US Building Giant Warns of Iraq Chaos

Violence and lawlessness, the threat of disease, and political uncertainty could make business ventures in Iraq less attractive then expected, Bechtel, the controversial US construction giant, warned today.

Despite the lure of lucrative reconstruction contracts, Bechtel did its best to deter starry-eyed opportunists at a packed "roadshow" at a London hotel on business prospects in Iraq.

"Your security is your responsibility. It is not provided for you," Tom Elkins, the executive in charge of procurement for Bechtel, told conference delegates.

Companies could also find insurance difficult to obtain or expensive, Bechtel cautioned. To cap it all, the average contract size might be worth less than $1m (£610,000).

Despite the sobering message from Bechtel, the roadshow at the Novotel hotel in Hammersmith, west London, attracted more than a thousand hopefuls, forcing organisers to enlarge the conference room. The interest in the Bechtel roadshow reflects the mounting frenzy to get a foot in the door in Iraq, especially now that the UN has lifted decade-long sanctions against the country.

Rebuilding Iraq will be the world's largest reconstruction project since the Marshall plan after the second world war. Reconstruction could cost an estimated $100bn, providing work for construction companies at a time when the global slowdown has hit big investment projects.

The reconstruction process has already drawn accusations of foul play, when the US agency for international development (USAid) drew up a shortlist of only American companies, including Bechtel, for its main contracts.

British government officials and UK companies attacked the decision on grounds of political favouritism, especially as Britain was America's main ally in the war effort. Bechtel was chosen as the main contractor to rebuild Iraq in a deal that could be worth up to $680m over 18 months.

The company expects to farm out at least 90% of the rebuilding work and British companies saw today's event as Bechtel's effort to show that non-US companies will also have opportunities in Iraq.

Today's event in Hammersmith and a similar one organised by Trade Partners UK, set up by the Department of Trade and Industry and the Foreign Office, have led to accusations that the US and Britain are dividing the spoils of war.

Outside the Hammersmith event, between 20 and 30 opponents of the US-led war in Iraq chanted: "Vultures, vultures." Today's conference followed a similar gathering in the US and the roadshow will move on to Kuwait as Bechtel seeks subcontractors.

The early part of today's meeting focused on setting out the guidelines for submitting a tender with Bechtel. By the end of the end of the week, 10,000 firms are expected to be fighting for the chance to do business with the US giant.

"Look around the room - these are your competitors," Mr Elkins told delegates in London.