Jay Hallen didn’t much like his job at a real-estate firm. His passion was the Middle East, and although he had never been there, he was intrigued enough to take Arabic classes and read histories of the region in his spare time.
He had mixed feelings about the war to topple Saddam, but he viewed the American occupation as a ripe opportunity. In the summer of 2003, he sent an e-mail to Reuben Jeffrey, whom he had met when applying for a White House job a year earlier. Hallen had a simple query for Jeffrey: Might there be any job openings in Baghdad?
“Be careful what you wish for,” Jeffrey wrote in response. Then he forwarded Hallen’s résumé to O’Beirne’s office.
Three weeks later, Hallen got a call from the Pentagon. The CPA wanted him in Baghdad. Pronto. Could he be ready in three to four weeks?
“It was really a shock,” Hallen recalled. “In my entire life, that was probably the single most life-changing phone call I received.”
Despite his eagerness to go, he asked for a few days to consult with his family. After he accepted, he settled in for the monthlong wait. And then he began to have second thoughts. It started with the car bombing of the Jordanian embassy. Then the United Nations headquarters in Baghdad was blown up, killing twenty-two people. “I came within inches of declining [the post],” Hallen said. “I was really on the fence and really tormented about it and had a good week or two of sleepless nights.”
His family told him they didn’t want him to go. In the end, Hallen decided to take the job. “I knew that this was really one of the few great chances to really crack my life open in a positive way,” he said. “I believe strongly that in this life you won’t have any rewards unless you take risks.”
It wasn’t just Hallen who was taking a risk. So was the CPA. Hallen had not followed American stock markets. He hadn’t studied economics or finance. But he had had a brief fling as an entrepreneur—onstage. At Yale University, where he majored in political science, he had appeared in a campus adaptation of Dr. Seuss’s The Lorax. He played the Once-ler, an enterprising scoundrel who chops down trees to produce a polyester-like fabric, transforming a once-beautiful countryside into a barren wasteland. The Yale Herald wrote that Hallen’s “remarkably pliable, green-painted face creates a sympathetic villain, teaching the audience that the concepts of absolute good and absolute evil are often far too simple for the complexities of the real world.”
Upon graduation, Hallen went to work for a private consulting company in Washington. After a year and a half, he sent his résumé to the White House and was called in for an interview by Jeffrey—but no job materialized. Hallen held on to Jeffrey’s e-mail address, and when he learned that Jeffrey was working for Bremer, he tried again.
Before his departure, Hallen was sent to an army base in Virginia for a “training session.” He received two immunizations and a flak vest that lacked the ceramic plates required to stop AK-47 bullets. He then flew to Kuwait, where he received a gas mask, a lecture on the four most common types of explosive devices in Iraq, and a full set of army fatigues (in case of an attack on the Green Zone, American civilians were told to don the uniform so they wouldn’t be mistaken for “the enemy”). He visited an amusement park and sampled a “tequila-flavored” virgin margarita before boarding a C-130 cargo plane bound for Baghdad.
The day he arrived, he met with his new boss, Thomas Foley. Hallen was shocked to learn that Foley wanted him to take charge of reopening the stock exchange.
“Are you sure?” Hallen said to Foley. “I don’t have a finance background.”
“It’s fine,” Foley replied. “Your job is to be the project manager. Your job is to get other people to get things done and contract things out. You will just be the main point of contact.”
After the meeting with Foley, Wirges invited Hallen onto one of the second-floor balconies of the palace. As they gazed out over the pool, Wirges offered Hallen a Cuban cigar and told the younger man about himself. He was thirty-nine years old. He was married and had two children. He had been in the navy for six years, before he became a private investigator, and then a sheriff’s deputy, and then an insurance agent, and then a mutual funds salesman, and then a personal financial adviser.
Hallen told Wirges about his time at Yale and the two jobs he had had since graduation.
He has no business being here, Wirges thought as Hallen spoke.
