US trade official: American businesses should invest in Iraq – now
A US official leading a trade delegation to Iraq encouraged American businesses not to wait to take advantage of Iraq's need for new infrastructure, despite ongoing security problems and corruption.
The United States is hoping that a share of Iraqi reconstruction projects will help revive the US economy in an ambitious goal of doubling American exports globally in the next five years.
But first, US companies will have to overcome their reticence and realize that despite ongoing security problems, corruption, and political paralysis, if they want to do business in Iraq, they can’t afford to wait to start, said a senior US official leading a trade delegation here.
“The opportunity to create partnerships and engage is not a year-and-a-half from now or two years from now, where perhaps you’ll see a continued reduction in attacks or violence. If you want to play a role here, you really have to be here now,” Francisco Sanchez, undersecretary of Commerce for international trade, told a group of reporters on Wednesday.
Mr. Sanchez says Iraq could figure prominently in meeting his mandate of doubling American exports – and creating new jobs.
“When I look at the infrastructure projects, the amount of money the Iraqi government is willing to invest – over $80 billion in the next several years – I see Iraq as a market where I can make a significant contribution for that in that goal,” Sanchez said.
Iraq’s biggest trading partners are neighboring Turkey and Iran, with the United States lagging far behind. Under US-led trade sanctions against Iraq in the 1990s, American companies were barred from doing business here and along with other Western countries have had to try to rebuild a foothold. The US has spent tens of billions of dollars on Iraq reconstruction, including billions that can't be accounted for, according to US auditors. The US now, though, will be looking to Iraq as a trading partner rather than as an aid recipient.
Ongoing violence, which dramatically increases security costs, has posed significant obstacles to doing business. The lack of a new government more than seven months after Iraqis went to the polls has added another layer of uncertainty.
“The Chinese are here, European companies are here, the Turks are here, the French are very much here.… You need to come out,” said Sanchez, describing his message to American firms.
In a sign of its increased confidence in the ability to do business in Iraq, the official US export credit agency, the Export-Import Bank, has begun backing short and medium-term loans for Iraqi imports of American products.
“I’m not trying to sugar-coat this," Sanchez said, "but what I am trying to say is, the Iraqi government is sorting through some of these challenges as the physical security increasingly improves. You can’t wait for everything to be perfect."
Oil reserves up?
The delegation Sanchez is leading includes 14 American firms, most of them in engineering, industrial equipment, and security. They met with Iraqi business people in the heavily guarded Green Zone where the US Embassy is based.
On Monday, Honeywell International announced that it was expanding its business in Iraq and would open a Baghdad office to provide equipment to the oil and gas industry. Iraq last week announced it had dramatically increased its estimate for proven oil reserves, giving it the second-largest reserves in the world after Saudi Arabia.
Oil Minister Hussein al-Shahristani said surveys by international oil companies and the discovery of new fields had raised the level of proven reserves by 25 percent, to 143.1 billion barrels.
While oil experts say Iraq’s reserves have likely been underestimated due to more than a decade-long halt in exploration, they cast doubt on the certainty of the government’s figures.
“Everyone agrees that Iraq’s declared reserves have been underestimated because the country was closed to international oil companies for a very long time and very little exploration was done,” says Ruba Hasari, an oil analyst and founder of the Iraq Oil Forum website.
“But at the same time, it does not give the full picture – seismic sureys and more appraisal work is needed for a more accurate figure,” she says, calling the announcement "premature."
Sanchez said the announcement of higher reserves was “worth looking at,” but would need more study.
“It’s encouraging news and we’d really want to understand what it really means,” he said.