Amrita Sen, chief oil analyst…
The successful OPEC production cut…
It has been nine years since US-led forces toppled Saddam Hussein’s dictatorship in Iraq and yet due to various deep-routed problems few have capitalised on plan’s to revive the nation’s economy or rebuild its infrastructure. Even specialists in frontier markets are giving the Middle Eastern state a wide berth.
Ziad Makkawi, who set up the private equity investment firm, Blue Gate Capital Partners, last year to try and take advantage of new infrastructure projects and the like, explained that his business has not experienced the success he hoped because, “suicide bombings, political problems, the Central Bank governor was dismissed, others have been arrested -- these things cast a big shadow on the business environment, and investors shy away.”
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Iraq has not been able to carry out most of its plans for revitalisation due to corruption, violence, daily blackouts, and congested ports hampering trade along with other similar infrastructure failings.
Efforts to resolve these issues have been delayed due to the deepening divisions between the majority Shiite Muslims, and minority Sunni Arabs, and further compounded by the conflict of power with the semi-autonomous Kurds to the north who are moving closer and closer to declaring full independence from Baghdad.
The government has set its budget for next year at $118 billion, 18% more than the 2012 budget, yet officials rarely get to actually spend all of the funds as bureaucratic delays and corruption probes often obstruct projects.
Liz Martins, a senior economist at HSBC Holdings Plc, said that, “the government has ambitious spending plans, but political disunity, capacity constraints and perceptions of insecurity have meant that very few projects have yet come to fruition.”
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com