Thread: Archive Latest News - Think Tank - 01/01/08 - 14/04/08

Iraq is preparing for Investment Opportunities in Dubai

Iraq is preparing for the conference to be held in Dubai next April with the participation of local and foreign investors to discuss investment opportunities in 40 government-owned companies in the sectors of petrochemicals, pharmaceuticals, nutrition, industries of construction, engineering, industrial services, spinning and weaving.

Iraqi Ministry of Industry and Minerals which is organizing the conference is looking forward to partnership agreements and production sharing; an official at the ministry said that the conference follows the recently announced three agreements, which are in the process of the final drafting, with the Federation of European companies, in the cement sector of Iraq and each agreement is estimated at one hundred million dollars.

During the second half of the same month, an exhibition for national trade and industry will be held in Baghdad with the participation of more than one hundred national companies from public and private sectors; the exhibition coincides with the reconstruction and investment year in Iraq.

Director-General of the Iraqi Exhibitions, Sebti Jum'a, said in a press conference held on the occasion, that the exhibition is the first step for the establishment of large specialized commercial exhibitions on the ground of Baghdad International Fair, and the participation of the Iraqi productive and commercial sectors will encourage these sectors to restore their effective role in improving the Iraqi economy and the growth of its contribution to the development.

Iraq received an invitation to private sector participation in the International Trade Forum organized in the Turkish city of Antalya in mid-May, by the office of "Mediterranean Bank" (MBP) which showed Turkey's desire to Iraq's participation in this forum which aims to trade cooperation among small and medium-sized productive and investment institutions in the world.

The forum involving ten sectors related to the construction and various industries to Asia, the Middle East, North Africa and Europe, offers the opportunity of direct meet between producers and investors and access to the latest techniques produced internationally, as well as investment projects supported by the European Union within the matching international standards of the European Union.

http://www.iraqdirectory.com/DisplayNews.aspx?id=5697

Iraq reconciliation conference due tomorrow

While national reconciliation conference is due on Tuesday, Accordance Front spokesman Salim Al Jibouri announced that the Iraqi government is not the party calling for this conference which is a meeting of political powers of which the government is part similarly to other parties. Al Jibouri fears this belief would narrow the perspective of the conference. He revealed that a committee including parties from outside the political process has prepared for the conference with the assistance of national dialogue ministry. Al Jibouri noted that the conference will tackle four headlines mainly institutional reform and issues regarding gunmen, militias and Awakening councils.

Iraq reconciliation conference due tomorrow | Iraq News | Alsumaria Iraqi Satellite TV Network

MPs criticize weak performance of Iraq’s Foreign Ministry in Dakar Summit

A number of lawmakers have criticized the weak performance of Iraq’s Foreign Ministry in Dakar Summit of the Islamic Conference Organization. For his part, head of the Iraqi delegation, Vice President Tarek Al Hashemi, affirmed that it has been agreed on the sidelines of the conference to open an office for the organization in Iraq.

MPs criticize weak performance of Iraq’s Foreign Ministry in Dakar Summit | Iraq News | Alsumaria Iraqi Satellite TV Network

Ministerial amendments take the upper hand of Iraqi politics

Ministerial amendments are taking the upper hand of Iraqi politics after Prime Minister Nuri Al Maliki vowed to fill in vacant posts with new ministers at the end of the current month, while Accordance Front members have announced that talks with the government have failed on account of overlooking their demands.

Ministerial amendments take the upper hand of Iraqi politics | Iraq News | Alsumaria Iraqi Satellite TV Network

Basra Development Committee holds conference in Kuwait

Basra Development Committee held its first conference in Kuwait. The conference aims to encourage Kuwaiti investors to invest in Basra Province and to inform them about the most important investment opportunities in industry, agriculture and tourism sectors.

During the conference the committee presented its strategy and targets that aim at developing the different sectors that need investments to be spent in, such as: oil, electricity, agriculture and industry and that in order to boost economic situation and to enhance farewell.

Basra Development Committee holds conference in Kuwait | Economics News | Alsumaria Iraqi Satellite TV Network

Opposition to Kurdish move to annex Kirkuk grows

More than 2,000 delegates comprising Sunni and Shiite Arabs inhabiting the disputed Province of Taameem held a conference on Sunday to express their opposition to a Kurdish move to annex the province to their semi-independent entity in northern Iraq.

