Barham Salih, Iraqi’s deputy prime minister, on Monday opened negotiations over a bilateral trade agreement with the European Union, admitting that much of the government’s $41bn budget for next year would be swallowed up by moves to secure the conflict-ridden country.
Making a pitch for foreign direct investment to boost reconstruction, Mr Salih warned that observers “should not underestimate the difficulties of this transition” from dictatorship to democracy. But he insisted that “many provinces of Iraq are relatively safe and secure and are able to receive investment”.
Peter Mandelson, EU trade commissioner, and Benita Ferrero-Waldner, who holds the external relations brief, met Mr Salih in Brussels to start talks on a Trade and Co-operation Agreement between Iraq’s fledgling government and the world’s largest trading bloc.
Key to the progress of negotiations would be technical assistance from the EU in crafting a regulatory framework conducive to investment, Mr Mandelson said. He argued that Iraq’s recovery would depend part-ly on its ability to diversify its economy away from oil.
The EU would back Iraqi accession to the World Trade Organisation, although officials admitted that setting a timetable for completing the trade agreement – let alone Iraqi accession to the 149-member global trading club – was at present impossible.
On Thursday, protracted talks will restart between Iraqi ministries and the country’s political constituencies on the nature of a hydrocarbon law, the basis for any future contracts in the sector, Mr Salih said.
The law is expected by early next year.