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By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

A confused and confusing decision by the Council of Ministers-CoM followed by an imprecise statement from the Ministry of Oil-MoO regarding Iraq-Jordan/ Basra-Aqaba Oil Pipeline-BAOP project had ignited a new wave of serious concerns and protests that eventually led to filing two lawsuits of appeal before the Federal Supreme Court-FSC and, probably, more cases are in the making, but surely the heated debate continues unabated.

To clarify what surrounds BAOP project, a debating platform, Al-Mushtarek, invited me to address the mater; by utilizing Zoom facility and with help of PowerPoint the event was successfully convened.

The topic is, Basra - Aqaba Oil Pipeline: Economic, Legal, Geopolitical, Geostrategic and National Security Perspectives.  My purpose is to make independent, professional, constructive, and facts/evidence-based contribution to the national ongoing debate regarding this pipeline.

Throughout my presentation I covered some basic issues before opining the debate by and with the direct participants who are in many different countries and others who posted questions through other social media means, particularly Twitter.

The first issue was "Reality and Implications of Semi Landlocked Geographic Location".

The reality, Iraq is the only Arab resource rich (oil and gas) country that has very narrow access to international waters through north Arabian Gulf; due to its imbalance economic structure, it has high dependency on natural resource, specifically oil, exports revenues, and after almost a century of oil discovery the failed economic policies only deepen such imbalance, making it more chronic and the country as clear example manifesting "Dutch disease" and "Resource curse" effects, exacerbated by devastating kleptocracy of post 2003 invasion.

Geography is sovereign, and thus there are, for Iraq, many implications of relevance to our topic- oil export pipelines.

Each of the neighboring countries, i.e., Jordan, Syria, Saudi Arabia, Turkey possesses a "location rent"; this could be economical and financial (in terms of transit fee, oil supplies or operating the pipeline) and political leverage, competition and interference.

Each export outlet has, simultaneously, geopolitical risks and geostrategic importance and, thus, there are high degrees of associated vulnerability and uncertainty.

The diversity and capacities of oil export outlets through pipelines and seaborne represent an economic rationality problem, i.e., if all oil export outlets are developed, total export capacity would exceed total oil production capacity by many folds.

The above reality and implications are bound to impact Iraqi decision making and the national debate on any proposed oil pipeline.

My second talking point is to provide brief background and data on BAOP.

This project has been under official and formal considerations for four decades; it went through two distinct periods of intensive attention while shelved for almost 28 years in between.

The first period, 1983/4, was short but witnessed very intensive efforts at high level of decision making.

A pipeline of one million barrel daily, the US Bechtel Co., was selected to execute the project that could cost estimated to be one billion US Dollar, half of which would be offer by the US EXIM Bank' financial guarantees.

Iraq requested US government security guarantees for the pipeline against any Israeli attack, but the US government refused to make such undertaking.

The project was shelved, and Iraq pursued other options; the first was to expand the capacity of Kirkuk-Ceyhan (Turkey) pipeline-ITP through a loan from APICORP of OAPEC and, the second was a new pipeline through Saudi Arabia-IPSA, financed fully by Iraq.

BAOP project was completely forgotten due to ITP expansion, IPSA, Kuwait invasion, the sanction and US led invasion of 2003 and its dramatic far reaching consequences.

The second period started in earnest in 2012 and continued to date.  Every government and prime minister stated and asserted they have concluded a "Frame Agreement" with Jordan regarding the pipeline, but no substantive verifiable complete documents comprising such frame agreement and feasibility study ever made public!!!!

From whatever available information, I premise my assessment on the following formal data:

The pipeline project is composed of two parts: Part 1, between Basra and Haditha with designed capacity of 2.2mbd, while Part 2, is between Haditha and Aqaba with designed capacity of 1mbd. The two parts have different pipeline sizes, length and there are many pumping stations and tank farms along them and a loading terminal at Aqaba.

The entire project was reportedly estimated cost at $26billion ($4billion for part1 (15.4%) and  $22billion for part 2 (84.6%)) as an "investment BOOT/BOT", or between $8.5 - $10.9billion as "EPCF".

Obviously, the difference is very huge indeed, but no official clarification was provided, and our repeated questions remained unanswered by any authority within the government!!

I move now to my third item which is about MoC Decision 95 of April 2022.