The delegates have issued a statement calling on the government to cancel a paragraph in the interim Iraqi constitution on a referendum to decide the fate of the province.

The future of the province, of which the oil-rich city of Kirkuk is the capital, is one of the most contentious issues in post-Saddam Hussein Iraq.

Arabs and Turkmen, who are mostly Shiites, vehemently opposed the idea of a referendum whose result they say would be a foregone conclusion due to what they describe as the Kurdish ‘hegemony’ of the city.

The delegates charged that since the downfall of Saddam Hussein’s regime, the Kurds have been dominating the provincial council, denying access to police and civil service to other ethnic minorities.

Certain groups have threatened to use force in order not to let the Kurds annex the city.

The delegates said they would oppose any referendum the government decides to hold in the future unless there was prior agreement that power in the province will be equitably divided between the Kurds, Arabs and Turkmen.

To appease the Americans, who are alleged to lean on Kurds, Arab tribes have strongly participated in U.S.-sponsored militias.

They have formed their own ‘Awakening Councils” or militia groups which the U.S. finances and arms.

The delegates said they would press ahead with helping the U.S. contain violence in the province, adding that their eagerness to join these councils was because the Kurds have prevented their tribesmen from joining the provincial police force.

“This is also one way to find jobs for the unemployed in our ranks,” the statement added.

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Oil hits record near $112 a barrel as dollar slumps

Oil jumped to a record near $112 a barrel on Monday, as a surprise weekend cut in the Federal Reserve discount rate and the fire sale of stricken U.S. investment bank Bear Stearns sent the dollar to all-time lows.

Crude for April delivery was up $1.16 at $111.37 a barrel by 7:52 a.m. (British time), off a record $111.80 hit earlier.

May London Brent crude was $1.30 higher at $107.50 a barrel, after trading as high as $107.97 earlier, near the April contract's record $108.02 peak on Friday.

"The recent oil prices have been swayed by the currency moves, including this latest rally to a record," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi. "The dollar weakness is the factor at the moment."

The dollar plunged across the board on Monday as the spreading U.S. financial crisis led to JPMorgan Chase acquiring stricken investment bank Bear Stearns, stirring fears that more financial firms may become casualties.

The Federal Reserve took more emergency measures to stem the fast-spreading financial crisis, cutting its discount rate on Sunday and opening up discount window lending to major investment banks, a tool not used since the Great Depression.

The dollar slid 3 percent against the yen at one point to its lowest since 1995, while the euro hit a freak peak against the dollar, as investors became more convinced that the Fed and other major central banks may have to conduct coordinated dollar-buying intervention to stem the sell-off.

The dollar later trimmed some losses after Japanese Finance Minister Fukushiro Nukaga stepped up his verbal warnings on Monday, saying he is watching currency market moves in cooperation with authorities in the United States and Europe.

Fed policy-makers are set to meet on Tuesday and are widely expected to lower the benchmark federal funds rate by up to a full-point to try to put a floor under an economy many believe is already in the throes of recession.

Crude oil prices have jumped about 16 percent so far this year in part because of a steep decline in the U.S. dollar -- a factor that has supported the nominal value of all commodities priced in the currency.

Oil analysts have said they expect oil's inverse relationship with the dollar to last until there are significant signs that underlying commodities demand is eroding because of the U.S. economic slowdown.

The Organization of the Petroleum Exporting Countries has shrugged off calls for more supply. Oil markets are rising due to speculation and the U.S. dollar's fall, not on a lack of petroleum production, OPEC President Chakib Khelil said on Sunday, the official Algerian news agency APS reported.

Adding support to energy markets, Iraq halted pumping of Kirkuk crude through its northern pipeline to Turkey on Sunday due to a minor breakdown, but pumping was expected to resume soon, a shipping source said on Monday.

In Nigeria, an oil workers' union is calling for a strike in the oil sector starting on Wednesday to protest about a labour dispute at the Nigerian arm of ExxonMobil , a union boss said on Monday.

Oil hits record near $112 a barrel as dollar slumps - International Herald Tribune

Cheney, visiting Iraq, will push access for oil firms

Vice President Dick Cheney made an unannounced trip Monday to Baghdad, where he plans to push Iraqi political leaders toward opening the country's vast oil fields to international companies, a senior Bush administration official said.

Cheney, who arrived in the Iraqi capital with his wife and daughter in the morning, is to meet with top officials, including Prime Minister Nuri Kamal al-Maliki, a Shiite, and President Jalal Talabani, a Kurd.

