[A-List] Walmart to stock 'Made in Iraq'?????

[CeJ <jannuzi@xxxxxxxxx>]

http://www.washingtonpost.com/wp-dyn/content/article/2007/05/13/AR2007051301165.html

Key quote:

> > Brinkley [a deputy undersecretary of defense], who was interviewed
in Washington, said he expects several [state-owned] factories to
reopen this summer. By year's end, he envisions Wal-Mart stores
selling made-in-Baghdad leather jackets and other U.S. retailers
stocking Iraqi loafers, hand-stitched carpets and pinstripe suits.>>

article follows:

Defense Skirts State in Reviving Iraqi Industry

By Rajiv Chandrasekaran
Washington Post Staff Writer
Monday, May 14, 2007; Page A01

Paul Brinkley, a deputy undersecretary of defense, has been called a
Stalinist by U.S. diplomats in Iraq. One has accused him of helping
insurgents build better bombs. The State Department has even taken the
unusual step of enlisting the CIA to dispute the validity of
Brinkley's work.

His transgression? To begin reopening dozens of government-owned
factories in Iraq.

Overseeing business development for the Pentagon, Paul Brinkley,
carrying helmet, has sought to restart state-run factories in Iraq.
Overseeing business development for the Pentagon, Paul Brinkley,
carrying helmet, has sought to restart state-run factories in Iraq.
(Defense Department photo)
Transcript
Outlook: L. Paul Bremer Punches Back at Iraq Critics
L. Paul Bremer, who led the Coalition Provisional Authority from May
2003 to June 2004, will discuss his Sunday Outlook article explaining
and defending the decisions he made in that capacity.
Tell Us Your Story

Got a story to share about your experience with the military or VA
health care systems? Contact The Washington Post at (202) 334-4880 or
by e-mail at militarycare@xxxxxxxxxxxxx
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Brinkley and his colleagues at the Pentagon believe that
rehabilitating shuttered, state-run enterprises could reduce violence
by employing tens of thousands of Iraqis. Officials at State counter
that the initiative is antithetical to free-market reforms the United
States should promote in Iraq.

The bureaucratic knife fight over the best way to revive Iraq's
moribund economy illustrates how the two principal players in the
reconstruction of Iraq -- the departments of Defense and State --
remain at odds over basic economic and political measures. The
bickering has hamstrung initiatives to promote stability four years
after Saddam Hussein's fall.

Under pressure from Congress to demonstrate progress on the ground,
the military often favors immediate solutions aimed at quelling
violence. That has prompted objections from some at State who question
the long-term consequences of that expeditious approach.

In recent months, the two departments have squabbled over the degree
to which Iraqi farmers should be aided by subsidies and tariffs. They
also remain at odds over State's desire to deploy reconstruction teams
to two Shiite-dominated provinces in central Iraq. Defense officials
are balking at providing robust security for the teams, preferring to
deploy as many troops as possible in Baghdad. State contends that
well-protected American civilians in those provinces will build
relationships with future Shiite leaders.

"There has been a surprising degree of venom and hostility" between
the departments, said a senior U.S. government official involved in
Iraq policy.

The dispute between State and Brinkley has become so pitched that he
has effectively stopped working with the U.S. Embassy and is setting
up his office elsewhere in Baghdad's fortified Green Zone.

"We tend to not deal with them very often," Brinkley said of embassy
officials. "We have our own mission, and we do our own thing."

Although the embassy's chargà d'affaires, Daniel Speckhard, said
Brinkley "has the support of the embassy," Brinkley travels to
factories without embassy personnel in tow and holds his own meetings
with Iraqi trade, commercial and banking officials. He has also
organized trips for U.S. business executives to Iraq and has
encouraged deals between Iraqi state-owned firms and U.S.
corporations.

Brinkley, who was interviewed in Washington, said he expects several
factories to reopen this summer. By year's end, he envisions Wal-Mart
stores selling made-in-Baghdad leather jackets and other U.S.
retailers stocking Iraqi loafers, hand-stitched carpets and pinstripe
suits.

