Monday, March 2, 2009

Basra prospects brighten as foreign investors line up - Daily Star, Lebanon

This year should be oil-rich Basra's best in decades, with foreign companies queuing up to invest there as long as Iraq's government lets them, the province's reconstruction boss told AFP. The number of firms visiting the southern port city, Iraq's third-largest, is now 20 a month, compared to two in the same period six months ago, said Keith Mackiggan of Britain's Department for International Development.

The victory of Iraqi Prime Minister Nuri al-Maliki's allies in January's provincial election and the imminent arrival of a new administration in Basra will trigger an upturn in the area's fortunes, he said.

"Our job is going to get much easier in 2009 because it could not get any more difficult after the last local government," said Mackiggan, whose team is based within the sprawling military camp near Basra airport that is home to the British Army and diplomats.

"Maliki will have a say in who runs this place and after stabilizing the security situation he now has the incentive of national elections at the end of the year to deliver. If he doesn't he won't do well at the polls," he said.

Recent international investment visits coordinated by Mackiggan's team have included Schlumberger and Baker Hughes, two of the world's biggest oil and gas infrastructure groups.

Global courier DHL has also been in town, along with hotel operators, steel pipeline production companies and legal firms from Britain.

Having moved to Basra in September, Mackiggan was confronted with "an atmosphere of hopelessness" typified by poor public services and admits he was not optimistic.

Infrastructure is woeful, with few of the city's 1 million residents enjoying clean water, while power cuts are constant and unemployment hovers around 40 percent.

Many areas consist of stench-ridden, sewer-filled canals and vast tracts of rotting rubbish piled waist high along the potholed and dust-filled roads that lead to slums.

Mackiggan's team has helped train 2,700 engineers, planners and finance specialists to fix the problems but has seen local politics stop them from doing their jobs.

The previous provincial government was beset by rivalries among three main Shiite factions - the former rebel Supreme Iraqi Islamic Council, the smaller but influential Fadhila party and the popular, firebrand cleric Moqtada al-Sadr.

"Programs were not approved because of political reasons," said Mackiggan, describing how 32 signatures needed from warring parties made reaching an agreement impossible. "We called them the government of sidewalks because that is all they had time to change when they realized there was an election coming up."

The prime minister's State of Law coalition, however, secured an absolute majority in Basra in January's polls. With 20 out of 35 seats, it should now be able to push through the funding for key improvements.

"The political log-jam should now be cleared and Maliki has the incentive of the national elections to do that," Mackiggan said.

The improvement in Iraq's security in the past year has made international companies less wary of the country's recent past and more optimistic about its future, sparking investment visits.

Construction projects, religious tourism - from Iran in particular - and greater traffic of goods through the nearby port of Umm Qasr are all factors in securing future economic growth.

"This is an Aladdin's cave and what has been a trickle of visits is going to become a flood," Mackiggan said, acknowledging that companies still have to put their money where their mouth is and that government flexibility is needed.

"Converting investment proposals into contracts is the biggest task. There is some reticence in the national government and that has to be overcome," Mackiggan said.

But the Oil Ministry's announcement on Thursday of a joint venture being signed with a British company to set up a drilling company, Iraq's first such deal, signals that such barriers are starting to come down.

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