[OPE-L] With Much of Iraq Turned Into Scrap, A Market Heats Up

From: glevy@PRATT.EDU
Date: Mon Nov 26 2007 - 20:12:29 EST

---------------------------- Original Message ----------------------------

Subject: With Much of Iraq Turned Into Scrap, A Market Heats Up
From: SJGluck@aol.com
Date: Mon, November 26, 2007 3:52 pm

Dear Colleague,

I was struck by an article
in the Wall Street Journal which conjured up a
picture of the
incredible destruction we have caused in Iraq. We have made it a
haven for scrap iron dealings. We have put Iraq through a grinding mill,

devastating its land and destroying its people. It's now up for
grabs by
globalized predators. It's heartbreaking. We should support
every move and statement
to get out of Iraq NOW NOW NOW.


With Much of Iraq
Turned Into
A Market Heats Up
Mr. Khafaji, Man of Iron,
Way Past Export Ban;
'A Very Good Business'

November 23, 2007; Page A1

al-Khafaji has spent decades making things of
metal. Among his
creations: portable military radar and a revolving
restaurant atop a Baghdad television tower.
These days, the
61-year-old engineer is starting a new career -- breaking
made of metal. "You know, scrap is a very good business," he
Just south of Baghdad, the factory he runs is littered with
shredded junk:
vehicle fragments, twisted pipes, old bed frames and
chain-link fence. Mr.
Khafaji and a Kuwaiti partner plan to ship it
to world markets, where scrap
prices are soaring. But first, they
have to overcome an Iraqi government export
A race is on
to cash in on Iraq's scrap metal, one of this bruised and
nation's most abundant resources. The scramble began soon after the 2003

U.S. invasion. Following the fall of Saddam Hussein's regime,
loaded trucks with scrap and sent them across Iraq's
barely guarded borders. The
definition of what constituted scrap was
broad. Good machinery and expensive
equipment were looted and packed
off, too. Horrified, Mr. Khafaji mobilized
workers to guard their
factory from thieves.
Elsewhere in Iraq, looters dismantled the
country's smelters and steel
plants. Scrap that would have been
turned into steel now had no domestic use and
piled up instead.
Eager to regulate the scrap free-for-all, the U.S.-led Coalition
Authority began selling export licenses in 2004. Armed
with the new permits
and scrap-laden trucks, exporters headed south
to Umm Qasr, Iraq's only port
on the Persian Gulf.
working for local authorities stopped the trucks and told the
exporters their licenses were no good. "What they wanted was a
piece of the action,"
recalls Musab al-Kateeb, who worked for
the Iraqi trade ministry at the
The thwarted exporters
demanded refunds for their licenses. In a hastily
arranged meeting,
the trade ministry upbraided officials from Southern Iraq and
ordered them to honor the export permits. Tempers flared. "The
meeting ended
very badly," recalls Mr. al-Kateeb.
summer, the Iraqi government took over from the CPA and slapped a
blanket ban on all scrap exports. The immediate rationale was to clamp
down on
smuggling, but there was another reason.
plan to build new housing, requiring large amounts of steel
reinforcing bars. Iraqis want to make them locally out of recycled
scrap, instead
of relying on expensive imports of finished steel.
Though rich in crude oil,
Iraq lacks iron ore.
"We'd like
to have a good reserve of scrap inside Iraq," says Sami al-Araji,
Iraq's deputy minister for industry and minerals.
As U.S. forces
settled in for a long stay, American-made scrap started
piling up,
too. Consider Camp Anaconda, a U.S. logistics base 80 miles north of
Mr. Khafaji's factory.
With 30,000 residents, Anaconda is a small
American town in the middle of
Iraq. It has a weekly newspaper and a
movie theater that seats 800. The camp's
junkyard stretches for
several city blocks with rows of gutted trucks, an
airplane and mounds of scrap about 30 feet high.
"There's a lot
of scrap on a lot of bases, says Brig. Gen. Gregory Couch,
Anaconda's commander. "It's four years that we've been over
here." Because of a
2004 American statute, U.S.-owned property
is immune from the Iraqi laws.
That makes Anaconda's scrap a prized
export commodity, unlike the Iraqi scrap,
which may not be exported.

