Foreign Investment in Iraq Growing
Contrary to current widespread perceptions that the bulk of government contracts to help rebuild Iraq will benefit only a small group of companies, numerous new opportunities exist through the new multi-billion dollar Development Fund for Iraq (the “Development Fund”), according to John Podgore, an associate in White & Case’s Washington, D.C. office and a former attorney at the Pentagon who has substantial government contracting experience.
“In addition to contracts for the reconstruction of Iraq being awarded by the U.S. government using U.S. government funds, the CPA is currently awarding contracts to help rebuild Iraq that are paid from the Development Fund ,” said Podgore.
The published procedures and guidelines for the award of Development Fund contracts contain a preference for “Iraqi-based” contractors. But due to the definition of “Iraqi-based” contractors and the liberalization of foreign ownership and investment opportunities under recently-published CPA (Coalition Provisional Authority) Order Number 39, Podgore says that it is possible for wholly-owned subsidiaries of American and multinational companies to qualify as Iraqi-based contractors for purposes of being awarded Development Fund contracts so long as such subsidiaries have their respective principal places of business in Iraq.
Under CPA Order 39, where an international agreement to which Iraq is a party provides for more favorable terms with respect to foreign investors investing in Iraq, the more favorable terms under the international agreement will apply. “While a new Iraqi government has the right to alter the CPA Order, it is unlikely it will do so given that the country needs foreign investment to successfully rebuild”, according to White and Case’s Pieter Bekker.
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