Disagreements among Americans about how to deal with Iraq's
government-run businesses began shortly after U.S. forces arrived in
Baghdad in April 2003. The first U.S. adviser to Iraq's Ministry of
Industry and Minerals, retired ambassador Timothy Carney, wanted to
reopen many of the country's 192 state-owned factories, which,
according to the World Bank, employed more than 500,000 people before
the war.

But the U.S. occupation administrator, L. Paul Bremer, deemed that to
be bad economic policy. Many factories had produced substandard goods
before the war and had since been looted. Fixing them would cost
hundreds of millions of dollars. Bremer wanted private investors to
buy the factories, even as workers continued to be paid to stave off
hardship.

But the hoped-for private investors never arrived. Factories remained
shuttered, and the Iraqi government whittled down the payroll
subsidies. Some former workers found new jobs. Others, U.S. military
officials believe, joined the insurgency.

Overseeing business development for the Pentagon, Paul Brinkley,
carrying helmet, has sought to restart state-run factories in Iraq.
Overseeing business development for the Pentagon, Paul Brinkley,
carrying helmet, has sought to restart state-run factories in Iraq.
(Defense Department photo)
Transcript
Outlook: L. Paul Bremer Punches Back at Iraq Critics
L. Paul Bremer, who led the Coalition Provisional Authority from May
2003 to June 2004, will discuss his Sunday Outlook article explaining
and defending the decisions he made in that capacity.
Tell Us Your Story

Got a story to share about your experience with the military or VA
health care systems? Contact The Washington Post at (202) 334-4880 or
by e-mail at militarycare@xxxxxxxxxxxxx
Military News

   * Determination of Majid Khan as Enemy Combatant
   * Transcript:Military Blocks Popular Web Sites
   * Transcript:Senate Hearing on U.S. Attorney Firings
   * Transcript:The War Over the War
   * A Casualty Of War: MySpace

More Stories
Who's Blogging?
Read what bloggers are saying about this article.

   * Paul - MySpace Blog
   * TimShorrock.com
   * BloggerFodder.net


Full List of Blogs (71 links) Â

Most Blogged About Articles
On washingtonpost.com | On the web

Save & Share Article	What's This?
Digg
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In the early months of the occupation, the State Department wanted to
resuscitate the state-owned enterprises; the Pentagon's civilian
leadership, dominated by neoconservatives, rejected the idea of
supporting government-run industry. By last year, the positions had
been reversed. Military commanders began arguing to restart the
factories, even as a new crew of embassy economists, some of whom had
been scarred by dealings with state-run firms in Eastern Europe,
disagreed. Because State was now running the show in the Green Zone,
its opposition carried the day.

Then Brinkley arrived in Baghdad.

Brinkley, a balding 40-year-old who speaks in rapid-fire sentences,
had joined the Defense Department as a political appointee in 2005
after serving as an executive at JDS Uniphase Corp. At the Silicon
Valley manufacturer of fiber-optic equipment, he had helped the
company acquire a factory in China that had been run by the
government. The experience, Brinkley said, convinced him that
"state-owned enterprises can provide jobs, and turn a profit and lift
hundreds of millions of people out of poverty."

Brinkley's initial mission last summer was to simplify Defense
Department contracting to give Iraqi firms a better chance of
providing goods and services to the U.S. military. While he was in
Iraq , Lt. Gen. Peter W. Chiarelli, then the top field commander,
urged him to visit a bus and truck factory south of Baghdad that had a
modern assembly line, talented managers and skilled employees. All but
75 of 10,000 employees had been laid off because the Iraqi government,
the factory's principal prewar customer, was no longer buying the
vehicles. Many furloughed workers had joined the insurgency, the
factory manager told Brinkley.

