Safer Iraq draws foreign investors
BAGHDAD — Iraq is poised to receive a flood of foreign investment, thanks to improved security. More than $74 billion in projects have been submitted for government approval in just the past five months, according to Iraq's state investment regulator.
The investors include companies from the U.S., Europe, and Gulf Arab states. Their proposals all involve sectors other than oil, including a $13 billion new port for the southern city of Basra, several hotels and thousands of housing units nationwide, says Ahmed Ridha, the chairman of Iraq's National Investment Commission.
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The biggest project, submitted by investors from Kuwait, Qatar and the United Arab Emirates, calls for an entirely new city to be built just outside the holy Shiite city of Najaf at a cost of $38 billion.
Only one of the projects has broken ground, while most others are still awaiting government approval, which has been difficult to obtain. The scale of the proposals — which, combined, equal almost as much foreign investment as China receives in a year — has drawn skeptics who say the final amount spent will be much smaller.
However, companies say they are eager to plow money into a country that has not received significant foreign investment for decades due to Saddam Hussein's economic mismanagement, U.N. sanctions and war.
"The political direction of Iraq is going the right way," said Najah al-Balaghi, the Iraq chairman for The Aqeela Company, the consortium behind the project in Najaf. "Our company is ready to play."
The projects seek to address long-standing needs in Iraq, such as a severe housing shortage and under-investment in public utilities. Najaf is visited by millions of Shiite tourists a year but infrastructure there is poor.
"This is an extraordinarily undercapitalized society," said Todd Schwartz, an economic counselor at the U.S. Embassy in Baghdad. "There's no question that Iraq can absorb $74 billion and hundreds of billions more."
There is plenty of money available as well, added Schwartz, in Gulf monarchies awash in petrodollars.
Prime Minister Nouri al-Maliki's crackdown on Shiite militias this Spring led to a thaw in relations with Sunni governments in the Gulf. That has encouraged investors such as Aqeela to turn to Iraq without fear of falling out of favor with their own governments, says Majed Michel, vice president of the Iraqi American Chamber of Commerce.
Most of the projects could remain on hold until al-Maliki signs off on regulations that streamline the government approval process, Michel says.
The Najaf project, for example, is currently held up due to ambiguous laws determining which government body has the right to sell the land.
Michel remains skeptical of ambitious plans such as Aqeela's: "You can't find anything solid or real yet, just shadows," he said. "But six months ago, we didn't have even shadows."
