High-quality clothes and leather goods, all made in factories in some of the most dangerous areas of Iraq, will soon arrive in shops across the world, according to Paul Brinkley.

Mr Brinkley, the US deputy under-secretary of defense responsible for "business transformation" in Iraq, said: "We've brought international retailers who are interested in the products Iraq makes. Iraqi-made leather and clothing will appear in Western retail outlets very soon."

Next week he hopes to announce a substantial order from abroad for hand-made carpets produced by seven workshops in and around Baghdad.

Many of the women on the factory's payroll are some of Iraq's most vulnerable - widows or divorcees - who have no hope of finding alternative income.

Mr Brinkley's mission is to scour the country for state-owned companies to turn around. Speaking in the Kurdish city of Irbil, he said that his plans ranged from putting Iraqi goods, such as leather jackets, on Western shop shelves to restarting production in the moribund goliaths of Saddam Hussein's old heavy industry plants.

A task force of American business consultants, recruited by Mr Brinkley, is touring Iraq, visiting mothballed ceramic works, cement factories, engineering plants and shopping centers.

Some are in the most dangerous parts of the country.

By soaking up the unemployed in insurgent-dominated cities, America hopes to erode support for terrorism. Mr Brinkley believes that reviving the economy is as critical as the military campaign against insurgents.

But it took five armored Humvees and a detachment of US troops to protect three of Mr Brinkley's consultants when they toured a dairy in Abu Ghraib, the town outside Baghdad that is home to the notorious prison.

Many of Iraq's factories were crippled by the administration of Paul Bremer, the post-invasion ruler installed by the Pentagon. He starved the state-owned firms of capital, believing that industries could quickly be privatized after Saddam's fall.

But Saddam ran nationalized industries as a social welfare program. Instead of producing high-quality goods for sale, companies were subsidized by the regime to provide jobs for the masses. Virtually none of the over-manned and inefficient enterprises was commercially viable.

After Saddam fell and Mr Bremer ended the subsidies, some 300,000 workers lost their jobs. Many are thought to have joined the ranks of the insurgents.

Today, the Pentagon has dumped Mr Bremer's approach and accepts that state-owned firms will be pillars of Iraq's economy. But Mr Brinkley insists that they must become viable.

"The good thing is very few of these businesses completely disappeared," said Mr Brinkley. "The majority still exist at some level. We want to work with those that are left to stimulate potentially profitable parts of the business."

He hopes that renovated factories will trigger a "cascade effect", boosting the entire economy. "These idle plants are the engine of the Iraqi economy," he said.

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Solution to insurgency is 'Made in Iraq' - Source