Embassy News
Remarks at the Dialogue on Business and Investment Climate in Iraq
U.S. Ambassador to Iraq, Ryan Crocker; U.S. Deputy Secretary of the Treasury, Robert M. Kimmitt; U.S. Deputy Secretary of Commerce, John J. Sullivan
November 1, 2008
DEPUTY SECRETARY KIMMITT: Excellencies, ladies and gentlemen, it is a pleasure to join in welcoming you to the dialogue on investment and business climate. On behalf of the American delegation, including Ambassador Crocker and my colleagues from Washington, John Sullivan and Mike Delaney, I would like to express appreciation to our Iraqi hosts, and particular appreciation to my friend, Vice President Adel Abd Al-Mahdi, for hosting this event.
We meet in the midst of historic transformation in a global economy. In just the past few weeks, the United States and other countries have taken steps to provide much-needed liquidity to the financial system, strengthen financial institutions, protect investors, and enhance market stability. These actions are a powerful step toward restoring the health of the global financial system, and creating the condition for continued increases in cross-border trade and investment.
Even as we seek to stabilize the major economy's financial markets, we continue to focus attention on supporting emerging markets, including Iraq, at this time of global stress. Without economic progress and sound financial practices, political and security gains will remain temporary. This is why the U.S. government is committed to working alongside the Iraqi leadership to help create a stable macro-economic environment, strengthen the financial system, and build a solid foundation for private sector growth.
Private sector development is the engine of a flourishing economy, and the only sustainable catalyst for job creation. Expanding the private sector helps diversify the economy, making the country more resilient to external, economic, and financial shocks. It also brings in new management techniques and the latest technology, which create efficiencies that enable businesses to compete in the regional and global marketplaces. As the vice president said in his remarks, the goal is to return the private sector to its natural place in the Iraqi economy.
Iraq has many resources from which to draw, and its immense natural resources are only the most well known. Companies around the world are beginning to recognize the long-term investment opportunities that now exist in the agriculture, infrastructure, telecommunications, financial services, and tourism sectors.
However, there are many obstacles that limit business opportunities for Iraqis and their international counterparts. And that is precisely why we are here today. This morning we will hear from Iraqi leaders discussing the progress they are making in reforming investment laws and regulations, including through the National Investment Commission.
Later today we will hear from the private sector and the World Bank, who will discuss ways that the Iraqi government and its international partners can best promote investment and leverage public and private sector initiatives. Importantly, key officials from the Council of Representatives, as well as provincial governors, will also participate in the dialogue to help shape the vision for Iraq's economic future.
It is also important to emphasize at the outset that today's dialogue is not the first effort to promote Iraq's private sector. I would like to note briefly some of the work that Iraq, and we in the international community, are already doing to improve the Iraqi economy as a basis for discussing how to do even more together.
First, Iraq itself has made significant progress implementing a sound macro-economic framework. Their accomplishments include: establishing a strong and respected currency, lowering inflation, improving fiscal policies, attaining consistent growth, and reducing subsidies. Iraq has also passed an important investment law that will help lay the legal basis for foreign investment in the country. And it has maintained a trade regime built on a simple, low-tariff schedule.
Externally, Iraq has substantially decreased the sovereign debt burden incurred under the foreign regime by actively engaging with the international community. By concluding agreements with remaining official creditors, particularly in the Gulf, Iraq would send a positive signal to investors that it can resolve disputes amicably.
Investors are also closely watching political negotiations in Iraq, including on security arrangements. We hope that negotiations on the security agreement can be concluded as quickly as possible. This, again, will send an important signal, not just in the political and security field, but also in the economic and financial fields, and especially to foreign investors.
Second, agencies from across the U.S. government, many of whom are represented here today, are implementing initiatives to support Iraq's private sector development. For instance, the Treasury Department is providing technical assistance and guidance to help Iraq modernize its public banking sector. The Department of Defense's task force to improve business and stability operations in Iraq focuses on encouraging industrial revitalization, attracting foreign investment and market access, and modernizing the private banking sector.
The U.S. Agency for International Development helps expand private sector access to financing, supports regulatory reform, and distributes assistance for development support to Iraqi businesses. The Overseas Private Investment Corporation, through programs like the Iraq Middle Market Development Foundation, has created loan programs to support small and middle market business initiatives. Because in Iraq, like in the United States, it will be small and medium-sized businesses that create the majority of good-paying jobs.
Third, and finally, the international community as a whole has also helped Iraq rebuild its economy. At the Madrid Donor's Conference in 2003, 45 countries and international institutions pledged $34 billion for reconstruction and development. In the international compact with Iraq, agreed in Sharm El-Sheikh in 2007, an even larger group of donors provided additional support in return for Iraq's commitment to multiple benchmarks to create an enabling environment for private investment and job creation.
In the United Nations and World Bank, both manage the international reconstruction fund facility for Iraq, into which donors have contributed almost $80 million focused on private sector development.
While much has been done by Iraq, by the U.S. government, and by the international community, significant challenges remain. As you will hear later today from the World Bank, its Doing Business Indicators ranked Iraq 152 of 181 countries. We already know some of the most important areas for improvement: the complexity of Iraq's existing laws, regulations, and administrative procedures; the need for competition and consumer protection laws; and, importantly, the publication of implementing regulations for the new investment law. Iraq's ministerial and provincial budget execution also is still too slow, and the average time and cost to start a business are some of the highest in the region.
The Iraqi government, with the support of international donors, is creating a strategy to overcome these hurdles, including efforts with the World Bank to improve the ease of doing business. But the Iraqi government and its international partners also have much to learn from private sector colleagues, including those in this audience. You have the resources and experience to help Iraq develop a robust private sector by helping identify and resolve some of the major impediments that investors face.
