The withdrawal of U.S. troops from Iraq in December 2011 marked the beginning of a new era for U.S. - Kurdistan relations, one in which the region will change its role as a military partner in wartime for that of an important trade and investment destination in the Middle East.
The U.S. is currently one of Kurdistan’s most important foreign investors. A number of major American energy companies, such as Exxon Mobil, Aspect Energy, Marathon Oil Corporation, Hillwood International Energy, Hunt Oil, and Prime and Murphy Oil, are already operating in the region. There is enormous potential for further U.S. investment in areas such as telecommunications, infrastructure, and R&D.
Although the war in Iraq is now over, the growing concerns over the regimes in Syria and Iran signal that Kurdistan will maintain its strategic importance for the United States.
This was made clear during President Masoud Barzani’s April, 2012 visit to Washington D.C., where he was received with the honors due a head of state and met with President Barack Obama, Vice-president Joseph Biden, Secretary of State Hilary Clinton and Secretary of Defense Leon Panetta. This reception sent a strong message to the international community about Kurdistan’s geopolitical importance.
|“The Kurdistan Region has become ... an important hub for international business and commercial activity, with hundreds of foreign companies and investors safely and successfully operating here.” |
NECHIRVAN BARZANI, Prime Minister
|“We have to recognize that safety and|
stability play a fundamental role in the development of Kurdistan. This encourages private investors come and invest here.”
KAMARAN AHMED, Construction
and Housing Minister
|“We are tolerant and we have taken lessons from the past in order to have a prosperous and bright future.” |
FALAH MUSTAFA BAKIR, Head of the Department of Foreign Relations
Conversely, Washington has been instrumental in providing international recognition for Kurdistan as an autonomous region that is vastly different from the rest of Iraq.
A rapidly-developing area with huge economic potential, Kurdistan holds approximately a third of Iraq’s total oil reserves. The planned Nabucco pipeline could make Kurdistan’s gas reserves a key source of supply to Europe and Turkey, ending Russia’s monopoly of the European gas market. The region’s successful development is based on a mixture of respect for individual rights and private enterprise.
As Herish Muharam, Chairman of the Kurdistan Board of Investment
, puts it: “You can see ambition in the eyes of each individual in this society and it sends a message about why Kurdistan has become a kind of hub in the region and in Iraq.”
Kurdistan has entered a phase of rapid reconstruction in which progress is being made through a combination of public and private sector initiatives.
Ministry of Construction and Housing Kamaran Ahmed points out that security is the most important factor in this new era.
“We have to recognize that safety, stability and safety measures play a fundamental role in the development of Kurdistan. This creates a motivated environment and encourages private investors to come and invest here.”
Kurdistan’s economic future clearly lies in the potential of its energy industry. The region is not only rich in oil and gas; it is also business-friendly and provides entry to the energy giant that is Iraq. According to OPEC, Iraq’s resources of 143 billion barrels of crude oil and 126.7 trillion cubic feet of gas are the fourth largest in the world after Venezuela, Saudi Arabia and Iran.
However, Iraq’s oil production is almost half that of Iran, meaning there is plenty of room for growth. And Kurdistan presents an attractive gateway to Iraq, because it accounts for 43.7 billion barrels of oil reserves, 25.5 billion more barrels of unproven reserves and between 3 and 6 trillion cubic meters of gas. Kurdistan currently produces 100,000 barrels of oil a day, but it aims to raise that figure to 1 million barrels by 2015 and to export at least 10% of the total.
The Kurdistan Regional Government (KRG) is headed by the Kurdistan List coalition, which won the regional parliamentary elections in July 2009. The coalition consists of the Kurdistan Democratic Party (KDP), the Patriotic Union of Kurdistan (PUK), the Kurdistan Islamic Movement, the Chaldean Assyrian Syriac Popular Council, Turkmen representatives, Communists and Socialists, but the first two parties dominate the coalition. Following a cabinet reshuffle in April 2012, the previous Prime Minister Barham Salih was replaced by the President’s nephew, Nechirvan Barzani.
Kurdistan has some of the most progressive laws in the Middle East. Its constitution allows for religious and minority freedoms and stipulates that at least 30% of the members of parliament have to be women, the largest such percentage in the region.
As Falah Mustafa Bakir, Head of the Department of Foreign Relations, says: “We are tolerant and we have taken lessons from the past in order to have a prosperous and bright future.”
To attain that future, Mr. Bakir stresses the need for local as well as foreign investment: “If foreign investors do not see local investors investing in their own country or region, how would they come in? Because we were isolated, we did not have the capacity or capability to implement all these projects, so we needed to bring them from outside. Without that, we cannot develop.”
Official data indicates that there are approximately 1,600 foreign companies and 11,000 local companies in Kurdistan. The number of foreign companies in the country rose from 1,170 in 2010 to 1,600 right now. Between 50% and 60% of all foreign investors are Turkish.
Kurdistan has benefited from a comparatively stable security situation and an independent Foreign Investment Law, as well as from the creation of the Kurdistan Board of Investment
(BoI) in 2006. In order to gain foreign investors’ trust, the regional government is working to build a stable banking system and fight corruption,.
As Mr. Bakir explains: “Kurdistan is open for business and it can serve as a launch pad to enter the Iraqi market. We don’t want to encourage people to come to the region just to benefit from the 5 million plus market here; we’ve told them that it is a market of 30 million plus.”