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AFC Travel Report - Iraq (Part 1)

In line with our process of being on the ground in the countries we invest in, AFC Iraq Fund CIO Ahmed Tabaqchali travelled to Iraq recently for an investment conference. All photos are by Asia Frontier Capital.

While discussing my trip to Iraq with a client over coffee, he suggested writing this for those who don’t know Iraq, other than from what they see or hear in the media, in order to show what life is like there. As an Iraqi expat it is possible for me to assume two personas, as an Iraqi intimately familiar with the culture and the place, as well as a foreigner who mostly sees Iraq through the eyes of intermediaries – the media in this case.

This trip had many purposes, to take part in a Banking conference, meet young Iraqi entrepreneurs, visit companies, and pay a visit to the Iraq Stock Exchange. I also planned to spend time at the Institute of Regional and International Studies (IRIS) and its parent, the American University of Iraq-Sulaimani (AUIS), in Iraq’s Kurdistan to follow up with future direct research projects on Iraq’s economy post ISIS, and to visit one of Kirkuk’s oil fields. The Kurdistan trip will be the subject of our travel report for next month, while this travel report will be focused on Baghdad.

The Royal Jordanian flight was jam packed, but the flipside was that the arrival at 6 am and clear winter skies which provided excellent views of Baghdad. One of the first things that a foreigner notices is how green the city and its environs are, as seen from this aerial photo as the plane made its final approach to Baghdad airport.


Final descent into Baghdad International Airport


While the greenery is not universal in Iraq, it is a defining feature of the areas between the Tigris and Euphrates whose agricultural richness led to the rise of the Mesopotamian civilization. It is still a promising area, even though it has been subjected to years of neglect following migration into the cities, as well as desertification due to drought and dam building by Turkey and Iran.
Baghdad international airport’s (BGW) story mirrors Iraq’s history of conflict. It had its opening delayed until 1982 due to the First Gulf War with Iran. The airport was mostly closed in 1990, leading up to the Second Gulf War. It eventually fully re-opened soon after 2004 following the Third Gulf War. While Iraqi Airways resumed flights soon afterwards, it wasn’t until 2008 that international carriers resumed flights. Today most regional carriers fly to Baghdad such as Qatar Airways, Emirates, and Middle East Airlines to name a few. The airport has been undergoing an upgrade and expansion since 2010 in order to meet expected growth in passenger traffic.



The author at the departure gate of BGW


The upkeep of the airport (terminal, surrounding open spaces, airport road to Baghdad) is an example of the new private sector-government partnerships the government has introduced to keep civil infrastructure well maintained and up to date. The era of lower oil prices led to such partnerships and will likely lead to more down the road.

As the conference was held in the Al Rasheed Hotel, within the heavily fortified Green Zone of Bagdad, the organizers contracted with the travel services team of the much wider Al Burhan Group to arrange a meet and greet service for attendees arriving at the airport. In a pleasant surprise, the team’s leader was familiar with my writings on Iraq and decided to provide a tour of the area and the hospitality at the Al Burhan Centre at the airport zone- a secure, luxurious accommodation compound.

The Green Zone is the common designation of the International Zone of Baghdad, the seat of the government before the 2003 invasion, the headquarters of the Coalition Provisional Authority (CPA) during the occupation and subsequently the seat of the new Iraqi government. It is sealed off from the rest of Baghdad by concrete blast walls, barbed wire fences and Bremer-Walls (portable, steel-reinforced concrete blast walls). I had not been to the Green Zone previously…well, not since before it was designated as the Green Zone, and as such was keen to witness it from the inside.



The Council of Ministers' Building, 14th July Street, Green Zone


The Al Rasheed Hotel sits on the edge of the Green Zone in an area known as the Amber Zone, yet still offers most of the security of the Green Zone. For access to the city, visitors need to park their cars by the entrance to the Green Zone and walk the 20-30 minutes to the hotel.

