Some things never last, and so it has been for Kurdistan’s skyrocketing growth and development boom. Exactly a decade after it all began in 2003 with the toppling of Saddam Hussein, who had tortured the Kurds literally and figuratively, the plan to become the Middle East’s next rising star began to unravel.
I happened to visit the autonomous region in Iraq’s north shortly before the downfall, on the invitation of Emaar chairman Mohamed Alabbar. The renowned developer from Dubai was launching an ambitious $3bn master community project in the capital of the Kurdistan region, Erbil.
Downtown Erbil, as it was to be called, would create 15,000 residences and 40,000 jobs, Emaar said. “There’s no doubt there’s a strong sense of optimism and positivity here that reminds me of my home town Dubai,” Alabbar said during a speech at the launch on October 27, 2013.
He was right. Kurdistan had blossomed into the new darling of the region, with gross domestic product per capita reaching $7,600 (almost double Iraq as a whole) the number of universities increasing from one to 17, health services sophisticated enough to attract foreign patients and more than 100 UAE businesses alone keen to share a slice of the growing fortune.
No one was to know that the following year the tables would turn. The Kurds could argue it was not their own doing. After all, the trouble began when Iraq’s central government in Baghdad cut off payments worth 17 percent of the national budget. That left Kurdistan reliant on its oil exports via the pipeline to Turkey that caused the rift with Baghdad in the first place.
But in mid-2014 the oil price crash caused another devastating cut in Kurdish revenues. About the same time, ISIL threatened to enter Erbil and it remains a security concern and a significant strain on the Kurdish government, which is struggling to pay its Peshmerga armed forces.
But to blame its crisis on external factors would be the easy way out. Even before the economy went into meltdown, corruption was rife and government processes were inefficient. As with many things in life, it can take falling into a dark hole — such as being on the verge of bankruptcy — to face the problems and work to resolve them.
During interviews in Erbil last month, government ministers insisted change was progressing. Others argue it is simply lip service.
Inefficiencies have been recognised and there are some verbal plans to address them, such as publishing transparent government processes for investment or launching a business. But little has been enacted, while other needs such as cultivating entrepreneurship are yet to be formally recognised.
But the Kurds do deserve praise for their role in the war against ISIL. Not only have they proven the most formidable force against the militant group in Iraq, they are graciously hosting 1.8 million refugees and internally displaced people.
The Kurdistan Regional Government, which is racking up debt of about $100m a month, has quite rightly warned that it cannot continue to hold the fort without financial support.
At the same time, worsening sectarianism and an ill-timed referendum for independence are causing what is considered to be the ‘safe haven of Iraq’ to cave in on itself.
For all its problems, Kurdistan has proven its potential to become both an economic success and an example of unity in a part of the world desperate for both. But like an entrepreneur, Kurdistan needs support — mentorship, funding, favourable terms. Those who provide it will likely reap the rewards.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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