After nearly nine years, all US Forces are mandated to withdraw from Iraqi territory by 31 December 2011 under the terms of a bilateral agreement signed in 2008. Now the job facing the war-torn country is to re-build its economy. On Tuesday, prime minister Nouri al-Maliki gave a presentation to more than 400 executives representing a wide range of industries including petroleum, engineering and construction, commercial aviation, architecture, maritime cargo and financial services; the leaders of American commerce and industry, to proclaim Iraq’s “limitless” opportunities “open for business” to American investors. He said that, “It is not now the generals but the businessmen and the corporations that are at the forefront” of Iraq’s future.
Maliki was basically playing the role of a salesman, pitching his country to “the West”. He announced that “circumstances (in the country) have improved because of better security,” yet still acknowledged the difficulties ahead of developing a market-based economy governed by transparency laws and international regulations after the planned and strictly controlled economy of Saddam Hussein. Thomas Nides, the Deputy Secretary of State, told CNN “Make no mistake, this is a country that’s developing, its commerce is developing, it’s going to take time, it’s going to take energy,” but, “U.S. companies are going there because they believe they can make money and at the end of the day that’s what it is about.”
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For the first few months of 2011, as the war was slowing down and the forces were leaving the country in greater numbers, total foreign direct investment in Iraq reached $70 billion. The United States represented 11.6% with $8 billion of investment, up from nearly $2 billion in 2010. However Milaki has stated that “he is not satisfied with the number of US corporations in Iraq. All sectors of the economy are there, open for business, for American business.”
Despite all the desire for an increase in investment, Iraq has not previously been hospitable to US business offers. Two years ago the Iraqi government auctioned oil production contracts, but many members of Congress were outraged as not a single US energy firm secured a deal. Instead they were forced to watch as lucrative multi-billion-dollar contracts went to Russian and Chinese firms.
Iraq wants to try and diversify its economy to focus on financial, medical, agricultural, educational and infrastructural services, but oil still remains the dominant sector. The country boasts (mostly) untapped oil reserves of at least 115 billion barrels of oil, the fourth largest in the world, and therefore foreign oil companies have been chomping at the bit to return. Current output is about 2.5 million barrels per day, but according to OPEC could nearly be doubled by 2016.
Following times of conflict there generally dawns a period where those with the necessary resources can make billions. Iraq is just entering such a period and the government is actively searching for those people with the necessary resources. The IMF has already projected that the Iraqi economy could grow at a faster pace than China or India over the next two to three years. It is the perfect time to invest and help create a well balanced, modern country, as well as secure a stake in the worlds fourth largest oil reserves.
By. James Burgess of Oilprice.com