Middle East Times, July 19 – The US commerce secretary and his Iraqi counterpart signed an agreement on Monday to enhance commercial relations and improve Iraq’s investment climate as the massive American reconstruction program draws to an end.
Carlos Gutierrez visited Baghdad and declared his support for Iraq’s attempts to open up its economy – though his delegation’s vision of the future direction of the Iraqi economy appeared to be more ambitious than that of the Iraqis.
"It’s important that the government of Iraq carry through on promising liberalization and reform measures recently undertaken," said Gutierrez in a speech before assembled Iraqi government officials and business leaders as he laid out his support for Iraq’s economic efforts.
The event, organized by the American Chamber of Commerce, Iraq, featured a small trade fair focusing on the communications companies working in Iraq and a handful of private-public firms.
Communications, particularly mobile phone use, has been one of the few bright spots in the Iraqi economy with 7 million subscribers signed up in the last three years.
Officials recognized that the lack of security in the country was a serious barrier to foreign investment, and other than Iraq’s massive oil reserves, there is little to attract foreign investors.
One US diplomat predicted that "oil will be lubricant" to future investment.
"Our focus in the beginning will most likely be developing local domestic investment and then over time see foreign investment looking seriously at Iraq," said Gutierrez, describing future aid in the form of training, advising, and capacity building.
The secretary’s visit follows up on that of US President George W. Bush and his promise to send trade officials to Iraq to help with the process of opening up the economy.
It also comes as the administration’s $22-billion reconstruction program runs out at the end of February.
US Undersecretary for International Trade Franklin Lavin said that the most important thing right now was to get the necessary legal measures in place and then start privatizing the many public sector industries.
"There are 59 state-owned enterprises that they have to do something with," he said, adding that they would be looking at the next six to 12 months closely.
Iraq’s minister of commerce Abdel Falah Al Sudani told reporters that the investment law would be sent to parliament by the end of the week.
"The legal framework for investment in Iraq has been developed but not completely implemented," he said, predicting that it would go into effect by the end of the summer.
Privatization, however, is not something that is going to be rushed, maintained industry minister Fawzi Hariri, adding that he did not see it happening for at least five to 10 years.
"We believe in privatization, but we also believe in preparation, we have to prepare to privatize," he said.
Announcements by US officials in the Coalition Provisional Authority soon after the fall of the old regime in April 2003 that radical privatizations would be the rule of the day in the new Iraq provoked an uproar in the country and fears that the state’s patrimony would be sold off to foreign investors.
Suspicion over foreign control of the economy and Iraq’s oil and mineral wealth to this day has made the country reluctant to open up the economy to foreign ownership.
"Iraq is very socialist," said Hariri. "We need to educate ourselves," adding that the first order of business was to get parliament to pass the necessary legislation.
"Once these are in hand we can look at a case-by-case scenario where we can get the maximum benefit for Iraq and the industry itself strategically," he said.