By Robin Simcox, Research Fellow for Strategic Analysis, part of the Henry Jackson Society.
On Sunday 14 July, over fifty people were killed in a series of terrorist attacks in Iraq. The most deadly attacks took place in Basra, where three roadside bombs killed twenty eight.
A series of attacks – particularly via car bombs – have rocked Basra in recent months. However, the levels of violence are unlikely to deter future investment not only in Basra, but Iraq more broadly.
Oil sales account for over 90% of Iraq’s budget. It exports most of its oil from the south, and Basra – as a major hub for the Iraqi oil industry – is vital to the economy. The Southern Oil Company, the state-owned enterprise responsible for the southern oil fields, is based in Basra; 80 % of the country’s crude oil is exported from there; and 70% of Iraq’s oil is produced in the south.
As a result, and despite security concerns, investment has arrived. Foreign investment in Iraq reached $60 billion in 2012, and construction projects in Basra have seen malls, social clubs and hotels open. Standard Chartered is planning to open a branch there next year. As of last month, Qatar Airways now flies directly into Basra.
Basra is also a key port town, with the cargo unloading statistics at Basra contributing to revenues from Iraqi ports reaching $30 million a month in December 2012. This is the highest amount achieved in the country’s history, and the growing demand for shipping means that the Ministry of Transport plans to open a new port in Basra in the coming months.
All this helps explain why Nouri al-Maliki, Iraq’s prime minister, once described Basra as ‘the lung’ of the country. It is a potential economic powerhouse within Iraq, and clearly of significant strategic importance. Unless there is an enormous spike in violence, the potential gains on offer will ensure that terrorism does not lead to foreign disengagement.