High Stakes for Investors in Iraq Election
|April 29, 2014||Filled under Iraq Daily News|
Iraq Daily News -
Earlier this decade, investors were calling Iraq the new Golf Rush. Private equity firms saw the newly stable – yet still economically isolated – country as brimming with opportunities. Money rushed in even as the US military presence headed out.
But today, the situation has reversed, our correspondent covering Iraq explains. Security has deteriorated markedly; key economic legislation lingers in parliament. “The vast majority of funds have either withdrawn from the market or decided to squeeze their operations, because they can’t raise capital from investors,” our reporter says. “There were a lot of the private equity funds focused on Iraq. Now some are focusing on Libya,” because even that country appears more stable by comparison.
As Iraqis head to the polls on April 30 to elect a new parliament, many will be hoping to reverse the decline – particularly in security. In recent months, violence has risen to its highest level since 2008, a previous peak of the civil strife that consumed the country following a US invasion in 2003. The capital sees daily bomb attacks, and sectarian militias control whole areas of some of Iraq’s major cities. Life in many places is on hold.
Politics has been equally tumultuous of late – a fact that has delayed key reforms that businessmen have been waiting for. One example, our correspondent explains, is a new capital markets law that has been in parliament for four years. “The parliament has been discussing between various personalities, the prime minister and his rivals, when really pressing, tangible things like the capital markets law – things that would bring in more capital, and jobs, and improve the private economy – are being left on the sidelines.”
This ignored economic policy is intertwined with security. “These are really pressing issues, because once you give people jobs, they have less to complain about,” our reporter notes. The capital markets law, for example, could open up broad foreign investment by allowing foreign custodians that would be “allowed to hold assets on your behalf in order to reduce counter-party risk,” our correspondent explains, adding that banks such as Citibank and Standard Chartered have already pitched their services, should the government finally approve the law.
But now all that will be on hold again as a new parliament forms after elections. And the economy, while ever on voters’ minds, may be second priority. “I’m not sure to what extent voters are looking at the long-term vision for Iraq, rather than ways to find solution to immediate problems at hand – a security solution.”
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