Wirges thought he struck a deal with Hallen. Hallen would interact with the higher-ups at the CPA. He’d attend the meetings and deliver the briefings to Foley. Wirges would interact with the Iraqis. He’d travel outside the Green Zone and build the exchange.
Five days after Hallen arrived, he sent an e-mail to his family and friends:
The whole green zone feels like a college campus: roughly the same number of people, everyone does different things during the day, but in the same buildings, and uses the same living, dining and recreational facilities. It’s a small world, and there’s nothing like a dangerous, uncomfortable, or just plain different environment to create a sense of closeness among people… .
The Iraqis I’ve met are extremely gracious and supportive of us. But then again, any Iraqi that I, as a CPA person, would come in contact with probably would be (unless he’s throwing a grenade at me, of course). But seriously, they are a great people, and maybe it’s the naïveté of being here less than a week, but I have very high hopes for this country. The reconstruction effort is thriving, so many incredible initiatives going on at once that never get any publicity. The Americans and other coalition people are so dedicated to the cause, and they are very talented and accomplished people, and the Iraqis I’ve met are very supportive and eager themselves.
Two weeks later, Hallen called Wirges in for a meeting. There’d been a change of plans, he said.
“Jay told me that this was no longer my personal project,” Wirges recalled. “I was no longer involved. It’s no longer an issue for the army. Have a nice day.”
Hallen had a new plan. He didn’t just want to reopen the exchange; he wanted to make it the best, most modern stock market in the Arab world. He wanted to promulgate a new securities law that would make the exchange independent of the Finance Ministry, with its own bylaws and board of directors. He wanted to set up a securities and exchange commission to oversee the market. He wanted brokers to be licensed, and listed companies to provide financial disclosures. He wanted to install a computerized trading and settlement system. All in less than four months.
THE GREEN ZONE, SCENE IV
The hand-tossed, wood oven–baked pizzas at Pizzeria Napoli were on a par with anything you’d find in Italy. Napoli was run by Walid Khalid, who had worked at a pizzeria next to the Trevi Fountain in Rome for two years. He returned to Baghdad a month after liberation to introduce real pizza to his homeland. Even if Iraqis didn’t warm to pizzas, he figured he’d have more than enough customers among the thousands of Americans who had descended on Baghdad.
He rented space in a strip of shops on Yafa Street, just north of the Green Zone, and set out to create an authentic Italian eatery. He hired bricklayers to build a wood-fired pizza oven. He found a dairy near the Abu Ghraib prison that was willing to make mozzarella according to his specifications. He struck a deal with a farmer who grew the same sort of juicy tomatoes you’d find in Tuscany, and he cultivated basil and oregano in his garden. His brother was recruited to take orders.
Walid looked like a man who spent too much time cooking and eating: He was perpetually covered in flour, and his belly almost popped the buttons on his shirts. He always seemed tired. He woke at dawn to make the dough and the sauce. Then he’d spend the day in front of the oven. He had an air-conditioner, but power wasn’t a sure thing. On most days, he’d have three hours of electricity, followed by a three-hour blackout. When there was no power, opening the glass front door didn’t cool the place down. It was 130 degrees outside.
I met Walid one day as I was leaving the Green Zone. I was hungry, and his tricolor wooden sign advertis
ing pizza prompted me to stop the car to investigate. He had no tables, just a narrow bar with four seats. He had underestimated the space he’d need; by the time the oven was constructed, there was no room for anything else.
As he made me a green pepper, mushroom, and onion pizza, he told me about his time in the army, his studies at Baghdad University, his escape to Jordan, his years in Italy. After my first bite, I knew I had found culinary salvation in Baghdad.
Walid sat next to me and nursed a Pepsi. “Where are the Americans?” he asked in halting English. “I build this place that is very good for take-away pizza, but nobody comes.”
“They’re in the Green Zone,” I said. “They have to follow their rules.”
“Rules?” he replied. “What do you mean? I am very close to them. They can even walk to me.”
Walid had no concept of what life was like on the other side of the walls. He didn’t know that the lights were always on, that drivers obeyed the speed limit, that there was an all-you-can-eat buffet in the palace.
