MasterCard Debit Card Services Introduced in Iraq
Iraq-USA, Economics, 12/24/2008

The private banking sector in Iraq is introducing MasterCard Incorporated debit card services as the country's economic development shows signs of gaining traction, according to a senior US Defense Department official in charge of business development in Iraq.

"There is a vibrant private banking capability in Iraq. With the US Treasury Department, we've automated and integrated 150 bank branches throughout Iraq that have complete linkage to international financial networks," Deputy Under Secretary of Defense for Business Transformation Paul Brinkley said at a recent seminar in Washington.

Brinkley said that MasterCard's introduction of debit cards is part of the formation of an electronic funds management system in Iraq that has come about from increasing capitalization of private banks. A debit card holder can withdraw cash from an automated teller machine or transfer funds electronically from his account to another.

"The US government has stopped using cash and has moved to electronic funds, which is contributing to the capitalization of private banks," Brinkley said. "Private banks are increasing loans in local communities, further stimulating economic growth and a return to normalcy." He added that the private banks are modernizing more rapidly than state-owned banks.

Brinkley has headed the Defense Department's efforts to revitalize the Iraqi economy since 2006, when he was assigned the task of reigniting economic growth in Anbar province, which once had been taken over by al-Qaeda. He said the priority was to create jobs and put people back to work.

"Much of the violence in Anbar province was economically motivated. There had been a near-complete breakdown in economic activity the previous three years," Brinkley said.

Brinkley said the Defense Department adopted a policy of seeking goods and services from Iraqi companies, not from foreign companies. In the past two years, he said, the Defense Department has done business with more than 4,000 Iraqi private companies.

"This is a staggering number and a huge testimony to the natural entrepreneurial energies of the Iraqi people," Brinkley said.

The deputy under secretary said that when his mission began, he reversed an earlier policy of the Coalition Authority that ordered the closure of state-owned enterprises, a measure that had been intended to speed up the birth of a market economy. Brinkley opted to reopen the state-owned industries because unemployment was around 50 percent and urgent steps were needed to absorb the energies of young men who were being recruited by militias.

"We've been able to restore or increase production in 66 factories all over the country. We've put thousands and thousands of workers back to work," Brinkley said.

As conditions permit, he said, state-owned companies are being sold into private hands, following the model of industrial development in East Asia. In 2008, investors, many of them foreign, put $1 billion into Iraqi factories, located in once unstable provinces, such as Diyala, Saladin and Anbar, according to Brinkley. "These investments are restoring economic activity and normal life to people in those areas," he said.

To help people in rural areas, the under secretary said, the Defense and Agriculture departments have recruited professors of agriculture from universities across the United States. The professors have been embedded with US troops or assigned to provincial reconstruction teams to work with Iraqi farmers, who account for about one-quarter of the Iraqi labor force.

"Reception in the Iraqi agricultural community has been extremely positive. (The agricultural advisers) are helping farmers restore Iraq to its traditional place as the breadbasket of the Middle East," Brinkley said.

Brinkley made his presentation about Iraq's economic progress a day after the Office of the Special Inspector General for Iraq Reconstruction issued a report that the $50 billion reconstruction effort lacked an overall strategy and clear lines of authority and cooperation among US government departments.

Brinkley and two other senior US government officials acknowledged that the reconstruction effort was chaotic and better planning will be required in the future.

The director of the Iraq office for the US Agency for International Development, Thomas Staal, said that knowledge of Iraq was lacking before the invasion. That led to unrealistic expectations that the reconstruction effort would be quick and easy. He said that now that the security situation is stabilizing, it is important that the United States and the international community "stay the course" in stabilizing a still fragile economy as US forces prepare to leave.

The State Department's John Herbst said that the US government recognizes the need for comprehensive planning for reconstruction efforts in post-conflict situations. As head of the Office for Coordination, Reconstruction and Stabilization, he is creating the civilian response corps, consisting of eight US government agencies, which will cooperate with the military in stabilization efforts.

Previous Stories:
  Iraq to increase of oil output   (6/23/2008)
  Iraq water resources benefit from US help   (1/22/2008)
  US: Reconstruction teams work to improve lives in Iraq   (9/5/2007)
  On US efforts to helps reopen Iraqi industrial facilities   (4/2/2007)

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