From the Los Angeles Times

It's not business as usual in Baghdad

An expo attracts firms finding their niche in troubled times and others struggling amid new competition.

By Tina Susman
Los Angeles Times Staff Writer

February 21, 2008

BAGHDAD — Mohammed Jabiry charts the progress of Iraq through the colors of its walls.

Institutional white is soooooo Saddam Hussein, Jabiry said Sunday, pointing to the colorful squares on a sample chart from Modern Paint Industries, a state-run enterprise. Nowadays, juicy-fruit colors such as clementine orange and jasmine yellow are growing popular, a sign not only of Iraqis' changing tastes but perhaps of their brighter mood, said Jabiry, who is Modern Paint's chief engineer.

The company was one of 233 taking part in the first Baghdad Business to Business Expo, which closed Sunday after a three-day run. More than a networking opportunity for Iraq's business elite, it was a showcase for their hopes, dreams, and in some cases their grim expectations for the future.

There was the tourism company with plans for sparkling resorts in the desert, and the cement companies banking on massive development projects. There was the prefabricated housing manufacturer, who sees Iraq's future filled with trailer parks, and the razor-wire factory owner whose business has soared on the fears of others.

A security company showed off an $8,000 pocket-sized bomb-detection device called Sniffex, which also picks up perfume scents. As a salesman demonstrated a Sniffex, its antenna spun slowly toward a woman wearing Tea Rose.

Organizing the business expo took four years, said Raad Ommar, director of the Iraqi American Chamber of Commerce and Industry, a businessman who divides his time between Iraq and La Crescenta.The first attempt in April 2004 was derailed three days before show time when an errant mortar shell crashed near the site.

This time security wasn't an issue, but there were some hiccups and headaches, Ommar said, sitting in a lounge in the Rasheed Hotel in Baghdad's fortified Green Zone, where the Expo was held. The usually quiet lobby and hallways of the hotel, whose fortunes have fallen since the start of the war, were crowded with exhibitors' stalls. Men and women in business suits ambled among them, eyeing the goods, networking and enjoying the bowls of candies on each display table.

Logistic issues

It took four days just to get the exhibits through X-ray machines and into the hotel. Then there were the badges: 8,000, or one for each invited guest. Everyone attending had to be frisked, which created a bottleneck at security as people began arriving for Friday's opening.

"Even the guy who was supposed to open the event got stuck in line," Ommar said. "This was an incredibly difficult logistical nightmare."

Inside the hotel, hallways and conference rooms were lined with stalls showing a variety of goods, including toy tractors and models of the real thing along with the state-run tobacco company's giant cigarette boxes, to remind Iraqis that if they're going to smoke, they should be patriotic.

"Iraqi people are attracted more to the packaging than to the product," said Ali Kazeaer Majthab of the State Company for Tobaccos and Cigarettes, lamenting the decline in business since the ouster of Hussein. Majthab said Iraqis, who are fanatical smokers, are lured by imported smokes that were not easily available under Hussein, and they ignore local brands such as Sumer and Marbid.

Under Hussein, foreign cigarettes cost about four times as much as the locally made brands and accounted for 20% of sales in Iraq. Now, foreign cigarettes make up 80% of sales, said Leth Hady Ameer, a tobacco company engineer.

"We've lost our market," Ameer said, acknowledging that he wasn't helping things by being a nonsmoker. "It's bad for your health," he said, pushing a free sample across the table.

The tobacco company's complaints were common among exhibitors, who are juggling newfound freedoms with the challenges of global competition.

"Now it's a free market, and everything comes in," observed Abed Karem Mohammed Salman, a Modern Paint executive. He said profit was down 90% since Hussein's ouster. Before 2003, the company produced 20 million liters of paint a year. Now, it produces half a million liters a year, he said.

He blames cheap imports from Iran and Syria, and the higher cost of trucking products to the Baghdad factory. Trips that once cost $500 now cost $2,500 because of security.

On the other hand, style and taste are shifting, which Salman and Jabiry attribute to the flood of satellite dishes and Internet access that followed Hussein's demise. Suddenly, Iraqis could see the splashy colors surrounding the likes of Oprah and the cast of "Friends" on TV programs that had been off-limits to most.

"Before, Iraqis used to paint all the rooms the same color -- off-white," Jabiry said. "But now, they are really getting into color. The ceilings are one color, the walls are a different color. It goes along with the progress of the country."

Jabiry and Salman differed on the solution to Iraqis' business problems.

Salman said the government should do more to help them, especially since they are a state-run enterprise.

"At least give us government contracts exclusively," he said.

Jabiry disagreed. "We need new brains in this industry. We still are stuck in the 1960s-style socialism," he said, adding that once people see their cheap Iranian paint fading with the first rains, they'll come back to the Iraqi brand.

Secure in insecurity

Ibrahim Mohammed Farej's wire, mesh and nails factory has no problem attracting customers. Demand for chain-link fences and razor wire has soared, Farej said, comparing what he calls Baghdad "before liberation" to Baghdad today: business is better now, but security is worse.

Before, his factory in the city could leave its gates unlocked 24 hours a day, but there was little demand for its products. Now, its gates are locked 24 hours a day.

"You get something, and you must lose something," he said with a shrug and a sad smile.

Few know that better than Ommar, who returned to Iraq in 2003 after 34 years in the United States to found the Iraqi American Chamber of Commerce. Three years later, he was abducted by gunmen and held hostage. He was freed five days later after his wife paid a ransom.

Ommar estimates that as much as 75% of Baghdad's business elite has fled because of security fears. He bases this on the number of disconnected cellphones among the business leaders with whom he once maintained contact.

But he predicts better things in 2008, and says that if he had his way, this year's Expo would have been held in a downtown hotel outside the Green Zone.

He dismissed the notion that it might have been impossible to secure the site. Then he added, "Maybe I'm just the kind of guy who likes to gamble a bit."