Iraq's port city shows signs of an economic comeback

As Iraqi dockworkers unload rice from the Yichanghai, a Thai freighter, the boat's captain recalls the last time his company sent a ship to Umm Qasr, Iraq's only port city, in 2004. Boats had to wait one to two months outside the port before authorities allowed them to dock, and local militias often extorted extra duties.

"It was too much of a problem," says Captain Cao Zhanshu, explaining why his company did not send another ship until now. This time the situation looks much different. They only waited 10 days and paid no bribes. "I think it's safe to come here," he says.

The return of ships like the Yichanghai is a sign of an economic comeback in Basra Province. With violence seemingly under control at the moment, Iraq's south appears to be rising once again. Still, the steady presence of corruption and organized crime threaten to stunt the region's growth.

"There is a huge mood of optimism about," says Nigel Haywood, consul-general at the British Embassy in Basra. "We know the optimism is fragile.... It's not yet irreversible, but the progress is getting pretty close to becoming irreversible."

Just four months ago, members of the radical Shiite cleric Moqtada al-Sadr's Mahdi Army freely roamed Basra Province, publicly executing rivals and extorting money from local businesses and merchants. All of that changed, however, following a major Iraqi Army offensive this past spring that locals credit with bringing peace.

In Umm Qasr, the amount of cargo arriving daily has tripled since April from 10,000 metric tons per day to 30,000. That number is likely to continue rising if the port can obtain International Shipping and Port Security (ISPS) certification, which indicates that the port meets international security standards. The designation would lower merchants' insurance costs by 50 to 100 percent, say British military officials who are actively working to help the port gain the accreditation.

Already private companies from the Middle East, Europe, the United States, and Asia are looking into investing hundreds of millions of dollars into Umm Qasr.

"The biggest change is the security situation, which is really very good now. There have been no incidents in Umm Qasr since I've been here [starting in May] and this has facilitated investment, both nationally and internationally," says British Army Maj. Neil Croft, commander of Wales's A Squadron, 9th/12th Lancers [Prince of Wale's] in Umm Qasr.

The rapid increase of ships has proven something of a mixed blessing for the port, however. "We receive more ships now, but we don't have enough vehicles to unload them. Our business has developed but the port has not," Says Faisal Salman, a dock supervisor in Umm Qasr.

The limited infrastructure has fed a culture of corruption. Since ships must often wait days until there are enough shore hands to download their freight, Mr. Salman says many dock workers force boats to face long delays unless they pay a bribe for priority service.

Despite improvements and specialized training designed to reduce graft, coalition officials say it will take time before Iraqis have a corruption-free system.

"There are two kinds of corruption: economic and criminal," says a coalition official on condition of anonymity. Criminal corruption is taking a bribe and not inspecting a shipment at all, explains the official. Economic corruption is taking a case of soda from a shipment, for example, and selling it in town.

While coalition forces are taking a stand against criminal corruption, the official says the Iraqi model is not yet ready to function without economic corruption and a crackdown would risk alienating port officials. "It's very difficult to overcome economic corruption," says the official.

"We're not quite at the point where people are saying, 'Hey, this is a normal country, let's come out and invest.' We still have security concerns here, but we're hoping that the rapid upturn in the graph of security is going to continue and will make it much easier for people to operate here," says Mr. Haywood.