> Business Guide for Iraq

# U.S. Department of Commerce

> **TABLE OF CONTENTS**

[Page]{.underline}

I.  Introduction 2

II. Political and Economic Environment 2

> The Iraqi Government 2
>
> Economic Policy 3
>
> Security 5

III. Doing Business in the Private Sector 5

> Exporting/Trade 5
>
> U.S. Export Licensing 6
>
> Investment and Company Registration 6
>
> Banking and Finance 8
>
> Business Centers and Potential Partners 10

IV. U.S. Reconstruction Contracts 10

> Iraq Project and Contracting Office (PCO) 11
>
> U.S. Agency for International Development (USAID) 12
>
> U.S. Army Corps of Engineers 12
>
> Finding Partners and Subcontracting Opportunities 12
>
> Other Contracting Issues 13

V.  Iraqi Government and International Contracts 13

> Iraq Ministry Contracts 13
>
> International Donors 13
>
> Other Contracting Issues 14

VI. Critical Contacts For Business 14

> Business Guide for Iraq

# U.S. Department of Commerce

# 

##  February 17, 2006

# This business guide is updated periodically to reflect the current situation in Iraq

**I. INTRODUCTION**

This guide reports on the existing and future opportunities for trade
and investment in Iraq. The U.S. Government, including the U.S.
Department of Commerce, continues to work with the Iraqi Government,
Coalition partners, international organizations, and the business
community to facilitate economic recovery through private sector
opportunities, Iraqi Government contracts, and U.S. and international
reconstruction contracts. Additional business information can be found
at [www.export.gov/iraq](http://www.export.gov/iraq). General
information on Iraq can be found on the U.S. Government's World Fact
Book website at
[www.cia.gov/cia/publications/factbook/geos/iz.html](http://www.cia.gov/cia/publications/factbook/geos/iz.html).

**II. POLITICAL AND ECONOMIC ENVIRONMENT**

U.S. Government and Iraqi Ministry contracts have been the leading
business opportunities in Iraq. However, opportunities through the U.S.
Government are beginning to diminish, while private sector opportunities
continue to increase. The section below outlines the current commercial
environment that is common to all these forms of business in Iraq.

**The Iraqi Government**

Since the fall of the former regime, Iraq has had a series of temporary
governments. On June 28, 2004, all governmental authority in Iraq was
transferred to the fully sovereign Interim Iraqi Government (IIG). The
Coalition Provisional Authority (CPA) ceased to exist on that day
although its website ([www.cpa-iraq.org/](http://www.cpa-iraq.org/))
will be kept for reference purposes. Although the CPA no longer exists,
the orders the CPA established through its 100 decrees make up a
significant portion of Iraqi commercial law. On June 29, 2004, the U.S.
Embassy in Baghdad officially opened (<http://iraq.usembassy.gov/>).

Following the January 2005 elections, the Iraqis created the Iraqi
Transitional Government (ITG), headed by Prime Minister Ibrahim
al-Jaafari. The ITG's primary responsibility is to administer Iraq's
affairs, in particular to provide for the welfare and security of the
Iraqi people, promote economic development, and write and pass Iraq's
new permanent constitution.

On 15 December 2005 Iraqi voters went to the polls to elect a Council of
Representatives. Two hundred seventy-five members were elected to a
four-year term, although the composition of the Council has not been
determined yet. The new Council will govern Iraq under the new
Constitution as approved by the voters of Iraq in October 2005.

The current laws governing Iraq are a product of its recent history and
leadership. Under the Hussein regime, an established commercial law
existed. A U.S. Government analysis of the Hussein regime's commercial
law in Iraq can be found at:
[http://www.export.gov/iraq/pdf/iraq_commercial_law_current.pdf]{.underline}.
This law was significantly amended by the CPA orders and the actions of
subsequent Iraqi Governments. These orders liberalized the investment
and business environment, went far in creating important commercial laws
and institutions that are up to international standards, and make up a
significant component of current Iraqi commercial law. All referenced
CPA orders can be found on the old CPA website. Some Iraqi laws may not
be fully implemented at this time. It is important to understand the CPA
Orders, the former regime's law, as well as the Constitution of 2005, to
effectively do business in Iraq.

**Economic Policy**

It appears that the basic economic situation in Iraq is better today
than it was less than a year ago. GDP growth has reportedly recovered
the ground it lost in 2003. GDP in 2004 may have grown by as much as 40
percent. The IMF has estimated 2005 GDP growth at 2.6 percent while 2006
projections are at 10.4 percent. Further improvements in growth will
depend on reconstruction efforts, security, and sound monetary and
fiscal policies by the Iraqi government. Macroeconomic issues are
discussed in detail in the most recent IMF Staff Report on Iraq
(<http://www.imf.org/external/pubs/cat/longres.cfm?sk=18499.0>).

### Central Bank and Monetary Policy

On March 6, 2004, the CPA issued Order #56 promulgating a new Central
Bank of Iraq (CBI) law. The new CBI law establishes a central bank
authorized to perform certain monetary functions, manage foreign
reserves, act as the government's banker and fiscal agent, issue
currency, establish and maintain systems for clearing and settlement of
payment transactions, and supervise private banks.

