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WASHINGTON -- Despite an international
advertising campaign that promotes Iraq's three
northern Kurdish provinces as "The Other Iraq" -
safe, progressive and ideal for doing business -
American investors remain hesitant about the region,
according to Iraqi and American analysts.
Middle Eastern companies have increasingly invested
in Iraq's Kurdish region, widely considered the most
secure in Iraq, but few if any American firms have
invested so far, according to Raad Ommar, chief
executive officer of the Iraqi-American Chamber of
Commerce and Industry.
"My experience tells me that very few US companies
have invested in either Sulaimaniyah or Erbil, or if
they did we would have heard about them and they
would have become members [of the chamber]," Ommar
wrote in an e-mail from Iraq ahead of an April 27
investment conference in Erbil. The chamber has
about 700 members, he wrote.
Erbil and Sulaimaniyah are the main political and
commercial cities in Iraq's Kurdish region, which
consists of the provinces Erbil, Sulaimaniyah and
Dahuk. The region has enjoyed limited autonomy since
1991, but remains divided between two rival
political parties.
The Kurdistan Democratic Party administers Erbil and
Dahuk provinces. The Patriotic Union of Kurdistan
administers Sulaimaniyah province. The two parties
are in the process of forming a unity government
based in Erbil called the Kurdistan Regional
Government, or KRG. But the government has yet to
unveil a draft version of a common investment law,
which it was expected to do at Thursday's conference
in Erbil, Ommar said.
The KRG has promoted the Kurdish region through a
partner organization, the Kurdistan Development
Corporation, which initiated an advertising campaign
called "The Other Iraq" in November 2005, according
to the corporation's Website. Advertisements have
appeared in American and international print and
broadcast outlets and invite potential investors to
"See the promise" and "Share the dream" of the
Kurdish region.
The advertising campaign has been popular, according
to Nijyar Shemdin, the KRG's representative to the
United States and a spokesman for the development
corporation. A Website, theotheriraq.com, has
attracted more than 1.25 million hits and 380,000
downloads of promotional videos, Shemdin said in a
telephone interview.
But neither the KRG nor the US Commerce Department
could provide a record of American firms doing
business in the Kurdish region. Analysts said that
they strongly doubted the presence of American
companies in the Kurdish provinces outside of "the
major contractors" hired by the US government. Those
contractors include Kellogg, Brown and Root, General
Electric and Siemens, among others.
A Website for a September 2005 trade fair in Erbil,
called DBX Kurdistan, lists more than 400 companies
that registered for the event, including 34 American
firms. But Ommar, of the Iraqi-American Chamber of
Commerce and Industry - which organized the event -
said that those firms have not invested directly in
the Kurdish region.
American investors are hesitant about the Kurdish
region because of corruption, lack of transparency
and political uncertainties, said Vance Serchuk, a
research scholar with the American Enterprise
Institute, a Washington think tank.
The two main Kurdish parties have only just begun to
merge operations into a unity government, and until
that happens, the political and economic realities
in the region are determined "less by formal
institution and more by patronage networks", Serchuk
said.
"Every aspect of life, from the soccer club to the
security services - all of them, in one form or
another, intersect with the parties," Serchuk said,
noting that such patronage networks are not
attractive to American investors because there is no
central power structure and no regulation.
The lack of a common investment law has underscored
the problem. While the Patriotic Union of
Kurdistan-controlled Sulaimaniyah province has an
investment law in place, the Kurdistan Democratic
Party's two provinces do not, according to Ommar.
Business leaders are expecting to see a draft
version of a combined law this week, he said.
Bilal Wahab, a Kurdish Fulbright scholar studying
international corruption at American University in
Washington, compared the current investment climate
in the Kurdish region to the lawless business
atmosphere in Indonesia that led to an economic
collapse in the early 2000s.
"I'm getting a sense that something similar is going
on [in the Kurdish region]," Wahab said. "I'm very
happy that the parliament is considering making
Kurdistan a real investment magnet, and by 'real' I
mean transparent, dependable, accountable."
Until an effective common investment law is
implemented, American companies are not likely to
invest American capital in the Kurdish region, Wahab
said. He said that contractors doing business in the
Kurdish provinces are only "recycling Iraqi money"
and that Kurdish leaders recognize the problem.
"If they want foreign money to flow, they don't have
an option. It's an obligation to make foreign
investors happy," Wahab said.
More than 60 Turkish companies have invested in
northern Iraq, according to Shemdin, the KRG's
representative in Washington. He said that some of
those firms assisted in construction projects at
Erbil and Sulaimaniyah airports, which offer
international flights to countries including Jordan,
Turkey and Germany.
But while Turkish and other Middle Eastern companies
have done business in Iraq's Kurdish areas, American
investors have been less responsive, despite the KRG
and Kurdistan Development Corporation-backed
advertisements in the United States.
Kurdish authorities have produced a memorable
advertising campaign in "The Other Iraq", according
to Serchuk, but he said that the ads do not
acknowledge the Kurdish region's problems.
"The ads are very glossy and very nice and very
compelling. It's a very moving kind of campaign, but
the Kurds still face some serious problems," he
said. "I don't think friends of Kurdistan do them
any favors by whitewashing that fact."
UPI
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