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Iraqi business climate indicates revival

Iraqi customers wander among the vendors at the busy Shorga market in central Baghdad last Tuesday. Following sectarian clashes that have caused more than 3,000 deaths and brought business to a halt, Iraq’s commercial climate is now improving. PHOTO: AFP

Iraqi businessman Saad al-Sudani is confident that Iraq’s commercial climate is edging toward normalcy, but the merchant also knows just how quickly it can all go wrong again.

Four months ago the meat and dairy supplier suffered a loss of almost US$1 million when US soldiers stormed and commandeered his warehouse filled with perishables, including cheese, which he says they stuffed into sandbags.

US forces were at the time locked in fierce street battles with the Mehdi Army, the 60,000-strong militia of radical cleric Moqtada al-Sadr, for the control of a shanty slum of 2 million residents in east Baghdad.

Sudani, 46, had stored much of his produce for distribution in the capital in the tallest building in Sadr City’s Jameela market. Then the US army took it over and banned him from entering.

“I was keeping goods there and they didn’t let me bring them out. I lost about US$850,000, and they even used 7,000 boxes of cheese for protection on the roof,” he said at a commercial conference in Baghdad attended by 100 businessmen.

Sudani is still awaiting promised compensation from the US Department of Agriculture, but despite his irritation over the incident, he, like many Iraqi traders, is buoyant that better security will mean more business.

“The work has improved, the markets have opened, Iraqi traders are dealing with other companies directly,” he said, adding that business had already taken him to France, Brazil and the US.

The 2003 US-led invasion of Iraq triggered sectarian clashes that at their height were killing hundreds of people a day, ground business to a halt, and many executives fled to neighboring Jordan.

“I left the country because of the violence but now that it is more secure I will return to live in Baghdad at the end of this month,” Sabah al-Moussawi, a construction magnate, said at the conference.

The Baghdad native and chairman of Aliedad group, a family-run construction company with 1,500 employees, believes that now the nation — fueled by a record US$69 billion government budget — is secure enough to risk tackling reconstruction.

“I came to rebuild my country,” said Moussawi, who is currently working on a series of joint ventures to revamp bridges and buildings around the country, but who wants joint venture partners to spread the risk.

To Sameer al-Shweli, an adviser to the business conference, that Iraqi businessmen are actually talking business is the best sign of all.

“It is the first time in six conferences we are talking about actual projects. Before we were always discussing terrorism and sectarianism,” he said.

Bombings still occur on a nearly daily basis around Iraq, but overall violence levels have dipped to four-year lows, raising hopes that a tenuous peace can hold.

In many areas of Iraq, shops and restaurants have thrown their doors open to the crowds that are again thronging main thoroughfares, and nowhere is this more visible than on weekend evenings in Baghdad.

Statistics in Iraq are virtually non-existent, but a survey published in late February by the Center for International Private Enterprise, a research group linked to the US Chamber of Commerce, said 45 percent of Iraqi businessmen surveyed expect sales to increase.

Only 13 percent said sales would decrease over the next six months.

But if Iraq is opening for business again, the challenges of normalizing the commercial environment is tough, said Taki Ali al-Moussawi, chancellor of Baghdad’s University of Mustansiriyah.

“We are at the beginning, we would like to establish the good basics to start and actually there are some plans started but there are still few,” Moussawi said.

“We have very big strategic plans in Iraq, which include electricity and oil and the refineries, and also other factories which will bring good benefits to Iraq,” he said. “But everything needs to be changed.”

And if Iraqis are ready to enact change, they have reached this point agonizingly slowly if at all for Iraq’s biggest patron, the US, which in a report released earlier this month lambasted Baghdad’s fiscal spending habits.

Little of the huge budget surplus from oil revenues as well as US reconstruction money is actually going to maintaining and rebuilding key Iraqi infrastructure, the Government Accounting Office report said.

Capital spending has been hampered by the lack of trained personnel, weak budgeting and procurement processes and ongoing violence across the country, it said.
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