After checking into the hotel, I went with a friend who works in the Green Zone for a long walk to see some of the main sites, but was not sure if I could take photos due to security concerns. I took a couple of photos including one of the 4 soldiers’ memorial looking into 14th July bridge which connects the Green Zone to the rest of Baghdad.



4 Soldiers monument, Baghdad’s Green Zone


The walk took us past Saddam’s abandoned massive concrete bunker that cost about USD 50m, 8 years to build by 1983 and which was designed to withstand chemical and nuclear attacks. It escaped heavy US bombardment unscathed in 2003, but the palace above was not so lucky, suffering from bombardment and years of looting afterwards. Next, was the tomb of Mariam, a local saint, that gave the area its original name “Karradat Mariam”, then Ibn Sina Hospital, famous for the quality of its staff and its reputation for treating all patients equally- US Marines, Iraqi soldiers and insurgents during the early years of insurgency following the invasion. After an HBO 2006 documentary “Baghdad ER” the hospital became known outside of Iraq for its role as a military hospital during the worst year of the insurgency. Our next stop was to the Ziggurat Palace, a beautiful building modelled after the ancient Ziggurats, or temples used by Sumerians, Babylonians and Assyrians of Mesopotamia. The final stretch of the walk took us under the Golden Dome Archway, marked by a striking dome modelled on Jerusalem’s Golden Dome mosque, eventually leading into the Unknown Solider Monument and the parade grounds bracketed by the Arcs of Triumph. The Arc commonly known as the “The crossed swords” which is marked by a couple of massive swords clasped by hands modelled on Saddam’s hands and a symbol of his rule. In 2007 it was due to be dismantled, but work stopped following the removal of the hands after local complains against erasing the city’s history, irrespective of its symbolism. A reconstruction processes began in 2010, as a symbol of Iraq making peace with its past, and the parade ground is once again used- most recently to celebrate the country’s victories against ISIS. While the Green Zone preserves much of Bagdad’s beauty, it is frozen in the past and is very quiet, especially compared to the bustling life in Baghdad across the barricades.


View from the hotel, showing part of the Ziggurat Palace on the right, Honour Camp- A Ministry of Defence annex building- opposite, the rest of Baghdad in the distance


The conference “Iraq Banking and Investment Summit” ran over 2 days and aimed to highlight the banking and investment possibilities post ISIS. My interest was to take part as the CIO of the AFC Iraq Fund within the Iraq Stock Exchange (ISX) session and as a fellow at IRIS to moderate an IRIS session “Venture Capital and Accelerator Programs in Iraq” focusing on Iraq’s start-ups.

At the ISX session I put on the hat of a foreign investor explaining to fellow Iraqis AFC’s investment thesis into post conflict countries, the fund’s long-term investment strategy, as well as the concept of arbitraging the delta between Iraq’s real risk and perceived risk. The presentation was delivered in local Iraqi dialect, a first for me, and it seems a first for the audience used to formal Arabic presentations. I was glad that it was so well received that it might start a trend. For those who are interested, the presentation starts on minute 42 on this YouTube video).

However, the highlight of the conference for me was meeting Iraq’s young entrepreneurs. I first came across Iraq’s nascent, but active, start-up scene at the Fikra Fair in October 2016 and have been fascinated by the young entrepreneurs and how they overcame the tough operating environment. Their visons and business models are no different than similar technology, entertainment & e-commerce start-ups elsewhere in the world, but their challenges are in a league of their own with the lack of security and infrastructure, from banking to internet. However, the most crucial challenge is access to expansion/growth capital in a culture that is not yet familiar with venture capital investing nor with banking, as less than 20% of the population have a bank account. With the organizers and IRIS, I introduced three exciting companies to the audience in Iraq, most of whom were unfamiliar with them, and highlighted the investment opportunity in them. (The presentation starts at minute 39).

