Few foreign companies, aside from those dealing directly with the military, are contemplating business in Iraq until the security situation improves.  Yet despite the violence, U.S. officials say opportunities do exist, primarily in the semi-autonomous northern Kurdish region where the economy is expanding rapidly.  As VOA's Bill Rodgers reports, U.S. officials are touting the northern Kurdistan area as a gateway for eventually doing business in the rest of the country.

Construction in Iraq's northern Kurdish region

Construction is one sign of the economic boom in Iraq's northern Kurdish region, where cranes tower over mosques in the region's capital city of Irbil.

Construction and other business activities are helping the economy there expand by an estimated 10 percent a year, according to Commerce Department Undersecretary Frank Lavin.

At a recent Washington seminar, Lavin urged American companies to consider operating from Iraq's northern Kurdistan area - a strategy he called the Northern Gateway Initiative. 

"If you're a U.S. company and you are thinking about an Iraq strategy," said Lavin, "think about the Kurdistan region as a possible gateway for Iraq, because the security situation is in hand there.  You do have broad latitude for business decision-making.  It is easier to expand, build and hire and so forth, and it can be a reasonable platform for serving the rest of Iraq." 

Frank Lavin

While no American manufacturers have established themselves in the Kurdish region, American products are available in markets, trucked in from Turkey.  Lavin believes the region is ripe for foreign investment.

"What they need right away is oil refinery and power generation," noted Lavin.  "But there's an enormous reconstruction and retail boom underway.  Almost anything you could sell in Turkey or Kuwait, you could sell in the Kurdistan region."

Iraq's huge petroleum reserves accounted for much of the country's nearly $30 billion in export earnings last year, and oil will be the main attraction for potential foreign investors.  The petrochemical sector especially offers promising business opportunities, but only if the violence that rocks parts of the country comes to an end.

Lavin acknowledges that foreign investment will remain non-existent until Iraqis stop the violence. "I think they've got to come to terms with it.  I think they've got to get their arms around it because businesses will go elsewhere," he said. "Businesses need a secure operating environment, and if they don't have confidence that is the direction Iraq is headed, they're going to put their efforts elsewhere."

In the meantime, Lavin and other U.S. officials are urging the Iraqi government to enact an investment law to prepare for the day when American and other foreign companies may want to do business in Iraq.