Canada: War May Be Hell But It's Profitable

The invasion of Iraq hasn't even begun and already Rubar Sandi is drawing up post-war plans to repair decrepit oil wells, overhaul the financial services sector and revamp its economy.

A Washington merchant banker who fled Iraq 28 years ago, Sandi -- who's involved with the U.S. State Department's "Future of Iraq" project -- wants Canadian companies to vie for a share of the multibillion-dollar rebuilding effort.

"For the past 10 years nothing has been built in Iraq," said Sandi, 49. "The sewage has been running off into the rivers, telecommunications doesn't really exist and the hospitals and schools go back to before the Iran-Iraq War from 1980-88. The stakes are staggering."

The White House estimates the war and first year of reconstruction may cost as much as $139 billion, and the United States may decide which firms are hired to repair a crippled Iraq.

The U.S. Agency for International Development is already inviting American contractors, including Fluor Corp., Halliburton Co.'s Kellog Brown & Root unit and Perini Corp. to tender for a $900 million contract to manage reconstruction work.

"When this conflict is resolved it's going to be time to award our friends and stick it to our enemies," said Ken Allard, a former U.S. army colonel who's now a professor at Georgetown University's Centre for Peace and Security Studies in Washington.

"It's going to be the U.S. bearing the cost of the cleanup and repairs," he said. "It's going to choose who gets those contracts."

Sandi said the U.S. state department advised him two months ago it plans to include companies from outside the United States in the reconstruction of Iraq's economy, courts, hospitals and schools.

But for Canadian companies like Calgary's Safety Boss Inc., a specialist in capping burning oil wells, Ottawa's position on Iraq could be a hindrance. Safety Boss chief executive Mike Miller has 150 firefighters poised to fly to Iraq and cap the wells, but what he could really use is a Washington lobbyist.

"It's a big political football," he said. "We could be left out because we're in Canada and the political waffling here isn't helping."

A decade after Safety Boss was hired by the Kuwaiti government to cap 180 wells set on fire by Iraqi President's Saddam Hussein's soldiers, Miller said he's concerned his company might be at a competitive disadvantage if the U.S. government invades Iraq without the sanction of the United Nations.

While Miller said he's had low-level correspondence with the U.S. Army Corps of Engineers, he noted that state officials in Oklahoma and Texas already are scrambling to ensure that local firefighting companies RPC Inc.'s Cudd Pressure Control, Boots & Coots International and Wild Well Control are chosen ahead of international competitors if Iraq's wells need to be capped.

In 1991, billions of dollars were spent rebuilding Kuwait after Iraq's occupation. The Iraqis dug combat trenches into highway lanes, mined factories and even set fire to Kuwait City's luxury hotels. After putting out oil fires and restoring electricity and other essential services, the focus shifted to a second phase of reconstruction. Hundreds of contracts worth at least $1 billion combined were awarded. Most of the business went to U.S.-based companies like Motorola Inc., AT&T Corp. and Raytheon Co., which installed an air-traffic-control system at Kuwait's main airport.

But some Canadian companies shared in the reconstruction.

Montreal engineering firm SNC Lavalin Group Inc., which includes rebuilding airstrips, roads and hydro plants among its specialties, won a contract in Kuwait following the Gulf War. Winnipeg's Bonar Inc., which had made jute bags for potatoes, grain and seed since 1906, began making sandbags for an American company that shipped them to the Gulf. The company later was acquired by Hood Packaging Corp.

As soon as the war began, TransCanada PipeLines Ltd., which had struggled to get U.S. approval for a $3.2 billion expansion to carry natural gas to Long Island, N.Y., from Ontario, received the go-ahead from the U.S. Federal Energy Regulatory Commission. The looming conflict in Iraq is a chance for similarly lucrative deals.

Iraq is 25 times as large as Kuwait with twice as many oil and gas wells. Even if none of Iraq's 1,600 wells is set ablaze, the cost of modernizing them may exceed $4.4 billion in the first two years alone, Sandi said. If the majority of them are on fire, that cost may double.

Other areas where Sandi said the state department may need assistance include privatizing Iraq's fleet of 13 passenger aircraft, abandoning the Iraqi dinar in favour of either the euro or U.S. dollar, renegotiating the country's $23 billion debt and housing the 1 million people living in refugee camps in Iraq.

To be sure, Ottawa may have a say in which companies land business in Iraq. Canadian firms that want to do business there need U.N. approval, said Sameer Ahmed, a spokesperson with the Ministry of Foreign Affairs and International Trade. He said the policy would be re-examined if Saddam's government were toppled.

Other companies that may bolster sales following a war might include Nortel Networks Corp. -- its one-time distributor in the Middle East was Bin Laden Telecommunications Inc., a subsidiary of the construction group founded by Osama bin Laden's father -- Ellis-Don Construction of Toronto, Volvo Motor Graders Inc. in Goderich, water purification company Zenon Environmental Inc. in Oakville and SNC-Lavalin.

"We go where our clients want us to, so long as it's with the approval of the Canadian government and the United Nations," said Gillian McCormack, a spokesperson with SNC Lavalin, which last year won a $475 million contract to operate an irrigation project in Libya.

Several company executives said they didn't want to appear over-zealous about the chance to fatten profits in Iraq given that the business probably will come in the aftermath of a bloody conflict.

"We're not ambulance chasers," said Andrew Benedict, chief executive at Zenon Environmental Inc. of Oakville, which won a contract in Afghanistan to supply Canadian army bases with water purifiers.

• 107 Energy