France has taken a leap ahead of its rivals in the race to tap investment opportunities in Iraq by building a heavily fortified business centre and boutique hotel where businessmen can sleep, eat and work in safety, according to a report from Reuters.
The complex, financed by private companies, is near the French embassy in Baghdad’s once glamorous Abu Nawas neighbourhood; it has room for 20 offices — half of which have already been claimed by major firms — and 10 bedrooms for visiting would-be investors.
“We say this is the time to come back to Iraq,” said Julien Kerdoncuf, deputy head of the embassy’s economic department.
The firms say “yes”, he said, speaking in English, but note that the security situation remains a concern, as Sunni Islamist insurgents continue a campaign of suicide bombings and killings.
“And what we say is: ‘Listen, we’ll take care of that, we’ll arrange everything, you get offices, you get swimming pools, you get hotel accommodation, you get food over there, and security is everywhere, everything you need, so you do not have an excuse not to come’. It is time to come — and actually they are coming, that is the big deal.”
The companies that have installed themselves in the French business centre include Lafarge (LAFP.PA: Quote), a pioneer of investment in Iraq, which already has cement plants in semi-autonomous Iraqi Kurdistan and has just started a $200 million renovation of an Iraqi state-owned cement plant in Kerbala.
Others are oil contractor Technip SA (TECF.PA: Quote) and engineering firm Alstom (ALSO.PA: Quote).
Oil major Total (TOTF.PA: Quote), which has partnered with China’s CNPC to develop Iraq’s giant Halfaya oilfield, plans to move from Baghdad’s Green Zone government and diplomatic enclave to the business centre, French diplomats said.
Emerging from war, Iraq is trying to shake off years of violence, sanctions and economic decline by opening up its vast oil reserves — the world’s third largest — and attracting foreign investment and expertise to help it rebuild.
But while it has signed 11 deals with global oil companies to develop its richest fields, projects outside the energy sector have rarely gone beyond aspirations. Lingering violence and political uncertainty, four months after an inconclusive election, are keeping most western investors on the sidelines.
Of those brave enough to invest so far, Iranian, Turkish and Gulf companies lead the pack, especially in Shi’ite tourism, housing and banking.
The United Arab Emirates is the biggest investor in large projects, with total pledges of $37.7 billion, while Lebanon tops the list of investment deals below $1 billion, according to a report last year by Dunia Frontier Consultants.
France opposed former President George W. Bush’s 2003 U.S.-led invasion of Iraq. Now as a fragile peace returns, it is getting in on the ground floor, said Ambassador Boris Boillon.
In addition to Lafarge, which produces 60 percent of the cement sold in Iraq, car maker Renault (RENA.PA: Quote) has signed an agreement to assemble trucks in two plants, one south of Baghdad and the other in the Kurdish region.
Boillon said apart from the issue of security, Iraq suffered from an excess of red tape and corruption that could undermine profitability. The Iraqi government was also moving too slowly to approve plans and projects and put them in motion.
“I am not exaggerating if I say there are 50 (French) companies now waiting for an Iraqi decision to create a plan, a project. Iraq was considered too dangerous before. Now the question is not of security, it is more about economic profitability,” he said.
“Now it is important to send the right messages regarding profitability, the struggle against corruption and bureaucracy.”
Eric Noel, international sales director for defence, space and security for Communication & Systemes, used the dining room of the business centre recently to host officials from the Iraqi Communications Ministry with which CS signed a deal a year ago.
“Of course security is a major concern,” Noel said. “It has been improving in recent years and months, however it requires a lot of planning … to move around.”