As of January 15, 2004, Iraq's currency was successfully transitioned to
the New Iraqi Dinar (NID)
(<http://www.cpa-iraq.org/pressreleases/20040115_exchange_end.htm>). The
Iraqis have wholeheartedly embraced their new dinars. Not only are the
new notes much more difficult to counterfeit \-- a chronic problem under
the old currency regime \-- the Iraqis now have six denominations
available, up from only two.

The CBI has responsibility over exchange rate policy. The NID is a
free-floating currency. However the CBI uses monetary policy to
stabilize the NID against other currencies, especially the U.S. dollar.
It does this through a daily foreign currency auction that stabilizes
the rate and allows it to adjust when needed. For exchange rate history
visit the Central Bank of Iraq website:
<http://www.cbiraq.org/cbs6.htm>. The value of the currency steadily
appreciated after its introduction and settled around 1,470 dinars per
dollar.

On March 1, 2004, the Central Bank of Iraq liberalized interest rates on
deposits, loans, credits, securities, and all other domestic financial
instruments. The CBI previously set these rates. This represents a major
step in the development of Iraq's financial system.  The decision to
liberalize interest rates is facilitating the modernization and
development of Iraq\'s financial system based on market principles.

Iraq has been able to stabilize inflation, which was rampant under the
Hussein regime. Currently, inflation appears to be leveling off between
15 and 20 percent. It is important to note that low inflation or modest
inflation in the past gives little or no indication about what that
index will be in the future.

*Fiscal Policy*

The CPA released its fiscal 2004 budget in October 2003, available at
[www.cpa-iraq.org/budget](http://www.cpa-iraq.org/budget). The 2005 and
2006 budgets are briefly discussed in both the National Development
Strategy
(<http://www.export.gov/iraq/pdf/iraq_development_strategy_063005.pdf>)
and the IMF staff report on Iraq
(<http://www.export.gov/iraq/pdf/imf_report_0805.pdf>). CPA Order #77
created the Board of Supreme Audit in order to ensure ongoing Iraqi
Government transparency.

Iraq\'s large international debt of over \$116 billion could negatively
affect economic growth and future funding of reconstruction by
international lenders. The member countries of the Paris Club debt
organization met in November 2004. They agreed with the representatives
of the Republic of Iraq on a comprehensive treatment of the public
external debt owed to them providing a total amount of debt reduction of
80% in three phases. Iraq is also currently working on debt reduction
with its non-Paris Club creditors.

On June 4, 2004 the Financial Management Law and Public Debt Law were
signed. The Financial Management Law establishes a comprehensive
framework for fiscal and budgetary policy that comports with
international best practices. The Public Debt Law would permit Iraq to
replace unsound borrowing practices with a viable market based approach
to issuing public debt, under which debt will only be issued as required
to finance the Iraqi budget.

*Trade Policy*

On February 11, 2004, members of the World Trade Organization (WTO)
approved Iraq's request for observer status. On December 13, 2004, the
WTO established a Working Party to examine Iraq's membership
application. Number range CHAPTERWTO observer status and the
establishment of a working party express the international community\'s
confidence in Iraq and sends a positive message of transparency and
predictability to the business community. Iraq submitted a Memorandum on
the Foreign Trade Regime in September 2005
(<http://www.wto.org/english/thewto_e/acc_e/a1_iraq_e.htm>).

An indication of Iraq's commitment to the global trading community is
the change in its intellectual property laws. The United States and Iraq
currently provide access to each other\'s patent and trademark laws and
application procedures under the terms of the Paris Convention for the
Protection of Industrial Property. However, U.S. copyright owners have
no access to Iraqi copyright protection, as the United States and Iraq
are not members of any of the same copyright treaties. CPA Orders #80,
#81, and #83 provide amendments to the current Iraqi intellectual
property regime. The amendments help bring Iraq closer to current
internationally recognized intellectual property protection standards.

Some U.S. companies have been asked to certify their adherence to the
Arab League Boycott of Israel when they apply to register their
intellectual property rights in Iraq. Compliance with such requests may
be prohibited by the Export Administration Regulations and reportable to
the Department of Commerce. Please see
[www.bis.doc.gov/antiboycottcompliance/default.htm](http://www.bis.doc.gov/antiboycottcompliance/default.htm).

**Security**

The adverse security situation in Iraq, especially the central and
western regions, continues to be a concern of the international business
community in Iraq. Theft and violent crime persist in Iraq, and, in many
areas, may out weigh the threat from terrorist or resistance activities.
The potential for attacks against U.S. citizens and facilities remains
high. Roads and other public areas can be dangerous for conspicuous
foreign travelers. The U.S. Department of State issues up-to-date travel
warnings for countries throughout the world, and U.S. companies and
visitors are advised to carefully assess the situation in Iraq.

Both the Department of Commerce's Frequently Asked Questions on Iraq
(<http://www.export.gov/iraq/bus_climate/faq.html>) and the State
Department's Iraq Travel Warning
(<http://travel.state.gov/travel/iraq_warning.html>) and Consular
Information Sheet (<http://travel.state.gov/travel/iraq.html>) contain
essential security and safety information on travel to Iraq.

