U.S.-backed plan would transform Green Zone into prime real estate

Developers are looking years ahead and gambling that Baghdad will rebound.

BAGHDAD (AP) — Forget the rocket attacks, concrete blast walls and lack of a sewer system. Now try to imagine luxury hotels, a shopping center and even condos in the heart of Baghdad.

That’s all part of a five-year development “dream list” — or what some dub an improbable fantasy — to transform the U.S.-protected Green Zone from a walled fortress into a centerpiece for Baghdad’s future.

But the $5 billion plan has the backing of the Pentagon and apparently the interest of some deep pockets in the world of international hotels and development, the lead military liaison for the project told The Associated Press.

For Washington, the driving motivation is to create a “zone of influence” around the new $700 million U.S. Embassy to serve as a kind of high-end buffer for the compound, whose total price tag will reach about $1 billion after all the workers and offices are relocated over the next year.

“When you have $1 billion hanging out there and 1,000 employees lying around, you kind of want to know who your neighbors are. You want to influence what happens in your neighborhood over time,” said Navy Capt. Thomas Karnowski, who led the team that created the development plan.

Karnowski said a deal already has been completed for Marriott International Inc. to build a hotel in the Green Zone. He also said a possible $1 billion investment could come from MBI International, a conglomerate that focuses on hotels and resorts and is led by Saudi Sheikh Mohamed Bin Issa Al Jaber.

Elizabeth Caminiti, a Marriott spokeswoman, declined to comment. Phone calls and e-mails sent to London-based MBI were not returned.

For the moment, however, it’s mortars and rockets — not investment money — pouring into the Green Zone, which includes the U.S. and British embassies, key Iraqi government offices and other international compounds. Militants have escalated their shelling of the enclave since Iraqi forces began a crackdown on Shiite militias in late March.

But developers are clearly looking many years ahead and gambling that Baghdad could one day join the list of former war zones such as Sarajevo and Beirut that have rebounded and earned big paydays for early investors.

Even now — with violence in Baghdad again creeping up — the faint hints of the development plan have driven up the Green Zone’s already sky-high real estate prices.

Land that a few years ago was going for $60 a square meter on 50-year leases in the zone is going for up to $1,000 a square meter, American officials say.

Last week, a Los Angeles-based holding company for equity firms, C3, confirmed it was starting a $500 million project to build an amusement park on the outskirts of the Green Zone in an area encompassing the Baghdad Zoo. The first phase, a skateboard park, is scheduled to open this summer.

But any Green Zone project is literally starting from the ground up.

“There is no sewer system, no working power system. Everything here is done on generators. No road system repair work. There are no city services other than the minimal amount we provide to get by,” Karnowski said.

He noted that of 500 development projects carried out in Baghdad last year, not one was done in the Green Zone — with the exception of the building of the new American embassy.

The plan also envisions significantly reducing the non-Iraqi footprint in the Green Zone, a five-square-mile area crisscrossed by 15-foot-high blast walls and checkpoints.

About 50 percent of the area is occupied by coalition forces, the U.S. State Department or private foreign companies. If all were to go according to Karnowski’s plan, only 5 percent of land in the Green Zone will be in foreigners’ hands in five years.

Privately, American diplomats say the plan is, at best, wishful thinking.

Security is nowhere near the level needed for major development projects. Then there is the question of whether the Iraqi government even wants U.S. involvement in developing the center of their capital.

But Both Karnowski and Iraqi officials said the government of Iraqi Prime Minister Nouri al-Maliki is interested in hearing U.S. ideas in developing the Green Zone, though many Iraqi leaders have expressed worries and words of caution.