As political unrest once more seems to be a feature of the new year, with Nigeria and Romania among countries to experience protests, and the death toll continuing to rise in Syria, an increase in violence in Iraq is unnerving investors.

U.S. troops left Iraq at the end of last month, and on Dec 22 there were more than 10 coordinated bombings, followed by several further attacks this year.

Iraq’s tiny stock market was one of the best-performing in the world last year, gaining 30 percent where many emerging markets lost a similar amount. But prices have slipped nearly 5 percent this month.

The yield on the country’s  $2.7 billion bond due 2028, issued in 2006 in a restructuring of commercial creditors’ debt, hit its highest in over two years last week.

Religare Capital Markets says in its 2012 regional geopolitical outlook that:

The outlook for Iraq is bleak…we maintain our view that the Iraqi government will fall apart this year and sectarian violence will escalate.