**III. DOING BUSINESS IN THE PRIVATE SECTOR**

**Exporting/Trade**

Under the Hussein regime, all trade with Iraq was subject to strict
government licensing requirements and inspections. Under CPA Orders \#
12, 38, 47, 54, and 70, all tariffs, duties and fees for goods entering
or leaving Iraq were suspended through April 15, 2004. The same orders
prohibit several exports from Iraq, including many food products and
machinery parts. A list of these products can be found in CPA Order #54.
Beginning April 15, 2004, a five percent Reconstruction Levy is charged
on all goods shipped to Iraq. Exemptions from this import duty include
food, medicine, clothing, humanitarian assistance, and UN Oil-For-Food
program imports. Products for the Project and Contracting Office (PCO),
Coalition Forces, and reconstruction contractors are also exempt. Order
#38 contains the full list of exemptions. Additional information can be
found at the Iraqi Ministry of Trade website,
[www.motiraq.org/](http://www.motiraq.org/).

# Additional CPA orders also address border and customs procedures as well as authorizations for Iraqis to establish direct relationships with foreign trading agencies and companies, formerly prohibited under the old regime. 

The U.S. Government has designated Iraq as a Generalized System of
Preferences (GSP) beneficiary. The GSP Program grants duty-free
treatment to specified products from developing countries and
territories. Iraq will be able to take advantage of duty-free tariff
treatment into the United States on approximately 3,394 product lines.
More information can be found at
[www.ustr.gov/Trade_Development/Preference_Programs/GSP/Section_Index.html](http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/Section_Index.html).

Iraq's infrastructure is in the process of being restored. Baghdad
International Airport (BIAP), Basra Airport, Irbil Airport, and
Sulymaniah Airport are now open for commercial operations. Airlines
currently flying into Iraq include Royal Jordanian, Austrian, Air
Kurdistan, Iraqi Airways, Ishtar, Jupiter Emirates, AirServ, and Orbit
Express. Since May 2004, civilian flights into BIAP have doubled. The
ports of Umm Qasr and Khwar Az Zubair have been reopened for commerce.
More than 60 ships unload grain and other goods at the renovated ports
every month. These facilities are serving to boost trade of goods in and
out of Iraq.

**U.S. Export Licensing**

While most United Nations and U.S. economic sanctions against Iraq were
lifted in May 2003, the Iraqi legal and regulatory system as well as an
inadequate infrastructure and an unstable security situation pose
numerous obstacles to doing business in Iraq. Until the end of July
2004, the U.S. Department of Treasury's Office of Foreign Assets Control
(OFAC -
[www.ustreas.gov/offices/eotffc/ofac/](http://www.ustreas.gov/offices/eotffc/ofac/))
was largely responsible for licensing products for export to Iraq. This
jurisdiction was returned to the U.S. Department of Commerce's Bureau of
Industry and Security (BIS -
[www.bis.doc.gov/](http://www.bis.doc.gov/)) on July 30, 2004 under
Presidential Executive Order 13550 and related regulations issued by the
U.S. Departments of Treasury and Commerce. BIS can assist companies in
determining whether an export license may be required for Iraq. U.S.
companies must then work with BIS to obtain the license. U.S. export
licensing requirements for products entering Iraq can be found through
the BIS website at:
<http://www.bis.doc.gov/policiesandregulations/RegionalConsiderations.htm>.

**Investment and Company Registration**

Under the Hussein regime, foreign investment in Iraq was restricted by
statute to resident citizens of Arab countries. CPA Order #39, issued on
September 19, 2003, has significantly altered the international business
environment in Iraq by permitting 100 percent foreign ownership and
management of Iraqi business entities except in natural resources
sectors, including oil, and insurance companies. The Order provides for
equal treatment of foreign investors, foreign trade offices and branch
registration, methods of investment, and dispute settlement. The same
order also introduces a new requirement for foreign investors involved
in retail sales: a \$100,000 deposit in an Iraqi bank for the duration
of the retail activity. CPA Order #39 also officially permits foreign
investors to hold long-term leases of real property for up to 40 years,
but not ownership. At the present time, foreign companies should proceed
very cautiously before committing to any long-term lease.

An open investment regime necessitates the capability to legally create
and run companies under Iraqi law. The CPA with the concurrence of the
Iraqi Governing Council issued Order #64 on March 3, 2003, which
significantly amends Iraqi Company Law #21 of 1997. Among other
adjustments, the amendments allow any Iraqi or foreign person or legal
entity to establish or own an interest in a company in Iraq. The
amendments also require the Registrar in the Iraqi Ministry of Trade to
either approve or disapprove in writing within 10 days any application
to register a new company. These new regulations and the appropriate
application guide and forms can be found at
[www.export.gov/iraq/bus_climate/foreign_reg_guide.html](../www.export.gov/iraq/bus_climate/foreign_reg_guide.html).
All new companies in Iraq need to register with the Ministry of Trade.

