My Lords, following three decades of conflict and international sanctions, Iraq’s economy is set to become one of the fastest growing in the world over the next 10 years. Its GDP growth for 2013 is forecast for around 14%, largely fuelled by a rapidly developing hydrocarbons sector that already generates around $8 billion a month in oil revenues. On the back of this sizeable wealth stream, Iraq’s import demand is projected to increase by 150% by 2020, with major opportunities in sectors including power generation, infrastructure, healthcare, education, financial and professional services, telecoms, security and defence, IT and beyond. Inevitably, rapid population growth is also anticipated, from maybe 30 million today to maybe 70 million or beyond. These are large numbers for government and the private sector to satisfy demand for investment.
Where is Britain in this? British companies are especially well placed to capitalise on investment opportunities in Iraq given the significant historical and cultural ties that exist between us, as well as the UK’s solid reputation for quality and transparent business practices. UK exports to Iraq totalled £782 million in 2011 and exports of goods increased 40% in 2012 to just over £1 billion. Although commendable, this is minuscule compared with Turkish trade with Iraq, which climbed to $8.3 billion in 2011 from $2.8 billion in 2007 according to Turkish government statistics. Almost 600 Turkish construction companies are working in Iraq according to the Turkish Foreign Economic Relations Board. Iran’s trade with Iraq is worth more than $10 billion according to the Iran-Iraq Chamber of Commerce—that is 10 times as much as Britain’s.
Iraq is rebuilding the country from the ground up but there is continuing evidence that Britain is losing out to competitors, especially from the Far East and other European countries. There are many examples: massive contracts to build huge power stations in Basra have gone already to Greek and Turkish companies and recent defence expenditure favoured Russia and the Czech Republic. Iraq is rebuilding her railway system at a cost of more than $60 billion. The world’s first railway engine was invented here in Britain and a UK company, Bombardier, makes high-performance trains that are sold all over the world. Yet only this week the Iraqi Government announced that they were importing 10 trains from China.
I must point out that British company BP and Anglo-Dutch company Shell are between them producing more than 70% of federal Iraq’s total income from two giant oil and gas fields at Rumaila and Al Majnoon. Shell has just started a unique $18 billion gas capture programme, the first in the world, which will enable Iraq to fuel all its power stations with gas by the end of the decade. That will provide wealth for the Iraqi economy and jobs for the Iraqi people. It is a fantastic achievement by one British-owned and one partly British-owned company, with subcontractors that in many instances are also British. We should be very proud of their achievements.
Other sectors in Iraq such as construction and infrastructure are wide open to British expertise. Where is agriculture or the many other things we have to offer? With a few exceptions, I am sorry to say that British business is making less impact than we should in the federal Republic of Iraq and even less in areas such as the Kurdish regional government.
Alas, it is not only in Iraq that Britain has failed in the region. At the Opportunity Kuwait conference last week, I was disturbed to hear that Britain had only 2% of all investment in Kuwait by foreign companies, compared with 14% by the Netherlands. High-profile and important British politicians, including our Prime Minister, the Mayor of London and the Lord Mayor of the City of London, have shuttled through Gulf countries lately, aiming not just to sell British goods, such as warplanes, but to attract oil money to help fund pressing UK infrastructure needs.
Our bilateral trade with Gulf countries is estimated by analysts to be worth more than $15 billion annually, but that is still a modest sum given the estimated $2.2 trillion-worth of infrastructure under way in the Arabian peninsular states. We can and must do more. I pay tribute here to the extraordinary skills and sheer hard work of the Foreign and Commonwealth Office. I share its focus on the paramount importance of the development of the free market and the private sector as fundamental to the development of democracy. I am delighted that under the skilful leadership of the noble Lord, Lord Green of Hurstpierpoint, UKTI’s excellence is both more obvious and more effective in the region. UKBA is also working immensely hard.
Indeed, I am proud to be leading a UKTI-IBBC 100-strong mission to Iraq—I should explain that I chair the Iraq Britain Business Council. There, we will be led by a UK Cabinet Minister, the right honourable Member for Havant. We will be focusing on opportunities for small and medium-sized enterprises and, in particular on universities and science—his portfolio.
I believe that the key to success for Britain in Iraq and the region lies in rebuilding confidence. There remains in Britain much hesitancy about Iraq. We should be proud of the important part that we played in freeing the Iraqi people from their decades-long misery, which included institutionalised torture, genocide and slaughter by chemical weapons. We should be very proud of the work of our wonderful Armed Forces.
In just 10 years, Iraq has made huge strides forward. The recent free and fair local elections, and a growth rate today of well over 10% surely show that Iraq is fast becoming one of the most powerful countries in the region, and also the most stable. It is surely the best financial partner for us all. I believe that confidence-building measures, which I urge the Government to adopt, are the key to opening the door for a truly successful partnership between Iraq and Britain.