Kurdistan Region: Rare opportunity for long-term investment with higher return
Winning public trust in a democracy has never been easy, especially with nations that suffer from fragile democracies. Nevertheless, the leader of a country’s ruling party should form a new government based on a stable and robust economy and low security risks.
Normally, new governments need to maintain a state’s existing economic policy and find new ways to create more jobs and develop new modules for economic growth. These steps will help raise the Gross Domestic Product (GDP)—a means to move the prosperity of a nation forward.
The economy is the system whereby a country or region’s revenue, industry, and trade are organized. There are various requirements for establishing a stable economy. The main and, perhaps, most important is security and political stability. Of course, other factors such as land, labor, capital, technology, and a proactive labor force need to be established to maintain a healthy economy.
Although the Kurdistan Region has all of the above requirements to have a good economic infrastructure, it lacks an efficient locally-minded economic model to meet the demands of its population.
Moreover, despite the instability in the Middle East, including the so-called Islamic State’s ongoing threat, anti-government protests in Iraq, and tensions between the US and Iran inside Iraqi territory, Kurdistan remains safer than most countries around it. Security is certainly a great advantage for local and international investors who are interested in economic development and building economic infrastructure in various sectors where there are opportunities.
The new Kurdistan Regional Government’s (KRG) cabinet has also brought a great opportunity for the Kurdistan Region to achieve political stability. Indeed, one of the first statements Prime Minister Masrour Barzani made during his inauguration speech was that his government would prioritize a solutions-based approach with Baghdad, the eradication of corruption, building economic infrastructure, education reform, and investing in agriculture. The speech offered a positive beginning, and, since then, Prime Minister Barzani’s promises have been reinforced by action and change.
One of the significant reasons the Kurdistan Region has been unable to develop a stable economy in the past is due to political instability, high public service expenditure, and the war against the Islamic State. Additionally, Baghdad’s cut of Kurdistan’s share of the federal budget from 2013 to 2018 hit the Kurdish region very hard. The main reason for the budget cut was due to political differences regarding oil and gas exports. The new KRG cabinet’s approach, coupled with efforts by the Kurdish prime minister to visit Baghdad, has opened a new avenue to solve those differences.
While Baghdad–Erbil relations are imperative, Kurdish unity is also equally important for the region’s immediate stability. The triangle agreement between the leading Kurdistan Democratic Party (KDP), Gorran (Change) Movement, and the Patriotic Union of Kurdistan (PUK), as well as other minority groups, are important steps. Nevertheless, long-term stability can only be guaranteed through a strong and stable economy, which provides opportunities as well as a steady income for the people.
On the one hand, solving problems between Baghdad and Erbil and, on the other hand, rebuilding trust among political parties in the Kurdistan Region has created a suitable environment for the KRG to propose several reforms. These include tax and revenue, the banking sector, foreign investment, education, and civil servant and pension reforms. Prime Minster Barzani has made it clear that those sectors must urgently be reformed before Kurdistan moves forward.
No one can claim that reform or introducing new laws will be free of challenges, but the strong desire Prime Minister Barzani and his cabinet members have shown to be a government for the majority and not the few are positive.
Today, most developed countries are in the fifth industrial generation. However, the factors above are still important elements for the economic growth of countries who are in post-conflict recovery. The Kurdistan Region’s Gross Regional Product (GRP), for instance, is lower than where it should be because the income per capita is below the average standard. Kurdistan must work toward building its own version of economic development.
The Kurdistan Region may not be the largest in the Middle East, but it is a gold mine for foreign investors, especially in the agriculture, tourism, and natural resources sectors. Moreover, following half a decade of economic austerity and war, the Kurdistan Region’s leadership have made solid commitments to move the region forward with wider reforms, which will provide low risks to foreign investors.
Awat Mustafa is a board member for the Barzani Charity Foundation and researcher. He holds a Master of Science in International Development from Newcastle/Northumbria University in the United Kingdom.
The views expressed in this article are those of the author and do not necessarily reflect the position of Kurdistan 24.
Editing by Karzan Sulaivany