The announcement last week to pass the Oil Law (the same one that has been about to be passed for the last 5 years) without Allawi’s party being involved just shows how the politics has shifted from a Shiite / Sunni issue to a Sadrists plus one of the others issue; that is a development worth watching.

But all this has not stopped the investment in Iraq. In 2010 Iraq attracted almost $43 billion in foreign investments – the real surprise is not the magnitude or the destination but the nature of the investments made. The top sector is not Oil & Gas, whatever you are led to believe from the press; the top destinations are residential property (33%), transport (16%), electricity (14%), industry – mainly cement and steel (14%) and then – in 5th place – oil and gas with 13%. Turkey dominates the investments with just over 33%, followed by Italy (12%), France (10%) then South Korea and the USA with the United Kingdom at 9th place with just under 3%.

What Iraq really needs is a truly integrated Government focused on Iraqi interests: and this needs Maliki to dump a few of the overtly pro-Iranian figures from his coalition. Allawi needs to abandon the idea of a strategic policy council (this was dumped in late 2010 in all but Allawi’s mind) and the Sadrists need to be properly integrated into the Government in some way (if the Mahdi army is reformed it will not be good) and lastly some sort of long-term military deal with the United States needs to be sorted out.

But then …… which country does have a Government that puts national interest ahead of political survival.

For investors in Iraq there are going to be periods of investment and periods when you need to keep your head down. Iraq is a different market from most others in that investors will need to understand the political dynamics more fully than the other markets – the costs of making a mistake are too high.

Aberdeen energy businesses looking to develop business opportunities in Iraq are able to access free advice through a series of seminars run by Upper Quartile on behalf of Aberdeen City Council. The next seminar in the series will take place at Marischal College on Friday 27th January.

For information contact Siobhan Young at siobhan@upperquartile.co.uk.