Arab states still wary of investing in Iraq

Debt relief negotiations have been ongoing for months, but Iraq's Arab creditors show little enthusiasm for a complete write-off.

"They have not demanded that we repay them," says Mr. Zebari, "but the issue of debt is still there."

The disinterest in Iraq is in marked contrast to the economic surge elsewhere in the Middle East. Money is pouring into other Arab states from record-high oil prices and Arab countries, on average, are experiencing a 6 percent annual economic growth rate. Cities from Dubai to Cairo are being transformed by a boom in real estate and construction, although rising inflation has caused great hardship for the masses of Middle Eastern poor.

A few corporate titans have begun working in Iraq, such as Orascom Telecom, an Egyptian company, but many Arab investors are keeping their distance. Experts say this is unlikely to change any time soon.

"People in the [Persian] Gulf would be more than happy to invest in Iraq, but if we go there then there are no guarantees on anything," says Hani Al Hamly, secretary general of the Dubai Economic Council.

"There is not sufficient infrastructure for investment: There are not enough roads, there are no good government institutions," he adds. "If the environment were different ... everyone would be excited to go."

Yasser Saeed Hareb, who works for the Mohamed Bin Rashed Al Makhtoum Foundation, a development organization in Dubai, United Arab Emirates, agrees.

"People in the Gulf absolutely want to have a relationship with Iraq," he says. "They are a part of the Gulf and we have a long history with them, but I don't think anyone wants to take the risk of dealing with Iraq now."

But now that decades of Sunni rule has given way to Shiite dominance, some say there is worry in the Sunni Arab world that Iraq is no longer part of the club.

"The Arab states need to do more, they can't just keep acting like Iraq is not there," says Khaled Abdulla-Jannahi, chairman of Bahrain's Ithmaar Bank, a major financial institution.

"But the problems between the Sunnis and the Shia inside Iraq are scaring people," he adds. "It has become a problem for the whole region now."

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