Who is going to be first into Baghdad?

Many Middle East companies face an awkward dilemma. None of them wants to miss out on the $100 billion reconstruction of Iraq, which presents countless business opportunities. But risking the lives of business executives at this stage is just not acceptable.

Eyes are therefore very carefully trained on the satellite TV channels to judge at what moment it will become safe to enter Baghdad. For the moment looting and lawless behavior combined with tired and inadequate coalition forces make the decision not to go very easy.

That will change over the coming weeks as troops are reinforced and replaced. There will also surely be a resolution of the precise role that the United Nations will play in the post-Saddam era. Indeed, the shape of the new interim administration in Baghdad will become apparent.

Then business interests need to watch for a better security situation and for Western governments to recommend that Iraq is now safe. But there will be many practical issues to face then.

Real estate prices will surely rocket in central Baghdad, as happened after the fall of communism in Eastern Europe. Moreover, hotels and other basic infrastructure such as telecoms will be is very short supply, and hence very expensive.

But for those that get it right the pickings could be much greater than those state assets expropriated by looters in the past week. Imagine, for example, the banking sector.

Is early privatization an option for the state banks? Could the major international banks take a strategic interest? For somebody will have to handle the flow of money into and within Iraq.

However, these are early days, and money itself is an issue. Hyperinflation seems to have killed the Iraqi dinar and a new currency, like the Afghani, looks essential. In the meantime, presumably, US dollars will be the sole currency.

Yet Iraq is not Afghanistan. Oil revenues of some $15 billion a year and a population of around 26 million people mean that Iraq has a unique opportunity for an economic renaissance.

The parallel is surely East Germany and the fall of the hated GDR regime in 1989. Then the existence of a wealthy neighbor in the shape of West Germany enabled a rapid transition to a market economy. Iraq has its wealthy GCC friends and foreign occupiers.

All the same, many companies have gone bankrupt as a result of getting their investments in East Germany wrong and even today the eastern German states have high unemployment and a lower standard of living than in the western states.

Thus while the reconstruction of Iraq offers a historic business opportunity it does not come without commensurate risks. Getting into Baghdad may be just the first of many risks associated with business in the New Iraq.