The vice president plans, among other things, to push Iraqi officials to pass petroleum legislation that would help bring international oil companies to Iraq, according to a pool report of comments by a senior administration official who was flying with Cheney.
The official described the petroleum issue as being about Iraqi leaders "figuring out how they really begin to exploit" the country's resources, according to the pool report.

Peak Oil News >> Public Policy; Political and Legal News >> Cheney, visiting Iraq, will push access for oil firms

Cheney Says $100/Bbl Oil Reflects Market 'Realities'

The current price of crude oil, well above $100 a barrel, "reflects primarily the realities in the marketplace," U.S. Vice President Dick Cheney said Monday in Baghdad.

Cheney said rising demand from the developing world and low spare production capacity are driving up prices, and, in passing, added the "declining value of the dollar" as factors pushing prices higher.
Cheney is on a Middle East tour that will take him to Saudi Arabia, the world's largest oil exporter and de facto leader of the Organization of Petroleum Exporting Countries, in coming days.

Cheney's trip follows heavy lobbying by the Bush administration - including direct talks between President George W. Bush and Saudi King Abdullah - for the Saudis and OPEC to boost oil output. But Saudi-led OPEC rebuffed the calls from the U.S. and other consumer nations in the recent months, most recently opting to keep oil output steady at a March 5 meeting and not meet again on the issue until September.

At March 15 briefing, a senior administration official appeared to play down any expectation the U.S. again would ask the Saudis for more oil during Cheney's trip.

"I'm not sure he'll seek anything more than a good and thorough discussion about the current situation in the global energy markets," the official said.

Nymex crude oil futures prices were down $4.50 a barrel, or 4%, at $105.71 a barrel Monday at 1:12 p.m EDT after hitting a record intraday high of $111.80 earlier.

The dollar fell to a historic low of $1.5905 against the euro Monday, falling dramatically overnight after the Federal Reserve took emergency steps to relieve financial markets facing the rising prospect of recession.

At a press conference in Baghdad, flanked by Ryan Crockers, the U.S. ambassador to Iraq and Gen. David Petraeus, commander of the multi-national forces in Iraq, Cheney cited a lack of global spare oil production capacity a as main force behind current high prices.

"One of the problems we've got now, obviously, is that there's not a lot of excess capacity *********," he said, according to a transcript of the event.

"My recollection on the numbers is that in 1985, when global production was on the order to 60 million barrels a day, there was an amount of excess capacity equal to over 16% of that production; that last year, 2007, when the production level is approaching 90 million barrels a day, the excess capacity was down around 3%," he said. "There's just not a lot out there."

Cheney noted that "some of that excess capacity represents high-sulfur crude, for example; it's not very attractive and not easily marketed."

The vice president said surging oil demand from the developing world is also pushing up prices. "The Chinese and the Indians ... as their economies grow, as they develop larger middle classes, are consuming significantly larger amounts of oil.

"One of the ... other areas where there's been significant increase is among the producers themselves. That is, a lot of nations that used to be producing primarily for export are now consuming the larger part of what they produce as their economy's develop; you know, some of the Gulf states, for example, that are developing increasingly sophisticated economies that require more energy in order to operate their economies successfully," he said.

"So, if you look at all of that and you look at the much closer balance, if you will, between supply and demand, as well as the declining value of the dollar, you've got a situation in which we've seen the price of oil rise fairly dramatically in recent months, up now to over $100 a barrel."

"But it reflects primarily the realities in the marketplace," he said.

Cheney's visit in Iraq corresponded with the fifth anniversary of the day in which President Bush gave Saddam Hussein 48 hours notice that the U.S. planned to oust him from power.

Asked about the prospects for attracting international investment into Iraq to boost its oil output, which lags pre-war levels, and how violence in the producing region is limiting output, Cheney deferred to Crocker and Petraeus.

"It's ... very much the case that to bring international companies in for the modernization that the sector requires is going to take some further steps on the part of the Iraqi government, most importantly a hydrocarbons law," said Crocker, who noted the issue was discussed earlier Monday, when Cheney met with top Iraqi officials, including Prime Minister Nouri al-Maliki.

"Everyone will benefit from a comprehensive oil law. And as we have in the past, we've urged them to get on with it," Crocker said.

Petraeus said Maliki recently asked U.S. officials to encourage Western oil companies to become involved in Iraq and added there are many security challenges still to overcome.

