The question that constantly arises in Iraq, and that is often posed perplexedly, is: “Why have the Iraqis failed to attract large-scale investments over the past ten years of political and economic change?”
Figures certainly indicate that the arrival of international oil companies is an example of successful investment. Yet the answer to the above question is evident when examining the laws of the Iraqi National Investment Commission, which doesn’t include oil investment in its scope of work.
Oil extraction and marketing is quite different from the investment movement, which is primarily linked to market development, higher employment and training, introduction of various industries into the country, and agricultural, touristic and urban development.
It is well-known that Iraq is a single product economy, where oil export accounts for 95% of the country’s budget.
We can talk for hours about how the investment law serves as a real obstacle to bringing in foreign companies. It is clear that the investment law in force in the Kurdistan region of Iraq is more flexible than its counterpart in Iraq’s Arab regions.
We can also talk about security as another significant obstacle. Despite the relative success of Iraq in decreasing insurance rates incurred by foreign companies in exchange for bringing their staff into Iraq, instability is still a key obstacle to investment. Meanwhile, political deterioration, disputes and ongoing threats that the current political system will collapse do not provide a favorable environment for investment.
While these obstacles have impeded the arrival of well-known companies from industrialized countries, they have also provided a positive atmosphere for the arrival of companies from other countries — such as Iran, Turkey, China and some Arab states. These latter countries often have lower standards in the investment fields.
It is worth noting that the declared figures of foreign investment in Iraq are variable, and even the figures suggested by the investing countries do not seem to be accurate.