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Dear Investor,

The AFC Iraq Fund was up 2.7% in August 2025, underperforming its benchmark, the Rabee Securities U.S. Dollar Equity Index (RSISX USD Index), which was up 4.0%. For the year, the AFC Iraq Fund is up 12.4%, outperforming its benchmark’s 4.3% increase.

“The world’s surprise boomtown: Baghdad” is the title of The Economist’s article on 4^th September 2025, highlighting Baghdad’s construction boom, driven by the country’s stability, which in turn is drawing foreign investments. These, and the points made in the article on population growth, pent-up demand, and liquidity, were the themes that have been made here in July 2023 in “Construction Activity and Stability”. The piece further highlighted that “This private sector led construction activity was supported by funding from the Central Bank of Iraq's IQD 14 trillion (USD 10.7 billion) and IQD 4 trillion (USD 3.1 billion) subsidised lending initiatives.”  and noting “ … during 2021-22, about IQD 6.7 trillion (USD 5.2 billion) and IQD 0.5 trillion (USD 0.4 billion) were disbursed from the two initiatives for real estate financing”.

Unlike in the prior two years, the summer holidays and the 40-day Arbaeen pilgrimage did not exert their usual subduing effects on the market’s turnover, or on its trend. This came as a surprise as August is the hottest month of the year, and mid-month witnessed the climatic ending of the pilgrimage that marked the martyrdom of Prophet Muhammad’s grandson Imam Hussein. As such, this supports the thesis that the market’s technical picture continues to be positive, and that the RSISX USD Index is continuing with the process of consolidating its gains that started in December 2024, following a blistering 35.9% three-month rally. While this consolidation could continue over the next few weeks, the likely consolidation or pullback should be within its multi-month uptrend (chart below).

Rabee Securities U.S. Dollar Equity Index and Daily Turnover

Even more of Iraq, as seen through a visitor’s eyes

As first mentioned, two months ago, Thomas Hugger visited Iraq at the end of May 2025, and with me, embarked on a tour of the country that included business visits, cultural, and historic tours. Two months ago, we reviewed our visit to the Iraq Stock Exchange (ISX), the Bank of Baghdad, and Baghdad Soft Drinks, which were also featured during the AFC Iraq Fund section of Asia Frontier Capital’s latest quarterly webinar on 24^th July 2025, providing its regular “Asian Frontier Markets Update”. Last month, we reviewed our visit to some of Baghdad’s old districts (Al-Madrasa Al-Mustansiriya, Al-Mutanabbi Street, and Al-Shawaka), the ancient cities of Babylon, and Ctesiphon. This month, we review our visit to the ancient city of Ur, the Marshes, and the meeting point of the Tigris and Euphrates rivers forming Shatt Al-Arab at Al-Qurnah. Next month will cover our visit to Iraq’s third largest city, Basra, and other aspects of Thomas’s Iraq visit, that space did not allow for inclusion in the prior months.

This leg of the visit was a trip from Baghdad to Ur, the Marshes, and Al-Qurnah. Our guide, as for the prior visit to Babylon and Ctesiphon, was Ali Ghanem Sarhan, one of my students at Baghdad Business School (BBS), who is now an independent freelance tour guide specialising in cultural and historical tours. His rich Instagram account (@alighanim.1) chronicles his criss-crossing the country with tourists from all over the world.

Our first destination, the ancient city of Ur, about 350 km south of Baghdad, was founded circa 3800 BC, while ancient, is still about 1,600 years younger than the first Sumerian city of Eridu. Ur, along with Uruk and Eridu, was among the most significant city-states of southern Mesopotamia, which were founded circa 5400-3800 BC on the edges of the Mesopotamian Marshes. These cradles of civilisation developed complex systems for writing, mathematics, astronomy, agriculture and its related industries, and many others –some of which we use without being aware of such as the division of the year into 12 months, and of the hours into 60 minutes. Agriculture and trade with the outside world played a major part in Ur’s evolution as Southern Mesopotamia, apart from the two rivers, the reeds that grew along their embankments, and its rich soil, had no other natural resources such as metals, stones, rocks or wood. The products of its extremely sophisticated agricultural system were traded for the materials it needed, and the city became a major regional trading hub that traded with all the known world then, as far as the peoples of the Indus Valley.

