Violence remains a daily occurrence in Iraq, yet the time is right for firms to invest. With national elections and recently concluded oil deals, the country is entering a new phase in its history.
The economy is picking up pace. Numerous business prospects are emerging. The concept of democracy is gaining momentum and political participation is rising. Sectarian tensions and the divisive politics of identity are also on the decline – at least for now.
However, radical groups and criminal organisations remain a credible threat to health, safety and business activity. Over the last year, levels of violence have not decreased in Iraq. Arguably, conditions have actually worsened, with a notable rise in the number of mass casualty attacks taking place since August.
That said, where violence was once widespread, it is now becoming increasingly concentrated. Patterns recorded by AKE indicate that terrorist attacks remain most frequent in urbanised areas where there is a mix of ethnic and religious communities.
The three provinces of Arbil, Dahuk and Sulaymaniyah are located in the predominantly Kurdish north of the country. They are administered by the Kurdish Regional Government (KRG) and, with good levels of security and a largely homogenous population, they have been spared the wrath of rampant terrorism and ethno-nationalist intimidation campaigns.
Turkish and Iranian troops occasionally launch cross-border operations in search of Kurdish terrorists based in the mountains, but this is unlikely to affect business activity away from the immediate border area.
This has been extremely positive for many would-be investors. KRG territory has often been the first point of investment for companies looking to establish a presence in Iraq.
Significant oil supplies in the region have further accelerated this investment, with a large number of oil firms signing deals with the Kurdish authorities.
These have been controversial, given that Baghdad does not recognise the deals as “constitutional” and investors need to be aware of certain political risks involved in doing business in the region.
Nonetheless, from a security perspective, KRG territory remains a relatively stable part of the country.
In sharp contrast, the ethnically divided cities of al-Mawsil (Mosul) and al-Kirkuk remain among the most dangerous places on Earth.
They lie just south of KRG territory, but safety conditions here are starkly different.
Numerous attacks in al-Mawsil leave tens of people dead and injured each week, while al-Kirkuk remains the subject of a bloody and bitter dispute over oil, identity and the question of which ethnic minority can claim it as a capital.
At present, al-Mawsil sees about two to three attacks every day, and it rivalled Baghdad for being the most violent district of 2009. Together, al-Mawsil and Baghdad accounted for about two-thirds of the country’s violence over the course of the year.
The capital remains violent for different reasons. Terrorist groups have strong intent to disrupt the political activity that remains concentrated in the city. Furthermore, it is here that the majority of news cameras are pointed.
An attack in Baghdad captures the spotlight of both the domestic and the international media, amplifying the political message of the responsible terrorist organisation.
However, from a security perspective, Baghdad has some advantages.
It is here that the majority of private security firms are based, and clients looking for professional protection can find it more easily here than anywhere else in the country.
Although crime is becoming more of a problem in the International Zone (referred to as the IZ or Green Zone) it remains a relatively well defended part of the city, while security coverage in other compounds and neighbourhoods is improving.
At the same time, the Iraqi security forces are gaining experience and, while measures remain far from complete, levels of citywide security as provided by the state continue to improve.
Meanwhile, areas with large Sunni Arab communities in Iraq remain vulnerable to terrorist violence. Radical Islamist groups such as those affiliated with al Qaida continue to have a presence in these areas.
Districts such as ar-Ramadi and al-Fallujah, in al-Anbar province, as well as al-Ba’qubah, al-Khanaqin and Balad Ruz, in ad-Diyala province, are major flash points. There are presently very few foreigners operating in these areas, but those who are face the risks of suicide bombings, shootings and kidnap.
It is in the south, however, where the majority of business opportunities are set to arise over the coming months. Once again, conditions here are unique and affected by quite different factors from elsewhere in the country.
Levels of violence are generally lower here than in the central provinces. The population is majority Shi’ah, so community relations are generally less tense. The Iraqi security forces have also managed to improve their level of coverage over the past two years.
Operation Charge of the Knights in early-2008 saw major counter-insurgency operations target rampant militant activity in the region. Localised violence and criminality were considerably reduced by the operation, which also bolstered the credibility of Prime Minister Nuri al-Maliki.
Today, corruption and militant activity remain a concern, and attacks take place on a weekly basis, but conditions are much improved.
Criminality in the city of al-Basrah and its surrounding districts means there are no grounds for complacency. The city itself was the most hostile part of the south over the course of 2009, with other local hotspots including the cities of an-Nasiriyah and al-Amarah.
Some areas in the south saw virtually no violence over the course of the year, including Umm Qasr and the province of al-Muthanna’. Furthermore, with rising activity in the local construction and hydrocarbon sectors, the outlook for the region is increasingly positive as the area’s massive oil wealth attracts a growing number of potential investors.
Security, intelligence and training are as paramount as ever in order to protect employees working in the country. However, the possibility of pursuing business proposals in safety is greater now that at any point since the 2003 invasion.
Demand for the skills and expertise of firms based in Aberdeen and the Grampian area is high, and with proper preparation, companies can overcome the security obstacles in Iraq in order to do business safely and profitably.
John Drake is a risk consultant at AKE Ltd