TOPSHOT - An employee stands at the Hammar Mushrif new Degassing Station Facilities site inside the Zubair oil and gas field, north of the southern Iraqi province of Basra on May 9, 2018. / AFP PHOTO / HAIDAR MOHAMMED ALI
Iraq has been courting multinationals such as GE and Siemens to reduce gas flaring and rebuild its utilities. AFP

Iraq energy sector at crossroads as leadership change looms

Iraqi elections are not decisive, but just a basis for further negotiation.

The latest instalment, voted on last Saturday, has turned up surprises, some grounds for hope and some disillusionment. Convoluted coalition-building is expected, but Muqtada Al Sadr’s strong showing complicates the prospects for economic reform and, above all, the vital energy sector.

The main results are now clear, though a few seats could change with recounts and legal challenges. Mr Al Sadr’s "On the Move" (Sairoun) alliance, with the Communists, won 54 seats in the 329-member parliament. He campaigned on an populist, anti-corruption platform and benefited as his support held up while turnout for others slumped.

Current prime minister Haider Al Abadi’s Nasr bloc won 42 seats; the militia-dominated, Iran-aligned Fatah list of Hadi Al Ameri, 47; former prime minister Nouri Al Maliki’s State of Law 25; and various Kurdish, cross-sectarian, minority and other parties the remainder.

The disappointing turnout reflected voter apathy, as well as intimidation and vote-rigging particularly in the Kurdish areas. Mr Abadi, who defeated ISIL and retook Kirkuk from the Kurds, was undone by a lack of economic results. But more encouraging was the success of some parties in picking up seats across the sectarian divide, and the stronger focus on achievements rather than identity politics.

It is mandatory for western media to refer to Mr Al Sadr as a “firebrand”, but his politics have undergone considerable evolution. His movement is less vocally anti-American, he now calls for a technocratic, non-sectarian government not beholden to Iran, and met Saudi crown prince Mohammed bin Salman in Riyadh last year.

He has ruled out joining with Fatah or with Mr Maliki, although such declarations are never final. That still leaves room for Mr Abadi to return as prime minister, though more beholden to the Sadrists this time.

The new government will have more financial room for manoeuvre because of the rise in oil prices and winding-down of the war. That also means more scope for corruption and populist hand-outs. Mr Al Sadr’s campaign promised stronger, technocratic governance, but unwieldy and ineffective coalitions, graft and patronage are ingrained in the modern Iraqi political system.

A government containing a heavy populist element is likely to suspect foreign investment and prefer heavy state employment, high current spending and budget deficits.

This would be contrary to Iraq’s clear needs. Energy subsidies and overstuffed state employment should be phased out in favour of direct cash payments to the needy, paying down debt, accumulating sovereign wealth to buffer the economy, and investing heavily in infrastructure and education. Improving the country’s dismal electricity and water situation should be a goal that technocrats and populists alike can get behind.


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Bureaucracy, which invites inefficiency and corruption, should be simplified – particularly the absurd visa system. The Iraqi private sector needs to be strengthened, including big potential employers such as tourism, agriculture and industry. Sectors which are attractive for foreign investment should be enabled to use it, instead of sucking up scarce state funds.

The key one of these is petroleum. After prime minister, oil minister is one of the five key positions alongside foreign affairs, defence, finance and interior. The current incumbent, Abdul Jabbar Al Luaibi, running for MP, came in first on Mr Abadi’s list in Basra.

But this time the choice is complicated by the law passed in March, but not yet implemented, re-establishing the Iraq National Oil Company (Inoc). This was promoted by Ibrahim Bahr Uloum, former oil minister and parliamentary candidate on the Fatah list. It would give enormous powers to the chairman, who would hold ministerial rank, and would be able to decide how 10 percent or more of oil revenues would be distributed.

Re-establishing a dedicated national oil company, and moving operational responsibility to it from the ministry of oil, is a good idea. But as currently worded, the law is a recipe for turf battles between Inoc and the ministry. The relative political strength of the next minister and chairman, and the party machines behind them, is therefore very important. Sadrists have often refused to meet foreign oil companies, but the aphrodisiac qualities of power may change that, and in any case there are ways round their objections.

