Tags: Iraq | sovereign | iraq | investment | capital

A Truly Sovereign Iraq Will Attract Global Investment

A Truly Sovereign Iraq Will Attract Global Investment

Mikhail Mishchenko | Dreamstime.com

Wednesday, 19 February 2020 12:13 PM Current | Bio | Archive

Iraq is struggling to attract foreign capital because of its extensive security problems, fragile institutions and lack of governance.

Creating a truly sovereign nation — the ambitious goal of the protest movement sweeping across the country — would be a trigger to unleash the billions of dollars that Iraq so badly needs after the U.S. withdrawal in 2011.

Sovereignty means shaking off the influence of Iran, which has embedded itself into Iraqi affairs and penetrated virtually every aspect of the country’s political, economic and religious life.

The Islamic Republic considers Iraq, as well as Lebanon and Syria, crucial to its national security. It is working to curtail Iraqi sovereignty and military capabilities, and to ensure that political factions loyal to Iran remain in power. Iran’s ultimate goal here is to ply Baghdad away from its alliance with Washington so Iraq can become a subservient state. Iran now has “key elements of its government acting as proxies for Iranian interests.”

Iran has long been a major presence in southern Iraq, due to a shared faith and tribal ties that span a porous border. Tehran has been the main voice of Shi’a Islam since the late 1970s, when Iraq’s Baathist government began to persecute its Shi’a population. Iran provided a haven to opponents of Saddam’s regime and funded Iraqi opposition groups.

The U.S. invasion allowed the return from exile of members of Iraq’s two biggest Shi’a political parties with allegiance to Iran: the Islamic Dawa Party and the Islamic Supreme Council of Iraq. Many of these people became high-level government officials, and others are among Iraq’s most prominent clerics.

“The link they have with the Iranian government, with the Iranian hierarchy, runs deep,” Farhad Alaaldin, chairman of the Iraq Advisory Council and a former presidential adviser, told NPR in January. “There are very strong links – religious links, cultural links…obviously, the Iranians are using these links to further their political cause and their interests.”

Tehran now has a vast web of influence in Iraq, according to an extraordinary article by The Intercept and the New York Times based on 700 pages of leaked Iranian intelligence reports and cables. The documents detail “years of painstaking work by Iranian spies to co-opt the country’s leaders, pay Iraqi agents working for the Americans to switch sides, and infiltrate every aspect of Iraq’s political, economic and religious life,” the article says.

Iraq’s youth know this. That’s why they have taken to the streets across the country — even in the Shi’a-dominated south — demanding the ouster of a corrupt ruling elite, an end to Iraq’s sectarian-based political system and the expulsion of Iranian special interests. Protests in the south have been particularly fervent, signaling that Tehran may have underestimated the Iraqi desire for independence.

As civil disobedience builds across Iraq, political organizations such as the National Independent Iraqi Front, a non-sectarian group led by both Shi’a and Sunnis who share the protesters’ demands, is gaining popularity for its anti-Tehran, Iraqi nationalist messaging.

Ammar al-Hakim resigned as the head of one of the oldest Shi’a Islamist political parties in Iraq to form the pro-sovereignty National Wisdom Council. These groups, falling under the leadership of the Sovereignty Alliance for Iraq, would happily take Iran’s place and help Iraq get back on its feet.

The Iraq they envision would be far more attractive to foreign investors than it is today — Iraq receives a trickle of Foreign Direct Investment which has been negative since 2013 — reaching minus $4.9 billion in 2018.

These numbers could skyrocket if Iraq’s circumstances changed: the country has the fourth-largest proven oil reserves in the world and it needs major reconstruction and infrastructure development. Oil aside, The United States, considered by many pro-Western Iraqi’s as having abandoned them in 2011, has a lucrative opportunity to step in and support core infrastructure development and economic diversification here.

As Saudi Arabia has discovered, there are risks to having an oil-dependent economy. Price volatility can devastate government budgets — the Saudis still run massive deficits five years after the 2014-2015 oil price collapse. Plus, it’s just plain risky to put all your eggs in one basket.

U.S. investors stand to gain through fostering diversification particularly in Iraqi security, education, energy, construction, healthcare, tourism, and agriculture. Indeed, foreign investors in Iraq have certain tax and import duty exemptions, the right to repatriate capital brought into the country, along with proceeds.

But Iran stands in the way. Widespread corruption in government tenders and the awarding of licenses or concessions to political allies, like those in Tehran, has put off foreign investors. Iran’s sway has discouraged Gulf States who traditional deploy serious capital to the region’s most affected areas to spurn innovation and growth. Yet wealthy Arab investors won’t invest in Iraq while a hostile power is running the show. The same applies for the U.S..

The chairman of Iraq’s National Investment Commission has said the country needs at least $600 billion of investment “and this figure could push towards $1 trillion by 2022.”

If Baghdad establishes sovereignty and becomes a self-governing state, the United States and others can help this money roll in. This can only be done by freeing Iraq from Iran’s iron grip, ensuring that pro-sovereignty groups with Iraq’s best interest at heart can flourish.

Raphael Badani is a geopolitical risk consultant and interactive simulation designer in the private sector.

© 2020 Newsmax Finance. All rights reserved.

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If Baghdad establishes sovereignty and becomes a self-governing state, the United States and others can help this money roll in.
sovereign, iraq, investment, capital
Wednesday, 19 February 2020 12:13 PM
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