29-09-04

Businessmen and economists gathered to discuss reconstruction prospects in violence-wrecked Iraq said that lack of security was a major impediment to investment but that the country still offers enormous potential.

Participants in an Iraq reconstruction conference differed, however, on whether a new law that opens up the country to foreign investors was the right answer to decades of a state-controlled economy which left the private sector "completely disenfranchised," as one banker put it.

Calling for the repeal of CPA law 39 enacted by the now defunct US-led Coalition Provisional Authority, London-based Iraqi banker Basil Al Rahim said the law states that Iraq "should be opened immediately to foreign investment," except for property and oil and other natural resources.

"The problem is that you're approaching an economy that has been state-managed for 35 years... and if you open the floodgates to foreign investors, you'll never give the private sector a chance to get on its feet and compete, and you will not allow domestic wealth creation," he said.

Rahim, whose argument was contested by other panellists, made a powerful case for the "empowerment of the private sector" in Iraq, calling for the creation of a "private sector commission" to oversee its revival and for drastically reducing the state's role in economic activities.

Rahim, managing director of MerchantBridge investment bank, said Iraq had six resources which "never converged in one country."

The Chairman of the Iraqi Business Council in Abu Dhabi warned that mounting abductions of foreigners, many of whom have been killed by militant groups, were triggering an "exodus of business" from Iraq.

Egypt's Oil Minister Sameh Fahmi said Iraq will become the fifth country in the region to join a natural gas network stretching from Egypt and expected to reach Europe. It was not clear how Iraq will fit in the grid plan, but Syria's Oil Minister Ibrahim Haddad said his country's pipeline will feed the Iraqi one.

Source: Gulf Daily News