News On Iran & Its NeighboursIraqIranian builders win contracts in city that Shias helped...

Iranian builders win contracts in city that Shias helped to wreck

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ImageThe Times: Iran has won a $1.5 billion (£1 billion) contract to build 5,000 houses and three hotels in Basra, the Iraqi city where British forces have been fighting Shia extremists believed to be armed by Tehran.

The Times

Michael Evans in Basra

ImageIran has won a $1.5 billion (£1 billion) contract to build 5,000 houses and three hotels in Basra, the Iraqi city where British forces have been fighting Shia extremists believed to be armed by Tehran.

An Iranian company has succeeded with its bid for the project because British and American companies, wary of security conditions, were slow to make offers, the head of investment in Iraq’s biggest port toldThe Times. “The Iranians are going for all the contracts,” one British official said in Basra.

The irony is not lost on British diplomats in Basra involved in trying to help Iraq to redevelop its economy and infrastructure.

The Shia extremists who turned Basra into a violent and unstable city two years ago, causing a high number of British military casualties, are now believed to be in Iran.

This week soldiers of The Queen’s Royal Hussars, attired in their regimental berets, proved how security has changed for the better in Basra as they went on foot patrol with colleagues from the Iraqi Army’s 51 Brigade, part of the 14th Division which controls the city. Their route took them past areas of considerable deprivation in northern Basra but there were pockets where, incongruously, expensive-looking villas were under construction.

Lieutenant-Colonel Chris Coles, commanding officer of The Queen’s Royal Hussars, said that the security environment had changed so much that life for his soldiers at the tiny base called Thar Allah in the heart of the community in the northern Basra district was quieter than he had envisaged when his regiment arrived last year.

Despite the relatively peaceful conditions, Hayder Ali, the head of the Basra Investment Commission, said companies in Britain seemed unaware that security was no longer an issue. “Basra is open for business but UK companies say they need more time, although now is the moment to invest,” Dr Ali said.

The caution of British companies was confirmed by Nigel Hayward, the British Consul-General, who said: “Companies that are less risk-averse will do well here, but British companies are pretty cautious.”

Iran has traditionally had strong trading links with its neighbour but Nouri al-Maliki, the Iraqi Prime Minister, indicated during a visit to Baghdad by President Sarkozy of France last week that Iraq’s principal allies in the six-year counter-insurgency would be first choice for reconstruction contracts.

It was a reminder to France and other countries, such as Germany, which opposed the USled invasion in 2003, that their new-found enthusiasm for investing in Iraq now that the country is stabilising will not put them first in the queue.

Iraq is currently awash with visits from foreign and finance ministers from Europe and elsewhere, eager to jump on the investment band-wagon. Frank-Walter Steinmeier, the German Foreign Minister, was in Baghdad this week. “Germany wants to assist Iraq in reconsruction,” he said.

Iran has been investing heavily in different parts of Iraq for some time. Iranians are financing many construction projects in the holy shrine city of Najaf, in southern Iraq, and have leapt in to benefit from the newly built airport.

The announcement of the “new town” for Basra represents Tehran’s biggest construction contract in the country since 2003. But Iranian companies are already dominating Iraq’s building projects. The wealthier Iraqis in Basra and the Kurdish north apparently like the luxurious Iranian designs.

Dr Ali said that Karam, the Iranian company that has won the development contract, had proposed three possible locations for the huge complex, one in the centre of Basra and the other two on the outskirts. Apart from the houses and hotels, the plan also includes schools, a supermarket, 2,000 shops, parks and health facilities.

“The UK is open to bid for these contracts, and we have a good relationship with the British here in Basra, so why are companies not investing in the city?” Dr Ali asked.

The successful bid by the Iranians followed the visit to Baghdad last week of Manouchehr Mottaki, the Iranian Foreign Minister.

British construction companies may not be moving in smartly for Basra reconstruction contracts, but Shell is negotiating for a $3-4 billion contract to trap the flared gas from the oilfields that currently goes to waste, and converting it into energy. There is enough gas burning into the air to power a large city. Japan has also offered a $1.5 billion soft loan to help with rehabilitating Iraq’s oil infrastructure.

Rising numbers

50% Rise in house prices in central Baghdad in the past year

500,000 Refugees expected to return

39m People living in the country by 2015, Government estimates

1.9m Extra housing units needed to satisfy growth

Source: Times database

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