6
We Need to Rethink This
IT WAS TWO MONTHS AFTER the fall of Baghdad and I wanted to know why almost all of Iraq’s factories were still shut down. When I asked Tim Carney, the senior adviser to the Ministry of Industry, all he would say was, “Go visit the vegetable oil factory.”
The State Company for Vegetable Oils was in a blighted industrial park just three miles west of the Green Zone, at the end of a street lined with automobile repair shops. Dirt caked the floor, and a thick layer of oily crud coated the rusted machinery. The windows were shattered, and the lights were out. A genial man in a navy blue boiler suit informed visitors that the factory manufactured cleaning products as well as tins of cooking grease. But nobody, it seemed, used any of the factory-made soap on the factory itself.
The elevator wasn’t running, so I walked up three flights of stairs to meet with Faez Ghani Aziz, the company’s director-general. Aziz, an animated man with thick black hair and a broad grin, shook my hand and immediately apologized for the out-of-order elevator. “There’s no power,” he said. “Nothing is working now.”
We sat in a glass-walled office that overlooked what appeared to be a large laboratory. The lights were out in the entire building. The machines were idle. Carney had said the company employed four thousand people. I couldn’t see more than a dozen milling about.
Aziz, a fifty-three-year-old soil chemist, explained that the office in which we were sitting wasn’t really his. It belonged to the manager of the product-testing lab. Aziz was there because the company’s administration building had been looted. Everything had been taken—computers, furniture, files, pallets of soap, even the light switches in the walls.
He summoned tea. (An office boy had set up a gas burner in the stairwell to boil water. The office could make do without power, but not without tea.) As we waited for it, Aziz pulled a glossy, tri-fold product brochure from his desk. There were photos of a tin of al-Raie cooking oil, a bottle of Yasmeen shampoo, a can of Anbar shaving cream, and a bar of al-Jamal soap. All the pictures were yellowed and faded. It was clear that the brochure had been printed years ago, in the days when the company exported products to Syria and India.
“We are a good investment opportunity,” Aziz told me.
I had introduced myself as a journalist, but he obviously thought I was an investor. When I repeated that I was there to write about his company, not pour money into it, he sighed and said, “We are facing a very difficult future.”
The dormant production line below his office constituted one of six factories owned by the vegetable oil company, he explained. The others produced packaging materials, detergents, and sunflower oil. The company itself was one of forty-eight businesses owned by the Ministry of Industry. Aziz claimed that the company had cleared a $3.3 million profit in 2002, but when he described how the government subsidized state-run factories, it became evident that his woes were worse than a dirty building. In fact, the company was grossly unprofitable. The books looked good only because the company had received its raw materials for next to nothing: due to a government edict valuing the Iraqi currency for official imports at the rate before the 1991 Gulf War—when one dinar was worth more than $3, instead of the prevailing rate of 2,000 dinars to the dollar—the vegetable oil company had to pay just $1 for each $6,000 worth of imported products. The Finance Ministry made up the difference. Electricity was free. The company didn’t have to pay pensions either; the government took care of that as well.
All that financial assistance didn’t result in decent products. The fifty-year-old production line, built by Russian engineers, churned out goods that appeared to have been made in the communist, you-can-have-any-car-so-long-as-it’s-black factories of the former Soviet Union. When I asked Iraqi friends why they bought al-Jamal soap and Yasmeen shampoo, the answer was the same: “What choice did we have?” For years, Iraqi-made consumer goods enjoyed a virtual monopoly in the local market. Even when the government began allowing more imports, the vegetable oil company’s products were far cheaper than those of foreign competitors.
Aziz wanted to modernize the company, but under Saddam, the Ministry of Industry refused to allow him to solicit foreign investment or enter into a joint-venture partnership. He was told from which suppliers to purchase raw materials. Price didn’t matter. Nor did quality. The operative question was whether the country that was selling the goods supported Saddam. “If somebody from Syria wanted to sell us something, even if he didn’t have a competitive price, they made a deal with him,” Aziz said.
