While rumors circulate about possible US military strikes against Saddam Hussein, Iraq opens its second international trade fair this week.
Doing business with the enemy
US President George W. Bush may threaten with bombs, but this week Iraqis are more interested in business. For the second time since the Gulf War, the Arab country has opened its borders to an international trade fair.
Dubbed the Iraq Construction Fair, the five-day event has attracted some 250 European and Arab companies interested in investing in the Iraqi market. The fair, which opened on Sunday, follows directly on the heels of last week’s "Rebuild Iraq 2002" – the country’s largest trade fair since 1991.
The two trade fairs, although still small compared to international standards, mark the beginning of an opening up in Iraqi international relations. Especially in neighboring Arab countries, there is an interest in "exploring business and trade opportunities" in Iraq, say the trade fair organizers.
But European companies are also interested in getting a foot in the door to what could potentially develop into one of the region’s largest economies. Two businesses, Grohe Water Technology of Great Britain and the Greek Consolidated Contractors are proof of this growing interest. Both are official sponsors of this week’s construction fair.
"The level of participation reflects the companies’ interests in the Iraqi market," Deputy Prime Minister Hikmat Ibrahim Azzawi told reporters at the fair’s opening on Sunday.
Prior to the invasion of Kuwait in 1990 Iraq was a booming market in the Middle East. The country’s rich oil reserves had enabled the government to invest in construction and infrastructure projects, many of which were exemplary for the region. The educational and technological level was also above that of other Arab countries.
But all this changed after the Gulf War. American bombing raids destroyed the country’s infrastructure, devastating towns and industry. A ten year long embargo further crippled the economy, impoverished the people, and basically silenced any entrepreneurial spirit.
The strictly monitored UN oil-for-food program begun in 1996 limits the amount of goods Iraq can buy to food, medicine and other civilian goods. It is, therefore, virtually impossible for a free market economy to thrive in Iraq. And this will not change until Saddam Hussein agrees to let weapons inspectors into his country.
Nonetheless business analysts say there is still room for investment in the country’s construction field. The UN oil for food program generates between € 10 and € 13.5 billion ($9 - $12 billion) in annual purchases, and the accumulated balance of Iraq with the UN is € 13 billion ($11.4 billion). Over the next few years this is expected to triple, giving Iraq a tremendous purchasing power.
The most immediate demand is for construction products and services including the reconstruction of infrastructure, housing, and oil refineries. Once the sanctions are lifted, Iraq will be one of the world’s largest construction sites.
Business not bombs
Construction fair organizer Fares Saad said there was a "pressing need" to hold specialized fairs in Baghdad because the Iraqi market was developing rapidly. His Lebanon-based IMACO Industrial Marketing Company and Global Business Forum set up the fair together with the Iraqi government.
Lebanon, which has sent 72 companies to the fair, Syria, Saudi Arabia and the United Arab Emirates were the largest delegations to the Construction Fair.
Riyadh, which had severed Saudi ties with Iraq after the invasion of Kuwait, has been tentatively restoring trade with Baghdad under the oil-for-food program since 1999.
"When 30 companies, among the largest in Saudi Arabia are participating in a fair in Baghdad it will attract more companies in the future," said Adel al-Omran of the Saudi Al-Jawda Industrial Complex.
A good turn out among international exhibitors at this week’s fair could also have the added affect of putting pressure on Iraq to accept weapons inspectors and the international community to lift sanctions.