SHUMEH, Jordan, June 22 — L. Paul Bremer III, the chief United States administrator in Iraq, vowed today to dismantle that country's state-run economy by selling off government-owned companies and writing new laws to encourage foreign investment.

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Recognizing that a rapid shift would cause pain to many in the short term, Mr. Bremer also raised the possibilities of distributing part of Iraq's oil revenues as "dividends" to citizens or creating a national trust fund that would help finance a "social safety net."

"Every individual Iraqi would come to understand his or her stake in the country's economic success," he told business and political leaders gathered here for a meeting of the World Economic Forum.

Taken together, Mr. Bremer's comments amounted to a blueprint for turning Iraq into a Middle East model of free trade and deregulation.

He made it clear that he wanted to start privatizing more than 40 government-owned companies that make products ranging from packaged foods to steel. Many of those companies, he acknowledged, would not be able to survive in the face of real competition.

"A fundamental component of this process will be to force state-owned enterprises to face hard budget constraints by reducing subsidies and special deals," he said. "Iraq will no doubt find that opening its borders to trade and investment will increase competitive pressure on its domestic firms and thereby raise productivity."

Senior officials in the American-led Coalition Provisional Authority, which Mr. Bremer heads, have said they hope to agree on a plan in the next few weeks to sell state-owned companies to private investors. But they are vague about how quickly the process should proceed, acknowledging that new owners would almost certainly slash the work forces at many companies and that some companies would not survive.

Many foreign investors, especially in neighboring Kuwait, Jordan and Turkey, said they were eager to enter the Iraqi market. But they also said the situation was too unstable and the laws too undefined to make any commitments yet.

A senior allied official here said today that work had already begun on drafting a modern commercial legal code that would protect investors and property rights. But he also acknowledged that the work was in its early stages.

The problem confronting allied officials is that the mood of Iraqis is turning more sour by the day, as basic services like electricity remain erratic and joblessness mounts.

Copyright 2003 The New York Times Company

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