Iraq's economic outlook, a new report

Global Investment House is based in Kuwait and well placed to provide a sanguine account of economic prospects in its now occupied neighbor Iraq.

Its 27-page economic review and prospects for Iraq report is well observed and better than anything else available right now. However, much still depends on the restoration of security and law and order in Iraq and that falls outside the purview of economics.

With 95% of its foreign exchange derived from oil, this sector is critical to the rebuilding of Iraq. GIH points out that the best investment opportunities will be in green field sites and the potential for LNG, which is completely untapped, is considerable.

Only 15 out of 73 discovered oil fields in Iraq have been developed. Meantime, significant investment is required in existing oil infrastructure damaged by the war and lack of proper maintenance.

The industrial sector suffered considerably from UN sanctions due to its reliance on Western technology, and there is also scope for significant investment in power and chemical plants. Likewise, refinery capacity is only 415,500 bpd and the quality of output is poor.

There are two petrochemical complexes in Iraq, one running at 30% of capacity and the second never completed. Again there is scope for huge investment.

In the power sector Iraq has total power capacity of 4,300MW, leaving a current deficiency of 1,800MW. In the telecoms sector there are 675,000 fixed lines, no mobile network and 25,000 Internet subscribers.

What emerges from this report is a picture of a bankrupt nation with an infrastructure not fully restored since the first Gulf War of 1991, let alone since the conflict this year. The business opportunities are thus quite outstanding, albeit the mobilization of the political will to open them up is not yet in evidence.