Boom times in Kurdistan

The beleaguered region of Iraq is booming, much to the rest of the country’s chagrin

Boom times in Kurdistan

Matilde Gattoni

Five months after the U.S. military quit Iraq, the expression on the faces of foreign visitors landing at Kurdistan’s gleaming, new airport for the first time is always the same. After stepping off one of an increasing number of international flights, being ushered past security, with no visa necessary, toward a duty free shop — where a litre of Grey Goose Vodka costs US$27 — the most common response is disbelief.

While much of the country is still plagued by insurgent attacks, and a power struggle between Shia and Sunni Arab political factions threatens to push Iraq to civil war, Kurdistan is thriving, thanks to foreign investment and oil wealth. The Kurds are allocated 17 per cent of Iraq’s total oil export revenue, an enormous sum in a country with some of the world’s largest oil reserves. The semi-autonomous region is governed by the Kurdistan Regional Government, which claimed an eight per cent GDP growth rate last year, nearly topping that of China.

In just a few short years, the region has gone from war-torn and largely ignored by the international community to stable and economically prosperous. Even Canada has taken note. In March, a video of Prime Minister Stephen Harper appeared on local TV, wishing Kurds a happy New Year (it’s celebrated on the first day of spring); and in April, Canada’s ambassador to Iraq met with Kurdish officials to discuss co-operation.

Cranes dot the skylines of cities like Erbil and Sulaymaniyah; in Erbil, both the Hilton and Marriott chains are building new hotels, riding Kurdistan’s budding tourist wave. Because the mountainous region is rich in historical and archeological sites (the ancient citadel of Erbil, perched high above the city, is a major draw), both National Geographic and the New York Times ranked it among their top-rated places to visit last year. In the mountains north of Erbil, plans for a ski resort have been approved.

For most in Kurdistan, daily life is substantially better than when Saddam Hussein was in power. Western-styled malls carrying international brands like Levi’s or Mont Blanc are popular with urbanites, and there were long lines to view high-end Mercedes, Range Rovers and Jaguars at a recent auto show in Erbil. Yet this new-found prosperity comes at a time when long-standing feuds with Baghdad over land, identity, oil revenues and power-sharing are at an all-time high. With the region acting more independently as of late, these tensions are fuelling worries that a united Iraq cannot continue to exist.

Kurdistan’s president (the region is politically autonomous, though it receives a portion of Iraq’s budget) warned leaders in Baghdad recently that Kurdistan would consider holding a referendum seeking independence if Iraq’s Shia-dominated government didn’t share power with minority Kurds and Sunnis by September. Not surprisingly, new discoveries of crude in the region are contributing to the deteriorating relationship.

Oil production in Kurdistan is rapidly increasing, yet Baghdad has blocked U.S. oil giant Exxon Mobil, for one, from bidding on new exploration rights—payback for planning work in Kurdistan without Baghdad’s consent. (Last October, Kurdish authorities inked a deal allowing Exxon Mobil to explore six areas in Kurdistan without the central government’s approval.) Meanwhile, Kurdish leaders are frustrated by long delays in a proposed law to clarify oil revenue sharing.

In April, Kurdistan’s president made his frustrations known—not just with the logjams and endless delays, but also with Baghdad’s creeping authoritarianism: “What threatens the unity of Iraq is dictatorship and authoritarian rule,” said President Massoud Barzani. “If Iraq heads toward a democratic state, then there will be no trouble. But if Iraq heads toward a dictatorial state, then we will not be able to live with dictatorship.”

For many Kurds, who are just beginning to recover from the pain they endured under the previous regime, including an Iraqi military campaign that killed 180,000 Kurds, the statement stopped short of what they really want: a separate Kurdistan. Despite frustrations with Baghdad, the Kurdish government is barrelling ahead, forging closer ties with the international community. Last year, the U.S. opened a consulate in Erbil, where offices representing 24 nations now operate. Kurdistan’s relationship with Turkey has never been easy—Turkish troops invaded Kurdistan as recently as last year—but Turkey is now Kurdistan’s largest trading partner. Last year, US$6-billion worth of goods was traded between the two neighbours.

The 2,000 foreign-owned companies working in Kurdistan—mainly energy and construction firms—include some Canadian firms, like Calgary’s Talisman Energy. Some of the generous incentives that have lured them to the region include low corporate tax rates and loans of up to US$2 million for foreign-owned small and medium enterprises.

“Any foreigner can own land where they set up their projects free of charge, and they are tax exempt for seven years, which may be extended for up to 15 years in some cases,” said Fathi al Mudaris, economic adviser to Kurdistan’s minister of trade and industry. And investment laws, he adds, allow foreigners to own “100 per cent of the shares,” meaning businesses avoid having to partner with a local firm.

Falah Mustafa Bakir, the Kurdish minister of foreign affairs, says Canada is among a number of countries with whom Kurdistan would like to establish closer relations—partly because they see Canada’s federal political system as a workable model, according to Bakir.

When asked to reflect on Kurdistan’s future regional role, and whether escalated tension between the U.S. and Iran, Kurdistan’s neighbour, would affect it, Bakir chooses his words carefully: “We hope we won’t be the battleground for settling scores. Our people have suffered enough. This is a part of Iraq,” he adds, “but this is a friendly region that considers itself closer to the international community.”

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