Home
Part I
Iraq Business News: Firstly, Dr Ali al-Dabbagh, thank you for agreeing to speak to us. I’d like to start with a question regarding the Mubarak al-Kabir [Kabeer] port project in Kuwait: There have been some reports in recent days that that whole issue has been resolved, that it’s not going to affect shipping into Iraq and so on. Can you confirm Iraq’s position on the project?
Dr Ali al-Dabbagh: The Government of Iraq has not yet given its final opinion about the Mubarak port. We do feel that there is a negative affect on our navigation lines, and the issue briefly is that the strait, which is 8km wide, is split in half – half to Kuwait and half to Iraq – as per Resolution 833 of the United Nations. The Iraqi side is very shallow, and not suitable for shipping; the Kuwaiti side has a [section] which is suitable for navigation, and it is only used by Iraqi vessels crossing to Umm Qasr. Kuwaitis never use this side.
The [UN] resolution gives the right to Iraq to navigate through the Kuwaiti water without paying any fees and without raising any Kuwait flags, so we have the right to use that passage, and any construction in that part we feel is going to obstruct our navigation. And because Iraq has very limited access to the Gulf we feel that is going to create a very high negative affect on our future lines for navigation, so we have asked the Kuwaitis to wait until we get the full information that this is not going to affect us.
Kuwait say they are making the construction on ‘zero low tide’, which means there is no projection of the construction in the water. We want to be sure that there is no … negative influence, neither environmentally, commercially, nor on navigation or trading. This port is being built to serve Iraq, because the other side of Boubiyan Island is not facing to Kuwait, it is facing to the Faw Peninsula, and in order for this port to work you need to maintain a good relation with the people who benefit out of this, which means Iraqis in this case. Without having a proper arrangement with Iraq I think we can’t accept this construction unless we are sure that this is not going to harm us. We have the full right to be worried about this issue, and we don’t want to create any problems to Kuwait, but we maintain the full right to protect our interests, and the interests of the Iraqi people.
IBN: And those issues are not yet resolved to Iraq’s satisfaction?
AD: Let me say that there is a difference of opinion now that might be reflected through the Iraqi Government, but I can assure you that officially the Iraqi Government didn’t give the final word yet, and it might be discussed in the Iraqi parliament, and parliament may give its opinion to the cabinet to declare our final decision on how to resolve the problem with Kuwait.
IBN: Regarding Iraq’s project for the Grand Faw port, the schedules for that I’m seeing are for plans to be agreed within a year or so, and construction starting some time after that. Do you have firmer schedules, and is it possible to pull the them forward?
AD: Let me say that we are too late for finalising the plans for construction – we are still in the early design stage, unfortunately. The Ministry of Transport previously didn’t have enough efforts to speed up the design scheme for this port, and it is not going to be completed within the next 12 month. I think it will take more than a year to complete the design, and then a lot of preparation will be needed in order to see how that can be executed, whether the government is going to finance it, whether the private sector, whether an IPO – the Iraqi Ministry of Transport needs to work out these details in order to be ready to have our own port.
By the way, this port has been planned not only to server Iraq, it is planned also to serve Europe, to connect with railways via Iraq and Turkey to Europe, which will be a grand and a mega project for the region.
IBN: And in the meantime, while the design is being worked on, the Kuwaitis are building this other port. Do you think there is enough business for two very large ports in such a small area, and serving basically the same geographical area?
AD: Well our interests is that definitely we will not use the Kuwaiti port when we have our own one, definitely we will have the full right to take all the arrangement not to use the other port and to give priority to our port. I think Iraq is going to have a very huge demand for the port, and as I said it is not just serving Iraq.
I would like to advise the Kuwaitis that unless there is an arrangement in the common interest, the way they are going on right now is not wise, and I don’t think it will serve them. They do need to be friendly, with Iraq especially, in order to achieve their goals. It is being built as I said for Iraq and it is serving only Iraq, there is no other way to serve Iran or other Gulf states, so they do need to work out with Iraq certain formula in order to satisfy Iraq that there is no harmful effect on the interest of the Iraqis, and they do need to work out how to serve both interests.
IBN: So you don’t see the Kuwaiti port as competing with Iraq’s plan to use the Iraqi port to serve Europe and the hinterland?
AD: Trading-wise, definitely, we will not allow our port to be kept idle. We will use all steps and legislation and regulation needed to give the priority to our own port rather than allowing the others. Competition-wise, we have the full interest not to allow the others to compete.
