Iraq business elite flourish in Jordan safe haven

By Suleiman al-Khalidi
ZARQA, Jordan | Wed Dec 15, 2010

(Reuters) - In the luxury of his smart office in a Jordanian duty free zone, Iraqi entrepreneur Sahib Al-Haddad takes orders for his new milk powder factory from merchants in Baghdad.

Visitors are met by a painting of Iraq's once mighty Tigris river and lush palm trees, hundreds of miles from Al-Haddad's factory in the dusty Jordanian re-export zone.

Al-Haddad, from a prominent Iraqi Shi'ite merchant family, reminisces about his childhood in Najaf and the decades of war, sanctions and isolation which followed. But although violence is decreasing back home and the economy slowly recovering, he says his Crescent Company for Milk Products is staying in Jordan.

"Iraq is still not a secure market," he said in his factory, located on the main land route linking the neighboring Arab states. "We will never move out of Jordan, but maybe we will expand from Jordan to Iraq."

Thousands of Iraqi businessmen took refuge in Jordan in the 1990s, when their country was crippled by U.S. bombing and United Nations economic sanctions following its invasion of Kuwait. The U.S. invasion of Iraq in 2003 brought more turmoil.

The duty free zone in Zarqa, on the outskirts of the Jordanian capital Amman, expanded as Jordan became a safe haven for Iraqi businesses from construction firms to restaurants specializing in Iraq's famed fish dish -- Masqouf.

Many wealthy Iraqis have set up joint ventures in Jordan with international companies to supply their country with products and services. Some have expanded from that base to do business across the Middle East.

Iraqi investors who poured billions of dollars into the Jordanian economy in the last two decades include the Khawam brothers, traders and industrialists who were backed by Saddam Hussein, major hotelier Jawad Kasab, and the prominent Bunnia merchant family.

BUSINESS "NEEDS STABILITY"

Only a handful of businessmen are considering reopening industries closed after the crushing sanctions imposed for Iraq's 1990 invasion of Kuwait -- in contrast to major oil firms who have moved quickly to establish a presence in the country which sits on some of the world's largest oil reserves.

Lacking the security resources of the big oil companies, Iraq's family-owned businesses are more vulnerable to the ethnic and sectarian strife which still plagues their country.

Nabil Rassam, head of Nabil Company for Food Products, whose family business emerged as a top regional meat processing firm two decades after sanctions hit their Baghdad operations, says Iraq remains a risky place for business.

"When security prevails and there is electricity we can do something. It's not easy now to succeed in Iraq, you need stability," said Rassam, a Christian Iraqi.

The Nabil brand has become a household name in Jordan, Syria, Lebanon as well as Iraq -- although its factories inside Iraq have been closed for years.

Its main Jordan operations have recently been expanded to triple production of high quality processed frozen meat to 90 tonnes daily. Their exports go to the Gulf and include markets in Europe and the United States.

Several Iraqi businessmen in Jordan have won subcontracting work with the oil firms in Iraq. But although they travel between the two countries, most are wary of moving permanently.

Even if security improves, big hurdles to business in Iraq remain with infrastructure degraded by decades of war and sanctions, underinvestment and an economy struggling with inadequate power generation.

UNCERTAIN FUTURE

The Iraqi business class have created their own ambiance in the Jordanian capital and their mansions dot Amman's exclusive residential areas.

Land registry figures rank Iraqis on top of the list of non-Jordanian property buyers, spending over $250 million in the last ten months of this year.

Iraqi arrivals brought in billions of dollars into property assets or Jordanian stocks. They now constitute a substantial chunk of the country's 18 billion dinars (£15.9 billion) of deposits in the banking system.

But some businessmen say Jordan may be losing its appeal, citing tough visa and residency rules that triggered a capital flight to more attractive destinations in Dubai and Lebanon. Stifling bureaucracy has also scared off Iraqi investors.

"We have long told our Jordanian brothers that you should do more to attract businessmen instead of making them flee to other places," said Abbas Shamara, a prominent Iraqi business leader whose group has diverse utilities and energy related holdings.

Jordanian banks were also losing business to Lebanese banks who won over Iraqi firms hungry for capital, filling the vacuum left by an Iraqi banking sector that remains largely isolated from world financial markets and offers little credit.

"We deterred many Iraqi investors. If we had acted more wisely we would have attracted at least triple the investments that have come from Iraq," said Ziyad Basha, a Jordanian business consultant who advises leading Iraqi firms.

(Editing by Dominic Evans and Samia Nakhoul)

Source: Reuters.
Link: http://uk.reuters.com/article/idUKTRE6BE31L20101215.