While Iraq’s violent history since 2003 has been well documented, little is known about the cultural transformation that has taken place at the same time. Iraqis were virtually cut off from the world during the prior regime’s rule which controlled all communication within Iraq and with the outside world, the latter of which was reinforced by the prohibition on the use of satellite TV, internet and mobile telephony. These entered Iraq in full force after 2003 and spread like wild fire among a population that was also hungry for consumer goods denied to it, especially during the brutal sanction years. However, due to civil conflict following 2003 many activities were consumed in the home. For instance, watching movies in theatres was unknown until recently with the opening up of malls over the last few years. A number of young companies sprang up over the last few years, created by the new technology, entertainment and communication savvy generation to meet the needs of Iraqis, especially the younger generation.

The first company to present was Escape the Room Iraq, started in mid-2007 to provide a much-needed social activity for the youth and had over 3,000 visitors in its short history, many of whom were repeat visitors. In addition to satisfying the need for entertainment, the company has successfully targeted the business market by offering itself as a team building and training tool which has been well received. This was followed by Mishwar, an online grocery delivery company that provides its services throughout Baghdad. Mishwar was set up by young engineers who sought alternative means of income separate from the state following the economic shock in 2014. It delivers groceries throughout Baghdad and has seen significant growth since it was joined by its current director, who revitalized the company. It reaches a wide audience though creative marketing on Facebook highlighting interesting meals/dishes and providing the ingredients for immediate delivery. Finally, Miswag, an lookalike and the country’s most successful young company, founded about 3 years ago, which by 2017 had grossed about USD 1m in sales and could see sales over of USD 1.3m this year.  It has over 65,000 customers, which will likely grow meaningfully this year as it was chosen by Google, through its AI algorithms, for a pilot project in Iraq as part of its Middle East drive. Basically, Google will provide its services for free in return for showcasing the company’s resultant growth in Iraq. In addition to providing consumer products, the company provides an e-commerce platform for brick-and-mortar companies. All of these companies were funded by capital from friends and family and re-invest their profits to grow, however, all need access to new capital for enhanced growth. While these companies have their websites, Iraq’s rapid adoption of Facebook as a primary means of communication has provided these companies with an excellent, scalable platform to reach and target customers.


“Venture Capital and Accelerator Programs in Iraq” session

Faten Al-Waeli of Escape the Room in the middle, Ammar Ammen of Miswag at her left and Marwan Ahmed of Mishwar second from the left


Later in the day, with my colleagues at IRIS, I left the Green Zone and crossed the Al-Jumariyah bridge into the hip Al Karadah district, a peninsula nestled within a turn of the Tigris river that divides Baghdad into two halves: Karkh on which the city was founded in the 8th century and Rusafa. Karadah is a mixed population of Shias, Christians and Sunnis and one of city’s nine major districts. It is teaming with life from bars, restaurants and cafes to art galleries and bookshops. Karadah’s revival over the years is believed by many to be the symbol of a new Baghdad that reflects the city’s old values of diversity, inclusion and tolerance. However, Karadah’s symbolism has led to some deadly attacks, the biggest of which were the mall bombing in July 2016 that resulted in the death of 324 civilians and the May 2017 bombing of an ice cream parlour that led to 27 deaths. Yet, the district defies terror attacks, continues to boom and rebuild as soon as the dust settles with the ice cream parlour back to full operation within a week (more on this later).

The object of our visit was to meet the founders of the “The Station”, an incubator and the first co-working space for entrepreneurs created to provide them with the resources to launch their business. The founders explained their vison while showing us final construction works on the building, itself among the first wave of the city’s construction activity. The Station is set to begin operations in early February.


The Station, an Iraq security detail can be seen on the extreme right


Next on the Baghdad itinerary was to spend a morning with my friends and colleagues at the Iraq Stock Exchange (ISX). The exchange is in the Alwiya area in Karada and across the road from the beautiful Church of Our Lady of Salvation, an Assyrian Christian church that survived terrible attacks in 2004 & 2010. In 2010 there was a twin attack that started at the ISX and was followed by another at the Church with an attack at Sunday Mass. While the ISX escaped mostly unscathed with the death of 4 guards, the worshippers were not so lucky with 52 deaths. In a spirit that is typical of Iraqi’s, the ISX family went to work the next day as if nothing had happened.


