Video: Firms reassess Iraq projects

msnbc.com staff and news service reports
updated 4/22/2004 4:50:34 PM ET 2004-04-22T20:50:34

As violence continues to rock major Iraqi cities, American contractors are struggling to balance the need to keep their employees safe with the desire to keep working on lucrative reconstruction projects. On Thursday, German engineering giant Siemens AG pulled its employees out of the country, while General Electric Co. suspended some of its operations because of security concerns.

Siemens, which has been helping rehabilitate Iraq's damaged and outdated power stations, has finished much of that work, which was scheduled for completion May 15. Iraq’s Electricity Minister, Ayham Al-Samarei, said that he expects the Siemens’ workers to return soon. If they don’t return within a week, he said, Iraqi engineers will finish the job.

GE has suspended some operations in recent weeks because of the violence, but it is not pulling out, said GE spokesman Gary Sheffer.

"We have had delays in some of our work in Iraq because of the security measures that have been put in place," Sheffer told the Associated Press. "Work is continuing in some cases. In some other cases the work has been delayed."

GE has a major presence in Iraq. The company booked $450 million in orders last year and has projected $1 billion to $3 billion in business in Iraq by next year, according to Sheffer. The work includes power generation, medical equipment and water treatment.

That work has also made the company’s employees a target for terrorists. Last month, gunmen killed a Briton and a Canadian who were working as security guards to protect foreign engineers working for GE.

Siemens spokesman Andreas Fischer would not confirm whether any of its Iraqi operations had been suspended. He also would not say how many Siemens employees were in Iraq, nor would he give details on the company's Iraqi projects.

"We are still committed to help to rebuild the infrastructure, and it is our intention to continue the work as long as we can assure the safety of our employees in Iraq. "But for the safety of our employees we cannot make public any information about numbers or activities of our employees in Iraq," Fischer said.

Escalating violence
The ever-present threat to foreign contractors in Iraq has escalated in the past month following a series of kidnappings and murders amid some of the worst violence in the country since the U.S.-led invasion began. Some 50 foreigners have been abducted in Iraq in recent weeks; most have been released unharmed. One Italian hostage was killed by his captors, who threatened to kill another three Italians if Italy did not withdraw its troops from Iraq.

On Tuesday, three of four bodies found near an attack on a fuel convoy in Iraq earlier this month were identified as contract workers for Halliburton Co. The fourth body has not been identified, a Halliburton spokeswoman said. Another Halliburton worker seen on video footage after the convoy attack remained unaccounted-for.

Thousands of people have signed on as contract workers because of the good pay. Workers can earn up to $120,000 tax-free for a year's work, including overtime.

The killings bring to 33 the number of Halliburton contractors who have died while working in Iraq and Kuwait, performing jobs for the government that range from extinguishing oil fires to delivering fuel and food. But Halliburton Co. said its KBR subsidiary had no plans to suspend operations in Iraq or pull out.

"Absolutely not," said spokeswoman Wendy Hall in Houston. "KBR is resolved to continue support of the U.S. troops and to fulfill all contract obligations and move forward with the logistical support to troops, the reconstruction effort and assisting the Iraqi people rebuild the country's oil infrastructure."

But other private contractors, along with an army of private security firms, are re-evaluating the risk of trying to do business in a war zone. More than 120 global security firms have an estimated 20,000 personnel on the ground in Iraq. CNBC has reported that some firms have temporarily pulled personnel out of Iraq to neighboring countries like Jordan until the military puts down the insurgent uprising.

Some good news
The news for American contractors in Iraq Thursday wasn’t all bad. An Israeli Arab taken hostage two weeks ago and accused of spying for Israel was released by his captors.

Research Triangle International Vice President Sally Johnson said their employee, Nabil George Yaakob Razuq, was freed earlier Thursday. "He is safe and sound," she said.

Razuq, who  was working for the North Carolina-based company doing local governance work in Iraq, was  taken hostage April 8.  A chilling videotape was released by Razuq's captors soon after he was taken hostage in which they had accused him of spying for Israel, a claim rejected by both by RTI and Israel.

Earlier Thursday, two Swiss hostages were freed in southern Iraq, said an official at the Swiss Embassy in Baghdad.

Even as the violence escalates, American firms remain hopeful they’ll win new contracts in Iraq. Pioneer Natural Resources Co., a small U.S. oil and gas producer based in Irving, Tex., said Tuesday it wants to pursue exploration and drilling opportunities there.

“We'd like to open an office in Baghdad," Chairman and Chief Executive Scott Sheffield said at an Independent Petroleum Association of America conference in New York.

But any moves, he said, would be contingent on improved security and a stable government.

“It will be 2006 at the earliest," he said.

Oil proceeds rise
While Iraqi oil workers have struggled to restore exports to pre-war levels, the country is sitting on the world's second-largest oil reserves. Western oil companies are hoping to find even more resources through advanced drilling techniques and three-dimensional seismic exploration.

Proceeds from those oil exports will be critical to funding future rebuilding projects. Since last year’s invasion, Baghdad has exported more than $7.8 billion in crude oil, the U.S.-led authority governing Iraq said Tuesday.  Of the total put in the fund since it was set up on May 28, 2003, $309 million was deposited during the week ending last Friday, compared to $276 million the previous week, according to the provisional authority's Web site.

Under a May 2003 U.N. Security Council resolution, the Coalition Provisional Authority is required to deposit all the proceeds of Iraqi oil exports into the fund.

(The Associated Press, Reuters and CNBC contributed to this report.)

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