KurdistanObserver.com

Kurdistan Looks To Lead Way For Investment In Iraq

By Luke Baker

Sulaimani, (Southern Kurdistan) (Reuters) Aug 16, 2005- Scattered around his paper-strewn office, Iraqi entrepreneur and telecoms tycoon Faruk Mustafa Rasool has half a dozen sketches of his latest big project -- a futuristic 28-storey, 5-star hotel.

It may seem the last thing Iraq needs right now -- there are no tourists and any new building has more chance of being blown up than completed -- but this is not typical Iraq. This is Kurdistan where business is slowly starting to thrive.

Rasool's hilltop hotel will have a revolving restaurant on top and be linked to downtown by a cable car. He is also building cement factories and steel plants, hoping to cash in on a construction wave in the semi-autonomous northern region.

Rasool wants to turn Sulaimani, a city of around 700,000 people set in the mountains of northeastern Iraq, into a hub of business and industry -- first for the Kurdish region and eventually for the rest of Iraq as well.

"Sulaimani is going to become one of the most developed cities in the Middle East within a few years," Rasool said confidently as he talked a visitor through his investment plans.

"I wouldn't compare it to Beirut or Dubai because it's not a straight comparison, but I anticipate it developing on a very large scale with widespread links to the rest of the world."

Rasool's vision might seem far-fetched but investors agree and are pumping money into the region on a huge scale.

Sulaimani alone has benefited from almost $2 billion of private and government investment in the past 2 years.

BUILDING BOOM

Cranes tower over the once low-rise city. Apartment complexes, hotels, a hospital, a new university campus, ring- roads, a flyover, tunnels and factories are all in the works.

While no one can guarantee the city will not be targeted by guerrillas, so far it has been safe and is well defended.

A new airport was recently completed, providing links to Baghdad, Amman, Beirut and Istanbul. Routes to the United Arab Emirates, Cairo and parts of Europe are also planned.

Construction is also luring workers from across Iraq, Iran and Turkey. Doctors, teachers and engineers have also arrived.

The Kurdish regional government in Sulaimani oversees the Reconstruction and Development Agency, an office which has drawn up a long list of infrastructure needs and is now matching them with local government and international donor funds.

Muhamed Abdula Salih, an adviser to the agency, says $700 million worth of projects have started in the past year, with a South Korean contractor building the hospital, and Iranian and Chinese groups contracted to work on tunnels, roads and bridges.

"In five years' time, Sulaimani will look very different," he said, ticking off a long list of plans. "But this is not just for us, this is part of the development of all Iraq."

Alongside the agency, there is a private sector group, also linked to the regional government, which is lining up foreign investors for projects such as hotels and malls.

A Dubai-based group has a $200 million proposal to build a housing development with a high-rise business centre, shopping mall, banks, mosque and schools all on one site.

"The Kurdish regional government wants to make Sulaimani into another Dubai -- it's one of the reasons we're talking to many Gulf companies," said Sheelan Kanaka, an official working with the local government to pull in private investment.

Some, including Rasool, are skeptical of the "New Dubai" label, but they are sure they can turn the city into a base for investors and make it a jumping off point for the rest of Iraq.

"DREAM CITY"

Northwest of Sulaimani, across the mountains, is Arbil, the capital of the Kurdish region and another city on the rise.

Arbil is determined to catch up with Sulaimani and next month will host the "Ultimate Rebuilding Iraq Expo and Conference" a three-day event expected to attract companies from across the region, the United States, Asia and Europe.

"Arbil has a lot to offer and there's plenty of interest in investing," says Harry Schute, the director of a U.S. consulting company who also works for the Kurdish regional government.

One of the largest projects underway in Arbil is "Dream City", a housing development for the upwardly mobile. To handle flights from further field, a new airport is being built.

While a business boom would appear on the cards, some warn that competition between Sulaimani and Arbil could hinder Kurdistan's ambitions, with political rivalries between the cities leading to wasteful overlap as they bid for investors.

Each city is home to one of the region's two political parties -- the Kurdistan Democratic Party in Arbil and the Patriotic Union of Kurdistan in Sulaimani. The parties fought a low-level civil war during the 1990s.

The mobile phone network in Sulaimani, called Asiacell, is blocked from working in Arbil, and vice-versa, seemingly for political reasons. There is little cooperation between authorities on coordinating business plans.

"The success of our region depends on the honesty of the two administrations and how they behave," says entrepreneur Rasool, the chairman of Asiacell, referring to the political parties.

"If they are not honest with one another, then it will hinder the development process. Neither can do it alone."