Iraqi companies now have the ability to raise funds through a domestic
securities market. The Iraqi Stock Exchange (ISX) is a not-for-profit
organization independent of the Ministry of Finance. It was authorized
by law under CPA Order \# 74 and started trading on June 24, 2004. The
law also established a Securities and Exchange Commission and Depository
Operations Center and was designed to bring international standards to
Iraq's securities market. Foreign investment in the ISX in not permitted
at this time, however this option may be available in the future. The
exchange is currently open for 2 hours a day twice a week, but will be
extended once a pending automation program is completed.
([http://www.isx-iq.net](http://www.isx-iq.net/))

Long-term investment opportunities may exist with the Iraqi State-Owned
Enterprises (SOEs).  For more information see the SOE company profiles
at
[www.cpa-iraq.org/business/industries/index.html](http://www.cpa-iraq.org/business/industries/index.html)
and at
[www.export.gov/iraq/market_ops/index.html#mim](http://www.export.gov/iraq/market_ops/index.html#mim).
The Ministry of Industry and Minerals (<http://www.iraqiindustry.com/>),
and other Iraqi Ministries
(<http://www.export.gov/iraq/links/index.html#ministries>), may provide
more information on future developments in this area.

Currently, some U.S. companies are reporting requests from Iraq for
adherence to the Arab League boycott of Israel. Compliance with such
requests may be prohibited by the Export Administration Regulations and
reportable to the Department. Please see
[www.bis.doc.gov/antiboycottcompliance/default.htm](http://www.bis.doc.gov/antiboycottcompliance/default.htm).

Under CPA Order #49 of February 20, 2004, corporate and personal income
taxes have been capped at significantly reduced rates of no more than 15
percent while they were suspended through the end of April 2004. Please
see CPA Orders #37, #49, and #84 for a full discussion of the current
taxes, their functions, and status.

Beginning May 1, 2004, all employers including foreign employers of
Iraqi workers must withhold tax from the salary paid to their Iraqi
employees. Information and forms related to this requirement may be
found at [www.iraqtax.org](http://www.iraqtax.org/) and at
http://www.buyusa.gov/iraq/en/erocket2.html.

**Banking and Finance**

During the regime of Saddam Hussein, Iraq had a functioning, albeit
flawed and tightly controlled, financial system whose private banks were
prohibited from conducting international transactions. Since the fall of
that regime, the government has overhauled the system and created the
foundations of a strong liberalized economy. Iraq now has a series of
laws that provide for: the independence of the Central Bank of Iraq, the
establishment of the Trade Bank of Iraq, liberalization of foreign trade
and investment, the establishment of the Iraqi Stock Exchange,
anti-money laundering provisions, and further laws on banking and
financial management. These laws are being backed by a variety of
training programs that seek to provide skills to members of the Central
Bank as well as Iraq's major state-owned banks and private sector banks
and introduce them to internationally recognized procedures.

## Domestic Banking and Finance

Iraq's seven state-owned banks make up most of the Iraqi banking sector.
Two of these banks alone, Rafidain and Rashid, account for about 85% of
the sector's assets while the other four hold only 5%. Private
institutions hold the remaining 10% of these assets. These banks, with
the exception of the Trade Bank of Iraq, have serious insolvency
problems, are plagued with non-performing loans, and are in no position
to do business abroad.

Iraq's domestic financial and banking structure is developing. On
October 28, 2003, the Central Bank of Iraq authorized Iraq's private
banks to process international payments, remittances, and foreign
currency letters of credits. A list of Iraqi private banks, with points
of contact, is available from the CPA website at
<http://iraqcoalition.org/economy/iraq_private_banks.html> and from the
CBI at <http://www.cbiraq.org/cbs4.htm>.

Licenses are required for anyone to open a bank in Iraq. Under CPA Order
#40 the number of foreign bank licenses was limited to six with
limitations on ownership of private banks, but this requirement was
rescinded on June 7, 2004 by CPA Order #94. There is now no legal limit
on the number of licenses that can be granted to foreign banks.
Following a request for applications issued in November 2004, Iraq
received fifteen applications for a foreign bank license. Originally,
the Central Bank Governor announced the three licenses to be awarded --
The Hong Kong Shanghai Banking Corporation (HSBC) and Standard Chartered
Bank both from the U. K. and the National Bank of Kuwait (NBK). Later
the Arab Banking Corporation of Bahrain was also granted a license. Most
recently, HSBC purchased a majority share in the Iraqi private bank, Dar
Es Salaam and has begun operations.