IBN: So you could, for example, stop products coming through Iraq …
AD: We don’t need to use theirs, that is critical, we would like to avoid it but if Kuwaitis want to continue ignoring the interests of Iraq I think we have to have the full right to take also precautions to protect our interests.
In the second part of this interview, Dr al-Dabbagh discusses the new hydrocarbon law, the valuation of the Iraqi dinar, and the prospects for development in the country.
[You must be registered and logged in to see this link.]
Part II
In this second part of the interview, Dr al-Dabbagh discusses the Hydrocarbon Law, the valuation of the Iraqi dinar, foreign investment in Iraq, and the future of his country:
Iraq Business News: I’d like to ask you about the hydrocarbon law that is currently with the parliament. The Kurdish side has disagreed with the current wording of that. Do you see a possible resolution that would eventually see Kurdish oil contracts being recognised by Baghdad?
Dr Ali al-Dabbagh: It is too early to say that recognition could be achieved for the oil contracts in Kurdistan. First of all, the oil law is going to be subjected to, I think, long debate, lengthy debate in the parliament, because still it is controversial, but in the end we do need that hydrocarbon law – we can’t continue without it. We would like to advise that the structure of the parliament is not as in 2007/2008, so by voting a simple majority could be achieved, so we’d like to ask all of the figures in the parliament to look after the common interest, not to their interests, so the Kurdistan contracts need to comply fully to the oil law.
IBN: We hear a lot from foreign companies about difficulties and delays getting investment licences, also difficulties bringing expats into the country to work – what is your policy with regard to that, and what do you plan to do to ease the way for foreign companies coming into Iraq?
AD: You should not ignore that we are in a transitional stage … but at the same time you should not forget that we have great opportunities; Iraq is an attractive place to do business even though there are inefficiencies – legislation, arbitration, insurance – all of these related things where we are in the early stages, but again with the current situation in the region and globally I think Iraq represents one of the best places to have proper and selective investment – you could see that in the oil sector – on Sunday there is a workshop in Amman to highlight on the fourth bidding round – and there are possibilities in mining being discussed here in London. The mining and mineral sector is untouched, is a virgin sector and certainly is a promising sector. The housing sector, the electricity sector, all these represent the best opportunities in the region.
Keep in mind that the region is facing tremendous changes … Iraq with its own problems and difficulties represents I think one of the best places in the region.
IBN: Do you have any specific targets regarding, for example, the Transparency International index for corruption, and how you would see things improving on those sorts of metrics?
AD: I don’t deny that corruption represents one of the big headaches for us, but again there is a lack of legislation, a lack of the tools needed in order to protect the country from these elements. We are improving, but I think it is a slow improvement. We do need more effort, and corruption always is a function of political incompetency, and we have political problems in Iraq … which definitely will be reflected. All the measures being taken will not work unless there is a proper political atmosphere which could help all the institutions to fight the corruption.
IBN: Regarding trade in general, do you think that the Iraqi dinar is at a reasonable level at the moment, or should it be allowed to float and perhaps appreciate over time?
AD: I think it is a wise policy which we are following, to control our currency and not to allow it to fluctuate. We are still in the early stages of opening the market and liberating our markets and we do need to take hard steps to control the currency from such a high fluctuation, which definitely could destroy the market which is still in its early stages and would not be immune to fluctuation. We are going to continue protecting our currency, and deleting the three zeros from it doesn’t have any negative effect, rather it is just a cosmetic step which could make things easier and make for a lower quantity of paper in the market.
IBN: Regarding the country in general, and the progress you’ve made over recent years, how would you envisage Iraq in, say, 3 to 5 years’ time; how would the Iraq of 3 years’ time or 5 years’ time be different from the Iraq of today?
AD: The remarkable thing now is the security situation, we is much better than in 2006/2007, which was a big disaster, which was about to descend into civil war, but not only the security has improved, but also the economic situation and the standard of living of the people.
And we should not deny that the services have not been improved in the way that the Iraqi citizens look for, but in the end there is a lack of efficiency, there are deficient people in the administration, there is also problems with security and influence and regional influence, and this all resulted in slow progress in providing the main and general services for the citizen, but in general we are in a good situation.
The Americans are leaving at the end of the year, we are going to do the job by ourselves, the security situation is our responsibility and in the long term we have to do it by ourselves, but I don’t deny we do need also the American help still in providing proper training for our security forces.
IBN: Dr Ali al-Dabbagh, thank you very much for speaking with Iraq Business News.
LINK
