May 19, 2011


The Hot-Money Cowboys of Baghdad (STEVEN LEE MYERS,5/22/11, NY Times Magazine )

[Ayad Yahya, the general director of Al-Bilad Islamic Bank], an aging economist who once worked for Iraq’s state bank, recalled visits to Amman and Beirut under Hussein’s rule. “We brought back bananas and Pepsi for our children,” he told me. “We said to them, ‘This is a banana.’ ” In 2007, while the sectarian fighting in Iraq was still in full bloom, Yahya acquired the means to make Pepsi himself. He led a group of investors that took over the formerly state-run Baghdad Soft Drinks Company, a factory on the city’s southern outskirts that was once partly owned by Hussein’s erratic and fearsome son, Uday. It was the officially licensed Pepsi franchise in Iraq from 1984 until it shut down production after the invasion of Kuwait in 1990. Now it’s humming again. With new management, a renewed Pepsi license and an extensive refurbishment, including new bottling lines, generators and water purifiers (the source being the Tigris River, half a mile away), it supplies 80 percent of the soda in Baghdad and nearly half in all of Iraq. This makes it one of the country’s largest manufacturers, which is a sign of its managerial success and also the sad state of manufacturing in Iraq.

“The economy is growing, but the path is long,” Yahya said later over a lunch at the soda plant that included Iraq’s national dish, a delicious roasted carp, called masquf, and Diet Pepsi. “This is just the very beginning.” As we ate, Al Jazeera murmured on a flat-screen, broadcasting the protests in Egypt that toppled Hosni Mubarak. Yahya watched the scenes, riveted. “Arab investors used to think Egypt was the most stable,” he said. “Now we are.”

The war in Iraq is widely seen as a colossal blunder of American hubris that killed tens of thousands and displaced many more, leaving a shattered, sectarian wreck of a country. Even now, as President Obama withdraws the last of nearly 50,000 American troops by the end of the year, the insurgency simmers and the state is neither stable nor fully democratic. The government is rife with corruption and paralyzed by an ossified bureaucracy. And yet also, undeniably, Iraq has turned a corner. After years of war, looting, sectarian bloodshed and political infighting, Iraq’s economy is beginning to take off, fueled by a resurgence in oil exploitation — and soon natural gas — and an influx of foreign capital that has swelled despite the protracted political impasse that followed Iraq’s parliamentary elections in March 2010.

The International Monetary Fund recently estimated that Iraq’s gross domestic product grew 2.6 percent last year — nearly as much as the struggling American economy did — and it projected astonishing increases exceeding 11 percent this year and next. Some say Iraq’s economy — estimated at roughly $80 billion today — could expand six or seven times in the next decade as it increases oil production to a level rivaling Saudi Arabia’s.

“That’s conservative,” James Hogan, the country director for the international banking giant HSBC, told me as we sat in his sleek, glass-walled office in Baghdad. HSBC acquired control of the Dar Es Salaam Investment Bank in 2005 and has since built it into one of Iraq’s largest private financial institutions. It had assets worth $91 million when HSBC took control; according to Hogan, it has $407 million in assets now. By market capitalization, it is the largest company traded on the Iraqi Stock Exchange, an institution that did not exist in 2003 and began electronic trades only two years ago. “What success will look like in 5, 10, 20 years, that’s what we’re all here for,” Hogan said.

“People used to say: ‘America is coming for our oil! America is after our oil!’ ” Abbas Fadhil Shamara told me. “But at the end of the day, you did not see many companies.” Today Iraqis complain not that Americans are coming to steal their oil but that our companies — and foreign corporations, too — are too slow to arrive.

Thanks, W.

Posted by at May 19, 2011 6:24 AM

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