Excellencies, ladies and gentlemen, by building a vibrant economy led by the private sector, we will help improve the lives of the Iraqi people, enhance stability, and bolster prospects for lasting peace. But there are also sound business reasons for exploring investment opportunities at this time. By leveraging the ingenuity and entrepreneurship of those from all communities involved, we will achieve much more together than we ever could, acting alone. Thank you very much.
(Applause.)
AMBASSADOR CROCKER: Your Excellency, Mr. Vice President, Your Excellency, Mr. Deputy Prime Minister, Excellencies, ladies and gentlemen, (speaks in Arabic), and good morning.
It is a pleasure to participate in today's Iraqi-U.S. Dialogue on Business and Investment Climate. I would like to extend my special thanks to the American business representatives who traveled to Baghdad to participate in today's dialogue. Their presence is recognition of Iraq's great economic potential, and our common desire to unlock that potential through increased investment.
For several years our governments have been meeting in the bilateral Dialogue on Economic Cooperation. Today's event is part of that broader dialogue. The economic dialogue has been growing in importance in recent years. As Iraq's economy grows, and as the security situation improves, the economic and commercial dimension of our relationship assumes increasing importance.
As with our strongest relationships around the world, we look forward to the day when the U.S.-Iraqi partnership is marked primarily by an active flow of businessmen, students, and tourists between our two countries, and by growing trade and investment links.
Any country's economic well-being depends on an active private sector. And Iraq is no exception. Foreign investment is critical for Iraq to achieve the development goals it has set for itself. And anyone who has been following the price of oil in recent weeks is reminded that Iraq cannot rest all of its economic development hopes on its hydrocarbon reserves. It is in the interest of all of us who are friends of Iraq to help work towards the creation of a strong and diversified economy in this country.
So, that is what we are here to talk about today. Iraq has taken many positive steps to create an environment that welcomes foreign investment. The 2006 investment law, as others have already noted, was very important. And, as Dr. Ghadban noted, Iraq's recent adherence to the World Bank's multilateral investment guarantee authority was also a significant step.
I am especially pleased to see here today a number of Iraq's provincial governors and members of provincial investment commissions. There have been important achievements. A group of American investors recently signed the first Iraqi investment license for a major hotel project, and a consortium of foreign companies signed the first joint venture agreement for management of two state-owned enterprises. But we all realize that more needs to be done before Iraq realizes its extraordinary economic potential.
So, today I hope we will have a frank and open conversation about what still needs to be done to improve the business and investment climate. I urge you to take advantage of the participation of the companies present, the U.S. Chamber of Commerce, and the World Bank, and listen to their experience in Iraq and other markets. We can learn a great deal from their stories and success, and, perhaps even more importantly, draw some significant lessons from examples of failure.
But this is a dialogue today, it's not a lecture. There are things that Iraq needs to do, certainly, but there are also things that the U.S. may need to do. For example, I have heard on many occasions concerns that U.S. visa procedures impede travel, including for business and investment purposes.
As we look ahead to a year that will bring many changes to the U.S.-Iraqi relationship, it is important that we all focus on the importance of working to improve our economic links. As the vice president noted, in 2009 representatives of the new U.S. administration will sit down with our Iraqi counterparts to continue our economic dialogue. I hope that we will participate jointly in trade and investment promotion, in fairs, and that we will celebrate many significant new investments.
I hope for progress toward Iraq's entry into the World Trade Organization, and I hope that the Iraqi people all experience the benefits of improved security and its reflection in economic growth. Thank you. (Speaks in Arabic.)
(Applause.)
DEPUTY SECRETARY SULLIVAN: Excellencies, colleagues, ladies and gentlemen, I am honored to be here today to participate in this historic dialogue on business and investment in Iraq. I am the Deputy Secretary of the United States Department of Commerce. In the United States government, the Department of Commerce is responsible for, among other things, the relationship between the federal government and the private sector, the business sector, of the U.S. economy.
Therefore, I am particularly pleased to see with us here today representatives of the U.S. business sector -- companies, the Chamber of Commerce -- who have come here to Baghdad to talk to us, to U.S. government representatives and, most importantly, to the Iraqi government representatives about their experiences doing business here in Iraq and other markets. That exchange, in addition to the input from the Chamber of Commerce and the World Bank, is a very important part of our dialogue today.
As Ambassador Crocker said, this is a dialogue. There is much to learn on the American side, as there is on the Iraqi side. One thing I have learned is that American companies want to do business here in Iraq. In fact, they have been doing business here in Iraq, through U.S. or Iraqi government contracts, or Iraqi representatives. But U.S. investment in business here in Iraq is not nearly as robust as it should be, because more needs to be done to improve the environment, the climate, for business and investment.
That is not to say that substantial progress hasn't been made. I was here in this hotel two years ago for a trade expo. That trade expo was held in the room right next door, because it was so small. Today, we are here in this room, in a much different environment. Substantial progress has been made. That progress has now allowed us to have this dialogue, where we can talk more specifically about our economic relationship and all that can be done to promote business and investment in Iraq.
As my colleagues, Deputy Secretary Kimmitt and Ambassador Crocker have said, the key to economic development in Iraq is the private sector. That is why it is important for us to have U.S. and other companies here to discuss their views on improvements that can be made. It's their views that are the most important, in the long term, for Iraq's economic development. And there are many things that we can (inaudible): growth of the Iraqi economy, and ultimately, the peace and prosperity of Iraq.
I look forward to participating with you today in this endeavor. Thank you.
(Applause.)
# # #