Abu Dhabi firms pledged to inject hundreds of millions of dollars into Iraq's telecoms and property markets, on a day when Baghdad received a surprise visit from Sheikh Mohammed bin Zayed, the Crown Prince of Abu Dhabi. The flurry of new deals comes after the Government announced in July it would forgive a US$7 billion (Dh25.7bn) debt owed to it by Iraq, a hangover from the Saddam era.
In light of a vastly improved security situation in Iraq over the past six months, a consortium of Abu Dhabi property developers, Al Maabar International, and Etisalat said they could launch new projects in the country this year. Crucially, their investments are focused on the capital, Baghdad, where some neighbourhoods have been hardest hit by sectarian violence. Until now, many proposed investments focused on the more stable northern Kurdish region, bypassing many of Iraq's 27.5 million residents in the centre and south regions.
"It is critical, really, to get the diplomatic and economic buy-in of Arab Gulf states for the reconstruction of Iraq," said Professor Gerd Nonneman, an associate fellow at Chatham House, a UK think-tank, and director of Middle East politics at the Institute of Arab and Islamic Studies at the University of Exeter. "These economic gestures, whether from Government-controlled companies or private firms, are symbolically very important - and they're critical in creating investor confidence and bringing in capital," he said.
The business schemes follow the designation of Abdullah Ibrahim al Shehhi as the UAE envoy to Iraq, based in Baghdad. Recently, Bahrain and Kuwait have signalled they would also post ambassadors in the city. Etisalat, which operates in 17 countries in the Middle East, Africa and the subcontinent, is reportedly looking to invest in one of the three licensed Iraqi operators. "The signs coming out of the market are comforting to Etisalat," said Jamal Jarwan, the chief executive of Etisalat's international investments division. "I cannot comment on political matters. Purely from a commercial point of view, this looks promising."
Etisalat's investment plans include deploying a second-generation (2G) mobile network in the country. Mr Jarwan said the new venture could focus on Baghdad and the central and south regions of Iraq. Al Maabar International, a joint venture between five of Abu Dhabi's biggest property firms, said it planned to develop a project in Iraq this year valued at more than $500 million. "We want to launch a mixed-use project in Baghdad before the end of the year... it will be a huge project," Yousef al Nowais, the managing director of Al Maabar, told Reuters yesterday.
"People [in Iraq] need suitable houses to live in after the war has destroyed their homes and there is an effort now by Arabs to work for the stability of Iraq." Aldar Properties and Sorouh each hold 30 per cent stakes in Al Maabar, with the rest owned by Reem Investments, Reem International and Al Qudra Holdings. The new investments in property and telecoms come after the Sharjah-based Crescent Petroleum and Dana Gas have invested $650m in oil and gas projects in the the autonomous Kurdish region in northern Iraq.
Part of the new-found confidence in Iraq comes from a decrease in violence in the country over the past six months. But Prof Nonneman said the alliance of Kurds, Sunnis and Shiites working towards a political compromise was fragile and called any foreign investment in Iraq very risky. "It is a gamble, but if it comes off, it could be massively profitable," he said. @Email:email@example.com