as Britain leaves

Iraq reconstructs.

I was at the Invest in Iraq conference yesterday, being heralded by Lord Mandelson as a “new chapter” in Iraq’s history. I wondered if the timing was planned - the UK unveils a big conference to attract private investment into Iraq, the same day it pulls its troops out of Basra…out with the troops, in with the bankers! - but maybe that’s cynical.

It was an impressive event - the main hall at the Landmark Hotel, which seats around 500, was completely full, with people being turned away. Prime minister Al-Maliki and several other ministers gave a strong message: Iraq is moving from a centrally-planned to a free market economy, and it wants to move very quickly to provide jobs and services to the economy. ‘Otherwise’, as the suave deputy PM Barham Saleh put it, ‘we will be voted out at the next election.’

Or maybe it doesn't.

That support could come in the form of export credit agency (ECA) guarantees. Such ECA guarantees are quite normal for big infrastructure projects in emerging markets, and in today’s low liquidity market, it’s essential if public-private deals are going to get done. Otherwise, governments have to finance deals off their own balance sheet, which Iraq’s government cannot yet afford to do. So ECA coverage would seem to be essential for the reconstruction of Iraq’s infrastructure.

 But here’s the rub - not a single western government provides any export credit agency coverage (ECA) for project finance in Iraq. Not the US, not the UK, nothing.

Comments

[red]

Oh congratulations, you've got raivo pommer syndrome...

Anyway. What was I going to say?

I wondered if the timing was planned - the UK unveils a big conference to attract private investment into Iraq, the same day it pulls its troops out of Basra

Yes, the timing was planned. Downing Street made an explicit troops leave/business arrives announcement. It's supposed to show the "success" of the war. Dead people = buiness opportunities. Lovely.

Brown said export credit guarantees would be reviewed.

Will the government actually underwrite project finance in Iraq? Dunno - probably depends how much pressure it gets from which arm of business.

At the moment, the Treasury is directly providing project finance to prop up the PFI - public money to replace non-existant private finance - so on the one hand there's not much they won't do to help the infrastructure firms.

On the other hand, the government is already underwriting a shed-load of toxic banking. I'm not sure at what point the taxpayer's underwriting capacity is deemed to have run out...

Still, I'm sure that Brown will want UK firms to get a nice chunk of the Iraq spoils, so he will probably come up with something.

I'm sure it's not that long since the government was paying out millions in export credit guarantee money to firms that lost money in the last wave of exports to Iraq - arms for Saddam Hussein...