## Trade Bank of Iraq and International Financial Institutions

Iraq's state banks are not yet in a position to do business abroad due
to their insolvency and technical inefficiencies. Yet, trade finance and
short-term credit was recognized early as essential to the growth of
trade in Iraq. For this reason, the CPA established the Trade Bank of
Iraq (TBI) as a separate Iraqi government entity and export credit
agency to facilitate the import and export of a variety of goods and
services to and from Iraq. The TBI (<http://www.tbiraq.com/>) provides
expertise and a point of contact within Iraq for international firms.
More importantly, it provides trade financial services that other Iraqi
institutions are currently unable to offer in order to bolster the
confidence of suppliers that payment will be received for the delivery
of their goods and services. The TBI works with Iraqi commercial banks
and the operating consortium, which is a group of international banks
led by J.P. Morgan Chase. As of September 1, 2005, the TBI had issued
1740 Letters of Credit to 66 different companies, totaling over \$6.52
billion. The TBI is discussed in detail in CPA Order #20.
([http://www.iraqcoalition.org/regulations/index.html#Regulations](http://www.cpa-iraq.org/regulations/CPAORD20TradeBank-17July03.pdf))

On October 5, 2004, the Export-Import Bank of the United States (Ex-Im
Bank), the Iraqi Ministry of Finance and the Trade Bank of Iraq (TBI)
signed a framework agreement that enables Ex-Im Bank to continue to
support U.S. exports for Iraq reconstruction. This agreement replaces an
agreement concluded in December 2003 and reflects the assumption in June
2004 of sovereignty by the Interim Government of Iraq. Renewal of this
agreement allows TBI to continue to access Ex-Im Bank's \$500 million
facility. Under this facility, Ex-Im Bank insures short-term letters of
credit issued by, or on behalf of, TBI in respect of purchases of U.S.
goods and services. The facility approved its first transaction in April
2004. In December 2003, 15 other nations joined Ex-Im Bank in entering
into framework agreements with TBI. Ex-Im Bank is working with these and
other nations to help them develop similar agreements.

While Ex-Im is still closed to routine trade finance transactions with
respect to Iraq, it will consider applications for exports to Iraq that
involve buyers or letters of credit from banks located in third
countries. Ex-Im (<http://www.exim.gov/>) is also accepting applications
under its Working Capital Guarantee Program for subcontractors providing
goods and services to Iraq under U.S. Government reconstruction
contracts.

OPIC (<http://www.opic.gov/>) provides funding through direct loans and
loan guarantees to ventures involving significant equity (at least 25%)
and/or management participation by U.S. businesses. See OPIC's finance
page (<http://www.opic.gov/finance/>).

Another funding possibility is the Iraq Middle Market Development
Foundation (<http://www.immdf.org.jo/>), funded in part by OPIC. The
IMMDF obtained its license to operate in Iraq in November 2004 and has
disbursed a number of loans. IMMDF's mission is to support the economic
development of Iraq and assist in the creation of jobs for Iraqis by
making loans to middle market businesses and Iraqi financial
institutions. The goal of this program is to provide market rate loans
to entities that would not otherwise be able to secure financing on
reasonable terms as a means of stimulating employment growth and the
reconstruction of Iraq.

The International Finance Corporation (IFC), the private sector arm of
the World Bank, approved plans to establish an Iraq Small Business
Finance Facility of up to \$170 million to help Iraqi banks finance
Iraqi small business. More information can be found in its December 19,
2003 press release at [www.ifc.org](http://www.ifc.org/). The IFC is
currently working with private contractors and other international
bodies to set-up this program. Other international organizations are
also providing micro-credit throughout Iraq. ACDI/VOCA
([www.acdivoca.org/](http://www.acdivoca.org/)) and CHF
([www.chfhq.org/](http://www.chfhq.org/)), nonprofit development
organizations, are currently active.

The International Monetary Fund has formally recognized the Government
of Iraq. On September 30, 2004, the IMF agreed to grant an emergency
post-conflict assistance package of \$436 million to Iraq. This comes
after the Iraqi Interim Government agreed to pay more than \$80 million
in arrears to the Fund. Most recently, in December 2005 the IMF approved
a \$685 million Stand-By Arrangement for Iraq over the next 15 months.
Details can be found at
http://www.imf.org/external/np/sec/pr/2005/pr05307.htm.

**Business Centers and Potential Partners**

The CPA and the Iraqi Ministry of Trade established the Iraqi Business
Center Alliance in Baghdad to provide business services to a growing and
eager Iraqi business community. The IBC provides a forum for foreign
businesses to find Iraqi domestic partners. The IBC website provides
extensive listings of Iraqi Ministry and Coalition tenders
([www.iraqibusinesscenter.org/](http://www.iraqibusinesscenter.org/)).
The Business Center maintains a database of Iraqi companies interested
in international partners at
[www.ibcguide.org](http://www.ibcguide.org/).

The Baghdad Business Center provides business information and services
at: <http://www.baghdadbusinesscenter.org/>. The City of Kirkuk, located
in the heart of the northern oil industry, formed the Kirkuk Business
Center that publishes highly informative newsletters
([www.kirkuk-business-center.org](http://www.kirkuk-business-center.org/)).
Basra also has a business center which can be reached at
964-0780-109-6729 or through their website at
[www.basrabusinesscentre.com/](http://www.basrabusinesscentre.com/). The
Nineveh Business Center operates in the City of Mosul and can be
contacted at
[www.ninevehbusinesscenter.org/](http://www.ninevehbusinesscenter.org/).
Plans for opening additional Business Centers are being considered. The
Iraqi Business Center (IBC) provides a databases of Iraqi companies from
which U.S. and other foreign companies can find potential partners from
its own website (<http://www.iraqibusinesscenter.org/>).

