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Pentagon Backs $5 Billion Green Zone Development Plan

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 now 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 now 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.

One diplomat, who asked not to be named because of no authorization to speak to the media, said they did not think Iraqis would want Washington to "turn this area into downtown Kansas City."

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.

"The Iraqi government wants to limit U.S. power in the Green Zone," a top adviser to al-Maliki said on condition of anonymity as he was not authorized to speak to the press.

Iraqis also complain that the Americans — because they control security in the Green Zone — essentially hold a veto over the investors.

Karnowski acknowledged that American officials would vet potential investors because of a "vested interest."

Some Iraqi leaders even have drawn parallels to the U.S.-backed development plan and what Saddam Hussein did in the area — known by its Iraqi name of Tashri during his regime.

Hussein stocked the neighborhood with family and tribal allies, political loyalists and members of his elite Republican Guard. Karnowski called the accusation "partially true."

"Why do people build fences around their house? The intent is until such time as it's much safer around here, you want to be able to influence what goes on," he said.

The biggest hurdle to the plan is sorting out the true owners of property in the Green Zone, where "eminent domain by gun" was employed during the Saddam era, Karnowski said.

The chaos after Saddam's fall also added the murkiness.

"It's a jungle here," said Hussein, a 28-year-old from Lebanon who started a contracting company about a year ago in Baghdad and rents out living space in the Green Zone on the side. "It used to be like the Wild West — you grabbed some property and said, 'this is mine."

Air Force Lt. Col. Monte Harner leads the effort to discover who owns the titles and consolidate the areas held by the U.S. military.

He said the Army plans to move a military hospital in the zone — now located in a former private medical facility — to a base nearby, freeing it up for Iraqi use. Also in the works is the consolidation of Green Zone housing used by American troops.

Sadiq al-Rikabi, a top adviser to al-Maliki, said there are also plans for development projects at the Baghdad airport west of the city, including a hotel.

American officials confirmed some projects would be carried out near the airport.

According to Karnowski, the United States will spend $120 million to demolish buildings damaged by air strikes during the opening days of the war.

Both Karnowski and Harner are aware their Green Zone plan is viewed as unrealistic by many, primarily U.S. Embassy officials.

"If you talk to people at the State Department, they still believe a hotel isn't going up. But it is a done deal," Karnowski said of the Marriott project.

Harner also believes even having a blueprint is important.

"You have to stake a goal in the sand before you can begin to move toward it," he said. "Without a vision of what could be, you're just treading water."