Iraq Business News

Of all infrastructure in Iraq, the transport network is one of the most critically underdeveloped. That may be changing as the country seeks to get on the move.

From the Eye On Iraq: The transportation sector is, unquestionably, one of the most fundamental services to Iraq’s population. With over 29 million people needing to get around on a daily basis, it represents a massive opportunity for investment and growth – not least as it is one area that has suffered from the twin effects of government neglect, placing it at the foot of the region’s transport systems in terms of development and modernization, and the ongoing security situation.

But the country has a long history of integrated transport provision. In 1869, it became one of the first Middle Eastern countries to have a rail carriage pulled by horses, and then was home to the region’s first railroad, the Baghdad-Byzantine Berlin route, which was constructed in 1911 and connected Iraq with neighboring countries.

As for domestic land transport, Iraq operated fleets of modern tourist buses since the 1930s, and was the first  and only Arab country to operate the single and double-decker buses, built by the famous British Leyland, which were operating until the collapse of Saddam’s regime.

Reasons for deterioration

The quality and performance of the sector started to deteriorate by the early 1970s, when the Baath regime started importing old, cheap transport vehicles and, despite high oil prices for much of the decade, deprived the infrastructure of the necessary investment.

This lead to rapid deterioration and regression of most of the road and rail network. Means of transport failed to keep pace with either modern international developments or the burgeoning population. In addition, the repeated wars the country has been plunged exhausted the economy to the extent that the government was not able to provide the most basic services to the citizens. Imports, other than military hardware, were kept to a minimum, and were related to transport were ordered by officials or committees who lacked necessary qualifications or experience – and were riddled with self-interest and corruption – to make the right choices for the nation. To make things even worse, the international sanctions imposed on Iraq after its Kuwait invasion in 1991 had a devastating effect on the economy and all services.

More recently, the pervasive chaos which followed the 2003 US-led invasion (the looting, ransacking, and destroying of all government properties) and all the installations that accompanied it, have left what remained of Iraq’s transport infrastructure in ruins. This makes it, sadly, the most backward country in the region in terms of travel, with its transportation sector in the worst situation in its history.

Foreign investment in 2009 and beyond

The Ministry of Transportation, like all the other ministries, started a campaign to rebuild and develop the transport infrastructure of the country. It is encouraging foreign investors to enter the Iraqi market, and many international companies have responded to their invitation by bidding for various projects all over the country. The transport sector is now a major arena for international competition.

A press release by the Transport Ministry said that 55 investment contracts have been completed since the beginning of 2009, composing of operational deals andinvestment plans. Looking ahead, Minister of Transport Amer Ismaiel met a group of Italian companies along with Iraqi private investors, to discuss developing the Fao port in Basra, which will be built in two stages, the first of which will cost around 2 billion Euros. In his press briefing, Ismaiel reaffirmed “the importance of this strategic project, which will boost the national economy in general, and the transportation sector in particular, and provides thousands of jobs to Iraqi youth.” The minister also added that “not only Iraq will benefit from this project, but the whole world will, as it will connect Iraqi and Gulf ports with the Mediterranean”.

The ministry also signed a contract with an unnamed South Korean company to provide 39 buses to be used for domestic transport inside Baghdad, which suffers from insufficient public transport vehicles and outdated private buses. Another contract was signed by the General Company for Passengers Transportation with Hyundai, also South Korean, to provide 130 tourist buses. The deal was signed when the company’s director, Osama al-Sadr, visited the Hyundai factories in Seoul last month.

In another area, the Mayor of Baghdad, Saber al-Issawi, announced that the long-delayed Baghdad underground project is still ongoing. In his press conference, the mayor claimed that “17 international companies expressed their wish to participate in this project, but Baghdad Governorate selected only seven to bid for the $3 billion project”. He also said that “the underground, the first in Iraq, will consist of two lines of 20km, which will ease the cumbersome traffic jams from which Baghdad streets and commuters are suffering.” The seven companies will have until January 2010 to submit their bids and a technical committee will be formed to review and select the winners, the mayor added.

Away from the roads, German Duetsche Bahn intends to participate in building the Iraqi railroad system. A delegation visited the country last month and held talks with Rafi Abbas, Director General of the state-owned General Company for Railway, who stressed on “the necessity of rehabilitating all railroad networks in Iraq for its importance in the revitalising the economy.” He also added, “The ministry is taking steps in rehabilitating the western network to a modern one which will connect all cities in western Iraq, and Iraq with the neighboring countries.”

Recently, an Iraqi official close to the PM said that the Iraqi government has succeeded in attracting more than $100 billion from foreign investors to execute reconstruction projects in Iraq. PM Nouri al-Maliki said in London’s “Invest Iraq” conference, held on April 30th, that “all circumstances are provided to start investment projects in Iraq by foreign companies, and the Iraqi government will do everything to help and assist these companies in carrying out their projects and protecting them.”

Tags: Iraq, Transport

This entry was posted on Tuesday, February 16th, 2010 at 11:25 am and is filed under Transport. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.