Risks and Opportunities in Iraq

Exactly two months after the elections in Iraq, the votes are still being re-counted in the Baghdad constituency.

Yes, it’s a laborious and painstaking procedure, but surely the cost of more manpower and better systems would be outweighed by the benefits of speeding up the process, so that people would know where they stand and could get on with the job of forming a government.

Despite the uncertainty over the final tally of seats, the process moved a little closer to a conclusion this week with the announcement that the main Shia-ite parties – Nouri al-Maliki’s State of Law, and the Iraqi National Alliance – would form a coalition. As the numbers stand at present, they would be four seats short of a majority, and it is still unclear who would be Prime Minister. The process grinds on.

But from an investment point of view, periods of uncertainty often present opportunities. As Warren Buffett put it, “you pay a very high price for a cheery consensus”.

With that in mind, it was interesting to read Paal Aarsaether, spokesman for the United Nations Development programme in Iraq, describe investment in the Iraqi energy and power-generation sector as a “no-brainer”, considering the soaring demand.

The Financial Times quotes him as saying, “the risk is relatively high at the moment, but Iraq will be a completely different country 12 months from now”. If that’s the case, then this is the time to start investing.

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