Llewellyn C Werner, chairman of C3 Invest, a firm with footings in private equity that functions as a holding company, has been doing business in Iraq for three years; his company’s projects have included installation of the fibre optic infrastructure of Baghdad to more recently helping develop an entertainment zone for the city, Al Zawra Park. “We are working in all parts of the country, and we’ve been here long enough to see the transition that is taking place slowly but surely,” he says. “It is quite remarkable.”

 Mr Werner volunteers that there is no clearer illustration of how confident he feels about the improved security situation in Iraq than him bringing his 13-year-old son over to Baghdad in April 2010. And the reason his son is making the journey is itself an illustration of the normalcy that is returning to life in the country: the young pianist will be performing with the 80-piece Iraqi National Orchestra in a charity concert at Al Rasheed Hotel.


 One gets the impression Mr Werner, a Californian, could talk all day about the various aspects of business life in Iraq. It is a trait common among foreigners who spend a lot of time in frontier markets. There is something about such an experience and such the place that captivates, and keeps hold of, one’s imagination.

 But there are also those who engage in ‘suitcase business’, who prefer to fly in, make a quick buck, and fly out, and who treat every emerging market roughly the same. There is no shortage of this specimen in Iraq. Old Iraq hands – which in this high-speed environment means anyone who has been around ‘pre-Surge’ – insist such an approach is unlikely to succeed in Iraq.

Showing commitment

 One does get the feeling that there is a perceived hierarchy among international operators in Iraq, with those who have been around a while very eager to stress that they stuck it out through the bad old days of the aftermath of the invasion in 2003 and the bloodletting of 2005 to 2007. Part of that may be a bit of (understandable) bravado, but it is also a way of showing commitment to the country and signalling to Iraqi partners they are in it for the long haul.

 “We will only do business here with Iraqi partners,” says Mr Werner. “And the key goal of all investments is to employ Iraqis.”

 The biggest problem many companies have is that they do not know how to do business with Iraqis and they do not accept that in order to be successful they need Iraqi partners, adds Col Adam Such, a colleague of Mr Werner’s who is a former US army officer. “There are numerous willing and able Iraqi partners who could facilitate investment, and there is an incredibly talented pool of labour here that is very ingenuous and efficient,” he says. “I would say it’s beneficial to have an Iraqi partner; it’s absolutely essential to take an organic view and to understand Iraqi culture if you want to be successful in Iraq.”

 Paul Stanley, director of Iraq programmes at security consultants Olive Group, urges companies to go a step further and actually become Iraqi – in corporate structure and name, and as much as possible in mentality. Or failing this, at least try to view business situations from the Iraqi perspective.

 “Come to Iraq with an open mind and do not be overly dogmatic and too robust with the Iraqi staff, on the basis there is a language barrier,” says Mr Stanley. “Some of the top engineers don’t speak English. That doesn’t mean that they’re any less capable. It’s an attitudinal thing. The investment is here, there are great returns to be made but you’ve just got to come and do it in a particular way.

 He says business success in Iraq requires three Ps: presence, persistence and patience.

 One thing Iraq does not require is a rulebook. “If a company comes to Iraq with a rulebook that it must adhere to, then things are going to take a lot longer. Iraq’s is a paper-based economy and therefore things are much, much slower. It is important to be aware that, first, things take a lot of time and, second, progress is made through who you know and which connection you have made.”

Collective confusion

 Making sense of the complex connections among the power players in Iraq is a challenge; but it is something to be conscious of at all times as these connections permeate all. Hardly any decision is taken in isolation. “If you speak to individuals collectively there is a stratified sort of discussion of who’s doing what, but actually beneath that there will be various connected parties, individuals who are referred to later,” says one Western business source.

Spectator sport

 Understanding this dynamic is helpful towards understanding, for a start, why there tend to be ‘spectators’ lined along the sides of meeting rooms when dealing with Iraqi officials: these are representatives of the various other influencers. Talking business in front of an audience could be discomfiting for the less culturally attuned, but it is par for the course in Iraq.

 It also explains why business people might find their Iraqi counterparts can take a deal to a certain point but seem to stall at signing it. That is because often they need to go away and refer to others. There is a constant game of balancing who is going to have influence, who is not, who is favoured, who is not. The crucial element to understand is that the game “is not necessarily related to funding, to extortion or related to anything we expect it to be related to as Westerners. It’s related to who you are, what relationships you’ve got, how you’ve treated people, how you’ve behaved,” says the source.

 “In some provinces, you’ll find that influence is much more political. That’s potentially where the players behind the scene are politically motivated. It is a two-tiered system of influence.”


‘Corruption’ is in the eye of the beholder

 How rife is corruption in Iraq? That depends on how one measures it and, more importantly, how one defines it.

 The problem is not as severe as is portrayed, Col Adam Such, executive vice-president of C3 Invest, argues: “There is a hyperawareness of it because there is so much attention being placed on every aspect of Iraqi society that the degree [of corruption] is magnified.”

 There is a drive to increase transparency and reduce corruption levels across the government ministries. Meanwhile, some argue there are elements of Iraqi interaction – accepted business norms – that are impossible and in fact unnecessary to fight and that could be considered as much a unique if undefined form of taxation as straight-up graft.

 “You’ve just got to have an understanding that there are individual ‘sub-taxation policies’, if you will, that are not grounded in any rules, they are made up largely as they go along, but that is the way business is done,” says one Westerner who works frequently in Iraq.

 This does not mean a company has to go so far as to pay bribes to officials, he stresses.

 “It helps using Iraqi business contacts to facilitate. You need to embrace a system of facilitation to ensure that you are acting in good faith and in accordance to Iraqi law at all times, and within that understand that for the cost of equipment and items that there may be some taxation applied, some tariffs to pay – don’t be surprised by that. But the tariff system that applies is not codified at all, there is no reference to it anywhere. It just is what it is.”

The cost of this supplement was underwritten by the United States government. Reporting and editing were carried out independently by fDi Magazine.