MoC agrees to adopt a plan to execute the pipeline by the Chinese CITIC' consortium with Worley Engineering as supervising consultants, according to the proposed EPCF by the Ministry of Oil; the project is to be financed by the Iraq-China strategic cooperation framework and, after 2022 state budget law is promulgated.

The above decision raises more questions than offers answers, clarifications, or assurances.

Discussion within the MoO revealed that no sufficient funding is available under the Iraq-China strategic cooperation framework; no other mean of funding is secured and, 2022 state budget law has not been even proposed so far as the new government has not been formed!! Moreover, nothing at all was released regarding the EPCF proposed by the ministry- utter lack of transparency. Also, it is not clear whether the proposed EPCF is the same or different from that proposed by the MoO in October 2021 and sent then to the Ministry of Planning-MoP for inclusion under the investment provisions of the state budget. And, what makes the matter murkier is a follow-up statement by the MoO asserting MoC decision was only a "roadmap" as the project is still under study and consideration!!

No surprise, therefore, that the pipeline project and MoC decision ignited powerful reactions, mostly by Iraqi parliamentarians and oil professionals.

These reactions include "parliamentary questions" that require formal answer from the MoO, various public statements by parliamentarians and other legal actions. Two legal cases were field before the FHC by the outspoken parliamentarian Dr. Hanan Fatlawi: a "stay/ restraining order" (Amr walaei) and an appeal case, both dated 16 April 2022. Also, a former member of the parliament, Lawyer, Yosuf Al-Kolabi and a group of lawyers and parliamentarians have been considering launching another appeal before FHC.

For the economic evaluation of the project, I used and calculated three criteria as presented briefly hereunder.

• Cost of funding (based on EPCF contract according to MoO October 2021 and MoP December 2021 official data) of capital cost ca. $9 billion, funding cost-accumulated interest ca. 1.9billion. Total cost payable in six equal annual installments.

Funding cost, i.e., accumulated interest, ranges between 21% and 109% of capital provided by the contractor, depending on when these six installments start: after the completion of the pipeline or at the commencement of the construction of the pipeline.

These funding costs are unreasonably high and, if the project is to be financed by the Iraq-China strategic cooperation framework, such cost of funding is totally unacceptable and contravene with the provisions of that framework.

• Cost of "piped-barrel". This cost was estimated by using full-cycle method; 25 years economic life; $300 million operating cost, $0.25/b transit fee; 4 years construction period with capex distributed evenly; pipeline capacity utilization rate-PCUR ranges from minimum 20% and maximum 80% of designed capacity.

The cost ranges between ca. $10.4/b at 20% PCUR and ca. $2.7/b at 80% PCUR. The implications are if seaborne barrel cost Basra FOB- Aqaba is lower than $10.4/b, it is not rational then for Jordan to import 200kbd through this pipeline AND if it is lower than $2.7/b the pipeline then has ZERO feasibility; it loses any competitiveness!!!

• Limitation and deception of conventional commercial feasibility indicators such as NPV, IRR and Payback-period; this is due to the intrinsic biasness to oil price and its impact. This was proved analytically and empirically in my previous articles on the pipeline and how such arguments prompt corruption, favoring contractor interest and ignore efficiency considerations.

In addition to the above standalone assessment, this project should be subject to thorough comparative assessment; such comparative evaluation covers exports options comprising existing, possible, and potential alternatives.

This takes me to address very briefly these comparative options for export outlets.

• Southern route/Basra export outlets. Now KAOT is expanding to add 600kbd and 300kbd within 6 months and, adding one more SPM would add 900kbd; both options are cheaper, quicker, fully sovereign, have more oil marketing flexibility and generate higher "Netback" for Iraq. Hence, either option is more valuable compared to the BAOP from capacity & operation, economic, financial, national economic security, strategic importance, and geopolitical complications among others.
• The Turkish route provides three options. I- Rehabilitation of pipeline section Kirkuk- Feishkhabor measurement station on Iraq-Turkey borders; II- Use/buy current KRG (KAR/Rosneft) pipeline; III- revive Turkish 2011 proposal for a new Basra-Ceyhan pipeline at, then, $2billion cost for 1.6mbd and 18-24 months construction period. Either option I & II is better than "Part 2" of BAOP, and option III is highly favorable than entire BAOP.
• The Syrian route. This route has many unique advantages: two pipelines- more than 2mbd; two types of crude- regular and heavy oil; two export facilities- Banias and Tertus on the Mediterranean; pipeline to Lebanon; it goes along Railway line Iraq-Syria; mutually supportive to IIS gas pipeline; it benefits from China's BRI. But this route currently faces formidable geopolitical risks: American policy and military, Qasad, Daesh presence. Also faces opposition from Turkey, SA and Jordan.
• Rehabilitating IPSA; the pipeline costed Capex $2.7billion, Opex $72 annualy, pipeline capacity 1.65mbd (1990). Using same BAOP methodology IPSA had piped-cost of $1.49/b at 20% PCUR and $0.37/b at 80% PCUR (these should be escalated by annual index increase). IPSA rehabilitation remains viable option with competitive/ comparative advantage (from cost, marketing flexibility and geopolitical complexity) over BAOP if it requires partial rehabilitation. But for complete rehabilitation, this route has one disadvantage since most of it is in Saudi Arabia compared with other routes; but this depends on cost of full rehabilitation.