The U.S. Chamber of Commerce has certified a partner in Iraq called the
U.S. Chamber of Commerce of Iraq. They can be found at
<http://www.amcham-iraq.org/>.

U.S. businesses should be cautious and conduct due diligence when
working with any Iraqi partner. Please see our Fraud Warning at
[www.export.gov/iraq/pdf/fraud_warning.pdf](http://www.export.gov/iraq/pdf/fraud_warning.pdf).

**IV. U.S. RECONSTRUCTION CONTRACTS**

U.S. Government-funded contracts continue to be one of the leading
business opportunities in Iraq. Opportunities for U.S. firms to
participate in the reconstruction of Iraq are mostly associated with
rehabilitating the country\'s infrastructure. A convenient list of all
recent contracts and their known subcontractors, along with links to
their website can be found at
<http://www.export.gov/iraq/market_ops/contracts.html>.

U.S. Contracting opportunities can be found through three main tendering
organizations, discussed below. These are the Project and Contracting
Office, the U.S. Agency for International Development, and the U.S. Army
Corps of Engineers.

All contractors conducting work in Iraq should pay particular attention
to CPA Order #17 (revised June 27, 2004) with amendments, which outlines
contractor's responsibilities and immunities while acting in Iraq. The
order continues certain administrative and official act immunities from
Iraqi law for contractors and their subcontractors supplying goods and
services in Iraq under contracts or grants with foreign governments. The
order also provides immunity from Iraqi law to international consultants
provided by foreign governments to the Iraqi government and officially
accepted in that role by the Iraqi government.

**Iraq Project and Contracting Office (PCO)**

The Iraq Project and Contracting Office (PCO) manages the \$18.4 billion
appropriated by the U.S. Congress to support the reconstruction of Iraqi
infrastructure. Construction has begun on 2,512 projects worth about
\$10.626 billion. Of the \$18.4 billion, \$4.113 billion has been paid
out.

In broadest terms, this office is responsible for all activities
associated with program, project, asset, construction, and financial
management of that portion of the reconstruction effort undertaken by
the United States. The PCO maintains a website
(<http://www.rebuilding-iraq.net/>) where contracting activities are
reported. The Iraq Reconstruction Management Office (IRMO), also
contained within the U.S. Embassy in Baghdad, coordinates U.S.
reconstruction efforts amongst the various U.S. government agencies and
the Iraqi Government.

In the fall of 2003, the U.S. Congress approved The Iraq Relief and
Reconstruction Fund (IRRF) allocation, totaling \$18.4 billion. The IRRF
was designed with flexibility in mind so that as progress is monitored
fund distributions can be adjusted as necessary. Reallocations and
reporting on the use of reconstruction funds can be found in the
quarterly Section 2207 report (<http://www.state.gov/m/rm/rls/2207/>).

All PCO solicitations, amendments and awards are posted on the PCO
website (<http://www.rebuilding-iraq.net/>) as well as the Federal
Business Opportunities website (<http://www.fedbizopps.gov/>). PCO has
prepared a document that guides companies through the contract process,
"A Lesson in Winning Contracts"
([www.rebuilding-iraq.net/pdf/success.pdf](http://www.rebuilding-iraq.net/pdf/success.pdf)).

For current solicitations, companies from all non-terrorist designated
countries are eligible to compete for prime contracts. Each solicitation
is subject to the soliciting agency's eligibility requirements.

**U.S. Agency for International Development (USAID)**

The role of the U.S. Agency for International Development (USAID) in
Iraq is to restore critical infrastructure, support essential health and
education services, expand economic opportunity, and improve efficiency
and accountability of government. Specific sectors include education,
healthcare, food security, infrastructure reconstruction, airport and
seaport management, economic growth, community development, local
governance, and transition initiatives. There are also USAID contracts
in the areas of electoral processes and education, government
transition, civil society, and employment services.

The USAID Iraq website (<http://www.usaid.gov/iraq/>) includes
information about contract solicitations and awards. USAID press
releases and Weekly Reports contain valuable insight on potential
business opportunities.

**U.S. Army Corps of Engineers**

U.S. Defense Department reconstruction contracts are issued by the U.S.
Army Corps of Engineers (USACE). Their primary mission is to restore the
capability for oil production, oil refining, and gas processing to
pre-war conditions. The USACE website
([www.grd.usace.army.mil/index.html](http://www.grd.usace.army.mil/index.html))
offers information on their operations in Iraq and contracting
opportunities.

For information regarding U.S. Department of Defense (DOD) procurement
related to the reconstruction of Iraq, see their Iraq procurement site
at:
[www.acq.osd.mil/dpap/paic/iraqreconstruction/iraqcontractinfo.htm](http://www.acq.osd.mil/dpap/paic/iraqreconstruction/iraqcontractinfo.htm).
The DOD issues weekly reports on the status of several key areas in Iraq
such as essential services, power production, and security. These can be
found at [www.export.gov/iraq](http://www.export.gov/iraq) in the "Key
Docs" sidebar.

