Investing in Iraq

April 28, 2009

Ministers from Iraq, from prime minister Nuri al-Maliki down, are in London on Thursday to attract investment into the country. Could Iraq be one of the few investment regions decoupled from the global economic cycle?

It was having a war while the rest of the world was enjoying economic boom. As well as signs of lessening violence now and the promised withdrawal of U.S. combat troops by August 2010, it does have oil.

The country has a $2.7 billion bond maturing in 2028, has written off much of its debt with the Paris Club and others, and is planning government bonds totalling $5 billion.

As one fund manager told me: “Iraq is a less correlated asset, it doesn’t have much debt and its bond is holding up reasonably well.” But he still added, “the political risk is the thing that makes Iraq stand out negatively from other credits”.

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With 115 billion barrels of proven crude oil reserves, Iraq has the world’s second-largest endowment of oil, amounting to 11% of the global total. Only 17 of 80 oil fields have been developed. There has been virtually no exploration for many years.

Iraq also has significant proven natural gas reserves; virtually all are undeveloped. This country is a raw diamond with loads of investment opportunities, (energy, construction, telecom), Iraq will boom as soon as the security and political situation has been stabilized.

U Make excellent points. which is exactly why the U.S invaded iraq to begin with. all that stuff about 9/11 being the reason to invade iraq is nonsense. american saw dollar signs when it saw iraq. however with the countries likes saudia arabia who back al-qaeda, they are determined to make sure that the security situation in iraq never gets better, to ensure they remain america’s top oil dog.

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