Iraq Crisis Not as Bad as You Think: Bartle Bull

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June 12 (Bloomberg) -- Bartle Bull, fund manager at Iraq Investment Partners, discusses the state of Iraq’s economy, governments and markets in light of Islamic militants taking over three major cities and offers his outlook for investments in the nation and the safety of Iraq’s oil fields and pipeline. He speaks on Bloomberg Television’s “Market Makers.”

How concerned are you right now?

No doubt these are very serious events.

We will talk about markets in the second.

In terms of politics, it is important to remember who these people are.

They are still part of the french of the suni side.

-- the fringe of the sunni side.

They really do not have a chance of holding this and any long-term way.

Still very significant they have been able to do this spectacular raid.

We have to remember iraq is 15% sunni and these people represent a tiny percent of that minority.

The really bigger things on the mind of markets, we will get into it in a moment, but the markets in iraq have not responded as catastrophically as it looks.

If these people are such fringe, players, why are people taking this so seriously?

It is spectacular what they have achieved.

So why can't come out from achieving more?

-- cwhy count them out from achieving more?

Remember and even recent history how resilient it has been.

Al qaeda lost just five years ago.

The main reason they lost is because they had no popularity among the broader iraqi public.

Surely you are more concerned.

If this is such a small party that they can take the second biggest city in the country with such ease, isn't there a bigger concern about the people who run the country in the institutions they're meant to keep it stable?

There is huge concern about that.

A great question.

It is a much more reflection of those things.

The current government has been terribly divisive, especially with the sunnis.

It has managed the economy very badly.

I think those are the bigger implications.

Remember we had elections april 30, very recently.

The government formation process is still going on.

To me, the biggest implications of this -- this time will receive, the implications for the government formation process , will he stay or fall are much more important for the long-term.

Let's talk about markets.

We have seen a reaction two days after it happened in the oil market.

The risk here is they will never get back toward 6 million barrels per day, because why on earth would you want to invest in infrastructure with this kind of instability right now you go with someone like you that has money exposed to what is happening, how concerned are you that this is it and there will be no growth in this country?

Oil is a great place to start.

As we saw free beasley, -- prev iously, oil is in the north and basra in the south.

Both of these places are untouched by all of this and will remain untouched.

Purely kurdish in the north and shiites in the south, this violence tends to happen in the mixed areas.

The oil price has moved 2.5% up over the past week.

The iraqi equity market was down 4.5% yesterday, the big day.

The euro bond, the biggest global barometer of faith in the countries found this -- sound ness now yielding a little under seven percent.

It was 10% only three years ago.

Oil fields are safe him and the country has been through worse even than this and stuck together.

Are the pipeline safe?

The pipelines are at risk because they run through the regions you are talking about.

The oil fields may not be there, but the pipelines are.

If you cannot get the oil out of the country, what is point in producing?

That is the concern.

Grade-point come and jonathan.

-- great point.

You can see it right there.

The pipeline going into turkey.

That is the big risk, the pipeline.

Northern pipeline, nerds and -- northern oil, 15%. southern, 85%. that is the key point.

The northern part will always be exposed.

Iraq will always be violence unfortunately.

This pipeline has been disrupted a lot in the north already.

It is already the second reducer in opec.

And only growing.

The big story is in the south.

We mentioned earlier on you are responsible for $5 million and a rack.

-- in iraq.

How much money can you afford to spend on the situation right now?

Describing it to the public or looking at it?

Of course, all of my time.

It is critical.

Politics are often of the heart of emerging market investment, but at the same time, we are invested in a small number of companies, and proving they can make real money in terrible times.

What do they do?

Classic emerging market plays, consumer goods.

A pepsi bottler, one of the top three cell phone companies listed on the local exchange.

Our favorites are the banks, another classic leverage play on gdp growth in emerging markets and frontier market scenarios.

Thank you very much.

This text has been automatically generated. It may not be 100% accurate.


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