Italy eyes Iraq investment, worried over security
Italian companies are now looking at fresh opportunities in Iraq's infrastructure and housing sectors-says Italy's ambassador to Iraq.
October 18, 2010 8:47 by Reuters
Italy, one of Iraq’s main trade partners, wants to invest more in the war-battered country’s metals and construction sectors, but poor security is deterring investors, Italy’s ambassador to Baghdad said.
Italy is already a big player in Iraq’s vital energy sector, with oil major ENI developing the country’s southern supergiant Zubair field. Italy is also a major importer of Iraqi oil, with 12 percent of its oil needs covered by Iraq last year.
Italian companies are now looking at fresh opportunities in Iraq’s infrastructure and housing sectors as well as joint ventures with Iraqi firms in the steel and plastics industries, Maurizio Melani, Italy’s ambassador to Iraq, told Reuters.
“Italian companies are certainly interested in participating in the reconstruction of Iraq,” Melani said at the Italian embassy compound inside Baghdad’s heavily guarded Green Zone.
“Investments need a situation which is secure, which is seen as stable and sustainable … At this stage, not all the conditions are there.”
Iraq’s security has improved, but attacks and explosions still occur almost daily. The country also remains without a new government since an inconclusive March 7 election as political factions jostle for power.
“A new government will need to make some legislative improvement. It will have to improve the functioning of the banking and financial system, which sometimes is an obstacle to activities,” Melani said.
Emerging from the shadow of war and economic sanctions, Iraq needs cash to rebuild its economy and crumbling infrastructure.
It has signed oil deals with global companies after two bidding rounds last year in a bid to quadruple its crude output capacity and generate the billions of dollars it needs.
Oil majors have largely shrugged off security concerns despite the attacks, and more foreign investors are scrambling to grab contracts in Iraq.
Italy’s second-biggest utility Edison is among companies listed to take part in an Oct. 20 auction where three gas fields are being offered for development.
Melani said companies including Italy’s biggest construction company Impregilo, Grandi Lavori and Technital, have been awarded a designing contract for the Fao port, at the southernmost tip of the country. Italian investors could be interested in carrying out the project later on, he added.
The Iraqi authorities are pursuing a number of projects to improve port facilities, including a new $6 billion port at Fao.
Smaller Italian firms have formed joint ventures with Iraqi investors in sectors such as retail and engineering and are exploring opportunities in Iraq’s northern Kurdish region, which is more stable in terms of security, he said.
Imports from Iraq, mainly oil, average more than 3 billion euros per year, while exports from Italy were just 589 million euros in 2009, up from 107 million euros in 2007, Melani said.
“There is room for improvement in the coming years,” he said. “Once the political and security situation is not a problem any more, this country can have very rapid progress.”
(Editing by Maria Golovnina and Will Waterman)