When companies are seeking investors, they often hit the road, making presentations and making their cases. Iraq has recently begun doing the same thing, with the help of the U.S. government.
USA Today recently reported on a meeting in Madrid last week, where bigwigs from some 200 of earth's biggest companies discussed investment opportunities in Iraq with Iraqi representatives. Companies represented included Coca-Cola (NYSE:KO), General Motors (NYSE:GM), ChevronTexaco (NYSE:CVX), Caterpillar (NYSE:CAT), General Electric (NYSE:GE) and Eli Lilly (NYSE:LLY). Iraq is estimating that it will need some $300 billion in the decades ahead to build its economy.
At roughly the same time, elsewhere in Madrid, diplomats from both Iraq and the U.S. extracted pledges totaling some $13 billion from various governments, with the funds (some of which will be loans) earmarked for rebuilding the nation.
American investors might want to keep tabs on developments as companies move into Iraq. The situation offers a lot of promise and a lot of risk. On the promise side, as USA Today notes, "There is no shortage of demand. The average Iraqi earned $237 a year in 2001. Only 9,000 people have Internet access; less than 3% have a telephone." On the risk side, well. just look at the front page of almost any major newspaper: there's still a lot of violence and a significant lack of internal structures -- such as a stable government or legal system.
Despite the uncertainty, Coca-Cola is already dispensing drinks in Iraq, while Caterpillar is dispatching bulldozers and power generation equipment. A New York Timesarticle offers an explanation for why some companies aren't balking at the dangers: "'Sure there's lack of security, but it's no worse than working in some Latin American countries or Africa,' Pedro González-Haba, foreign affairs director of the Spanish Builders' Association, said."
Interestingly, a bunch of the companies attending the meeting are based in nations that opposed the U.S.-led war in Iraq. Russia's deputy foreign minister noted, "We hope and trust that we will not be punished for our position on the war in the awarding of contracts."
Stay tuned, investors. Like Rome, Iraq won't be rebuilt in a day. Learn more about war-related investing in this Jeff Fischer article.
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