From Baghdad to Erbil (I)


BERLIN/BAGHDAD/ERBIL (Own report) - By accelerating its expansion into the Kurdish regions of Northern Iraq, German businesses are encouraging Kurdish secessionist aspirations. The German businesses' appetite has been particularly aroused by the riches in resources of the "Autonomous Region of Kurdistan". Reserves of 45 billion barrels of oil are estimated to be in this province alone. The Kurdish regional government in Erbil is laying claim to these reserves and has already concluded delivery contracts with foreign oil companies - most recently with RWE, the German energy giant. Subsequent tensions with the central government in Baghdad are massively fomented by Germany. Contrary to Iraqi law, one can hear from the German Ministry of the Economy that the province should have sovereign rights over its oil and gas reserves. Simultaneously, Berlin is encouraging German small-scale enterprises to do business in Northern Iraq, considered a "boom" region, offering a "reliable investment climate". Observers fear that the economic drifting apart in Iraq - supported by Germany - and the Kurdish claim on the resource rich regions of Mosul and Kirkuk could provoke a civil war.

Boom Town Erbil

Since the end of the 2003 war on Iraq, waged by the US and its allies, German companies have been using the Kurdish Northern provinces to regain a foothold in the country. These companies include Siemens, Zueblin, Hochtief and Heinkel, as well as some consulting and security firms.[1] Security firms are pointing out that travel in the "Autonomous Region of Kurdistan" is much "easier to organize and less dangerous" than in the rest of the country.[2] Already since quite some time, German industrial companies have been considering Erbil a "boom town".[3] Unlike Baghdad, Lufthansa can have direct flights to Erbil - and no visas are required.

High Rates of Growth

The German Ministry of the Economy and the "Working Group Middle East and North Africa" of the German Chamber of Foreign Trade (AHK) are inviting a "cross-industry delegation" to visit the "Autonomous Region Kurdistan" in mid-October. This is the second time since 2009. The visit will include meetings with high ranking "political decision makers", among them the Kurdish ministers for housing, commerce and industry, health and electricity. The interlocutors have not been chosen at random: "High rates of growth and therefore very good possibilities for new orders are being offered in the building sector, which is continuing to benefit from large investments in the reconstruction and development of the infrastructure; in the health sector with its enormous need to catch up and in the food industry," according to the AHK.[4]

Ten Years Tax Exemption

The business delegation's agenda includes a visit to this year's "Erbil International Fair". More than 50 German enterprises were presenting their products at the industry and trade fair already in 2009. The German Ministry of Economics and Technology (BMWi), the Association of the German Trade Fair Industry (AUMA) and VDMA - German Engineering Federation were among the fair's "official supporters".[5] The Kurdish provincial government, from its side, is using the Fair to promote its "investment law" offering foreign companies extraordinarily advantageous conditions, including unlimited land acquisition, a ten year tax exemption and a 100 percent repatriation of profits.[6]

Development Aid

In the meantime, German enterprises interested in the lucrative activities in the "Autonomous Region of Kurdistan" can have on the spot advice. This past May, a "German Trade Office" was opened in Erbil on the initiative of the German Ministry of the Economy and the German Chambers of Industry and Commerce (DIHK). It is being administered by associates of the Association of Experts in the Fields of Migration and Development Cooperation (AGEF) - formally a German non-profit "development aid" institution. According to its own accounts, the trade office's free services consist not only of furnishing information on Northern Iraq's "market situation", but more particularly of "preparing requests for application of Iraqi companies and administrations and transmitting these (...) directly to German companies."[7]

Self Determination

The German businesses' appetite has been particularly aroused by the riches in resources of the "Autonomous Region of Kurdistan". Reserves of 45 billion barrels of oil are estimated to be in this province alone. Contrary to the law in Baghdad - the central government insists that the intake from oil business deals be shared with the entire nation - the Kurdish provincial government has independently concluded several oil contracts with foreign energy companies. The giant in this branch, the German RWE Corp., seeks to feed up to 20 billion m³ of natural gas from the Kurdish regions of Northern Iraq into its planned "Nabucco" Pipeline. The German government is also massively promoting the business preferences for the Kurdish region. On the occasion of the opening of the German Trade Office in Erbil, the section director for Foreign Trade in the Ministry of the Economy, Karl-Ernst Brauner, declared that the Kurdish Provincial Government must "make its own decisions concerning its oil and natural gas deposits."[8]

Danger of Civil War

In light of Iraq's internal conflicts concerning the sharing of revenues from oil, observers in business circles are already predicting "enormous tensions between Erbil and Baghdad." They predict that if the Kurdish provincial government seeks militarily to impose its claims on oil deposits near Kirkuk and Mosul, the "dissention" could escalate into a "nationalist Kurdish-Arab Conflict".[9] Just recently the Archbishop of Kirkuk, Louis Sako, warned against the "danger of Iraq disintegrating into a civil war between the various ethnic and religious communities."[10]

In the next few days, will be reporting on how the Federal Republic of Germany, which for decades had cooperated closely with Baghdad, changed the orientation of its foreign policy to the north and facilitates, not just economically but also politically and culturally, the secessionist aspirations in Erbil.

[1] see also Goldgrube
[2] see also Sicherheitsberatung
[3] Kurdistan: Neues Büro für den Boom; 31.05.2010
[4] AHK Arbeitsgemeinschaft Middle East and North Africa/MENA-Projektpartner e.V.: Branchenübergreifende Delegationsreise anlässlich der Erbil International Fair in die Autonome Region Kurdistan (Erbil und Sulaimaniyah), Irak. 16.-20.10.2010 (Einladungsschreiben)
[5] IFP Iraq: Erbil International Fair 2009. Show Report
[6] IFP Iraq: Erbil International Fair 2010. 18-21 October
[7] AGEF: Deutsches Wirtschaftsbüro Irak (Faltblatt)
[8] Kurdistan: Neues Büro für den Boom; 31.05.2010
[9] Die Regionen im Porträt. Teil 2: Kurdistan; 16.10.2009
[10] Irak: Gefahr eines Bürgerkriegs; 27.08.2010