https://al-sura.com/how-the-iraqi-c...glish-will-work-to-rebuild-an-redevelop-iraq/
The Iraqi Investment and Reconstruction conference in Kuwait drew a lot of media attention, much of which was completely uninformed and inaccurate. What is rather ironic is that the convention was not hard to understand and I will outline in plain English exactly what the goal was and how it will be achieved. You don’t need a degree in economics to understand it and you don’t need much background in politics to get to the crux of the conference, to make rebuilding Iraq profitable, attractive and a wise investment option.
One of the biggest hurdles in Iraq for any sort of new development is bureaucracy and the corruption associated. Many errantly think Iraq is a lawless land but in reality there are more laws than ever before, regulating things to the nth degree without end in sight. As an investor it isn’t attractive to go to a country that is heavily regulated and state-leaning for development. This was overcome with relative ease, however poorly reported on, the corruption and bureaucracy was cleverly skirted by giving more management and oversight to the World Bank and United Nations (UN) in projects to increase investor confidence.
The World Bank itself outlined that Iraq would need $88 billion US dollars to reconstruct infrastructure and build a stronger economic base for the long term. Many misreported this figure as what the Iraqi government wanted from the conference. Approximately half, $45.8 billion US dollars was set aside for purely rebuilding purposes and the other half was set up for the very lucrative and profitable projects such as the metros, railways and port facilities. A total of 212 projects were highlighted and of those, 157 were specifically up for grabs to foreign investors. What is unique about these investments is the Iraqi government will not get any direct cash from the investment, rather the investors, UN and World Bank will transparently audit the projects and work with Iraq to ensure the projects are completed without corruption.
Several countries offered lines of credit in the billions, a total of 30 billion US dollars was put forward at the end of the 3 day conference. The enormous offering puts many projects that would otherwise be a risky investment into a far more likely light, projects that would bring much of Iraq’s economic powerhouse in the south into a new league. The success in drawing 30 billion US dollars in potential will more grantee more companies flocking to get a slice of the pie.
At the end of 2018 the Iraqi government will have completed the bidding cycle for the 212 projects and work will begin. One of the key focuses on all of these projects is the use of Iraqi workers throughout, the UN and World Bank have enshrined this throughout the conference and with the many projects it is very promising for the Iraqi workforce to be awash with cash flow domestically as part of the investments.
The beauty of this is of course that Iraq is not itself accruing debt, the investors are bringing their own finances as well as the credit lines offered by nations wanting to invest into Iraq. The Iraqi debt will thus be maintained at the relatively low percentage it is currently and no limitations will suddenly appear on the Iraqi budget. This conference avoids the corruption of local authorities, builds Iraq with strong investor confidence and ties to its neighbors and the international community as a hot-spot for wealth. Only a few of these projects need to be completed to bring Iraq forward as powerful economic hub in the middle east.
As with bids, the investments and credit-lines are yet to all be finalized with many nations eager to put money up for grabs after the Iraqi election in May comes up. Awaiting the results to see where Iraq is going for the next 4 years will be key to several billion more in pledges from a variety of countries around Iraq and the world.
Over the next 5 years the Iraqi government itself seeks to fulfil the remainder of the money needed for the reconstruction of Iraq after ISIS with policy being heavily influenced by the World Bank and UN auditing, helping local investors expand the private sector of Iraq. Given that Iraq’s budget is increasingly drawing away from oil revenues this figure is likely to be fulfilled with the next 5 years, and if oil prices are maintained at the $60/barrel level this figure will easily be fulfilled by oil revenues alone.
This rare investment opportunity in Iraq has increased confidence in Iraq and given a nation that has been heavily focused on state-managed enterprises a chance for an expansive private sector. Iraq will be among the few oil-based Middle Eastern nations with a thriving private sector with the added bonus of being among the only with a thriving industrial workforce in the Arab world.