Even if Saddam’s government approved, that didn’t mean Aziz got what he wanted. The purchase of modern soap-making equipment from Germany, to replace half-century-old machines Aziz called “primitive,” was held up by a United Nations sanctions committee because of concerns that the technology could be used in the manufacture of biological or chemical weapons.
Aziz also didn’t need four thousand employees. But he couldn’t fire any of them. Every year, the ministry would send over a few dozen more. Some were college graduates promised lifetime government employment. Others had Baath Party connections. Because only about a thousand workers were actually required to run the factories, the rest sat around and drank tea. Some didn’t even bother to show up for work.
But those rules no longer applied. Nor could Aziz count on the same fat subsidies. He knew the score. “We were not very efficient,” he said. “If we do not change, we will not survive.”
He paused for a moment, then continued in a near whisper. The company, he said, should be privatized. Perhaps it should be sold to the employees, or to a private investor. Having the government own a vegetable oil company makes no sense.
As I got up to leave, he admonished me not to utter a word about privatization to the workers. “It’s a very sensitive subject,” he said. Iraqis lucky enough to get a job with a state-run company assumed they were guaranteed employment until retirement. Any suggestion that the safety net had disappeared along with Saddam had the potential to inflame the workforce. “You can’t solve one problem by creating a new problem,” he said. “You have to prepare the people for the decision.”
The next time I saw Tim Carney, over a lunch of grilled lamb and cold beer at Nabil’s, I asked him about the vegetable oil company and privatization. He said it made no sense over the long run for the Iraqi government to own factories that made cooking oil, carpets, paper, batteries, and leather shoes. The companies had to be sold off. Iraq didn’t even need a Ministry of Industry. But Carney figured the decision of what to sell, when to sell, and for how much rested with the Iraqis. The ministry’s management agreed. So did the political leaders angling for a role on the Governing Council.
Because Iraqis were in no position to make those decisions right away, Carney’s first priority was to get the ministry—and all of its companies—working again. So what if the factories were inefficient? He assumed it would do the economy good to get people back to work. And he thou
ght it would also help with privatization: a factory that was actually producing something, even if it was third-rate shampoo, would fetch a higher price than a shuttered one.
Carney knew he wasn’t the right guy to tinker with the nuts and bolts of restarting factories. He was an ambassador. Foreign policy was his thing, not economic policy. At the time, he had only one person working for him, a lieutenant colonel in the army reserves named Brad Jackson, who was no expert in balance sheets and cash-flow statements. Jackson did, however, have valuable real-world experience. Back home, in upstate New York, he had run the industrial development agency for Franklin County.
As Carney was beginning to despair, Jackson announced that help was on the way: a high-powered consultant named Glenn Corliss would be joining their team. Jackson said that Corliss had worked on Wall Street and was an expert in rescuing distressed companies. And he understood corporate accounting.
“Great,” Carney said. “Sounds like just the guy we need.”
Corliss arrived in the Republican Palace wearing an Armani suit and black loafers. He told people he worked for JPMorgan and Fidelity Investments. He had the self-confidence of a general.
It was months before anyone other than Jackson knew the real story.
Corliss was everything he claimed: he had worked for Fidelity, as an analyst, and at JPMorgan’s private equity division, where he had invested in industrial companies; he had experience in venture capital and had specialized in restructuring failing businesses.
His secret was that he was an army reservist. He was not a big-shot lieutenant colonel like Jackson, or even an officer. He was a specialist—just one rank above private.
In early 2001, Corliss had begun to feel restless on Wall Street. He had a lucrative venture-capital job, but trying to further enrich already wealthy investors was losing its appeal. International development sounded intriguing. He began to think about joining the World Bank or the International Monetary Fund or the U.S. Agency for International Development. One friend said that Corliss could sign up for a part-time job to be on a “sort of SWAT team that runs into a disaster area and helps rebuild the economy.”
Imperial Life in the Emerald City Page 11