Published On: Tue, Feb 13th, 2018

Rebuilding Iraq begins with security and reconciliation

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A series of high-level meetings in Kuwait later this week represent the most significant push so far to stabilize Iraq following the defeat of Daesh. To illustrate its importance, the International Conference for the Reconstruction of Iraq will be co-hosted by the emir of Kuwait, Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, Iraqi Prime Minister Haider Abadi, UN Secretary General Antonio Guterres, World Bank President Jim Yong Kim, and the EU foreign policy chief Federica Mogherini.

The focus was originally on stabilization of areas liberated from Daesh to prevent terrorists from re-grouping, as happened in the past. However, the event has evolved into a larger reconstruction and investment conference for the whole of Iraq, as reflected in the agendas of several meetings of experts and business leaders on Feb. 12 and 13.

To highlight the original goal, the main conference on Feb. 14 will be preceded by a meeting of foreign ministers of the Global Coalition against Daesh, to discuss their future steps.

Investment priorities include transport, energy and agriculture as part of a plan to rebuild parts of the country and revive the economy after a three-year war on Daesh and 15 years of civil war. The National Investment Commission published a list of 157 projects it plans to seek investment for at the Kuwait conference.

Some of these projects are about rebuilding destroyed facilities, such as Mosul’s airport, while others are new investments to strengthen and diversify the economy away from oil, according to Mudhar Saleh, economic adviser to Prime Minister Haider Abadi. He estimated the cost of those projects at $100 billion, to come mostly from foreign investors.

It is an ambitious bill, equivalent to 53 percent of Iraq’s GDP. But this is not a typical donors’ conference, at which rich nations pledge donations to a poor country. Iraq is a rich country with an economy exceeding $189 billion in 2017, nine times the GDP of Afghanistan, a country with a comparable population and war devastation. But Iraq has abundant oil and other natural resources. At over 4 million barrels produced a day, it has become the second largest OPEC producer after Saudi Arabia. Its GDP is larger than most Arab countries — even larger than most GCC economies, including the host Kuwait whose GDP in 2017 was $127 billion.

After a 15-year war and much devastation, a $100 billion investment bill is not too ambitious for a comprehensive reconstruction and investment program.

What is important is not to overlook the original purpose of this international undertaking: How to prevent Daesh or any other terror group from taking root again in Iraq.

In July 2017, the Iraqi government organized a private-public partnership conference in London at which business representatives met government officials and experts to explore opportunities and barriers to developing the Iraqi economy. Then, Ibrahim Al-Jaafari, Iraq’s foreign minister, declared that Iraq needed a Marshall Plan; he said this was an obligation on the international community, which he said had contributed to the devastation of Iraq.

The international community and Iraq’s neighbors have been sympathetic to Iraq’s call to invest in liberated areas and prevent the resurgence of terrorist groups, as a lasting peace depends on the ability to provide essential services and rebuild those areas. However, other than the US, GCC member states and the UK, very little aid has been forthcoming. Modest UN humanitarian assistance appeals went unheeded.

Foreign investment has been even more limited. Donors and investors alike have privately identified several issues that Iraq needs to address. First, there is need to reassure foreign donors and investors of the macroeconomic capacity to absorb the funds, and the technical ability and political will to properly distribute those funds. Under the Marshall Plan, there was extensive outside oversight to ensure that funds were spent effectively. Would such outside oversight, by the UN, the World Bank or individual donors and investors, be possible in Iraq for security reasons, and acceptable politically?

Second, while Daesh appears to be finally defeated, national reconciliation is far from complete. Iraq has taken steps to address reconciliation, establishing a high-level committee for that purpose and holding public meetings to air grievances. However, concrete confidence-building measures need to be taken, such as full participation in civil and security services by all, in order to reconcile Iraq’s religious, linguistic and ethnic communities after decades of war and suspicion.

Third, security concerns will be paramount for investors. Security of the liberated areas is the most difficult to achieve, but it is the one that investors need to be reassured about. Local and federal security personnel need to be deployed in those areas and financial guarantees need to be offered to encourage early investors.

Security is especially relevant to the large-scale infrastructure projects being discussed, such as the 500km rail line from Baghdad to Basra, the Baghdad-Mosul line, and the Baghdad metro. It is also relevant to the energy projects, such as refineries and pipelines.

In the past, it was the US that contributed the most to stabilize Iraq and provided humanitarian assistance. This time only American businesses are taking part, or so it appears. Surprisingly, it has been reported that the US government will not contribute funds at the Kuwait conference, but will instead encourage investment from the private sector and aid from European and Arab allies. If this is true, it may indicate lingering doubts about the ability to manage US funds, after billions were lost in the past to corruption and mismanagement. Such reluctance by Iraq’s largest donor highlights the need to address head-on the issues of corruption and mismanagement.

–(Courtesy–Arab News)

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