Pro BAOP arguments emphasis the strategic importance of the project; but Aqaba location refutes such claim. Analytically and empirically three strategic national security equations should not be ignored:

• Where there are four states that have direct presence in the area, the geopolitical risks are highly probable and thus the geostrategic importance, for Iraq, diminishes; this applies to Aqaba.
• When a location has Global Strategic Importance, the local geopolitical risks are less probable and less impactful and, thus, geostrategic importance for Iraqi oil exports are secured; this applies to Basra seaboard export outlets via Strait of Hormuz.
• BAOP-P2 route is highly susceptible to local terrorist and sabotage inside Iraq and Jordan, thus very vulnerable from national security and strategic perspectives.

What to do and the way forward

Recent government move contravenes the constitution on many aspects and thus, any legal action against government action should be supported. The government and MoO in particular, should provide and make the FEED and/or a comprehensive feasibility study publicly available.

BAOP' Frame Agreement is an international bilateral treaty with over 25 years term and, thus it should be debated, approved, and legalized according to the current constitution and valid laws.

Aqaba area is the most vulnerable geopolitically as four states can have very serious impacts: Egypt, Saudi Arabia, Jordan and Israel. Iraqi Ministry of Foreign Affairs should provide its assessment particularly regarding Wadi Araba Agreement between Jordan & Israel and advise on possible implications on this project.

Based on the published data and information, the economic, financial, geopolitical and geostrategic analysis do not support this project and particularly so through thorough comparative assessment. More data and transparency are urgently needed and thus are prerequisite for making final decision on expanding Iraq's oil export outlets.

The debate on this BAOP with my PowerPoint slides, in Arabic, is available through the following link  https://www.youtube.com/watch?v=apg0JY51rQ4

Click here to download the full report in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

By John Lee.

Saudi Arabia has approved a memorandum of understanding (MoU) with Iraq, under which Saudi Arabia would provide electricity to Iraq.

The agreement was approved at meeting of the Saudi cabinet (pictured) on Tuesday, chaired by King Salman bin Abdulaziz Al Saud.

According to the state-controlled Iraqi News Agency (INA), the routes of the new lines have already been decided,

INA quotes Iraqi Electricity Minister, Adel Karim, as saying that the link will be completed within two years.

(Sources: Saudi Press Agency, Iraqi News Agency, Shafaaq)

By John Lee.

The Iraqi Prime Minister has announced that the Ministry of Electricity is to be renamed the "Ministry of Electricity and Alternative Energy".

At a press conference in Baghdad, Mustafa al-Kadhimi (pictured) said it is unreasonable to build gas power stations when there is not enough gas available, so the new ministry will actively seek alternative power sources.

In the past, he said, power stations were built, "in an absurd manner, without planning and without knowledge."

He also referred to the country's electrical interconnection projects with the Gulf states, Saudi Arabia, Turkey, Jordan and Egypt, which will provide power until Iraq reaches self-sufficiency.

Addressing the annual shortage of electricity during the very hot summer season, he said that last year's production of 21,000 MW will not be achieved this year, due to the reduction in gas supply from Iran.

(Source: Govt of Iraq)

By John Lee.

Iraq's Minister of Oil, Ihsan Abdul-Jabbar Ismail, has met with the Saudi Minister of Energy, HRH Abdulaziz bin Salman, to discuss connecting their respective electricity grids.

They also discussed enhanced energy cooperation between the two countries, and the work of the Saudi-Iraqi Coordination Council.

Iraq and Saudi Arabia signed a memorandum of understanding (MoU) in January to link their power grids.

