It has been more than half a year since US forces officially withdrew from Iraqi cities and relinquished responsibility for civil security and administration to Iraqi authorities. American combat forces are drawing down – the US Marines are heading home and being replaced, in smaller numbers, by army divisions – and the focus is shifting to stabilisation and economic engagement. Many US bases are due to close, consolidate or change to Iraqi control.

While the extent to which the US military is ‘leaving’ Iraq has been somewhat overblown – tens of thousands of personnel will remain – the changing of the guard is well under way and in many respects has already been completed. The implications of this for foreign investors are manifold.

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Stabilising influence

Throughout the provincial elections in the spring and the pullback of US forces in the summer, ongoing stabilisation across the country as a whole has continued at a steady pace. Certainly there are local flare-ups of violence – most notably the blasts that rocked Baghdad in late October, killing more than 130 people and injuring hundreds more – and the threat of kidnapping for ransom still hangs over foreign visitors.

“There is a threat of kidnap, but most reported kidnaps are of Iraqi on Iraqi. If correct precautions are taken, the threat to expatriate staff is very low,” says Paul Stanley, director of Iraq programmes for security consultants Olive Group. “Most violence is still focused first on the Iraqi security forces, then US forces and finally international contractors.

“Investors who come here can see that security is improving. The Iraqi forces have been trained by the Americans and the British and together with tribal leaders in the provinces are policing the situation quite well. They have a good handle on their area and on who is coming in and what attacks, are happening. They are a force for good for stopping them, not least because they recognise it’s bad for business.”

And where the tribal leaders are not countering the attacks, political leaders are.

An intelligent approach

The number of reported security incidents is trending down – there were fewer than 900 security incidents in October 2009 compared with 1500 the same month a year ago, according to Olive Group. The figure for hostile incidents involving foreign civilians and private security details is decreasing, despite a larger contractor presence (see charts, below).

While the numbers are encouraging and indicative of broadly positive trends, they should be taken with a grain of salt. Historical comparisons are difficult because of the different ways in which US forces who were patrolling the cities measured such incidents against the less rigorous data collection capabilities of the Iraqi security forces.

However, by any measure there are fewer incidences of violence than the bad old days of 2005 to 2007, during which time close monitoring of the numbers was prudent due to the volatility and perilous nature of the situation.

What is more important now is not so much the number but the type of incident: the lethality, intent, perpetrators and the target. In other words, the who, what and why. In general terms, incidents are now fewer but more deadly.

“Everyone operating in Iraq needs to have a much more detailed understanding of the security situation beyond the straight numbers,” says Mr Stanley. “It’s just too easy for the media to use figures to get a sensational headline, but businesses need a deeper understanding of what is going on.

“The intelligence and the security terrains are complex and require an in depth understanding will be difficult to read going forward and how business’s engage with local communities will be critical. We are looking forward to seeing what Iraq will be able to put in place in terms of national infrastructure. As official US forces pull out and no longer provide intelligence, companies such as ours, with dedicated intelligence collection and production assets, are bridging the gap because intelligence capability is just not there at a local level. We have dedicated staff working specifically with our clients to ensure their local engagement plans are effective.”

Soul of discretion

As the security situation evolves in Iraq, so must the security set-up of international companies doing business in the country. Low profile is now the name of the game. It is less and less essential to stay within the confines of US military and governmental zones as local options become more feasible.

Mr Stanley points to the new Mnawi Basha Hotel in Basrah as an example of a suitable new alternative for business people visiting that area. ““It’s secured in a low-profile way, it’s commercially oriented and with the right measures in place can be a suitable venue for an international corporate. They don’t need big vests, big muscles and guns everywhere anymore. Security is becoming discreet, and must enable business.”

Hostile incidents involving Foreign Civilians/private security details

 

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