**Finding Partners and Subcontracting Opportunities**

The best way to ensure consideration as subcontractors or suppliers on
reconstruction contracts is to directly contact the prime contractors,
who are entirely responsible for choosing their own business partners.
Lists of these contractors can be found at
[www.export.gov/iraq/market_ops/contracts.html](http://www.export.gov/iraq/market_ops/contracts.html).
Small businesses can contact prime contractor representatives listed at
<http://www.export.gov/iraq/pdf/small_business_reps.pdf>.

Companies from all countries are eligible for subcontracts with the
exception of countries that support terrorist networks. In general, all
contractors should demonstrate experience, financial capability, high
competency of in-country personnel, the ability to positively impact the
Iraq economy through capacity-generation and employment, and the
capability to proceed quickly. Prime contractors and subcontractors are
expected to partner with Iraqi firms at every opportunity. Under PCO,
USAID and other programs more than 105,000 Iraqis are currently employed
in reconstruction projects.

Both the website of the old CPA and the current PCO website provide
essential advice for participating in Iraq reconstruction. Please see
<http://www.cpa-iraq.org/business/Contracting_FAQs.htm> and
[www.rebuilding-iraq.net](http://www.rebuilding-iraq.net/).

**Other Contracting Issues**

All contractors and subcontractors who are receiving U.S. Government
funding, regardless of nationality, are required to provide their
employees with workers compensation insurance. This is provided through
Defense Base Act coverage. More information can found at
<http://www.export.gov/iraq/bus_climate/dba.html>.

**V. IRAQI GOVERNMENT AND INTERNATIONAL CONTRACTS**

**Iraqi Ministry Contracts**

Most Iraqi Ministries are issuing their own tenders through the Iraqi
Government budget. These tenders can frequently be found on Iraqi
Ministry websites listed in the links section of the Commerce Department
website
([www.export.gov/iraq/links/index.html](http://www.export.gov/iraq/links/index.html)).
Sometimes these tenders are announced in Iraqi newspapers, which can be
found at <http://www.onlinenewspapers.com/iraq.htm>.

Iraqi Ministry tenders cover a wide-range of activities from oil-field
development and instrument control systems to medical supplies and
construction. Please be aware of CPA Order #87, which currently governs
all Iraqi public contracts, but not those contracts tendered through the
PCO, USAID, or other U.S. Government agencies. U.S. contracts are
governed by Federal Acquisition Regulations. Iraqi public tenders will
be increasingly important to Iraqi reconstruction.

**International Donors**

International donors continue to meet to discuss funds for rebuilding
Iraq. The World Bank and the UN presented their needs-assessments for
Iraq to the Madrid conference, including the areas of health, education,
agriculture, water supply and sanitation, economic management, and
investment climate. The assessments and cost estimates can be found at
[www.worldbank.org/iq](http://www.worldbank.org/iq). These assessments
are expected to guide the priorities and direction of Iraq
reconstruction by donor countries.

The United States has continued to build on the success achieved at the
October 2003 Madrid International Donors Conference. At this conference
and since, donors other than the United States pledged over \$13.5
billion in assistance for the reconstruction of Iraq. This includes \$8
billion in assistance from foreign governments and \$5.5 billion in
lending from the World Bank and International Monetary Fund (IMF) \--
all to be disbursed between 2004 and 2007. As of September 2005, over
\$3 billion of the pledges of non-U.S. assistance had been disbursed.
About \$2.7 billion of this was from other donor governments, either in
bilateral projects or through the International Reconstruction Fund
Facility for Iraq (IRFFI). Another \$436 million was in the form of IMF
assistance. Donor government disbursements are defined as funds that
have left government treasuries. Because, however, much of it is being
channeled for implementation through trust funds, contractors, NGOs,
international organizations, and Iraqi institutions, the impact on the
ground in Iraq is just starting to be felt. Most countries have chosen
to channel their funding through the above-mentioned IRFFI, a trust fund
facility managed by the World Bank and the UN (http://www.irffi.org/).
Information on these potential tenders can be found at
[www.ungm.org](http://www.ungm.org/). Potential tenders can also be
found on the websites of participating countries' international aid
agencies (http://www.uniraq.org/donors/donors.asp).

The United Nations Development Program (UNDP -
[http://www.iq.undp.org/]{.underline}) also operates in Iraq and issues
its own tenders. UNDP has identified three project focus pillars -
democratic governance, economy and employment, and infrastructure
rehabilitation and the environment. These pillars aim to promote
interlocking interventions with cross-cutting themes, integrating
programs such as civil society participation, capacity building, gender
development, human rights, and encouraging participation of expatriate
nationals.

