Iraq: Economy Recovering, Iraqi Property Market Booming

Baghdad, 17 Sep. The economy of Iraq is slowly starting to recover after years of war and instability.

Baghdad, 17 Sep. The economy of Iraq is slowly starting to recover after years of war and instability.

Baghdad, 17 Sep. The economy of Iraq is slowly starting to recover after years of war and instability.

The International Monetary Fund (IMF) has loaned Iraq $746.3 million to aid in the rebuilding of the war-torn nation. It has approved its first review of the country’s economic progress, as stipulated by the loan. The IMF said that Iraq’s economic success largely depends on its ability to maintain security, its reform policies, and how it looks after its oil revenue.

One example of economic progress in the country is I-BIZ (Iraqi Business and Industrial Zone), initiated by the US Army Corps of Engineers and Multi-National Corps-Iraq (MNC-I). This is a program designed to ensure sustained security, develop various skills, and provide opportunities to Iraqi firms to receive US contracts.

Students at I-BIZ learn plumbing, carpentry, and electrical work – which the country needs more of if it is going to rebuild. Other businesses at I-BIZ include metal shops, mechanics, retailers, asphalt and cement, and construction. One facility includes a concrete production plant, a rock-crushing plant to produce gravel, a skills training area, a contracting office, and a shipping and receiving yard. In addition to developing Iraqi skills and productivity, the facility is given work by the US government. This is a cheaper alternative for the US government.

The I-BIZ facilities are on 11 coalition bases, and will be expanded to 14. They employ in excess of 1,400 Iraqis. Yearly salaries amount to more than US $10 million.

However, programs like I-BIZ are not going to be successful without security within the country. Security in Iraq has improved considerably this year, and that has given the Iraqi economy a much-needed lift. International commentators attribute the improvements to the US military surge, but Iraqi’s are more likely to point to internal changes.

Iraq is a patchwork of diverse and often competing clans, tribes, religious groups, political parties and military associations. Governing the country requires a complex set of deals to be negotiated and maintained between all the key groups, to ensure that everyone gets what they perceive as their fair share of the wealth. This is particularly important in negotiating oil rights and revenues, ministries and trade.

Without these agreements, violence is the outcome. And if there is a fear of getting killed on the way to the market, you are probably going to stay at home.

Some kind of stability, however fragile, has been achieved in much of Iraq in the last few months, thanks both to the Surge and to internal deal-making. This had led to rapid economic growth.

Iraqis are ready to do their part to get the economy going. “Iraqis are very sociable people” said Yahya Al-Arbani, an Iraqi businessman. “We love to go to the shops and restaurants, and we love to meet with our friends and relatives and show off our latest purchases. We love our big TVs, satellite dishes, computers and mobile phones. Our wives love dresses and jewelry. We have been so frustrated for so many years because we have been stuck in our houses fearing for our lives, but now we are happy to go out, shop and eat.”

The Iraqi property market may be one of the first sectors to reflect this recovering economy. Just a year ago, nobody wanted to buy property, even though the prices were low. Now, prices have doubled, and anything on the market is sold almost immediately, according to Baghdad real estate agents.

With the majority of the 2.8 million displaced Iraqis from Baghdad, the government is now encouraging them to return, even paying their way home, in some cases. And they are returning, many willing to pay to not only live at home, but for the increasedsecurity they now expect.

Iraq has the second largest proven oil reserves in the world after Saudi Arabia, and should therefore be one of the richest countries in the Middle East. That it is such an economic weakling today is a testament to its worn-torn recent past. But if the tenuous peace being enjoyed inside Iraq today can hold, there will be many years of positive economic growth as Iraq regains its former financial strength.

Ahmad Akhoundov, EconomyWatch.com