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SCHUTE: Missed business opportunity in Kurdistan

Turks, Iranians and Jordanians invest while we sit on sidelines

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The Kurdistan Regional Government released significant news recently. It announced that Houston's Marathon Oil Corp. had acquired operating positions in four oil blocks in Iraqi Kurdistan. This is good news for oil development in Kurdistan and American business in Iraq. Another news story that same day went unnoticed by the Western press. The four-day Erbil International Fair came to a successful conclusion with nearly 850 companies participating. Only two American companies came to the fair. Where were the rest of the Americans?

This was the sixth consecutive year that Iraqi Kurdistan's capital hosted the fair. Once again, the fair was conducted without incident, with broad business participation and attendance by an array of senior regional and international figures. These included the Czech deputy foreign minister, the Polish minister of reconstruction, the head of United Kingdom Trade and Investment (UKTI) and representatives from among the 17 diplomatic contingents present in Erbil.

Fair organizers proudly proclaimed in their slick English catalog that they had had more than 20 percent growth, with 22 countries represented at the event. Turkey is at the front of that list with 76 companies, followed by, among others Iran - 53; Jordan - 44; Germany - 41; France - 19; United Arab Emirates -16; Austria - 13; Czech Republic - 11; U.K. - nine (though 39 U.K. companies were visiting the fair with UKTI); China - five; and the U.S. - two.

Some elements of the country list should be no surprise. Turkey is the largest investor by far in Kurdistan and has more than 600 companies active there. The supply base from Europe to Erbil is a mere four-hour flight away, making it relatively easy for the Europeans to participate. The most problematic representation was the large Iranian delegation. Even China and its five-company delegation outdid American business.

Why did all of these companies come to Erbil? They came because they realize there is plenty of opportunity in Kurdistan with a progressive investment law, free-market practices, excellent security and many opportunities. Those opportunities are not just in oil, either. They abound in agriculture, tourism and manufacturing. Kurdistan imports almost everything, yet it has a capable work force that is ready to make its own products and export to the rest of Iraq and the region.

One might ask, "Why don't American companies come?" There are two principal reasons. One is that many Americans still cannot distinguish the differences between Kurdish Iraq and Arab Iraq. As someone who has been to both and has spent considerable time in Kurdistan since 2003, I can tell you they are very different places in terms of security, culture, language and, most significantly, attitude toward America.

The second is that the U.S. government sends a confusing message about American investment in Kurdistan. On one hand, the Defense and Commerce departments have been active proponents of U.S. business. On the other, the State Department is the source of confusing messages.

Any business that might be exploring the array of State Department communications would readily conclude that all of Iraq is the same, meaning dangerous. In fact, State is even loathe to mention the word Kurdistan, likely in deference to the old Turkish hypersensitivity to the word. But if the Turkish consul in Erbil can openly say "Kurdistan region" in front of hundreds of guests, why can't the State Department's Iraq Travel Warning and Iraq Country Specific Information mention the federal region? In fact, the most recent Iraq Travel Warning (Nov. 5) says that "no region should be considered safe" and "attacks against military and civilian targets throughout Iraq continue." The warning mentions "Northern Iraq," but in a confusing paragraph mixing apples and oranges.

As someone who has been working in Erbil, I really don't know what the reference is for the State warnings and alarms. The fact is, no more than 200 U.S. soldiers have been based in all of Kurdistan since 2004 because there is security. No Westerner has been killed or kidnapped in Kurdistan since the war began. Other countries see these facts, and they queue up to get their companies into Kurdistan.

It would seem that because America did the heavy lifting and shed the most blood to bring freedom to Iraq - including Kurdistan - American business ought to be taking advantage of the excellent opportunities that abound and that Kurds want to share with Americans. A few companies, such as Marathon and Hunt Oil Co., have seen this and are enjoying the benefits. If others don't step in, Kurdistan will have to look to companies from those countries that do want to participate, whether they are from France, Germany, China or Iran. In that scenario, both American business and American diplomacy will miss out.

Harry Schute Jr. is a retired U.S. Army Reserve colonel. He commanded an Army Reserve civil affairs battalion in Kurdistan in 2003-04 and later was chief of staff for the Coalition Provisional Authority - North. He is a consulting adviser to the Kurdistan Regional Government.

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