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Iraq's Kurdistan region tries to rebuild
its economy
24.9.2007
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September
24, 2007
Erbil-Hewler, Kurdistan region 'Iraq', --
Billboards in Kurdistan's capital boast that luxury
malls and hotels are on the way, but banking and
insurance systems barely function. Cranes loom over
building sites, but few government inspectors check
the quality of construction.
This is economic development, on the fly. A sign at
the office of a trade association sums up the
freewheeling business environment in Kurdistan
region 'the part of Iraq' controlled by a Kurdish
administration.«Please leave your gun at reception,»
it says.
The Kurdish zone north of Baghdad is mostly
peaceful, while much of the rest of Iraq is a
patchwork of factions at war with U.S.-led troops or
one another. Development occurs because security is
relatively good, but the economy is weak, dependent
on imports, and prone to political uncertainty,
institutional pitfalls and a lack of transparency.
Some investors are diving into this poor region full
of untapped oil wealth, taking risks that would be
unacceptable in a Western-style business
environment. They include Kurdish businessmen based
in Europe and the United States, Turks, Gulf Arabs,
and a smaller number of Europeans and Americans.
Sigma International Construction, a Chantilly,
Virginia-based company, is building more than 350
luxury homes on the outskirts of Irbil. Right now,
the «American Village» development is little more
than leveled earth and shells of half-completed
houses, designed with walk-in closets, back doors of
sliding glass and fully equipped kitchens.
Jim Covert, Sigma's director in Kurdistan, said 80
homes had been sold in advance, and several
ministers from the regional Cabinet were clients.
The most expensive residence, the «Palace,» sells
for US$580,000.
«People don't blink,» said Covert, who employs Serb
foremen and Bangladeshi laborers because they are
more skilled than Kurdish workers. «People have
money here and they have nothing nice to spend it
on.
The same optimism is visible at construction sites
across the city, though most of them seem a long way
from the Utopian billboard images of gleaming office
towers and five-star hotels bordered by lush lawns.
At least one housing development near the airport,
named «Dream City,» is behind schedule.
The regional investment board has licensed 51
projects with a total value of US$5 billion since
last year; about 20 percent of that money has been
spent.
Two decades ago, most of Kurdistan's villages were
systematically destroyed during Saddam's Anfal
campaign against the Kurdish population. U.N.
sanctions imposed on the dictatorship also hurt the
Kurds, even though they enjoyed a U.S.-backed safe
haven.
Pell-mell development since the fall of Saddam in
2003 has yielded real benefits in the territory of
about 4 million.
The two main cities, Irbil and Sulaimaniyah, have
new airports and are building new roads, housing,
malls and schools.
Despite a recent outbreak of cholera in Kurdistan,
many Erbil residents have access to clean water from
a treatment facility built with help from the U.S.
Army Corps of Engineers.
Erbil, home to the regional Kurdistan government,
has a big park with rose beds, trimmed lawns and a
canal with paddle boats. A granite monument displays
the names of 98 people, including top Kurdish
officials, who were killed in two suicide bombings
in February 2004.
One new gasoline station in Erbil looks as good as
anything in an American suburb or freeway stop. It
takes credit cards, and has 16 pumps and a
mini-market that sells potato chips, chocolate bars
and other junk food from neighboring Turkey.
Hundreds of Turkish companies operate in Kurdistan,
even though their government has threatened to stage
a cross-border attack on a separatist rebel group of
Turkish Kurds who have bases in remote parts of
Kurdistan 'northern Iraq'.
Another source of political uncertainty is
Kurdistan's relationship with Baghdad, where
disputes over drafts of oil and revenue-sharing laws
have blocked progress toward a unified, central
government. Kurdistan's leaders signed an
exploration deal with Hunt Oil Co. of Texas after
drafting their own oil law, and the national oil
ministry quickly questioned its legality.
Nazaneen Muhammad Wusu, regional minister of
municipalities, said international bank loans for
Kurdistan have to be approved by the central
government, which amounts to a bottleneck on
progress. «Baghdad is not in a normal situation,»
she said. «They are more busy with security issues,
political difficulties. We are suffering indirectly
from the situation there.
Kurdistan is also on the national power grid, and
suffers constant blackouts that force people to use
private generators.
Eager to attract business, Kurdistan passed an
investment law last year that allows foreign
investors to get free land, as well as import
materials and repatriate profits without paying tax.
But the banking system is so basic that it is
difficult to wire money out of the country, and
insurance is virtually nonexistent; most car owners,
for example, drive without it.
Foreign agencies are helping to build up Kurdistan's
institutions, teaching basic skills such as how to
use a computer. Still, a culture of transparency has
yet to take hold and business deals often rely on
the power of personal connections.
«There may be some corruption here and there, we
don't deny it,» said Falah Mustafa Bakir, head of
the foreign relations department of the regional
government. But he said Kurdistan was committed to
an open business environment that could eventually
make it an economic «gateway» to the rest of Iraq.
Kurdistan, however, lacks a strong industrial and
agricultural base and is heavily dependent on
imports of products such as milk and grain, a legacy
in part of the U.N. oil-for-food program during
Saddam's rule that delivered foreign products to
Iraq.
Kurdistan has bottled water plants, but many Kurds
prefer to buy water from Iran and Turkey because
they think the quality is better.
For all their problems, many Kurds exude an optimism
that is all but impossible to find elsewhere in
Iraq.
«I think things will get better,» said Ali Abdullah,
an Erbil bookshop owner whose best-sellers are
romance novels and books of Islamic teachings.
«There's a lot of development in this city. It will
have a knock-on effect on other businesses.
AP
Since 1991, the Kurds of Iraq achieved self-rule in
part of the country. Today's teenagers are the first
generation to grow up under Kurdish rule. In the new
Iraqi Constitution, it is referred to as Kurdistan
region.
Kurdistan region has all the trappings of an
independent state -- its own constitution, its own
parliament, its own flag, its own army, its own
border, its own border patrol, its own national
anthem, its own education system, its own
International airports, even its own stamp inked
into the passports of visitors.
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