Ur, during its third dynasty, circa 2200-2000 BC, was the capital of an empire, which at its heyday was an incredibly rich cosmopolitan city, with a population of around 65,000. The dynasty’s founder king Ur-Nammu built its great Ziggurat, other major constructions, and enacted the first known legal code –about 300 years before the code of the great Babylonian king Hammurabi. The city’s well-developed bureaucracy needed to run a highly centralised system of governance for the empire, built upon that of the Akkadian empire founded by Sargon the Great, circa 2400-2200 BC, following the conquering of all the Sumerian city states, Ur included –the evidence of which can be seen in the sophisticated administrative tablets, or the “spreadsheets of empire”, unearthed from the state archives of Girsu (i).

Ur’s connection with our world does not stop with bureaucracy, but extends to faith and myth as the city is believed to be the home of Abrham who is thought to have lived there circa 2000-1500 BC, as well as its connection much earlier to the story of the deluge of Noah. During the city’s excavation in 1929, sandwiched between two distinct layers marked by human habitation, an 8-12 foot thick layer of soil was discovered that showed no sign of human occupation, and was the result of soil deposits of a massive flood dating circa 3500-3200 BC. While too old to have been the result of Noah’s deluge, it nevertheless was probably an inspiration for the story of the flood. The Tigris and Euphrates, brought life, prosperity and wealth to Mesopotamia, but also devastation with their irregular floods, the largest of which featured in Sumerian and Babylonian myths as punishments for human sins –in particular the great flood story in the “Epic of Gilgamesh”, in which the god Enlil, warns Utnapishtim about a deluge that would be brought by the angry gods, and instructs him to build a great boat to preserve human and animal life. It’s thus fitting that the late Pope Francis, while speaking next to Ur’s Ziggurat said “This blessed place brings us back to our origins” and “We seem to have returned home” during his historic visit to Iraq in March 2021.

Ur

Ur’s Ziggurat, much like all the great structures of southern Mesopotamia, was constructed from mudbricks utilising the rich muddy sediments deposited over the centuries by the flooding of the two rivers. However, many have not survived the thousands of years unscathed from the combination of the effects of the natural elements, neglect, conflict, and looting. Fortunately, layers of sedimentation protected the Ziggurat’s base until it was excavated in the 1920s, like many of Ur’s other remains. Despite the suffocating heat, the Ziggurat’s towering base was a magnificent sight to behold, both from a distance and while standing at the foot of the great middle staircase leading to its top. Based on the many sketches of how it originally looked, I tried to visualise how majestic it originally was with its next two successively smaller levels, and the shrine at the summit dedicated to the moon god Nana. We first walked to the base of the Ziggurat’s central staircase on the specially constructed wooden footpath, and from there to the remains of temples, palaces, the residential area, with our guide describing each including pointing out the general area that is believed to have been the home of Abrham.

Ur

Despite the rich history and the majesty of the site, we were the only visitors –it had a few signs with brief descriptions of the structures, but it did not have any tourist facilities, nor an information centre, nor even basic shops. In an effort to address these shortcomings, the authorities, a few kilometres away, developed a sort of a tourist village, which we visited, and once more were the only visitors. However, it was not obvious, at least to me, how that would work with the lack of facilities at the site itself –nevertheless it’s welcomed as a start of the mind shift needed to embrace tourism and unlock its value in contributing to job creation, and economic growth.

Thomes notes: “It is impressive that this place we visited was already inhabited about 4,000 years ago and that Pope Francis visited Ur on 6^th March 2021. But it seems he had better timing than us since the temperature was around 25 degrees Celsius when he visited. That’s much lower compared with the 46 degrees Celsius we had to endure. On the other side, it was sad to see that we were the only visitors to this majestic site and the tourist village. I sincerely hope that will change and more tourists interested in heritage will visit these important sites in the future and that the Government of Iraq will continue to preserve them for our descendants.”

