BAGHDAD (Reuters) - Investors daring enough to snap up a piece of Iraq as it emerges from the chaos triggered by the 2003 U.S.-led invasion are unlikely to be deterred by attacks which rocked the oil-producing nation’s capital, killing dozens.
Iraq, starved of investment in virtually every sector, is trying to get back on its feet and lure foreign investors despite an eight month political impasse since an inconclusive election and frequent attacks and killings.
The capital Baghdad was hit by a series of blasts on Tuesday in which at least 63 people died, just two days after a siege on a Catholic church during Sunday mass by al Qaeda-linked gunmen which ended with 52 hostages and police killed.
The incidents raised concerns about the ability of Iraqi security forces to protect the country as U.S. forces end combat operations and withdraw by the end of 2011, but they have not frayed investors’ nerves.
“We are still very positive ... We think this is an isolated incident,” said Winfried Scheel, the vice president for business development at U.S. logistics firm Sallyport which already has a footprint in Iraq.
This year’s Baghdad international trade fair is teeming with foreign firms including French cement maker Lafarge and German construction company Bauer. The fair opened a day after the church raid on Monday, though most participants probably arrived before the massacre.
Foreign investment in Iraq as overall violence falls 7-1/2 years after the invasion has been led by oil companies, which signed a series of deals that could unlock Iraq’s vast reserves and propel it to the status of a major oil-producing nation.
Security at oilfields is a top concern for the government as it tries to entice foreign investors into other sectors to help it rebuild Iraq’s dilapidated infrastructure, left in ruins by decades of war, international economic sanctions and neglect.
Sunni insurgents have recently attacked economic targets, like the central bank and the state’s Trade Bank of Iraq, and regularly blow up northern oil pipelines, but neither they nor Shi’ite militia have yet managed to scare off oil companies.
“We have yet to see a shift in al Qaeda’s operational capabilities that suggests they are going to be able to move on from slaughtering innocent people to attack Iraq’s oil infrastructure,” David Bender, the Middle East analyst for Eurasia Group, said.
The brazen attacks over past days could have more of an impact on smaller firms still tiptoeing on the sidelines.
“The major oil companies will not be deterred by these types of attacks, not least because these have not been directed at their operations. Furthermore, they have committed to Iraq having already weighed up these risks,” said Gala Riani, Middle East analyst with consultants IHS Global Insight.
“It is rather the smaller non-oil companies that will be wary of entering Iraq until there is a green light on the security front.”
Overall violence has dropped well below the sectarian carnage of 2006-07, but small car bomb attacks and assaults using silenced weapons still occur many times a day, broken every now and then by a major assault or suicide bombing.
The recent attacks took place despite heavy deployments in Baghdad of thousands of Iraqi soldiers and police.
Investors seem more concerned about the political void in the country as Shi’ite, Sunni and Kurdish factions continue to tussle over the formation of a new government.
“Without a government, there’s no stability, and without stability, it is not easy to invest,” said Necdet Pamir, an instructor at Bilkent University in Ankara and board member of the Turkish committee at the World Energy Council.
Additional reporting by Ayla Yackley in Istanbul; Editing by Michael Christie