Since 2003, Mr. Khafaji has been looking for work for his employees
at the
State Company for Automotive Industry here in Iskandariyah,
south of Baghdad.
The state-owned outfit is a collection of
warehouses and workshops scattered
over a few square miles of desert
on the edge of town.
In Saddam's day, the factory was swimming in
government contracts. In the
1990s, the Iraqi military ordered Mr.
Khafaji to design a mobile radar that
could avoid American
detection. His engineers built a trailer-mounted
contraption that
could scan the skies and drive away in 15 minutes. Another jewel in
Mr. Khafaji's engineering career is the rotating restaurant perched atop
International Saddam Tower in Baghdad.
After the regime
fell, the factory had little work and a bloated payroll of
Mr. Khafaji scavenged enough odd jobs for the factory to keep a
full-time work force of 1,200. The rest "are just sitting at home
and taking half
of their salary," he says.
Last year, Mr.
Khafaji approached his bosses at Iraq's Ministry of Industry
Minerals for permission to process and export American military scrap.
"We said, 'Forget about it,'" recalls Waleed Khidder, the
ministry's metals
expert. Allowing a state-owned factory to
participate, he adds, would have
undermined the Iraqi government's
export ban.
But Mr. Khafaji, an influential man in these parts,
didn't forget about it.
He's the chairman of the Iskandariyah city
council and a sheik of a large
Shiite Arab tribe. In a violent town,
he drives his white SUV without guards.
This year, Mr. Khafaji has
been talking scrap with a Pentagon task force.
The task force's job
is to revive Iraq's moribund state-owned factories and
help them
reach international markets.
The task force introduced Mr. Khafaji
to Public Warehousing Co., a Kuwaiti
firm that delivers food to U.S.
troops in Iraq. (The U.S. government is
investigating whether PWC
and a host of other companies set inflated prices for the
food sold
to the U.S. military. PWC denies wrongdoing and says it is
cooperating with the inquiry.)
This past spring, the Pentagon
consultants suggested that Mr. Khafaji and
PWC team up in a
scrap-export venture. They pitched the project as a big
saying in a document that an exporter could buy scrap for as little as
$14 a ton from the military and sell it at global rates approaching
Mr. Khafaji obtained approval from his bosses in Baghdad for a
limited role
for his factory, involving only scrap processing. The
Kuwaitis would buy the
scrap from the U.S. at Camp Anaconda and deal
with getting the green light to
export it.
One August morning,
the first scrap convoy barreled down from Anaconda to
Mr. Khafaji's
factory. In an open lot under a blistering sun, his crane
lashed chains to heavy containers and hoisted them off truck beds. Mr.
Khafaji dispatched two dozen men with hand-held saws and hammers to
break down
and sort the scrap.
The biggest hurdle still is
getting export approval from the Iraqi
government. The Pentagon
believes scrap originating with the U.S. military is not
covered by
the Iraqi ban. "If it's U.S.-owned, we have the authority and the
right to export it," says Robert Love, director of operations for
the Pentagon
task force pushing the exports.
Iraqi officials
note that Anaconda's scrap has been purchased by a private
firm, and is therefore no longer covered by the immunity accorded to
the U.S. military. PWC says it is trying to obtain the export permission
the Iraqi government, but wouldn't comment further.
his Kuwaiti partners navigate the Iraqi bureaucracy, Mr. Khafaji is
pressing ahead with his part of the venture. His workers have finished

shredding about 150 tons of PWC's scrap and are now loading it onto
containers for
rail shipment to the Southern seaport, he says.
Mr. Khafaji is planning to send three of his engineers to Kuwait for
training in the scrap business. He wants to build a big shed in his
factory to allow
for all-weather scrap storage and cutting. If all
goes well, he hopes to
turn the factory into a scrap-processing hub.

"There's so much money in scrap," he says.
Write to
Philip Shishkin at _philip.shishkin@wsj.com_
_With Much of Iraq Turned Into
Scrap, A Market Heats Up - WSJ.com_

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