Page 38 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

24 Dubai & Co.

Iraq took an expansionist posture. Hussein’s 1990 invasion of
Kuwait—an oil-rich region to which Iraq had laid claim for decades
but which was upheld as a separate, sovereign state by the UN—led
to the first Gulf War. Iraq was defeated by a United States–led coali-
tion that included all six GCC member states. Claiming that the
Hussein regime had weapons of mass destruction, the United
States, the UK, and a limited number of allies invaded Iraq in 2003,
quickly defeated the regime, and began a long and complex occu-
pation that has been characterized by sectarian violence and a lack
of national unity. The future of the Iraqi state, at the time of this
writing, remains tenuous.
From an economic perspective, however, Iraq is well-
endowed. Its oil reserves are vast, and potential for prosperity is
high. Unlike other oil states—in particular Saudi Arabia, whose
population is roughly the same size as that of Iraq—Iraq has an
education system that has been well developed for decades. The
Iraqi intelligentsia—including physicians, lawyers, teachers, and
other professionals—has long been an important pool of trained tal-
ent in the region, and many expatriate Iraqis have been successful
in other Arab (and in GCC) countries. Iraq also enjoys substantial
industrial and agricultural successes that were fostered under inter-
nal state direction and have not been directed outward for decades.
As astute observers have noted, a stable Iraq has all of the qualities
of a highly attractive market; namely, natural resources, a well-
endowed economy, a large domestic market, and a sophisticated
consumer base. Expect to see hot competition for market access in
Iraq when it achieves some measure of stability.
Syria, with a population close to 20 million, is another large
market that would be highly attractive for multinational firms if not
5
for its political turmoil. It has a large domestic market and has
achieved a degree of industrialization under a state-controlled
economy. Like Iraq, Syria spent many years under the secular dic-
tator Hafiz al-Assad and is now so under his son Bashar al-Assad.
Syria is on the watch list of Western powers as a potential security
threat, and investor confidence in the country is very low. Although
Syria lacks the massive oil reserves that Iraq has, it does have some
oil capacity, as well as a Mediterranean coastline that gives it
access to European Union (EU) markets. More important,
it could be a reasonably favorable market for business and for