(Source: Saudi Ministry of Energy)

Writing in Oil Price, Simon Watkins examines recent statements by Iraq's Oil Minister, Ihsan Abdul-Jabbar, that the country aims to increase its crude oil production to 6 million barrels per day (bpd) by the end of 2027.

Click here to read the full article.

By John Lee.

Iraq's Ministry of Finance has allocated one billion dinars (£700k) to Anbar Governorate to complete procedures relating to the Arar (Ar Ar) border crossing.

The border post with Saudi Arabia was re-opened in late 2020 following a 30-year closure.

Improving trade links between the two countries has been a priority for both governments.

(Source: Media Office of the Prime Minister)

By John Lee.

Jordan's Al Tanmiya Steel has completed the sale of its Iraqi steel operations for $195 million.

Al Tanmiya had full ownership of the Iraqi Al Anmaa for Construction Materials Production, which operates a steel plant (pictured) in Khor Al-Zubair, Basra.

Al Anmaa has been bought by Alghad Almutkamel for General Trading and Iron and Steel Metallic Industries.

According to a filing published by the Saudi stock exchange, Al Tanmiya is 65-percent owned by Saudi Arabian industrial conglomerate Astra Industrial Group (AIG), with  Al Maseera International owning the remaining 35 percent.

In 2010, Astra paid $61 million for a 51 percent stake in Al Tanmiya.

(Source: Saudi Stock Exchange)

The IBBC Iraq conference at the Mansion House - meeting at a most important time for Iraq - Tuesday 24 May 

After a two-year absence, IBBC is back at the Mansion House hosting its Iraq conference on Tuesday May 24^th focusing on finance, energy and sustaining economic growth in Iraq.

The country stands at another pivotal moment with a new government still in formation, record high oil and gas prices and a world supply crisis, in recovery mode after the pandemic and a strong desire to diversify the economy, grow the private sector and improve employment prospects, particularly for the young, a possible Iranian / US nuclear settlement, issues over water supply and food production, diversifying into renewable energy  and still much work to be done on repairing and renewing infrastructure, but progress being made on improving governance and hugely enhanced government revenue to provide business opportunities across all the sectors.

International interest in investing in Iraq remains strong with the Chinese (Rumaila) and French (Total) Governments being particularly aggressive and most recently a wish expressed by the Saudi Government to join them.

In each sector we are hosting influential Iraqi ministerial attendees including the Minister of Oil H.E. Ihsan Abdul Jabbar Ismaael and Mr Kareem Hatta Deputy Oil Minister for Upstream Affairs, the Governor of the Central Bank of Iraq, H.E Mr. Mustafa Ghalib Mukheef, the Minister of Youth and Sport H.E. Adnan Darjal Motar Al-Rubaye, as well as Ms Taif Al-Shakarchi, Deputy Minister of Finance , Dr Salem Chalabi, President & Chairman of the Trade Bank of Iraq, a delegation of Iraqi Private banks.

From the UK side Louis Taylor, Chief Executive of UKEF, UK Ambassador Mark Bryson- Richardson, BP President Iraq Zaid Elyaseri, and Richard Wilkins from JP Morgan will address the audience with latest developments and opportunities and Professor Frank Gunter will present his latest views on the political economy.

Principal panel subjects include developing the banking sector, project finance, energy transition and how to boost short term production, education and skills, insurance, in addition to an online Tech panel addressing the benefits of crypto currency.

For companies interested in Iraq, this is a prime opportunity to hear what some of the most important players, both government and private sector are saying and thinking, and an excellent place for networking with potential partners and customers from both national and international organisations.

For further information and to register - please follow the link below:

IBBC Spring Conference at the Mansion House, London - IBBC (iraqbritainbusiness.org)

A reminder to overseas attendees, to arrange for visas to UK within the next few days as is relevant for your country.

(Source: Iraq Britain Business Council)

From the Iraq Britain Business Council (IBBC):

Baroness Nicholson and Christophe Michels led a 30-strong delegation of IBBC Members to Riyadh to meet with Members of the Saudi Iraqi Business Council.

The high profile meeting of Members of both Councils met under the auspices of the Saudi Minister of Commerce at the head quarters of the Saudi Chambers of Commerce.

