Iraqi Businesses Seek to Reduce Barriers to U.S. Investment
Abdullah Al-Jiburi, chairman of an Iraqi construction company, is in Washington enticing American business leaders to invest and trade in the Mideast country and U.S. government agencies to support them.
His son, meanwhile, is in China buying tractors.
“We want to renew our fleet,” said Al-Jiburi, who is building a 65,000-seat stadium and housing for the new Sports City complex in the southern city of Basra. “We wish to do it here in America, but nobody will support us, nobody gives us the terms of payment” the company can afford.
Al-Jiburi’s story highlights impediments for U.S.-Iraqi business relations that remain after a long war. Al-Jiburi is among almost 40 Iraqi business leaders in the U.S. capital this week at the same time as Prime Minister Nouri al-Maliki, who met with President Barack Obama at the White House on Dec. 12, seeking to bolster economic relations as the last American troops exit this month.
Iraq’s five-year national development plan includes more than 2,700 projects valued at about $186 billion. The goal is to diversify the country’s economy beyond oil, U.S. Commerce Secretary John Bryson told a luncheon in Maliki’s honor yesterday.
Chinese and French investors and their government agencies and financial institutions are opening wallets and removing barriers to business in Iraq with financing and flexible payment terms, Al-Jiburi said in an interview between meetings organized with the U.S. Chamber of Commerce and the State Department.
Al-Jiburi estimates he imported $40 million to $50 million of goods from the U.S. last year, all paid for in cash.
Iraq’s government has begun to smooth bureaucratic obstacles, such as visas and business registration, said Sami Al-Araji, chairman of the country’s National Investment Commission. He said his agency wants to show that “Iraq is open, Iraq is capable of offering the services you want and it’s not as bad as you see it on television.”
A business “matchmaking” meeting today aims to pair American and Iraqi companies that might do business together.
Iraq, which holds the world’s fifth-biggest crude oil reserves, estimates it must build 2.5 million homes by 2015. In April, the government tentatively approved a $37 billion plan to rebuild the country’s damaged infrastructure and spur economic growth.
“The opportunities are unlimited,” Maliki told the luncheon audience at the Chamber of Commerce in Washington yesterday.
Iraq wants American companies to help build roads, schools and hospitals, provide equipment and develop power grids, the premier said. Security has improved, as has political support for converting the former state-controlled economy, he said.
Obama said his talks with Maliki and meetings among other U.S. and Iraqi officials this week are focused on economic development and increased oil production.
“Our goal is simply to make sure that Iraq succeeds,” Obama said at a news conference with Maliki after their meeting.
Iraqi and American business leaders this week are visiting the Export-Import Bank of the U.S. and the government’s Overseas Private Investment Corporation, which supports private investment in emerging markets with loans, guarantees and risk insurance.
The Iraqi delegation also is trying to persuade the Commerce and State departments to expedite procedures and ease travel warnings so they don’t scare away potential investors.
Competitors in Iraq
Businesses from Turkey, South Korea, China and Germany are among competitors in Iraq who haven’t been as wary of the market, said Lionel Johnson, vice president for the Middle East and North Africa at the U.S. Chamber of Commerce.
“They’re very aggressive,” Johnson said. “And what we find is they have the strong support of their governments in advocating for their private sectors.”
After several false starts through the years in establishing a group to represent American businesses in Iraq, the U.S. Chamber yesterday formally accredited the U.S. Business Council in Iraq in a ceremony. The group’s board includes Exxon Mobil Corp. (XOM), General Electric Co. (GE), Honeywell International Inc. (HON) and Dyncorp International Inc.
“To get U.S. businesses involved in economic opportunities in Iraq is paramount,” said Hussain Qaragholi, managing partner of direct investment firm Phoenix Capital Group who is the organization’s president. His former employer, Citigroup Inc., also is on the council’s 12-member board.
Al-Jiburi says he hasn’t had a single security incident in six years of work on $1.2 billion of projects across southern Iraq. Americans, Germans, Turks, Indians and business people from seven other countries work alongside him, he said.
Still, most Americans “aren’t so brave” as to jump in now, when they have the opportunity to corner markets, Al-Jiburi said. “We want to pull their legs to Iraq, and they are pulling back. I tried many times.”
Next year is a “real test for the economic relationship between our two countries,” the investment commission’s Al- Araji said. “There is very big room for them to return to the Iraqi market.”
Vying for Contracts
American companies are vying for contracts to build the first 1 million housing units and for work on water, sewer and electricity projects, Al-Araji said. The commission’s notice of the housing program specifies a desire for modern construction techniques to speed development and keep costs low.
“If the housing projects move ahead, it will be a multi- billion dollar operation,” Al-Araji said. “Housing and infrastructure will be the biggest projects after oil and gas.”
Defense will pose another opportunity for American companies. The Pentagon yesterday notified Congress of its intent to sell Iraq a second lot of 18 Lockheed Martin Corp. (LMT) F-16 fighter jets. The sale, with associated equipment and training, is valued at about $2.3 billion.
Iraq placed an order for the first allotment in September.
“It is surprising how little commercial relations have developed between Iraq and the United States in these eight years,” said Daniel Serwer, an analyst with the Middle East Institute policy group and professor at Johns Hopkins University’s School of Advanced International Studies. He was last in Iraq in January. “Conditions have been so negative for everybody but security firms and a few very large oil companies.”
To contact the reporter on this story: Viola Gienger in Washington at email@example.com.