"The prime minister is very keen on getting large Western corporations reengaged in the oil and electricity sectors," Petraeus said. "He asked, in fact, that we make some phone calls, which we did, a week or so ago, to large corporations and asking them to reengage, and they will.

"They'll do it under certain - in certain ways and certain approaches that will be - will make it possible for them. Obviously, they'll have to take security challenges into effect, and there are many of those," he said.

"There are certainly extremist challenges in certain areas, there's criminal activity and there's corruption. And all of those have to be addressed by Iraq, and they'll all part of the operating environment for those large companies that do engage," Petraeus said.

Company News Story

Investors grab slice of Oil-Rich Region

The Khanzad American Village rises on a hillside north of the northern Iraqi town of Irbil, a series of two-storey luxury homes which true to its name are virtually indistinguishable from a suburban planned community in California or Arizona.

One would not know by looking at most of the country that Iraq’s economy is booming at a rate that the International Monetary Fund claims will be 7 per cent in 2008 – a natural enough effect of rising oil prices in an economy driven by the public spending of petroleum revenues.

Baghdad remains beset by political deadlock and administrative lethargy that according to US calculations saw the central government spend just 36 per cent of its total budget during the first eight months of 2007.

But in the autonomous region of Kurdistan, the economic boom is plain for all to see – the construction cranes in downtown Irbil and the planeloads of south Asian migrant workers give this formerly destitute corner the look of a Gulf state.

Meanwhile, trading companies and even some investment companies are enticed to set up shop in an enclave of relative stability that labels itself the “gateway to Iraq”. They are keen to take advantage of an oil-flushed $60bn-plus economy that needs to import nearly all its goods from abroad.

Officials of the Kurdistan regional government say the region’s economy was virtually destitute just a few years ago, having suffered under the previous regime of Saddam Hussein which destroyed thousands of villages in its attempt to isolate Kurdish guerrillas.

For investors there are opportunities in virtually every sector, but the downside is that new entries into a young market will suffer from a primitive banking system, power cuts, and other infrastructure failures.

“We admit that we have weaknesses... [and] we have to compete with Dubai, China, Jordan [for investment],” says Herish Muharam, the KRG’s investment authority chairman. Consequently, he says, the region has enacted a law that “gives more incentives than any other country in the [Middle-East] region,” allowing, among other things, full foreign ownership of assets.

The American Village is part of the $2bn (€1.3bn, £990m) that the regional government says has been invested in Iraqi Kurdistan since the passage of the investment law in 2007.

Its developers say they were lucky to get into a market early where “people have a lot of cash but don’t have anything to spend it on”, says Jim Covert, country manager for the US-based Sigma construction company, which is building the project.

He says 100 buyers including four government ministers have already snapped up homes worth between $225,000 and $585,000 in the Khanzad village.

Thanks to the KRG’s efforts, Mr Covert says, the project moved at breakneck speed – from conception to breaking ground took only three months.

However, so rudimentary is the banking system that buyers often make down-payments on their modern new homes with bags of $100,000 in cash.

One other problem is the security environment. Although Kurdistan is much less violent than the south, it still experiences the occasional car bomb as well as fighting in the border areas between the radical Kurdistan Workers’ party and the Turkish army.

Few here expect that Turkish tanks will ever enter downtown Irbil – not least because Turkish traders do a thriving business and Turkish contractors are involved in many of the region’s most prominent public projects.

“My message to our Turkish friends is to differentiate between our political differences and business,” says Mr Herish.

Still, say businessmen, Kurds are reluctant to make long-term investments in a region that has seen numerous destructive military campaigns over the past eight decades, from attacks by the Iraqi army to internecine Kurdish battles to last month’s Turkish incursion.

KRG officials admit the boomtown economy has caused problems. Kurds regularly complain about high inflation, which the IMF estimated at 25 per cent in Iraq in 2007.

Other dangers have yet to capture the public imagination, but are still very real: for example, Mr Herish is anxious to prevent his country from becoming a money laundering haven, or to allow the creation of mafias as in post-Soviet states.

Some economists also fear too much money is going into hotels and real estate as opposed to more productive investments – a common concern in newly opened economies in the Middle East, particularly if there are lingering doubts about stability. But whatever the pitfalls, say KRG officials, their region has to start somewhere.

FT.com / In depth - Investors grab slice of oil-rich region