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The Impact of the Iraq War on Arab Business

The impact of the Iraq war on Arab business has been varied. The greatest impact has probably been felt by Iraq itself. Initially, the impact on businesses in neighboring Arab states was minimal, as it was often Western companies that were involved in the reconstruction of Iraq after the war. This is beginning to change as the situation in Iraq show signs of stabilizing and Arab businesses begin to see the potential for doing business in Iraq.

There does not appear to be a strong relationship between the credit ratings of Arab countries and the situation in Iraq. The risk posed by Iraq to its neighboring countries before the war was considered serious, but it was not rated at the most serious level. The prospective risk it posed was greater, however, due to the possibility that Iraq might at some point have developed nuclear weapons, and the removal of this threat may have eliminated future problems for Arab business. The differences between individual Arab countries, such as the stability of their government or leadership succession, tends to be more important for their credit ratings and economic success than the situation in Iraq.

The economic crisis has generally been more influential on Arab business than the war in Iraq, particularly in countries like Dubai, which were reliant on luxury real estate developments and international investment. Some people had feared that the war in Iraq would have serious economic consequences for both Arab and worldwide businesses, but the effects were in fact overshadowed by the more recent economic crisis.

The effect of the war in Iraq on the attitudes of the Arab world towards the Western world and its businesses has been mixed. The effect of the war has been greater on foreign that Arab businesses, mostly in terms of the large profits made by certain foreign companies which played a role in the reconstruction of Iraq. The impact on oil prices and exports, and on imports into Arab countries has been minimal. A short-lived negative impact on sales of US manufactured goods such as soft drinks in Arab countries was discovered by researchers after the war, but trade between Arab and Western countries continues successfully.

Iraq itself continues to struggle, and it still has a very low ranking in the Doing Business index from the World Bank, but its economy is showing positive signs - but nothing compared to countries like Saudi Arabia or the United Arab Emirates... Oil and gas continue to be the bedrock of the Iraqi economy, but there is also a budding tourism industry and a number of neighboring Arab countries have begun to express interest in working in Iraq. During the initial reconstruction period, a lot of American and Western companies were working in Iraq, but there is now some cautious optimism among Arab states and businesses about the potential for doing business with and in Iraq, in sectors such as telecommunications, infrastructure, energy and finance. A stable Iraqi government and a decrease in security risks could help to open up the country to business opportunities for its own people and for neighboring Arab states, to a far greater extent than was possible when Iraq was subject to sanctions during the pre-war period.

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