraq, according to Gary Sheffer, a company spokesman.

Neither GE nor other companies working in Iraq would say how many employees they had in the country, citing security concerns.

Sheffer said the company intended to fulfill its contractual obligations in Iraq and was committed to rebuilding the country. "We are working with our customers to mitigate the impacts of the security measures that have been implemented recently," Sheffer wrote in an e-mail message. Paula Davis, a Siemens spokeswoman, also said her company was committed to the reconstruction but declined to provide further information on work in Iraq.

Two companies with much larger contracts in Iraq, Bechtel and Halliburton, said they had curtailed travel by their employees but were not considering halting their work.

"While some travel has been temporarily limited to `mission-critical' tasks, we are in constant communication with the military, and these restricted movements and increased security measures will not impact getting supplies to soldiers," said Wendy Hall, a spokeswoman for Halliburton, which delivers drinking water, food and fuel used by the American occupation force.

Halliburton said in a statement Tuesday that three of four bodies found near an attack on a fuel convoy in Iraq this month were its employees. A captive Halliburton employee, Thomas Hamill, has been shown in a video distributed by his captors.

A major private security provider in Iraq with access to intelligence information said that Halliburton has "been slowed down in terms of the number of routes and convoys they can run" and said the firm was having a difficult time hiring truck drivers to work in Iraq. He estimated that the overall number of Halliburton convoys was down by 35 percent.

Despite the delays, several government and private officials in Iraq remained optimistic about the long term.

"Yes, you have to be careful, take prudent measures to reduce your risk," said Tom Wheelock, director of infrastructure programs for the United States Agency for International Development, which oversees $3 billion in rebuilding contracts. "And with that context, with those kinds of guidelines, you can have success."

"What they all understand this to be is a gift from the people of the United States to the people of Iraq," said Adm. David J. Nash, director of the Coalition Provisional Authority's program management office, which is the process of awarding $9 billion in new rebuilding contracts. "I think it's vital."

Nash estimated that during the most intense days of the insurgency in early April, perhaps 25 percent of Iraqi workers hired for his office's projects actually arrived for work. Last week, attendance was back up to about 50 percent, or an average of 3,517 workers, said Steven Susens, a spokesman for the authority.

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