Mr Mohammed Al Khorayef, Chairman of SIBC presided over a 3 hour seminar at which 10 different IBBC member companies presented and discussed challenges and opportunities in doing business in Iraq. Mr AlKhorayef and Baroness Nicholson gave opening addresses on behalf of their respective organisations and attendees also heard short presentations from the Saudi Foreign Investment Authority and the Export Finance Authority.

The seminar was followed by an extensive networking Lunch.

The Saudi Minister of Commerce hosted members of both councils for dinner at the Ritz Carlton Hotel. The dinner was attended by the Governor of the Saudi Investment Authority, the Chairman of the Saudi Chambers of Commerce and other senior Saudi officials.

Both sides voted this first meeting a huge success which allowed for ample business to business meetings and the exchange of valuable experiences and information. Baroness Nicholson highlighted the important role IBBC can play in a triangular relationship between Iraq, Saudi Arabia and Britain. Christophe Michels emphasised the depth and knowledge of IBBC and its members, having worked in Iraq since 2009 if not longer and the willingness of IBBC Members to do business with their Saudi Companies in Iraq, but also in Saudi Arabia.

The meeting concluded with an invitation to SIBC members to attend the IBBC Spring Conference at The Mansion House in London on 24th May.

Christophe Michels stated that this was a first historic visit to Saudi Arabia for IBBC and that he was confident that IBBC and SIBC will build on it to further strong cooperation between their members in Iraq, Saudi Arabia and the United Kingdom. He added that today in Iraq business to business relationships really mattered and would lead to substantial measurable outcomes.

The IBBC delegation included, Mr Zaid Elyaseri, President of BP Iraq, Mr Sardar Al Bebany, Chairman of Sardar Group, Mr Mohammed Delaimy, CEO of SCB Iraq, Mr Ismail Maraqa, Chairman of PWC Middle East, Mr Khalil Nezir, Director of UB Holding, Mrs Sarah Akbar, MD of Oilserv, Mr Stuart Mackay, Corporate Development Director at G4S Risk Management, Mr Jaber Aljaberi, CEO of AA Global Trading Company, Ms Hadeel Hasan, Managing Partner of Al Hadeel Al Hasan LLC; Mr Khalil Al Salem, Deputy CEO of Al Majal; Mr Anmar Al-Gharifi, Partner, Saudi Arabia of Eversheds Sutherland (International) LLP, Mr Amar Shubar, Partner of Management Partners, Mr Hamed Silmi of Martrade Shipping & Logistics, Mr Hal Miran, Founding CEO of MSELECT, Mr Yaser Al Abbadi, Head of Business at NB of Iraq, National Bank of Iraq / Capital Bank and Mr Zeid Barghouti, NBI- Head of Treasury, Invest & FI, National Bank of Iraq / Capital Bank, Mr Faisal AlTamimi, Senior Associate- Business Development, PwC, Ms Leena Zeyad, Group BOD Administration Manager of Sardar Trading Agencies, Mr Habib Bitar, CEO of TBI Saudi Arabia and Mr Hussam Chakouf, Senior Associate of Zaha Hadid Architects, and was joined by IBBCs GCC Representative Mr Vikas Handa, Mr Richard Cotton, Commercial Advisor and Professor Mohammed Al Uzri, Health and Education Advisor.

On Saturday 26th March, our hosts organised visits to Riyadh Fort, now fully refurbished to its original state, the site now designated as the place where the modern Saudi state began in 1902 and to the Saudi National Museum, which records in fabulous settings, the geology, the history of the country over centuries, and the large diversity of cultures across the country.

On the evening of Sunday 27th March, the Trade Bank of Iraq in Saudi CEO Habib Bitar kindly hosted a dinner for the IBBC delegates who were able to exchange ideas with senior bank officials and other distinguished Saudi guests.

(Source: IBBC)

By Ahmed Tabaqchali, Chief Strategist of AFC Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Market Review: "Oil and the Economy"

The market, as measured by the Rabee Securities RSISX USD Index, increased by 4.5%, and 8.8% for the year. Average daily turnover on the Iraq Stock Exchange (ISX) declined for the second month in a row and is currently at the lower end of the levels that prevailed over the last twelve months.

On a positive note, the Rabee Securities RSISX USD Index has reclaimed the upper-end of the uptrend that it established over the last two years (chart below) - a promising development that is in contrast to that of many markets worldwide.

