August 28, 2014
ERBIL-Hewlêr, Kurdistan region 'Iraq',— The Islamic State organization (IS) is threatening Kurdish dreams of attracting more Arab and foreign investments to the Iraqi Kurdistan Region. The extremist organization's militants took over Kurdish areas south and west of the Kurdistan Region, whose security situation had been stable for years.
The new security situation in the disputed areas embarrassed the Kurdistan Regional Government (KRG) in front of Arab and foreign companies. Nawroz Amin, vice chairman of the Kurdistan Investment Board, said, “The investment in the Kurdistan Region amounted to $33 billion with a growth rate of 7%, which is high compared to some neighboring countries. There are 2,724 foreign companies [operating in the] Kurdistan Region.”
Haval Amir Saleh, president of the Kurdistan Businessmen Union, warned of the consequences of foreign investment companies continuing to evacuate their nationals from the region. “This will give negative signs to senior investors [whom] we already coordinated and managed to attract.”
For the second week in a row, shares in a number of energy companies operating in the Kurdistan Region of Iraq sharply declined due to the escalation of violence in the adjacent areas. Fierce battles are taking place between the Kurdish Peshmerga forces and IS factions.
Fifty-two oil companies operate in the Kurdistan Region and have signed contracts without the knowledge of the Ministry of Oil, thus raising the ministry's ire.
Moreover, the shares of Afren oil company dropped by 4.6%, leading the company to suspend its output at its Barda Rash oil field in Kurdistan. This was the first oil field to close following the advance of IS militants near the Kurdistan Region.
The company decided, as a precautionary step, to withdraw all its non-essential staff from the field. Genel Energy followed Afren's lead, but maintained production at the Taq Taqwww.Ekurd.net and Tawke oil fields. Chevron stated that it was evacuating its workers from the Kurdistan Region because of the security situation. ExxonMobil and other crude-oil production companies in the region took measures similar to Chevron's in anticipation of a deterioration of the situation.
Sources said, “The oil pipeline of the KRG of Iraq is working normally and pumping 120,000 barrels of crude oil per day, despite the advance of IS fighters in northern Iraq.” Moreover, Abu Dhabi National Energy Company PJSC (TAQA) issued a statement indicating the suspension of its activities in the Atrush oil field in Iraqi Kurdistan was a result of the region’s instability.
Saleh told Al-Hayat that the ongoing evacuation of foreign companies, in particular investment companies operating in the region, “is very dangerous to our economy.”
He said the move “will send negative messages to foreign investors and Arabs who had already been talked into bringing their investments to our cities during the last period, which must be described as successful on the economic and investment levels.” He attributed the migration of investments to “military operations, which broke out with the beginning of the IS occupation of Mosul and Salahuddin.”
He said, “The suffocating crisis in the region, as a result of the [failure] to pay employees’ salaries for months, completely crippled the economic sectors. Moreover, big local companies lost their capital after having invested in governmental projects that remained suspended because the budget was not approved.”
Kurdistan Alliance leader Najiba Najib told Al-Hayat that the effect of these events on the economic situation of the region, especially on investments, was insignificant. She said, “Most investments are local, despite the importance of the foreign ones.”
She also said that the Iraqi Kurdistan Region’s government and the Peshmerga forces “are the ones ensuring the life and funds of investors,” pointing out that the investment law is “a definite guarantee for their investments that terrorism cannot touch.”
By Nassir al Hassoun, Alhayat, Pan Arab newspaper - London. Translated by Pascale el Khoury Al-Monitor
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