The upstream oil and gas sector needs the go-ahead on major supporting projects of water injection and export facilities. To diversify the fiscal and export base, and create employment and technical skills, gas processing, world-scale oil refineries and petrochemicals are key next steps. The shape of a deal with the Kurds will depend on the eventual coalition, but would stabilise the autonomous region’s economy and unlock oil exports from the Kirkuk area.

Iraqi relations with Saudi Arabia have improved under Mr Abadi, and Mr Al Sadr’s rapprochement with Riyadh, too, suggests that under their leadership, the country would remain in its admittedly imperfect compliance with the Opec deal on production cuts.

In the current heightened regional tensions with Iran, Baghdad will aim as usual to play off its big neighbour, the US and other Arab countries. In contrast, a government featuring Mr Maliki and Mr Al Ameri would tilt much more to Tehran.

Iraq might benefit to some extent from sanctions on Iran, which raise oil prices and create smuggling opportunities. But it would quickly be sucked into the maelstrom of any regional conflict.

Iraqi voters have at last the luxury of deciding on bread-and-butter issues, but whatever new government they get needs to heed their message.

Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis


Company name: Klipit

Started: 2022

Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant

Based: Dubai, UAE

Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”


Company name: Revibe
Started: 2022
Founders: Hamza Iraqui and Abdessamad Ben Zakour
Based: UAE
Industry: Refurbished electronics
Funds raised so far: $10m
Investors: Flat6Labs, Resonance and various others

Switching sides

Mahika Gaur is the latest Dubai-raised athlete to attain top honours with another country.

Velimir Stjepanovic (Serbia, swimming)
Born in Abu Dhabi and raised in Dubai, he finished sixth in the final of the 2012 Olympic Games in London in the 200m butterfly final.

Jonny Macdonald (Scotland, rugby union)
Brought up in Abu Dhabi and represented the region in international rugby. When the Arabian Gulf team was broken up into its constituent nations, he opted to play for Scotland instead, and went to the Hong Kong Sevens.

Sophie Shams (England, rugby union)
The daughter of an English mother and Emirati father, Shams excelled at rugby in Dubai, then after attending university in the UK played for England at sevens.

Book Details

Three Centuries of Travel Writing by Muslim Women
Editors: Siobhan Lambert-Hurley, Daniel Majchrowicz, Sunil Sharma
Publisher: Indiana University Press; 532 pages


July 5, 1994: Jeff Bezos founds Cadabra Inc, which would later be renamed to, because his lawyer misheard the name as 'cadaver'. In its earliest days, the bookstore operated out of a rented garage in Bellevue, Washington

July 16, 1995: Amazon formally opens as an online bookseller. Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought becomes the first item sold on Amazon

1997: Amazon goes public at $18 a share, which has grown about 1,000 per cent at present. Its highest closing price was $197.85 on June 27, 2024

1998: Amazon acquires IMDb, its first major acquisition. It also starts selling CDs and DVDs

2000: Amazon Marketplace opens, allowing people to sell items on the website

2002: Amazon forms what would become Amazon Web Services, opening the platform to all developers. The cloud unit would follow in 2006

2003: Amazon turns in an annual profit of $75 million, the first time it ended a year in the black

2005: Amazon Prime is introduced, its first-ever subscription service that offered US customers free two-day shipping for $79 a year

2006: Amazon Unbox is unveiled, the company's video service that would later morph into Amazon Instant Video and, ultimately, Amazon Video

2007: Amazon's first hardware product, the Kindle e-reader, is introduced; the Fire TV and Fire Phone would come in 2014. Grocery service Amazon Fresh is also started

2009: Amazon introduces Amazon Basics, its in-house label for a variety of products

2010: The foundations for Amazon Studios were laid. Its first original streaming content debuted in 2013

2011: The Amazon Appstore for Google's Android is launched. It is still unavailable on Apple's iOS

2014: The Amazon Echo is launched, a speaker that acts as a personal digital assistant powered by Alexa

2017: Amazon acquires Whole Foods for $13.7 billion, its biggest acquisition

2018: Amazon's market cap briefly crosses the $1 trillion mark, making it, at the time, only the third company to achieve that milestone


Starring: Lupita Nyong'o, Joseph Quinn, Djimon Hounsou

Director: Michael Sarnoski

Rating: 4/5

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