Israeli businesses tiptoe into post-Baathist Iraq

News, October 2003, www.aljazeerah.info

With saddam gone, a market of 15 million beckons

Some consider shipping goods via cut-out companies based in Jordan as long as the Hebrew is erased from the packaging

Iason Athanasiadis
Special to The Daily Star, 10/20/03

ATHENS: Israel’s intent to enter the potentially lucrative Iraqi market remains one of the most oblique aspects of Western coverage of the reconstruction effort in Iraq.
Rumors that Israeli special units were active in western Iraq during the invasion were followed by feverish speculation about possible bilateral trade and grand infrastructure projects that could be concluded between Tel Aviv and Baghdad. The reopening of the un-used Mosul to Haifa pipeline was floated, as well as a railway project connecting Baghdad to the Mediterranean trade hub of Haifa via the northern Jordanian town of Irbid.
The US has shown willingness to involve its main Middle East ally in postwar reconstruction. Soon after US President George W. Bush announced major war operations over, his Treasury vice-secretary, John Taylor, urged Israeli firms “to work, invest, participate in the various fields” opening up. In July, Israeli Finance Minister Benjamin Netanyahu signed a general permit allowing trade with Iraq while Iranian spiritual leader Ali Khamenei made an allusion to an Israeli delegation visiting Iraq in a speech.
Khamenei’s reference to shadowy Israeli visitors set off rumors in Baghdad that were apparently corroborated by an article in the London-based Al-Hayat newspaper. The piece reported that a group of Israeli industrial representatives had made a trip to the Iraqi capital in order to scope out reconstruction-related business opportunities. Israeli newspaper Haaretz added that a number of Israeli firms are planning to open commercial offices in Iraq and are looking into the possibility of appointing local agents in the country.
“At this stage, it is invidious trying to gauge the extent of Israeli business in Iraq,” said Doron Peskin, the managing director of Info-Prod, a business information company that provides its clients with market research and political risk analysis. “There are many numbers being bandied around. Some are being propagated by people with special interests.”
But with possible export revenues from Iraq estimated at between $100 million and $250 million annually and Israel’s intifada-stricken economy mired in three years of depression, Israeli businesses and government alike have been regarding with relish the prospect of a new market for their products. Israeli ministers are studying ways of surmounting legal problems that currently stand as obstacles to bilateral trade and unlocking the 15 million-strong Iraqi market. These include the absence of a peace treaty between the two countries, as well as the Arab boycott of Israel, championed by Saddam Hussein.
Following the general permit eliminating barriers to trade with Israel issued by Netanyahu, Israeli firms have been active in seeking to create investment opportunities in post-Saddam Iraq. An article in the Israeli daily Yediot Ahronot reported that dozens of companies seeking to trade with Iraq have already started procedures to export their products. The piece was soon followed by a gathering of Israeli trade bosses in a one-day conference entitled How to Make Business in Iraq.
“With transition economies, it’s very easy to make big money and there’s always the temptation to make a killing,” says Ariel M. Ezrahi, a London-based lawyer who wrote his dissertation on trade relations between Israel and its Arab neighbors. “Some people don’t think of the (security) ramifications. You can imagine an Israeli software company thinking, ‘Can you imagine providing software for every computer used in Iraq?’ So, you can’t stop individuals from going.”
Mostly, Israeli companies are being reticent about openly trumpeting their intent to trade with Iraq. Several Israeli businessmen and analysts contacted for this article refused to comment on the issue.
“It’s a very dangerous situation and I think that Israelis will deal with it as they’ve had throughout history losing their assets and being evacuated or being successful and low-key,” opined Ezrahi. “If economic prosperity arrives, then these Israelis who went in first will make it big-time. The main word is that it’s premature. You have to bring stability and then you can think about Israeli investment. The Americans are also unwise in their support for Israeli involvement in the process.”
So far, it has been reported that five Israeli companies have expressed interest in working in Iraq: infrastructure firms A Arenson and the Solel Boneh Building and Infrastructure Company; Shiryonit Hosem, a manufacturer of steel doors; Tami 4, a water purification company that is already exporting purification devices to the new market; and Tanurgas, a Tiberius-based firm. Meanwhile, plans are being made to export the quintessentially Israeli snack food bamba (peanut-flavored puffs) to Iraq.
Some of the Israeli firms scrambling to lay claim to what they hope will blossom into a multi-billion dollar economy akin to the prosperity Iraq enjoyed in the 1950s, intend to join up with Arab or Turkish partners in a bid to disguise the identity of their product. Peskin believes that “covert Israeli trade” is a better way of approaching “countries without formal ties.”
“We believe that success for Israeli products will be achieved through working with a third party including changing source of origin and labelling,” said Peskin. “This can be done from holding companies in Cyprus and Jordan, for example, (and) will reduce the psychological barrier of importers being seen to trade with Israel and hide such trade from the common Iraqi.”
Ezrahi agrees: “Let the Jordanians have the office in Baghdad, manned by Arabs, and let Israelis feed in goods to Amman, have them repackaged there so no Hebrew markings are apparent, and move them on to Iraq. That way, the average Iraqi consumer will not realize that what appears to be a Jordanian product is Israeli-supplied. Maybe 20 years down the line, it won’t be a problem but even in Jordan, at the moment, you don’t find openly Israeli products.”
But problems remain. Jordan and Turkey prime candidates for partnerships with Israel due to the cordial relations that exist between their governments are unpopular in Iraq, for different reasons.
And the risk of investing in an unstable and hostile a market cannot be overlooked.

Earth, a planet hungry for peace

The Israeli apartheid (security) wall around Palestinian population centers (Ran Cohen, pmc, 5/24/03).

The Israeli apartheid (security) wall around Palestinian population centers in the West Bank (Ran Cohen, pmc, 5/24/03).

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