Iraq’s National Investment Commission (NIC) has released a list of major and medium-sized strategic projects containing 157 projects seeking foreign investment. Of these, 41 were classed as ‘major strategic projects’ and the remainder as ‘medium-sized projects’. Almost all are located in the relatively peaceful south-east or north-east of Iraq, where Islamic State (IS) has been driven out.

The majority of the major projects are within the chemicals, petrochemicals, fertilisers and refinery sector, which like many high-value industries in Iraq endured significant damage during the past few years. For example, 60% of the existing fertiliser plant in Baiji is damaged and it is therefore seeking $500m for reconstruction with a stated 17% return on investment, according to NIC.

Iraq’s primary destination for inbound greenfield FDI is in its coal, oil and natural gas sector, which has attracted $35.39bn since January 2003, according to fDi Markets, a greenfield investment monitor from the Financial Times. The country’s chemicals sector is the third highest destination, having garnered $6.01bn in the same period.

The NIC’s list also included many investment projects within the transport sector, such as the rehabilitation and development of Mosul International Airport, roughly 40% of which is damaged, and other opportunities for the reconstruction of railways, highways, ports and the Baghdad subway and metro. Separately, there are three major opportunities in the housing sector and four special economic zones looking for investment in Baghdad, Nineveh, Dewaniya and Huteen, with a focus on manufacturing, agriculture or new technologies.

The World Bank estimates that Iraq’s reconstruction will cost about $200bn. “It’s a huge amount of money. We know we cannot provide it from our own budget,” Iraqi prime minister Haider al-Abadi told the World Economic Forum in Davos. “[Nor can we] provide this through donations. That’s why we want to raise funds through investments.”

“Many governments will be willing to support the reconstruction of Iraq’s damaged infrastructure network over the coming years, as it will be seen as a precondition to limit the risks of sectarian tensions resurfacing in the country,” said Raphaele Auberty from Fitch Group’s BMI Research. For Arab Gulf countries, supporting the reconstruction of Iraq will also be a way to counter Iranian influence in the country, she added.

Until now, a number of pledges have already been made, namely $1.5bn from Saudi Arabia, $2bn from Kuwait and $5bn in credit lines from Turkey. However, private investment will remain weak, said Ms Auberty. “Foreign companies will be cautious to operate in the country without the support of their respective governments or multilateral financial institutions,” she said.

The key impediments to foreign investment are long-standing structural issues within Iraq’s government and to a lesser exgtent military risks and the threat from IS, said Dr Renad Mansour, a Middle East expert from think tank Chatham House. The root of instability is corruption and sectarianism, he added, and basic services across the country are not in place.

Mr al-Abadi and his party have positioned themselves as anti-corruption, but these are the same elites who have ruled Iraq since 2003, and investor confidence is low, said Mr Mansour. It is unclear where power lies, and anti-corruption policies have become a sectarian political tool to target opponents, he added.

Peace in Iraq should highlight the shortfall of foreign investment. The number of greenfield FDI projects fell from 49 in 2013 to eight in 2017, according to fDi Markets.