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Cautious UK firms set to miss out on Iraq reconstruction

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BRITISH CONSTRUCTION firms will lose massive reconstruction contracts in Iraq because of their reluctance to make local contacts, senior Iraqi officials warned this week.

'Foreign competitors are already on the ground in Basra, setting up offices and winning local contracts, ' said interim government Coalition Provisional Authority (CPA) head of utilities Colin McBride. 'But there is hardly any British presence at all.'

The CPA argues that the security situation in Basra has improved dramatically over the past few months and is now a viable place to do business.

'The big money is seriously starting to roll in and big projects are taking off, ' said CPA head of finance Andrew Alderson.

'Last year the Iraqis had a budget of £1bn - this year it is over £10bn. The US has pledged £13bn. And in the next four weeks we will be seeing several £70M-plus contracts let in the water sector alone.'

At the end of June, power will be handed over to Iraqi ministries and they will decide where money is spent. And it is Danish, Dutch and Italian firms that are stealing the march on UK firms, investing time and effort making contacts with local firms and ministries.

'This is critical because in Arab culture, having face to face contact and having developed a relationship is vital if you are to be accepted and trusted, ' said British Forces 35 regiment commanding officer of 44 Squadron Alec Hay.

'If I were in charge of a construction firm I would be out here already, without a doubt.

The speed of and hunger for development is accelerating.'

Work done by British Forces to make short term improvements and repairs to essential infrastructure, gave the UK a head start and earned goodwill, but this will soon be lost if British firms do not go out to Iraq now, said Hay.

McBride said the best way for UK firms to tap into the utilities market was to develop joint ventures with Iraqi firms.

Kuwaiti companies have been first to exploit this avenue.

The biggest UK player in southern Iraq so far is Mott MacDonald. It has a contract with the UK Department for International Development to consult on all CPA utilities projects but the consultant has yet to make an impact in the local market.

Halcrow has won some smaller contracts but has still not progressed plans to open offices in the country.

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