Tourist village near Ur

As we left Ur, the extreme heat, and the expanse of the desert around the Ziggurat complex, it was difficult to imagine that this was a sprawling city, teeming with life, in the middle of a lush green land, surrounded by an extensive network of canals, with the Euphrates, the Marshes, and the sea at its doorstep The Euphrates has changed course since then, the sea has receded by about 200 km, and our next destination, the Marshes, were now about 100 km away.

The Marshes, formed, about 11,000 to 13,000 years ago, by the convergence of the Tigris and Euphrates as they branched into deltas and shallow lakes, played a major part in the development of Mesopotamia. At some point in time, they were the largest wetland ecosystem of western Eurasia. The Marshes, as we know them today and that we were headed to, are what is left of these ancient Marshes, which took their shape gradually as most of the ancient Marshes dried up and the sea regressed to the south. They are home to the Marsh Arabs, known as the Ma’dan, who despite the intrusion of technology such as electricity initially, and the internet recently, have largely maintained many aspects of a unique aquatic way of life that goes back to the founding of the Sumerian cities circa 5400 BC. In addition to being the home of the Ma’dan, they are the historic home of the Mandaeans, followers of probably the most ancient religion in the world, and who have preserved customs and traditions that might date back to Babylon –interestingly, remnants of the Babylonians were still living in the Marshes in the tenth century AD. Ecologically, the Marshes are home to numerous species of fish and birds, are a stop-over for migratory birds, and are considered a key bio diversity area as literally they are a water world in the middle of an arid desert.

Over the years, the Marshes gradually eroded, initially by changing weather patterns, with the erosion accelerating in the middle of the last century with the building of dams upstream on the two rivers, in and outside Iraq, that substantially reduced water flows. More serious, were the drainage by successive governments to reclaim land for agriculture, and for oil exploration and development. However, it was their relative isolation and seclusion, that historically provided a sanctuary for those who opposed the state over the centuries, that almost led to their extinction following the First Gulf War in 1991. Then the regime, in seeking to quash the rebellion that rose in the south of the country following the war, embarked on a spectacular feat of engineering to drain them. The flows of the Tigris and Euphrates rivers were diverted by hundreds of kilometres of embankments, dykes, and canals, which over five years drained up to 90% of the Marshes, or an area of about 8,000 square kilometres –the result was a dwindling of the population to about 20,000 from a peak of 500,000 in the 1950s. Over a decade later, following the invasion of Iraq in 2003, they were reflooded, and life, though much changed from the past, returned gradually. Happily, the Marshes were declared a UNESCO World Heritage Site in 2016 (ii).

Our entry to the Marshes was through the town of Chibayish, in which we had a short walkabout, before heading to our host’s dwelling at the edge of the waters –like many of those who returned, he and his family live on dry land at the edge of the Marshes and not on the tiny islands that dotted them as in the past. We were welcomed at the Al-Mudhif, the traditional hospitality house made from the reeds that grow on riverbanks and in the Marshes, whose shape and construction have not changed for thousands of years. After a few rounds of Chai (Iraqi tea), each one of us was served a Masgouf –the Ma’dan insist that their Masgouf is the original method of this uniquely Iraqi way of grilling fish. We accepted their story and enjoyed the fish; after all, history is on their side as the Masgouf dates back over four and a half thousand years to the Sumerians, and its cooking doesn't seem to have changed much since then according to some Sumerian texts. For Thomas, expecting to eat mostly Kebab in Iraq and not a specific fish lover, it was his second fish meal, and he notes: “I once again enjoyed eating the delicious and nicely prepared Masgouf, but it was a little bit unique to eat the freshly cooked fish with bare fingers. I also enjoyed the flavour-rich rice and the sweet chai. However, I have to honestly admit that sitting in a chair and eating food from a table is much more comfortable than eating on the floor. I was glad that Ahmed and his brother were also struggling and experiencing, like me, some form of back pain.”

