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Tony Blair praises Iraq's economic progress

Full text of Tony Blair's speech to the Iraq Britain Business Council's 4th London Conference, delivered to an audience of senior executives from some of the world’s major corporations operating in Iraq as well as Iraq’s Deputy Foreign Minister al-Doreky and Britain’s Ambassador to Iraq, Simon Collis. 


This conference I know is one of several taking place that highlight the economic opportunity Iraq presents for the future, for Britain but also for investors from all over the world. Today, in particular, is a follow on from the IBBC Baghdad conference at the end of September. 

The challenges that Iraq still faces are obvious: continuing security problems of terrorism, especially around Baghdad; services and infrastructure still far below what they can and  should be; and bureaucracy and corruption in Iraq as elsewhere, a major source of discontent, And of course the political tensions remain high and often lead to paralysis when the country urgently needs movement. There is also the turmoil in the region not least in Syria. So the difficulties are manifest.

But this series of conferences is happening for a reason. There has also been progress. It is important not to exaggerate it; equally important not to ignore it. The economy of 2012 in Iraq is several times the size of ten years ago. Growth this year will be 9% and Iraq is set to be one of the fastest growing economies in the world over the next decade. A Government worker is paid now, on average around 4 times what he was ten years ago in real terms. Oil revenue now stands at $100 billion per annum and is set to treble by 2020. Last month Iraq surpassed Iran as exporter of oil. Iraq’s Central Bank now has the biggest reserves in its history. Baghdad stock exchange – with over 80 companies listed – will be joined by Basrah in due course. Basrah itself as its Governor recently remarked, is set for major change over the next few years. Three new satellite towns of 100,000 homes each; 60 projects for electricity under way to treble power production; and a doubling of the schools and universities. Contracts are also being drawn up for tenders for new roads, bridges and railways. The port and airport are on their feet and growing in business and trade. This is partly funded through the oil revenue now retained by Basra for its own use.

Child mortality in Iraq is at 30 deaths per 1,000, higher than it should be; but hugely below what it was. Healthcare also needs massive investment and there are ambitious plans for it.

In the Northern part of Iraq which has significant autonomy, we can see what the presence of security and the absence of a political log jam can do. Even as the world teeters on the brink of recession, it is enjoying an unprecedented boom, not least in trade with Turkey.

South Korea was Number 1 foreign investor in Iraq today with $12 billion of investment in 2011. Shanghai Electric has signed a $1 billion power plant deal in Wasit province. There are hugely ambitious plans for investment in new terminals, refineries and pipelines.

So these are all compelling reasons for Britain and British investment to be part of Iraq’s future. But, naturally, in addition, to the economic and industrial reasons, British forces helped liberate Iraq from Saddam and for years with much heroism and sacrifice helped Basrah survive the sectarian aftermath. They should be proud of what they achieved. The political and human impact of the Saddam regime is known though often overlooked. Hundreds of thousands died in his wars and in his campaigns against his own people. Less well known is the economic impact of his rule. GDP per head in 1989 was $2304. In the next ten years it fell to less than $600. Whole industries, agriculture and of course tourism all declined dramatically. Now at least there is the possibility to rebuild.

So, I am very honoured to be here at this IBBC conference to support growth in Iraq.

The question is how to turn the potential of Iraq into reality. Here there are also lessons that can be learnt from the round the world from nations that have emerged from conflict or from being failed states.

First, Government in a country like Iraq will always have a dual track challenge. Its leadership has to cope with the security challenge and especially where there are foreign players meddling in its politics, that is going to be very tough. However alongside the security challenge there is the simpler challenge of delivering better services and jobs for the people. The risk is always that the one overwhelms the other. Now of course the two are linked. But some of the basic changes around electricity, housing, water and roads. These have to be focussed on, and delivered, regardless. And though around the centre of the country the security issue is particularly acute, much of the country is relatively peaceful. Keeping the drive for delivery of basic services and infrastructure at the forefront of the Government’s priorities is essential and it’s a lesson that can be learned from around the world.

Secondly, corruption is an issue and has to be confronted. It is a long-term endemic problem. But again, what can happen is that areas of policy, for example, public procurement, can be isolated and protected if the right systems are put in place. Bureaucracy is also an issue linked to corruption but an issue on its own. The easier it is to do business, the faster the economy will grow and create its own momentum. So at least ensuring parts of Government work efficiently and fast with the necessary technical capacity is an absolute priority. Often countries find this hard because such capacity is hard to build. Iraq should have no difficulty resourcing such capacity.

Third, the development of a private sector is pre-conditional. One of the worst aspects of the Baathist philosophy was this almost atavistic belief in state ownership and power. Again, from round the world, one clear lesson emerges. To grow, a country has to encourage its private sector. The more this is done, the faster the results.

Fourth, in this development, foreign investment can play a part. When, as in the case of Iraq, a nation has been a failed state, the basic intellectual and business capital of the country gets destroyed. It takes time to replenish it. The private sector itself will take years to build its capability. Foreign investment in these years is a vital component of accelerating that process, not only for the money it brings, but for the management skills, the work discipline, and the basic ability to improve output.

Fifth, when the centre of Government is embroiled in so many difficult challenges, it is crucial to allow the provinces and regions the ability to move things themselves.

Finally, and obviously, the political context matters enormously. This is not just about maintaining democratic principles. This is about a nation having, despite all its differences and disagreements, a core of cohesion and unity of purpose. But in the Middle East right now, as revolutions sweep the region, we can see how hard it is for that unity of purpose to be discovered, consolidated and nurtured. So everywhere bubbles up religious, ethnic and tribal discord which then displace the sense of what people can be achieve together. There is no easy way to pacify such tensions. But the price paid for the disunity is immense and Iraq shows it. But if we take a step back and look at Iraq differently, we can see the possibility of Iraq as an economic powerhouse, as it should be, as a cultural icon, as an intellectual and artistic centre, which once it was. Keeping the vision of how it achieves that again is what all Iraqis and friends of Iraq should have at the front of their minds and hearts.

So today is a chance to contemplate these bigger questions; but most of all to discuss the size of the immediate opportunity. British business is already invested in Iraq; but there is so much more it can do. This conference is a platform to help all of you do it. It is a pleasure and an honour to be with you here today, to endorse the conference, support it and wish it well.   

And to all of you who have come from Iraq today: welcome and thank you, we will be with you to help build the Iraq that you want.