**\
Other Contracting Issues**

Iraqi Ministries have their own requirements for contractors and
subcontractors. Defense Base Act insurance coverage is only available
for companies working under U.S. Government reconstruction contracts and
does not cover companies working on Iraqi ministry or contracts or in
the private sector. Companies should do their due diligence and find an
insurance plan that meets their needs. Insurance is a necessary part of
international investment. Some insurance firms are beginning to offer
voluntary workers compensation insurance for non-reconstruction projects
in Iraq, however premiums can be costly. Companies should work with
their existing broker to explore this coverage. The Overseas Private
Investment Corporation (OPIC) currently offers three kinds of political
risk insurance for Iraqi projects: currency inconvertibility,
expropriation, and political violence. In addition, OPIC is offering
coverage more appropriate to contractors, exporters, and those providing
technical assistance and management services in Iraq. Finally, OPIC
offers stand-alone terrorism coverage. More information on OPIC can be
found at [www.opic.gov](http://www.opic.gov/).

**VI. CRITICAL CONTACTS FOR BUSINESS**

*Contract Resources*

Coalition Provisional Authority (website now static)\
[www.iraqcoalition.org/](http://www.iraqcoalition.org/)

Project and Contracting Office (formerly the Program Management Office)

[www.rebuilding-iraq.net/](http://www.rebuilding-iraq.net/)

Iraqi Business Centers

[www.iraqibusinesscenter.org/](http://www.iraqibusinesscenter.org/)

<http://kirkuk-business-center.org/>

[www.basrabusinesscentre.com/](http://www.basrabusinesscentre.com/)

[www.ninevehbusinesscenter.org/](http://www.ninevehbusinesscenter.org/)

American Chamber of Commerce of Iraq

<http://www.amcham-iraq.org/>

U.S. Department of Commerce\
Iraq Investment and Reconstruction Task Force\
Tel: 1-866-352-4727\
Fax: (202) 482-0980\
E-mail: <IraqInfo@mail.doc.gov>\
[www.export.gov/iraq](http://www.export.gov/iraq)\
\
U.S. Agency for International Development\
[www.usaid.gov/iraq/activities.html](http://www.usaid.gov/iraq/activities.html)

http://www.izdihar-iraq.com/index.html\
\
U.S. Army Corps of Engineers\
Tel: 1-866-461-5171, the Defense Department Iraq contract hotline\
[www.hq.usace.army.mil/cepa/iraq/contracts.htm](http://www.hq.usace.army.mil/cepa/iraq/contracts.htm) -
for USACE Iraq opportunities\
[www.hq.usace.army.mil/cepa/iraq/faq.htm](http://www.hq.usace.army.mil/cepa/iraq/faq.htm) -
for USACE Iraq contract FAQ\
\
United Nations Iraq Programs

[www.devbusiness.com](http://www.devbusiness.com/)

[www.iapso.org](http://www.iapso.org/)

[www.iq.undp.org](http://www.iq.undp.org/)

[www.ungm.org](http://www.ungm.org/)\
\
United Nations\
Office of the Iraq Oil-for-Food Program\
[www.un.org/Depts/oip/](http://www.un.org/Depts/oip/)

Oil-for-Food Contract Inquiries

Office of Peacekeeping and Humanitarian Operations

U.S. Department of State

\(202\) 736-7733\
\
*Government Resources*

U.S. Embassy in Baghdad, Iraq

<http://iraq.usembassy.gov/>

<http://www.buyusa.gov/iraq/en/>

Embassy of the United States

APO AE 09316

Baghdad, Iraq

U.S. Foreign Commercial Service\
American Embassy, Kuwait\
Tel: 965-539-5307/8, Ext. 2392\
Fax: 965-538-0281\
E-mail: <Kuwait.City.Office.Box@mail.doc.gov>\
[www.buyusa.gov/kuwait/en/](http://www.buyusa.gov/kuwait/en/)

U.S. Foreign Commercial Service

American Embassy, Amman, Jordan

Tel: 962-6-592-0101, Ext. 2632

Fax: 962-6-592-0146

E-mail: <ammanoffice.box@mail.doc.gov> and

Iraqammanunit.box@mai.doc.gov

[www.buyusa.gov/jordan/en](http://www.buyusa.gov/jordan/en)

U.S. Department of Commerce, Bureau of Industry and Security

Export Counseling Division\
Tel. (202) 482-4811\
[www.bis.doc.gov](http://www.bis.doc.gov/)

U.S. Department of Agriculture\
Foreign Agricultural Service

<http://www.fas.usda.gov/excredits/iraq.htm>

U.S. Department of State\
Office of Commercial and Business Affairs\
[www.state.gov/e/eb/cba/iraq](http://www.state.gov/e/eb/cba/iraq)

U.S. Department of State\
Travel Warning and Updated Security Information for Iraq\
<http://travel.state.gov/travel/iraq_warning.html>

U.S. Department of Treasury\
Office of Foreign Assets Control\
Tel: 1-800-540-6322\
[www.treas.gov/offices/enforcement/ofac/](http://www.treas.gov/offices/enforcement/ofac/)

Overseas Private Investment Corporation (OPIC)

\(202\) 336-8799

<http://www.opic.gov/>

U.S. Department of State, Defense Trade Controls\
[www.pmdtc.org](http://www.pmdtc.org/)

U.S. Central Command

[www.centcom.mil/](http://www.centcom.mil/)

This document contains links to non-Federal Government Web sites.
Linking to these sites does not imply endorsement of any products,
services, organizations, companies, information providers or content by
the U.S. Department of Commerce.