During the past few months, Iraq’s neighbors and others, have begun to engage diplomatically and economically with Iraq.
Diplomatic Engagement
Jordan: On August 11, King Abdullah of Jordan met with Iraqi Prime Minister Nuri al- Maliki, becoming the first Arab leader to visit Iraq since 2003. This visit followed Jordan’s naming of an ambassador to Baghdad in June.
Lebanon: On August 20, Lebanese Prime Minister Fouad Siniora became the second Arab leader to visit Iraq. During the visit, Lebanese and Iraqi officials discussed energy and trade relations.
Kuwait: Kuwaiti news agency, KUNA, recently reported that Kuwait’s prime minister is scheduled to visit Iraq soon. While Kuwait insisted that Iraq repay its $15 billion debt at a UN conference earlier this year, in October the Kuwaiti government will submit a request to parliament asking to forgive Iraq’s debt.
See this previous Background Basics for further information on regional diplomatic engagement with Iraq
Energy Negotiations
• An oil deal between TPAO (Turkish Petroleum Monopoly) and Iraq was signed during Turkish Prime Minister Recep Tayyip Erdogan’s visit to Iraq in July.
• Iraq recently ended negotiations with six Western oil companies for no-bid contracts.
• In August, China’s state-owned National Petroleum Corporation signed a $3 billion oil agreement with Iraq, the first major Iraqi oil deal since the fall of Saddam Hussein.
• During Siniora’s recent visit to Baghdad, he said that a future bilateral agreement will allow Iraq to supply Lebanon with crude oil.
Investing in Iraqi Reconstruction
The Iraqi government has attempted to draw foreign investment in non-oil sectors by updating regulations, but some questions remain unanswered.
Government Regulations
• The structure for private investment in all sectors, excluding oil, banking, and insurance, is guided by an investment law and regulated by the National Investment Commission.
• The investment law states investors cannot own land, but can rent land for up to 50 years.
• If potential investors choose to bypass the commission they are not eligible for incentives, including ten-year tax exemptions.
• Regional governments can also pass investment legislation, though it is unclear in practice which law would take precedent if these laws contradict federal rulings.
• As of July 18, the commission had issued only $418 million in licenses, partly due to problems in allocating land and receiving needed documentation for deals.
Non-Energy Ventures
• In the past five months, U.S., European and Gulf State companies have submitted proposals for more than $74 billion in projects concentrated in reconstruction, other than oil.
• To date only one project, a $120 million venture to build a luxury hotel in Baghdad’s Green Zone, has begun construction while most others await government consent.
Proposed Ventures
• $38 billion proposal to build a new city near the Shiite holy city of Najaf, which will include the building of 200,000 new homes, medical facilities and an artificial island.
• $17 billion to renovate the Baghdad airport and construction of a commercial park, conference center, golf course and five-star hotel in the surrounding area.
• $13 billion proposal to build a new port in the southern city of Basra.
• $5 billion project to construct an industrial city outside the southern Iraqi city of Kut.
• $1 billion venture by ArcelorMittal, the largest steel company in the world, with a state-run steel plant.
