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Iraqi Kurdistan region focuses on
investment and building
27.6.2007
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Pointing to Stability, Kurds in Iraq Lure Investors
June
27, 2007
Erbil-Hewler, Kurdistan region (Iraq), -- It
is a measure of soaring Kurdish optimism that
government officials here talk seriously about one
day challenging Dubai as the Middle East's main
transportation and business hub.
The Kurdistan Regional Government is betting that it
can, investing $325 million in a modernist terminal
at the Erbil International Airport to handle -
officials hope - millions of passengers a year and a
runway that will be big enough to handle the new
double-decker Airbus A380.
"We're not saying Kurdistan is heaven," said Herish
Muharam, chairman of the Kurdish government's Board
of Investment. "But we're telling investors that
Kurdistan can be that heaven."
As the rest of Iraq has plunged into a downward
spiral, Kurdistan has enjoyed relative political
stability and limited violence, in part owing to a
sectarian and political homogeneity lacking
elsewhere in the country.
Kurdistan's rising fortunes have been no more
apparent than in the wave of building and investment
that has swept the region in the past four years.
Iraqis and foreigners alike have poured in billions
of dollars, defiantly wagering that the region -
with a population of about 4.2 million, its own army
and a semiautonomous government - will remain
relatively peaceful even if the rest of Iraq slips
deeper into civil war.
Where explosions and bomb-scarred buildings have
been a defining symbol elsewhere in Iraq,
construction cranes are now a common feature on the
Kurdish landscape, tugging hotels, shopping centers,
and office and housing complexes from the ground.
While public infrastructure is still suffering from
chronic underinvestment, the regional government has
approved more than $4 billion worth of mostly
private development projects since August, when the
Board of Investment was created.
Billions of dollars' worth of other projects were
already under way.
Much of the money is coming from overseas, including
the United States, Europe, the Gulf countries, Iran
and Turkey, officials say.
The Kurdistan Regional Government has placed special
emphasis on attracting investors from the United
States and Britain, unleashing a slick advertising
campaign in English dubbed "The Other Iraq," which
includes television commercials featuring romantic
shots of Kurdistan's mountains, and waving, cherubic
children.
"It's spectacular, it's joyful," intones a narrator
in one 30-second spot. "It's not a dream. It's the
other Iraq."
The government has also hired lobbyists in
Washington to help promote its development agenda,
urging the State Department to change its travel
warning for Iraq to distinguish Kurdistan from the
rest of the country. Iraqi officials regard the
travel warning as an impediment to investment and
tourism.
Even with the negative travel advisory, development
has been booming. Contractors have been clearing
savannah and brush here in the capital of Kurdistan
to build suburban residential complexes that go by
names like the English Village 5.
One development, Dream City ("The Most Elegant
Square Kilometer in Iraq"), will include about 1,200
houses priced between $180,000 and $700,000, as well
as three schools, a supermarket, a restaurant,
recreation areas, a casino and a mosque, according
to Amer Ibrahim, the project's manager and
architect.
The principal partner in the Dream City project is
also building a U.S.-style mega-mall with 6,500
shops and four office towers in Erbil, one of the
oldest continuously inhabited towns in the world.
Several luxury hotels are under construction,
including one by the hotel chain Kempinski. A joint
venture between Austrian, Turkish and Kurdish
investors is developing a 500-bed hospital in Erbil.
There is even talk of a Burger King franchise and a
ski resort.
Asked about the most compelling ideas circulating in
the investor community here, Ibrahim responded,
"Everything, everything, everything." He went on:
"There's a big lack of everything. There are no
services, no infrastructure."
For all the shiny new construction in Kurdistan,
there are glaring deficiencies in the public sector.
Kurdistan's residents receive at most about three
hours of electricity a day. Not all areas of the
region receive drinking water, and the health care
and education sectors are anemic There are no waste
water treatment plants, and sewer systems are
inadequate: Even a moderate rainfall turns the
streets into foul rivers. |
The Kurdistan regional government is investing
$325 million in the expansion of the Erbil
International Airport, which they hope will help
them to challenge the position of Dubai as a
transportation and business hub for the Middle East.