At the Mudhif

After our meal, and another round of chai, our host gifted us “Shemaghs” –the traditional Iraqi headgear that is also the headgear of Jordanians and Palestinians known as the “Keffiyeh”, which has Sumerian origins. Legend has it that Sumerian fishermen wore fishnets over their heads to protect them from the scorching sun, which in time evolved into today’s headgear that incorporates two lines representing the two rivers and the fishing net design through; and the Keffiyeh is etymologically derived from the Iraqi city of Kufa, and means “from Kufa” (iii). Afterwards, we embarked on a long tour of the Marshes in the traditional long narrow canoe used by the Ma’dan for thousands of years, named the Mashoof, with the only nod to modernity being the gasoline-powered motor. No amount of reading or watching videos prepared me for the beauty or serenity of the Marshes once we were deep within them –we must have spent up to two hours there lost in this magical place. I plan to come back again, and hope to spend a few days to truly appreciate the place, see more of its people and try to experience a dying way of life. Thomas notes: “It was an amazing experience. After travelling hundreds of kilometres through desert, dust and sand, suddenly these water channels opened behind the house where we enjoyed the delicious lunch earlier. It was very relaxing peaceful, and the sunset was incredible. Also, the nature with all its different inhabitants, from simple fireflies to water buffalos was fascinating. As you can see, we took some stunning pictures but witnessing it in real is a very different story and much more impressive. I hope this remarkable place can be preserved for the future and will not be destroyed for a few pennies profit.”

A Mashof ride in the Marshes

The final leg of our tour of Southern Mesopotamia was a drive to the meeting point of the Tigris and Euphrates rivers forming the Shatt Al Arab river at Al-Qurnah, however, that was late in the evening and we couldn’t take the a full sense of the place –but then, it’s almost impossible to appreciate anything after being in the Marshes, even though Al-Qurnah is believed to be the Garden of Eden. Once again, there were no tourist facilities apart from a garden that housed a dead tree that the locals refer to as “Adam’s Tree”– suggesting it’s the “Tree of the Knowledge of Good and Evil”. However, the site’s sign leaves this to the imagination, instead noting that Abraham prayed there a few thousand years ago and saying that there will be a tree like Adam's tree in Paradise.  Thomas notes: “The place was a little busier maybe because it was after sunset and local people and local tourists enjoyed the funfair, ice cream, and other local attractions nearby the “Garden of Eden”. However, it was sad to see that the tree was ‘dead’. Sign of life?”

The sense of the antiquity of Southern Mesopotamia, both from being close up to the remains of its structures and from experiencing the remnants of its culture, this phrase comes to life: “In the landscape of recorded history, Iraq is Everest: just as Everest makes other mountains seem small, Iraq makes ancient history seem recent by comparison” (iv).

Al-Qurnah

Further information

The history of the Southern Mesopotamia, Sumerians, and the Marshes was simplified a great deal in the telling, keeping only the saliant points, and leaving so much more interesting material out. Dates are approximate, based on many sources, and the cities would have been settled much earlier than founded.

1. On the evolution of Southern Mesopotamia, and of the Sumerians, this video is worth watching
   • “Episode 8. The Sumerians - Fall of the First Cities” by Paul Cooper (@PaulMMCooper)
2. The story of the Marshes’ revival is captured in a CBS article and video; as well reflections twenty years following the Iraq invasion by the Iraqi-American engineer who played a crucial part in their reflooding.
   • “Iraq’s marshlands: Resurrecting Eden”, CBS 60 minutes, 22 June 2011.
   • “Iraq’s marshlands: Resurrecting Eden”, CBS 60 minutes video, 25 July 2011
   • “Eden reborn: Revitalizing Iraq’s marshes”, Azzam Alwash, in Chatham House’s series “Iraq 20 years on: Insider reflections on the war and its aftermath”, 3 April 2023
3. “The Story of the Keffiyeh”, Rajrupa Das, Al Markaz Review, 3 March 2024
4. “Heirs to Forgotten Kingdoms”, Gerard Russell, Simon & Schuster UK, 10 September 2015

AFC Iraq Fund Marketing Information as of 31^st July 2025

Subscriptions

The next cutoff date for subscriptions will be 24^th September 2025. If you would like any assistance with the subscription process, please get in touch with us at This email address is being protected from spambots. You need JavaScript enabled to view it. .

NAV as of 31^st August 2025 and performance table since inception

Regards
 
Ahmed Tabaqchali
Chief Strategist AFC Iraq Fund
This email address is being protected from spambots. You need JavaScript enabled to view it. 
 

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