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By Mufid Abdulla:
In parts of the world, economies seem to be melting away, while in others – especially the emerging markets – economies are doing fantastically well. The south of Kurdistan saw a 60% economic expansion between 2005 and 2010. This compares to a mere 5-10% growth for many developed economies over the same period. What we see in the south of Kurdistan is not conventional capitalism but includes a lot of private-owned companies which, combined with all the oil money and outside investors, has made this growth possible.
The political and economic environment in the Kurdistan Region became like a hot cake for investors from the south and center of Iraq, luring them to enter that market. The main contributing factors in building the investment structure in Kurdistan are as follows:
- There are now 47 oil companies working in Kurdistan. The size of the oil market has attracted so many investors including Tony Hayward, the former chairman of BP. Total and Exxon Mobil are playing a pivotal role in further developing that market for outside investors. Oil production is expected to reach 500,000 to 1 million barrels per day. That will hopefully add more than $100 billion to the budget of Kurdistan. Even though the Iraqi government accuses the Kurdistan Regional Government (KRG) of corruption and deceit over oil contracts, this is now the reality in the south of Kurdistan.
- Investment in real estate has become the second largest source of income in the south of Kurdistan. Contrary to the global trend, the price of land and real estate has increased by almost 90% annually. You might call this development unstable, unbalanced, uncoordinated and ultimately unsustainable – but this has been the situation since 2005. I believe the total value of property in the south of Kurdistan is greater than in Cyprus and more than half that of all Greece.
About half of the shareholders of the big companies operating in Kurdistan are foreigners.
Another important question is: where is the sustained growth of emerging countries like Kurdistan coming from?
First: Most of the growth continues to come from external demand by the Kurdish community in high-income countries such as the UK, German, Sweden, Holland ,Denmark, Norway and the USA. Many of these expatriates want to develop their investment portfolios and a new airport was opened last year in Erbil to handle the massive growth in Kurdish and foreign travel to Kurdistan.
Second: The supply of money coming from oil production has created high inflation in all sectors, and especially housing.
Third: Ubiquitous corruption has created a black market and that market has created a lot of projects run by the two ruling parties, who are in charge of the oil revenues.
Fourth: The Arab spring has created economic insecurity in countries like Syria, Egypt and Tunisia, pushing more investors to seek different markets for their production. Since the unrest and mass killings started in Syria, a lot of investors, including Iraqis in Syria, have moved their investments to the Kurdistan Region capital of Erbil. This has pushed up the price of land and properties in the Kurdistan Region by 15%, according to experts.
Fifth: the economic openness of Kurdistan has attracted companies from eastern Europe – and the Czech republic, Poland, Romania and the Baltic states have all opened consulates in the capital of Kurdistan: they are witnessing the rapid growth at first hand.
Finally, Kurdistanis in the south are not looking for an Arab spring but rather for peaceful reform and adjustment to the politics in Kurdistan. The opposition parties have outlined a programme of change to tackle the massive corruption and to try and ensure more equitable and balanced economic development. Nevertheless, continued growth in all sectors is evidence of the confidence that the consumers have in the market, especially in companies such as Total and Exxon Mobil. Kurdistan will experience the biggest economic growth yet over the next 10 months. Unless something dramatic happens, nothing can stop this trend.
Copyright © 2012 Kurdistantribune.com
Very evocative!
Re: “Finally, Kurdistanis in the south are not looking for an Arab spring but rather for peaceful reform and adjustment to the politics in Kurdistan”
It is sincerely longed that peaceful reforms will effect. Everyone is pro-peace and reform; however, given the mindset of political parties in S.Kurdistan, it is extremely cynical. If the logic of peace was tolerated in Kurdistan, Feb.2011 uprising could have been evaded. People would not have had to resort to an uprising to demand for their rights?
Another point is that most of the media zoom is focused on battling corruption in S.Kurdistan
Citizens in S.Kurdistan have other demands and more imperative priorities:
What about the status of Kirkuk and disputed areas? Those evacuating and fleeing persecutions in hundreds? What has been done so far? Who is in charge?
Why political parties do not allow the merge of their armed forces, including Goran? Who is going to protect KRG and our people if attacked?
Where is transparency and accountability in KRG’ budget, especially in energy sector? What kind of GOV conceals facts and figures from its own citizens?
What about our independence? What is our strategy or if there is any at all?
Will incumbent leaders agree to step down after two terms? I know officials who have served more than 3 terms.
There were two separate administrations. Now there are three. Can they be combined into 1?
And as forth…
I doubt it if current politicians can make any political adjustments on the above-cited cases?
Let’s hope that peace and diplomacy will work. But how long time will it take?
And what if does not? Will there be need for a Kurdish Spring then?
We need a vision for a second trasition that must focus on the social and economic transformation of south Kurdistan over th next 5 to 10 years. Vision would change all that .
This is really interresting, why is there so many Forreign Companies in the Kurdistan ? is that mean that local people isnt smart enough and lack of entrepreneur spirt?
I wonder this beacuse I Live today in Norway, I lived 13 years in sweden and grew up in Suleymania, I am working in the Construction buissnes, and me and my wife really want to move back to the “homeland” , But our homeland is Invaded by forreign interrest and leaves the local behind and leaves Unemployment ?
In kurdistan is there local Big Construction Companies to get contact with to get employment for us who want to go back to the Kurdistan ? ?
thank you for answers !