"The insurance industry has never been up against this kind of exposure before," R. Taylor Hoskins, vice president of Rutherford International insurance company, tells the delegates apologetically. Steven Sadler, managing director and chairman at Marsh Industry Practices, a division of Bremer's old firm, is even more downbeat. "Don't look to Iraq to find an insurance solution. Interest is very, very, very limited. There is very limited capacity and interest in the region."
It's clear that Bremer knew Iraq wasn't ready to be insured: When he signed Order 39, opening up much of Iraq's economy to 100 percent foreign ownership, the insurance industry was specifically excluded. I ask Sadler, a Bremer clone with slicked-back hair and bright red tie, whether he thinks it's strange that a former Marsh & McLennan executive could have so overlooked the need for investors to have insurance before they enter a war zone. "Well," he says, "he's got a lot on his plate." Or maybe he just has better information.
Just when the mood at ReBuilding Iraq 2 couldn't sink any lower, up to the podium strides Michael Lempres, vice president of insurance at the Overseas Private Investment Corporation (OPIC). With a cool confidence absent from the shellshocked proceedings so far, he announces that investors can relax: Uncle Sam will protect them.
A US government agency, OPIC provides loans and insurance to US companies investing abroad. And while Lempres agrees with earlier speakers that the risks in Iraq are "extraordinary and unusual," he also says that "OPIC is different. We do not exist primarily to generate profit." Instead, OPIC exists to "support US foreign policy." And since turning Iraq into a free-trade zone is a top Bush policy goal, OPIC will be there to help out. Earlier that same day, President Bush signed legislation providing "the agency with enhancements to its political risk insurance program," according to an OPIC press release.
Armed with this clear political mandate, Lempres announces that the agency is now "open for business" in Iraq, and is offering financing and insurance--including the riskiest insurance of all: political risk. "This is a priority for us," Lempres says. "We want to do everything we can to encourage US investment in Iraq."
The news, as yet unreported, appears to take even the highest-level delegates by complete surprise. After his presentation, Lempres is approached by Julie Martin, a political risk specialist at Marsh & McLennan.
"Is it true?" she demands.
Lempres nods. "Our lawyers are ready."
"I'm stunned," Martin says. "You're ready? No matter who the government is?"
"We're ready," Lempres replies. "If there's an expro[priation] on January 3, we're ready.... I don't know what we're going to do if someone sinks a billion dollars into a pipeline and there's an expro."
Lempres doesn't seem too concerned about these possible "expros," but it's a serious question. According to its official mandate, OPIC functions "on a self-sustaining basis at no net cost to taxpayers." But Lempres admits that the political risks in Iraq are "extraordinary." If a new Iraqi government expropriates and re-regulates across the board, OPIC could be forced to compensate dozens of US firms for billions of dollars in lost investments and revenues, possibly tens of billions. What happens then?