The contracting sector has consistently been the preserve of Iraq’s private sector and has provided an important source of state patronage. The Iraqi Union of Contractors, founded in 1988, was the only independent corporate association in the country. In contrast to labor, professional, student and business associations, it was staffed and managed by the contractors themselves, through membership fees. By late 1989, the Iraqi Union of Industrialists was beginning to achieve some independence from the Ministry of Industry, and had managed to replace bureaucrats with functionaries chosen by the board rather than the government. This process was in its initial stages. The Baghdad Chamber of Commerce, by contrast, included mostly retail and wholesale merchants, the majority of whom are said to be Shi‘i and who continued to be perceived as a threat to the regime.
Statistics show a steady growth in the number of contractors in Iraq, but also suggest that the group is hardly large enough to form a solid base for the regime.
Contractors can be divided into categories according to the size of the jobs they are able to bid for. Only the first category can take on contracts of any amount; the rest can be classified according to their financial capabilities. There appears to have been some reorganization of the classification system since 1975, as the more recent data shows that only a small number of the total registered contractors are in the six categories; most are in a large residual group. Interestingly, the liberalization and privatization measures were accompanied by the creation of state contracting companies in a sector heretofore completely left to private business. In 1988, six state-owned contracting companies were formed and in 1989 five new ones were created. These companies compete with the private sector for all contracts except “strategic” ones.
The number of large private contracting firms has more than doubled between 1985 and 1989, but data provided by the Contractors’ Union shows that the number of firms that renew their membership is very small, suggesting a great deal of flux in this sector. In 1989, for example, 2,086 of the 3,329 members were new. If, indeed, contracting is a source of state patronage, then the group that the state favors appears to be a very unstable one, possibly even performing one government contract and then dissolving. This unstable composition of the contracting sector, reflected in the low number of renewals, opens up the question of whether they form a support group for the regime at all.