Erbil is neither Dubai nor Fallujah for potential investors
Who’s investing in Erbil?
In recent years, a hard earned record for security and stability had gained the Kurdistan region of northern Iraq a reputation as a booming business center. Headlines splashed across magazines and newspapers comparing the growth of Erbil, the Kurdish region’s capital, to Dubai’s meteoric expansion. However, the summer of 2014 challenged that idea as a new phase of turbulence gripped the whole country. The onslaught of Islamic State of Iraq and Syria (ISIS) militants, who have taken control of large swathes of the country and carved a bloody path towards Erbil and Baghdad, was a stark reminder to all that Kurdistan is not immune to trouble in the neighborhood. But like the glittering hyperbole surrounding the rise of Erbil, the doom and gloom painted since the rise of ISIS may also be overstated. The situation is far from stable, but investors, analysts and business people focusing on the area say it won’t push them out, and it certainly won’t derail Kurdish development. The message was that you can still invest in Erbil.
Kurdistan on the rise
With its population of a little over 8 million, Iraqi Kurdistan has been growing rapidly since US-led forces ousted Iraqi President Saddam Hussein in 2003. This growth was mainly led by the oil industry, which dominates the economy of the region and funded massive investment in infrastructure. According to Conor Griffin of the Economist Intelligence Unit, foreign investment in Erbil and Kurdistan really started with energy and construction. “In energy, you have many small ‘cowboy’, frontier style players,” Griffin says. “Now you see big western companies coming in like ExxonMobil. The big choice for them was to stay in [southern] Iraq or go to [the] Kurdistan [region], and they have gone to Kurdistan, which I think shows that there is a lot of potential [there].”
In the wake of the oil industry’s expansion, small and medium sized foreign investors also flooded to Kurdistan, attracted by the relative security and social cohesion. Indeed, Chakib Chehab, head of Iraq Operations at Malia Group, a Lebanese conglomerate of companies that have large operations in Iraq, including in the Kurdistan region, cited this lack of sectarian tension within the Kurdish region as a contributing factor to their increased investment in the region since 2003.
Fast forward to 2014. Glittering highrises tower over Erbil’s department stores, shopping malls and forecourts full of fleets of white or orange tan cars. This very visible expansion of….[Continue reading over at Executive Magazine]