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Iraq a tough guinea pig for company that spurs development
Monday, March 10, 2008

During Steve DeAngelis' first visit to Iraq last year, a large car bomb exploded, killing several people and leveling buildings near the hotel in which he was staying.

It was a jarring reminder for the CEO of Enterra Solutions and visiting scientist at Carnegie Mellon's Software Engineering Institute that he wasn't embarking on a normal business venture.

But instability is why Mr. DeAngelis was there, the reason Enterra, based in Yardley, Bucks County, came to be in the first place.

Enterra is a small player in the rebuilding of the Iraqi economy -- the lesser-known mission of American forces -- but the company dreams big. In partnering with international and local companies, Enterra aims to jump-start industry and economic growth in Kurdistan.

Mr. DeAngelis has dubbed it Development in a Box, a template by which developing nations can integrate themselves quickly into the international economy and make themselves attractive to foreign investment.

But this is Enterra's first attempt, and Iraq makes for a difficult guinea pig.

"This is a place where people die," Mr. DeAngelis said.

Enterra was formed in 2003 by merging computer software (Mr. DeAngelis) and government contracting (senior managing director Thomas Barnett) know-how. The company provides "resiliency" services, basically swift problem-solving, mostly for government interests. In 2006 Enterra worked with Oak Ridge National Laboratory, outside Knoxville, Tenn., to help the government connect its disparate departments to better address and respond to terrorism threats.

The most recent project for the company, which has 41 employees, is Development in a Box.

The idea is to present a developing nation a road map to connect with the international economy and reap the benefits of globalization. Enterra will teach Western business practices and give logistical support to local companies, importing business-cultivating resources like banking and telecommunications.

Mr. DeAngelis compared the idea to the Marshall Plan that rebuilt Europe after World War II.

"This is a preconfigured Marshall Plan that gets dropped into countries," Mr. DeAngelis said. "But unlike the Marshall Plan, which was completely government funded, this is largely private-sector funded."

Iraq is a challenging place to start, not only for the violence that plagues the country, but for its pre-invasion approach to business.

"Consider that Iraq under the Saddam Hussein regime was almost Soviet style -- industries told what to make and how to make them," said chief operating officer Kevin Ruelas.

"They didn't have Western technology and Western know-how in marketing or distribution. They operated in a vacuum. What we're saying now is by bringing in a business center we can train them, educate them, market their products internationally."

Mr. DeAngelis made his first visit to the country in May and has spent 10 to 14 days there per month since then, planning and pitching for his company to be the region's business middleman.

"What I wound up doing in the beginning was being this evangelist translator," Mr. DeAngelis said, "explaining Development in a Box to every constituency group and aligning all their interests, so we're all singing off the same sheet of music."

Enterra received a small start-up grant -- less than $1 million, according to Mr. Ruelas -- from the Pentagon's Business Transformation Agency. There was no competition for the bid because Enterra's proposition was the first of its kind, Mr. Ruelas said.

"Enterra visited and immediately began generating ideas about how to apply their business model and technology to assist in rapidly redeveloping, war-torn economies," Paul Brinkley, deputy undersecretary of defense for business transformation, wrote in an e-mail.

"Their ideas clearly had benefit in terms of Iraqi economic development and as the security condition at the time was best in Kurdistan the concept was to deploy the capability there with the hopes that it would serve as a springboard for the rest of Iraq."

In November, the BTA approved Enterra's plans for a trading exchange -- what Mr. DeAngelis called "the eBay of Iraq" -- in Erbil, the Kurdish region capital, and in January plans were announced for a multi-lingual call center to solve problems for industries throughout the country. Mr. Ruelas said Enterra planned to send 10 to 15 American employees to its Erbil office, to get things up and running, and gradually replace them with local hires.

"My impressions in my trips were that Kurdistan is ripe for economic development," Mr. DeAngelis said.

"It has all the makings of a country that can be successful. It has a lot of riches in oil under the ground. It has water. It has fertile, arable land."

It also has manufacturing. Leather jackets, textiles, cigarettes, floor tile and marble for countertops all could be in global stores stamped with "Made in Iraq" within a few years.

Large multinational companies are also looking to invest there. Though no final deals are in place, Enterra is wooing telecommunications, oil, banking and other interests to the region.

But an enormous challenge -- and cost -- Enterra faces is security. Although Kurdistan is much calmer than southern Iraq, violence can erupt at any moment.

Enterra officials always travel with security, though it tends to be armed guards rather than the heavily armored transport more common in southern Iraq.

If the economy gets up and running, Enterra stands to cash in -- and get the chance to spread Development in a Box elsewhere. It also can affect the war effort in ways soldiers cannot.

"If they can get more people and Iraqis back to work," Mr. Ruelas said, "less of them will be making bombs."

Daniel Malloy can be reached at dmalloy@post-gazette.com or 412-263-1731.
First published on March 10, 2008 at 12:00 am