With sanctions-lifting in the air, Iraq’s popularity rises
UN sanctions remain firmly in place, but in the meantime a host of nations are beating a path to Iraq’s door. Most are claiming that they are being drawn to the country because of humanitarian concerns. But business interests are also clearly an issue.
This past Saturday, a Russian airplane touched down in Baghdad, laden with supplies for needy Iraqis. On board, with more than just charity in mind, were a group of politicians and several oil executives. They came to the Iraqi capital on the heels of a French delegation, which had actually landed in Baghdad in defiance of UN regulations. Both France and Russia were important trading partners of Iraq prior to its invasion of Kuwait in 1990.
Arab states are looking at this latest phenomenon with a sense of growing unease. Most reacted to the recent French and Russian flights with calls to end the air ban. Again there were more than purely altruistic motives at stake. They are concerned that they may lose out Europeans rivals when, eventually, the sanction-free Iraq is free to sign business contracts. Within this context, Syria announced plans to double its trade with Baghdad to $1 billion by the end of the year.
But why the rush? For although Iraq’s per capita GDP stood at $3,150 in 1988, 10 years later, with sanctions biting, GDP had plummeted to a decidedly third-world $208. Still, with a population of 22 million, and one of the few OPEC members with sufficient potential spare capacity to augment production in accordance with rising global demand, Iraq is clearly a country with real economic potential. Protesting UN sanctions policy is considered by many to be an inexpensive investment in the future, and a group of Japanese politicians did just that recently.
The rising price of crude oil has only served to enhance Iraq’s attractiveness. Since June 2000, the country has exported more than 180 million barrels, earning approximately $4.3 billion in the process. Its proven oil reserves equal about 112 billion barrels, second only to Saudi Arabia.
Once sanctions are lifted, Iraq plans to boost production to 6 million barrels per day. But before that will be possible, considerable investments by multinational corporations are required to revamp the country’s dilapidated oil infrastructure. It is fact that has not been lost on many.
In the meantime, one way to curry favor with the Iraqi authorities is to play the rules of the game. That means doing business within the framework of the UN-sponsored Oil for Food Agreement. A Malaysian delegation, led by a government minister, was Baghdad recently to pursue opportunities under the Oil for Food Agreement. At the same time it investigated potential business opportunities once sanctions are lifted, in areas such as reconstruction of infrastructure, telecommunications, engineering and consultancy.
A 35-member commercial delegation from India also visited Iraq recently, to discuss trade under the auspices of the Oil for Food Agreement. It members, who spoke about the strengthening bilateral trade ties in the fields of food, pharmaceuticals, electrical and oil equipment, also were keen to discuss the post-sanctions era.
So when will sanctions be lifted. If the United States and Britain get their way, not anywhere in the near future. But international support for the sanctions is definitely wavering, especially as the news media reports about the degree of human suffering going in Iraq.
The prospect of money to be made does not hurt either. Eventually, Iraq’s market will open up, and a more-than-ready world business community will wade in. – (Albawaba-MEBG)