It was reassuring to read the comments this week from BP's Iraq’s President, Michael Townshend, in which he confirmed that the delays in forming a government are not causing problems for the development of the giant Rumaila oilfield.
This is good, and despite the refusal of Iraq's politicians to resolve the political impasse, we have seen a string of major deals in both the private and public sectors in recent days:
- $66 Billion New Projects from Abu Dhabi Developers
- $10 Billion to be Spent on Oilfield Water Injection
- Iraq's Transport Ministry leasing 66 ships
But not everyone has the power of BP, and not everyone is dealing in billions of dollars; smaller businesses are less well able to negotiate the complexities of Iraqi business. Encouraging as Mr Townsend's comments are, we cannot ignore the fact that Iraq is suffering because of weak government. (See our article “Weak Laws Deter Iraq Investors More Than Violence”).
Ayad Allawi admitted as much in a flying visit to London last week: “... services are stagnant, the economy is extremely poor, and unemployment is rising”.
Meanwhile, there are signs that progress is being made on the political front, with the Shi'ite-led political blocs reportedly coming closer to agreement on a nominee for the position of Prime Minister.
But let's not get ahead of ourselves – they've only had six months, after all.