Investing in Iraq

There's no doubt that there is much to rebuild in Iraq. Gun battles, suicide bombings, and outdated or heavily damaged infrastructure have taken their toll on reconstruction efforts. Although Iraq receives millions of euros in development aid, putting the country together again also requires foreign private investment.

The Iraq Investment and Business Forum, a two-day conference for German and Iraqi investors, began on Thursday in Berlin. Sponsored by Germany's Foreign Office and the Arab-German Chamber of Commerce and Industry, among others, it comes on the heels of a similar conference in Washington held last month, and in the midst of the 10-day Baghdad International Fair taking place from November 1-10 in Iraq's capital.

Last November, Iraqi Finance Minister Bayan Jabr estimated that Iraq would need $400 billion (270 billion euros) to rebuild, a figure that would be beyond the country's reach without foreign investment. The 2010 budget approved in October was just $67 billion.

Forum organizers were expecting about 200 German entrepreneurs and 100 of their Iraqi counterparts. Newly installed German Economics Minister Rainer Bruederle was also expected to attend.

Abdulaziz Al-Mikhlafi, the general secretary of the Arab-German Chamber of Commerce and Industry, told Berlin's Tagesspiegel newspaper that Iraq was ripe for investment in sectors ranging from airports and highways to universities and the water supply.

"We will present a detailed picture of about 500 projects that Iraq can only undertake with foreign support," Al-Mikhlafi said.

"Getting in on the ground floor"

Germany's economic connection to Iraq is growing. German exports to Iraq in the first half of this year were up by 96.2 percent compared to January to June 2008, the organizers told AFP. Machinery and vehicles account for most of the nearly 300 million euros ($446 million) in exports.

"The Germans should make their move," Al-Mikhlafi said. "Many others are already there - the French, Koreans, Chinese, Japanese."

The same advice was offered to the UK when it hosted the Invest Iraq 2009 conference in May. Iraq's Deputy Prime Minister Barham Salih called on UK firms to recognize the potential his country holds for investors, telling them there was a "unique opportunity to get in on the ground floor of the new Iraq." The British government sent several ministers to speak at the event as well, as if to demonstrate how seriously it takes the matter, and how badly it wants to encourage trading with Iraq.

But have UK firms heeded the call? British trade with Iraq is certainly on the increase: UK exports of services to the country were worth 273 million pounds (around 300 million euros) in 2007, and 433 million pounds (around 480 million euros) in 2008. And UK exports of goods to Iraq were up 6 percent in 2009 between January and July, compared to the same period last year. But many say it's still not enough. According to Mostafa Bazergan of the Iraqi British Business and Investment Council, British companies are being left behind by international rivals when it comes to investing in Iraq.

"Personally I criticize the British companies. German companies, Australian, Italians - they are there, before the British companies. I wonder when they will realize this is a mistake and they should correct it," Bazergan said.

“Brits are moving in, little by little”

But Michael Thomas, Director General of the London-based Middle East Association, says British companies are moving into Iraq. A short while ago he arrived back from Iraq on the largest UK trade mission ever to visit the country. He traveled with British business leaders and was granted audiences with several Iraqi government ministers keen to talk about opportunities for increased trade. Thomas insists British companies are already on the ground, investing.

“Oil and gas is moving ahead quite nicely," Thomas said. "BP [British Petroleum] have got a big deal down in the south with the Chinese. Shell are also there. Penspen, a big pipeline company, are there. We've got a huge number of British companies there at the moment - little by little the Brits are moving in."

But Thomas admits the Brits might be moving in more slowly than competitors when it comes to investing in Iraq, preferring to spend time building business relationships.

"It takes a bit longer, we don't rush in madly, but once we're there, we're there for the long haul," Thomas said

Most of the British companies already in Iraq are oil and gas firms - that sector is already proving very lucrative for UK business. The hope is now that other British industries will move in - although security issues remain an overriding and often prohibitive concern.

Beyond gas and oil

The UK government is now keen to encourage investment in Iraq, having played a large role in the 2003 invasion of the country. Not only to help with its rebuilding and economic growth, but also because of the potential for money to be made for British firms. Investment is growing, and there have been notable successes already.

Thomas and Bazergan agree that the opportunities for business investment in Iraq are wide and plentiful, in industries including telecommunications, industry, agriculture, housing, water, waste water, and electricity. Thomas insists the list of services that British companies could be supplying to Iraq is "absolutely endless."

Olly Barratt/svs/dpa/AFP/AP
Editor: Deanne Corbett