NY.Times
A recently opened bowling alley in Sulaimaniyah,
Kurdistan, is a symbol of what the Kurdish
government's advertising campaign, geared toward
foreign investors, calls the other Iraq NY.times
Sulaimaniyah, Kurdistan. Kurdish teens enjoying a
recently opened bowling alley in Sulaimaniyah. The
three story entertainment
complex houses bowling, an arcade and a food court
and is one of many investments by Kurds returning to
their homeland from abroad. Although many Kurds
would prefer to formally secede from Iraq, the
region has enjoyed de facto autonomy since 1991, so
most teenagers cannot recall a time when Kurdistan
was ruled from Baghdad. Ny.times
New houses are being built at the English Village, a
410 unit residential housing complex partly financed
by British investors NY.times |
In the immediate aftermath of the U.S.-led invasion
in 2003, Kurdistan's officials were so desperate for
any kind of investment that they signed off on
numerous projects with only limited concern for the
essential needs of the population.
"The government built like mad," said Douglas
Layton, director of the Erbil office of Kurdistan
Development Corp., a public-private partnership
promoting investment in the region. "There was no
master plan."
To make matters worse, governmental graft went
unchecked.
"The corruption was happening because of the rushing
we were doing in nearly everything in a limited
amount of time,"
Muharam said in an interview here last month. "It
caused misuse, lack of transparency."
Many projects foundered because of a lack of
capital. Erbil, for instance, is dotted with
half-finished buildings, roadways and overpasses.
The government is now implementing a more
transparent system of contracting and is trying to
rectify the imbalance between public sector and
private sector development. Muharam said the
government was also trying to strengthen the banking
system and insurance laws to provide a more
attractive environment for investors.
The government passed an investment law last year
that offers generous incentives to outside
investors, including the right of full ownership of
properties, tax and customs duty exemptions,
repatriation and partnerships. The government has
also been providing free land to developers to
stimulate construction.
Officials and investors argue that Kurdistan offers
the opportunity for national and foreign businesses
to establish a foothold in Iraq with an eye toward a
more peaceful future when development in the rest of
Iraq will be possible.
"You can do business here today and as the situation
stabilizes down south - and I hope it will; it's not
looking too good right now - you can move down
south," Layton said.
Last December, Austrian Airlines began twice-weekly
flights between Vienna and Erbil, becoming the first
European-based commercial airline to fly into Iraq
since the invasion. Taher Horami, the airport's
director general, said he was in discussion with
other major international airlines on opening routes
into Kurdistan.
But hovering above the development boom is a dark
question: If the situation in the rest of Iraq
continues to worsen, will Kurdistan's relative
tranquillity hold? And if not, will all this
investment be lost?
Two truck bomb attacks by Sunni Arab insurgents in
May against Kurdish government targets, including
one in the center of Erbil, severely unnerved
residents and the elected leadership here, not only
because they were so deadly - at least 69 people
were killed in the blasts - but because the last
suicide attack of this sort in the region had not
happened in two years.
Harry Schute Jr., a U.S. security adviser to the
Kurdistan Regional Government, said the attacks may
have been intended to punish the Kurdistan
government for sending its Peshmerga militia to help
with the Baghdad security plan.
In addition, he said, insurgent groups have
repeatedly criticized the Kurdistan authorities for
their secularism and cooperation with the West.
The Kurds are anticipating an increase in insurgent
activity as a referendum approaches on the question
of whether Kurdistan can annex oil-rich Kirkuk and a
swath of disputed territory in northern Iraq, a move
opposed by many Sunni and Shiite Arabs. The
Constitution calls for a vote before the end of the
year, but no date has been set.
As jarring as the latest attacks may have been, they
did not appear to derail any development projects,
according to several government officials and
private investors.
Kurdistan's boosters point to the region's
homogeneity, as well as a strong military and a
well-developed intelligence network, as effective
buttresses against rampant violence.
"It's relatively secure," said Layton, an American
who has worked for many years in Kurdistan. "It's
not perfect, but I'd much rather walk down the
streets of Erbil than walk down the streets of
Detroit, New York, Washington and Chicago."
Still, he is not taking any chances. As he spoke,
bodyguards were posted outside his office. And
behind his desk chair, next to an umbrella, a
Kalashnikov leaned against the wall.
Alan Attoof contributed reporting from
Sulaimaniyah.
NYtimes com
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