Doubts On Bush Jobs Plan.

A new effort to revitalise some of the world's most outdated and decrepit factories for making vegetable oil, fertiliser, road signs and sulphuric acid was expected to be at the centre of President Bush's new plan for Iraq. But even before the measures were announced on Jan. 10, Iraqi political and business leaders expressed scepticism that any effort to transform a system of state-owned enterprises that has fallen so far into dysfunction could become an engine for job creation in Iraq.

The Bush administration describes the steps as a way to employ more Iraqis and to keep them away from more destructive pursuits such as joining the insurgency or fighting in a militia. Among the economic measures under consideration is new support for a programme which allows local US military commanders to finance small reconstruction projects. But recent statements by administration officials suggest the plan is likely to include an effort to revive parts of what was a vast Iraqi military and industrial base before it was destroyed by war, sanctions and looting.

That plan would involve pumping expertise and money for reconstruction into enterprises still owned by the Iraqi government, or privatising some or all of the companies to force them to become more competitive. Either way, Iraqi political and business leaders were dubious about the prospects for success.

"I doubt it very much in view of the current challenges and dangers facing the country", said Mahdi Hafedh, a member of Parliament and former planning minister. Hafedh said the state-owned enterprises were already a huge drain on Iraq's budget and most of them produced little or nothing. Many were filled with no-show jobs. He said: "The Americans should have made some consultations because this is ridiculous, frankly. What Iraq needs to do is reduce the number of employees in the state sector".

The focus on jobs and reconstruction is in many ways a return to the earliest days of the occupation, when the top US administrator in Iraq, L. Paul Bremer 3rd, pressed the idea that economic initiatives were as important as military action in stabilising the country and convincing ordinary Iraqis that the invasion would have tangible benefits for them.

That philosophy led to a reconstruction programme financed by $30 bn in US taxpayer money which had a marginal impact on the quality of life in Iraq, attracted ceaseless attacks on rebuilding projects and produced little but derision among Iraqis. In addition, US officials have never produced evidence that those enormous expenditures have lessened the attractions of the insurgency. Nor have those officials solved what appears to be a logical flaw in the plan: how does the US get credit for reconstruction projects when it must keep its participation secret to prevent attacks on those projects?

Batea al-Kubaisi, a government economics expert, said the employment picture in Iraq was without doubt grim. He said depending on how it is measured on the chaotic streets of Iraq, the unemployment rate ranged from 30% to 60%. Given those numbers, making use of the state-owned companies has distinct attractions.

Hafedh said overall, the 192 companies employed more than 500,000 Iraqis, which amounted to roughly half of all Iraqi government employees. But while the companies may appear alluring for reducing unemployment and sparking the economy, Iraqi businessmen said they were far from a solution.

Mahmoud Othman, a businessman who favours increasing support for the companies and privatising some, said many of those employees did nothing but collect monthly paychecks and go home, adding: "They are still on the payroll of the government although they have nothing to do".

The very names of the companies have the musty air of government institutions in a closed nation: the General Company for Vegetable Oils, the State Company for Battery Manufacturing, al-Mishraq Sulphur Industry Co.

According to an evaluation by Bremer's administration when privatisation was in the air in 2003, a company which produced metal castings, traffic signs and military medals was so damaged in the invasion that the "sign factory is only one that doesn't need to be completely rebuilt from the ground up".

Other companies, like a heavy engineering business called Nasco, have been damaged less severely but have different problems: Nasco is in Doura, now one of the deadliest districts in Baghdad.