(Source: Iraq Stock Exchange, Rabee Securities, AFC Research, data as February 28^th)

Among the index's constituents, lower-priced Gulf Commercial Bank (BGUC) was up 20.0% for the month, far ahead of the other nine constituents. The next best performing constituent was Bank of Baghdad (BBOB) up 4.7%, followed by Baghdad Soft Drinks (IBSD) up 4.4%, Asiacell (TASC) up 3.3%, the National Bank of Iraq (BNOI) up 2.6%, and Al-Mansour Bank (BMNS) up 2.0%, while the Commercial Bank of Iraq (BCOI) was flat. Decliners were led by Al-Mansour Pharmaceutical Industries (IMAP) which was down 6.5%, followed by National Chemical and Plastics Industries (INCP) down 2.0%, and Kharkh Tour Amusement City (SKTA) which was down 0.3%.

Excluding BGUC, these modest stock price performances for the month haven't yet reflected the increased bounty brought by high oil prices taking Iraq's oil sales to an all-time high for a fifth consecutive month (chart below). The country's high leverage to oil prices and hence to oil sales will have significant positives for both the economy, and the equity market down the line - as a result of the centrality of the government's oil fuelled spending to the economy.

(Source: Ministry of Oil, AFC Research, data as of February 28^th)

There is a great deal of fear built into oil's current prices, and as such they are unlikely to be sustainable for too long, yet the changed geopolitical landscape as a consequence of the invasion of Ukraine will have significant consequences for the supply and demand of oil. On the demand side, the limited disruptions brought by the Omicron variant on economic activity worldwide since its emergence has solidified market expectations that oil demand in 2022 will return to pre-COVID-19 levels seen in 2019 - there is no reason, at least for now, to expect meaningful change to these expectations following the Ukraine invasion.

However, the same market expectations that supply will itself, like demand, return to its pre-COVID-19 levels will likely be re-examined in light of the pressures that the OPEC+ group will be under in the new changed world order. Prior to the events leading to the current crisis, OPEC+'s plan was to fully unwind by September 2022 the production cuts agreed to in April 2020. However, over the last few months, the plan was facing difficulties as some members of OPEC+ were struggling to return to pre-COVID-19 production levels.

A situation will likely worsen given the wide scope of sanctions levied upon Russia, which will negatively affect its oil production and the production of many of the "+" members of OPEC+ that are closely aligned to Russia. Consequently, supply will likely be meaningfully tighter than anticipated earlier despite many countries releasing oil held within their strategic reserves, the return of full U.S. shale oil production, and possible production increases by Saudi Arabia. Moreover, the changed geopolitical landscape means the return of high-risk premiums to oil prices for a considerable period into the future.

(Source: U.S. Energy Information Agency, data as of February 8^th)

Oil price expectations - a consequence of the changed dynamics of oil's supply and demand - and what they mean for the Iraqi economy, are meaningfully higher than those articulated here in the "Outlook for 2022" which argued at the time that "oil prices at these levels are positive for the country's financial position in that they will provide governments, current and upcoming, with the wherewithal to continue with current expansionary economic policies that will also still allow for the accumulation of budget surpluses. Moreover, they will also lead to multi-year positive balances in the country's current account which in turn will translate into meaningful increases in Iraq's foreign exchange reserves."

Iraq's equity market outlook and attractive risk-reward profile, in the unfolding new world order, is in sharp contrast to that of many markets worldwide. Firstly, the Iraqi equity market is in the process of emerging from a multi-year bear market that saw the Rabee Securities RSISX USD Index at the end of 2020 down by 68% from its 2014 all-time high - unlike many markets worldwide that have had multi-year bull markets.

Secondly, its 8.8% performance year-to-date is in contrast to the sell-offs experienced by other markets in response to the changed world order dynamics.

Finally, the index's 8.8% increase year-to-date coming on the back of a +21.4% return in 2021, is by the end of the month still 58% below the 2014 high - underscoring the potential catch-up upside for the equity market and its attractive risk-reward profile versus other global markets (chart below).

Normalised returns for the RSISUSD Index vs MSCI World Index, MSCI Emerging Markets Index and MSCI Frontier Markets Index

(Source: Bloomberg, data as of February 28^th)

Please click here to download Ahmed Tabaqchali's full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the Chief Strategist of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years' experience in US and MENA markets. He is a Visiting Fellow at the LSE Middle East Centre, Senior Fellow at the Institute of Regional and International Studies (IRIS), and a Senior Non-resident Fellow at the Atlantic Council. He is also a board member of Capital Investments, the investment banking arm of Capital Bank in Jordan.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.