"It was clear that the approach we as the United States government had
taken toward state-owned enterprises was a mistake," Brinkley said.
"We were pretty direct and vocal about it."

The U.S. Agency for International Development estimates that nearly
half of Iraqis are unemployed or work fewer than 15 hours a week, but
those figures do not include hundreds of thousands who once worked for
state-owned enterprises and continue to collect about 40 percent of
their original salaries. If they are counted, Brinkley believes, the
true figure for unemployed and underemployed Iraqis may approach 70
percent.

Brinkley took his concerns to Gordon England, the deputy secretary of
defense, and proposed rehabilitating factories that seemed
salvageable.

After touring more than 50 facilities, Brinkley's team deemed about 20
worthy of repair, including factories that made car parts, textiles,
leather goods, fertilizer and hand-woven rugs.

But when Brinkley, who exudes a hard-charging intensity, revealed his
plans to officials at the embassy in Baghdad last fall, they bristled.

"Their reaction was, 'Why is the DOD in this space?' " he recalled.
"What I was proposing represented a 180-degree shift from their policy
-- and it generated full-throated feedback."

Brinkley said embassy staffers called him a Stalinist bent on
restoring a command economy. Another told him that if he rehabilitated
factories, Iraqis "are going to use those machines to make more
complicated weapons to kill our troops with."

Two embassy staff members confirmed Brinkley's depiction of the
tension but blame him for the rupture. "Here was this guy who
parachuted in from Washington who thought he had all of the answers
and that we were just a bunch of idiots sitting around in the Green
Zone," said one of the staff members, who spoke on the condition of
anonymity because he is not authorized to discuss the matter. "Had he
bothered to think about all of the reasons why pouring money into
these factories is a bad idea?"

Embassy officials warned Brinkley that if he opened factories in Sunni
areas first, he risked angering Shiites. Moreover, the electricity
needed by production lines would mean less for residences. Would
people really be happier, embassy officials asked, if they had jobs
but less power at home?

The embassy's in-house think tank, the Joint Strategic Planning and
Assessment Office, also joined the fray, issuing an internal
memorandum declaring that "trying to give these enterprises a new
lease on life will make Iraqis poorer without reducing the violence."
The memo, written by an economist from the Rand Corp. working on
contract for the embassy, added that "resuscitating state-owned
enterprises is a bad idea."

State asked the CIA to assess the link between employment and attacks
on U.S. forces in Iraq, two U.S. government officials said. The CIA's
subsequent regression analysis found no statistically significant tie
between the two phenomena, the officials said. The CIA also told State
that the vast majority of insurgents questioned by U.S. interrogators
in Iraq claimed to be employed, one official said.

Brinkley said he felt stung by the opposition, but he took heart from
the support of England and other Pentagon officials. He also countered
with an analysis from the military's Joint Warfare Analysis Center,
which asserted that a slight increase in job satisfaction among Iraqis
led to as much as a 30 percent decline in attacks on coalition forces,
according to a U.S. official familiar with its contents who supports
Brinkley's efforts.

Embassy opposition was not Brinkley's only problem. His plan to have
Iraq's Finance Ministry pay for repairs at the factories ran counter
to Bremer's edict, issued in 2004, that prevents the Iraqi Central
Bank from funding state-owned enterprises. Brinkley arranged for two
Iraqi banks to provide $5.6 million in loans to six factories, and he
plans to announce a second round of loans totaling about $20 million.

The White House was enthused enough about Brinkley's initiative to ask
Congress earlier this year for $100 million to underwrite his efforts.
Congressional appropriators scaled that back to $50 million, but
Brinkley believes even the lower amount would still put about 100,000
Iraqis back to work.

His team working on state-owned enterprises has grown to more than 60
people. He is also expanding his mission to focus on improvements to
Iraq's agriculture and communications sectors.

Despite persistent violence and the slow pace of reconciliation among
Iraqi leaders, Brinkley said, he continues to believe the United
States can help stabilize Iraq.