ARBIL, Iraq (AFP) -Northern Iraq’s relatively stable Kurdish region is trying to attract oil prospectors and investors instead of insurgents in an ambitious bid to rival commercial hotspots like Dubai.
The streets of the regional capital of Arbil are throbbing, not with the shock waves of car bombs but the roaring of bulldozers, as builders throw up a new generation of high-rise hotels and opulent shopping malls.
“Kurdistan is going to be an alternative to Dubai,” boasted Hoshyar Nuri Abbas, an official with the Turkish-Canadian oil company, TTopco, a joint venture between Genel Enerji of Turkey and Addax Petroleum of Canada.
While Iraq’s fragile central government has struggled to staunch the daily bloodshed in the war-torn Arab central and south, Kurdistan’s once-feuding political parties have agreed to fire off brochures instead of bullets.
Arbil airport welcomes jets from Vienna, Dubai and Istanbul and the region’s airline plans to offer flights to London, Brussels, Amsterdam and Berlin.
“It’s not an easy task (to attract investors) because we are part of a country that everyone says is a war zone,” said Falah Mustafa Bakir, head of international relations in the Kurdistan administration.
Bakir works in an office adorned with pictures of Iraqi President Jalal Talabani and Massud Barzani, president of the Kurdish Regional Government, leaders he credits with bringing stability to the area.
A year ago, as Baghdad spiralled into war between Arab sectarian and political factions, the two former rival guerrilla leaders set differences aside and merged their self-controlled regions into a single administration.
Soon afterwards the regional parliament passed a key investment law opening the door to foreign direct investment, and at present more than 600 foreign companies, mostly Turkish, are registered in the region.
In addition to providing a 10-year tax holiday to new investors, the liberal law allows foreign firms to own 100 percent of local subsidiaries and to repatriate all their profits.
“There is no safer place in the world … the growth is impressive and we don’t pay taxes. We would like to grow here,” says Mohammed Tahir Brifkany, a Kurd employed by the Turkish group BTP Nursoy to oversee real estate projects.
Nursoy has constructed a residential complex of 700 modern apartments, complete with a swimming pool and tennis courts, in Arbil. The company’s Iraqi operations employ around 1,200 people, more than its Turkish projects do.
The project is aimed at high-end clients, a new market for a region long accustomed to state-centred economic policies put in place by former dictator Saddam Hussein’s totalitarian Baath Party.
But most Kurds have not yet reaped the rewards. The average salary in Arbil is around 400 dollars (300 euros) a month, forcing many to work more than one job to afford basic goods, which are becoming more expensive.
“Saddam’s Iraq was a socialist economy. Now it is adopting a free market route,” said Aziz Ibrahim Abdo, director general of the local trade ministry.
“In such a transition phase you can see negative effects but life is better for the people than before.”
Nawzad Hadi Mawlood, the governor of Arbil, is optimistic that the Kurdish region will be a “copy of economies like the United Arab Emirates and be a good successful example for the new Iraq.”
Iraq’s Kurdish region has enjoyed de facto autonomy since 1991, when the United States extended a no-fly zone over the region following the first Gulf War, essentially cutting it off from Baghdad.
The Kurds, who strongly supported the March 2003 US-led invasion of Iraq, maintained their autonomy after US forces rolled into Baghdad.
It would help if, like the Gulf countries, Kurdistan could jump-start its growth by exploiting large hydrocarbon reserves. But while Iraq as a whole is flush with oil, the region’s reserves are modest.
Proven oil reserves account for 2.9 percent of Iraq’s total reserves, but experts say the region’s potential remains untapped.
“That (2.9 percent) is an estimate. We don’t really know. It’s a virgin area here,” said Kemal Afaraci, an official with TTopco overseeing the company’s site in the Kurdish region of Taq Taq.
The company is currently drilling its fourth oil well since the toppling of Saddam Hussein in April 2003 and hopes to drill two more by end of the year.
The three oil wells which TTopco has already drilled would produce 75,000 barrels a day, compared to the two million barrels produced in the rest of the country, mainly in the south.
Norway’s DNO, Turkish group Petoil and the Canadian company Western Oil Sands have signed production-sharing contracts with the regional government.
But it is unclear how those contracts will fare if Baghdad passes a draft hydrocarbon law — currently awaiting a parliamentary vote — that would put the country’s oil wealth under the control of a federal governing body.
In May, Iraq’s oil minister Hussein Shahristani said that any contract signed before the adoption of law, aimed at equitably distributing Iraq’s oil among all its 18 provinces, would be cancelled.
Kurdish officials nevertheless say they will honour the contracts, and the Kurdish Regional Government claims to have reached an agreement with Baghdad whereby it will receive 17 percent of the country’s oil revenues.
“These contracts adopt international standards and are in line with the draft law,” Bakir said.
Another concern is the region’s oil infrastructure, which has repeatedly come under attack by insurgents south of the regional boundary.
The main oil pipeline, extending from the disputed oil-rich city of Kirkuk to the Turkish port of Ceyhan, is almost always shut off, a reminder that even in Kurdistan the war is never that far off.