US's IRAQ ECON POLICY: 12 MILLION JOBLESS

By CHARLES J. HANLEY, AP Special Correspondent

BAGHDAD, IRAQ - THEY LINE UP by the hundreds, in the
 morning heat, on the slim hope of a job. Others wait -
 and wait - in a downtown square for a chance at a
 day's backbreaking construction work, and $2. Across
 town, one jobless engineer serves tea for pennies from
 a sidewalk table. Luckier Iraqis are handed brooms to
 sweep Baghdad's dusty streets.

Six months after America's lightning war in Iraq (news
 - web sites), the vast majority of Iraqi workers are
 unemployed. The Labor Ministry estimates 70 percent or
 more, some 12 million Iraqis, are without jobs.

Summarizing a half-year of occupation last week, U.S.
 administrator L. Paul Bremer pointed to Baghdad's
 reopened shops and traffic-filled streets. "Anyone can
 see the wheels of commerce turning," he told
 reporters.

His economic status report did not mention the
 millions of idle workers, but Iraqis see them
 everywhere, on their streets, in their homes. "This is
 our biggest problem today," said Nouri Jafer, labor
 undersecretary in Iraq's interim Cabinet.

Iraq became a land of the unemployed when the
 government collapsed in April under attack from the
 U.S.-British invasion force, and its ministries were
 burned and state-owned factories and oil installations
 looted in the war's chaotic aftermath. Then, after
 taking over in early May, Bremer formally dissolved
 the Iraqi army.

"The first mistake was when they disestablished the
 army and police forces," Jafer said. "This created
 more unemployment because (President) Saddam Hussein
 (news - web sites) had more than a million in the
 security forces."

"That surprised me, shutting down the army,"
 ex-lieutenant Nasir Ali Abed, 27, told a reporter
 after handing in an application at a makeshift "job
 center" run by volunteers in a Baghdad park. The main
 breadwinner for an extended family of 17, Abed wants a
 police job, but he isn't hopeful. "Things are not
 getting better."

Bremer's Coalition Provisional Authority is rebuilding
 a police force - 40,000 nationally thus far - but has
 only begun reviving the army, with just one 700-man
 battalion. Some state factories from the old
 government-run economy have managed to reopen, but
 heavier industries remain closed, especially those
 associated with military products.

The U.S.-led authority, through Iraq's interim
 administration, the Governing Council, has financed
 340,000 emergency jobs, generally paying the
 equivalent of $3 a day to a new army of 180,000 street
 cleaners across Iraq and 160,000 people clearing the
 countryside's poorly maintained irrigation canals.

In the face of 12 million, however, "this is a very
 small number," Jafer said.

The permanent jobs people want are in government
 ministries - at a minimum of $60 a month, double or
 triple what they earned before the war. Such
 government jobs are a first priority in a placement
 program Iraqi and occupation officials are trying to
 organize.

"We've registered 350,000 soldiers and officers for a
 combination of employment services - counseling,
 placement. We're putting them into a database," said
 Army Lt. Col. James Otwell, senior U.S. adviser to the
 Labor Ministry.

These ambitious plans - including official job centers
 and vocational training - await U.S funding, however,
 as part of President Bush (news - web sites)'s
 proposed $20.3 billion package for Iraq reconstruction
 in 2004.

More immediately, in 2003, the jobs have dried up.
 Bremer noted last week that in July he had ordered a
 freeze in hiring by Iraqi government ministries,
 "because we don't have enough money."

Even where government workers were recalled to their
 jobs, the vision of wheels turning can be an illusion.

At the Housing and Construction Ministry, now a
 charred shell, dozens of employees stand idly and chat
 outside an annex building for hours each day. There's
 not enough desk space inside. "We want to work, but
 there's no work to be done anyway," said one
 21-year-old woman, Rabad Hussein.

The bleak jobs picture has its sordid side, as well as
 its surreal.

Countless Iraqis tell of demands for bribes -
 generally $100 - from job "gatekeepers" at agencies
 ranging from the police to the Health Ministry. Others
 say subcontractors hiring street sweepers routinely
 pad their contracts by overstating the numbers hired,
 and then shortchange the pay given actual workers.

"It's all fakes and frauds," complained Yasir Fawzi
 Hamid, 28, who said he couldn't afford bribes demanded
 of him at two ministries.

Hamid is among dozens of Iraqi men, ragged, dirty, who
 drift each morning into garbage-strewn Tayeran Square
 in hopes of being picked up for at least a day's
 manual labor at a building site, for as little as $2.
 But little building is going on, and some of these men
 - many from destitute provincial areas staying at
 25-cent-a-day flophouses - believe things were better
 under the ousted dictator Saddam.

"Before the war, everybody had his own job, everybody
 was working," said Khalaf Jassim, a stocky,
 57-year-old man with nine children back home in
 southern Iraq's Qadissiyah province.

American adviser Otwell has a different perspective.
 "It basically was a welfare state," he said of the
 35-year Baath Party regime toppled in April.

Unemployment is not unfamiliar to Iraqis. Iraqi
 society had grown increasingly corrupt and politicized
 as Saddam's ruling group, through the government, took
 control of productive economic sectors. During two
 decades of war and U.N. economic sanctions, the
 welfare state deteriorated, paychecks shrunk, many
 Iraqis did lose their jobs, and the middle class grew
 poor. While joblessness increased during the final
 years of Saddam's rule, the government never announced
 any firm figures.

Flying in from Washington, American planners have
 their ideas: to privatize Iraq's economy by selling
 off promising state companies to investors - Iraqi
 investors, they hope, but foreigners if necessary.

"The private market is the one that's going to provide
 success," said Otwell, an Army Reserve civil affairs
 specialist from Orchard Park, N.Y.

It's a notion with believers even in Tayeran Square.

"We'll find work if foreign companies come to Iraq,"
 said Un Holam Sajid, a 40-year-old southerner. But
 Hamid interjected a note of realism: "There aren't any
 private jobs yet. It's the government that has to hire
 people."

At the Labor Ministry, Jafer said Iraq's interim
 leadership subscribes to the Americans' vision. "We're
 encouraging growth in the private sector, via foreign
 and Arab investment," he said. "But regrettably, the
 security situation is bad, and is improving only
 slowly."

Nearly uncontrolled crime, especially in Baghdad,
 coupled with bombing attacks aimed at the Americans
 and their supporters, have largely kept outside
 businesses away.

It's a self-perpetuating dilemma: Young Iraqis - with
 no jobs coming in - are joining the ranks of looters,
 carjackers and other criminals.

At his unofficial job center in a central Baghdad
 park, Lateef Jaber Mutar, 44, secretary of a newly
 founded "Unemployed People's Union," complained that
 the Americans "are slow" - with their bureaucracy of
 planners spreading through the rooms of a giant Saddam
 palace complex here.

"It takes them two months to do anything," he said.
 "We need jobs now."

A major U.N. assessment issued Oct. 3 said
 privatization of Iraq's state-owned enterprises should
 take at least four years. If a permanent Iraq
 government does follow that route, what is to be done
 in the meantime?

Jafer looked out his window at one feeble gesture: a
 few workmen clearing a large plot in front of the
 ministry. But what about the 12 million?

"One idea I suggested to the Governing Council is that
 they give people $100 as a kind of gift for Ramadan,"
 he said. That Muslim holy month begins in late
 October.

As for jobs, the ministry has no ready fixes, Jafer
 told a journalist. "Do you have any ideas?" the labor
 undersecretary asked. "I'd like to hear them."