The Church of Our Lady of Salvation surrounded by decorated Bremer-Walls


I always enjoy discussing all aspects of the market with the ISX family and so this visit spent time with senior management, compliance, regulatory oversight, IT, the Iraqi-Depository Centre, legal, as well as brokers and investors.  With the advent of electronic trading in 2009 most investors migrated from watching & trading at the exchange to broker’s offices. However, old habits die hard, and a number of regulars still come to the exchange’s floor to meet, gossip and trade. The exchange has been quiet over the last couple of years reflecting the lack of activity so often described in our newsletters. However, on this visit I could not help but feel that I was in a scene from Jim Rogers’ 1994 book “Investment Biker”, in that the stillness of some places was at such odds with their investment potential. Given the sentiment often expressed in these newsletters over the last few months, the stillness in a similar way is reflected in the valuations of the underlying assets traded on the exchange.


The author watching market quotation screens on the main trading floor of the ISX


Next on the itinerary was a visit to the district of Mansur on the Karkh side of Baghdad, named after Abu Ja'far al-Mansur, the second Abbasid Caliph and the founder of Baghdad. The route from the ISX took us through the still beautiful riverfront Abu Nuwas Street, named after ancient Baghdad’s most famous poet, and an area once full of cafes, restaurants, bars and luxury hotels. However, its location led to its demise as the entertainment heart of city, due to the concentration of the old regime’s seat of power across the river in what has become the Green Zone. Sadly it is still yet to regain its old glamour from 2003.


The view from Baghdad Hotel on Abu Nuwas, across the river on the right is the Ziggurat Palace, the Crossed Swords and Unknown Soldier Monument on the left and further left


Abu Nuwas Street


One of the restaurants in Abu Nuwas Street


The road from Abu Nuwas crosses the Al-Jumariyah bridge and then passes by a massive outdoor entrainment park in the heart of Baghdad, Al Zuwara Park.


Al Zuwara Park


On the road to Mansur


Mansur, like Karada, has been going through a revival over the years, including my old Mansur (same name) neighbourhood with its shops and restaurants. One of the new restaurants that we headed to was the local branch of the UAE’s Victorian era themed restaurant chain, Shakespeare & Co, one of many such regional franchises.


Shopping area on Mansur Street, Mansur



One of the residential area of Mansur neighbourhood


After lunch, the destination was the same Al Faqma Ice Cream parlour which was bombed in May 2017, though we took the long route through Qadisiyah neighbourhood to get there, passing by a Mandaean temple, one of the world’s most ancient religions. The Mandaean, or Sabis in Arabic, trace their origins to Adam, and although viewed by many as followers of John the Baptist due to the centrality of Baptism in the fresh waters of the Tigris & Euphrates. Yet many of their beliefs and rituals can be traced to the Babylonians. I didn’t stop at the non-descript building whose only evidence as a temple was a modest sign, instead leaving that to one of my next visits. The route then went over the Al Jadriyah Bridge passing over the Um Al Khanzeer island, named after Khanzeer or wild boars who roamed the island before it was converted into what became known as the “Weddings Island”.  Long neglected over the years, used as a US military base until 2010 due to proximity to the Green Zone. There are plans to open Weddings Island for investments to become once again a Tourist Resource with hotels, parks and a nature reserve.

The only visible signs after the deadly attack in May were the Bremer-Walls around the entrance to the strip that houses Al Faqma Ice cream parlour. 





Not many people having ice cream late afternoon in early December at Al Faqma


I could not help but go past the National Theatre whose reopening in 2009 marked the start of a return to normality in Baghdad, six years following the invasion and ensuing civil strife. Though I had no time to watch a play this time, it is high on my agenda for the next trip.



Iraqi National theatre, Fateh Square


Last on the Baghdad itinerary was a visit to the latest mall, Baghdad Mall, and to spend an afternoon with my cousins. The Mall located in Harthiya, opened with too much fanfare in August 2017, with crowds of thousands attending the opening ceremony. Walking across the mall, having coffee and lunch while having free WiFi felt no different than any other large mall worldwide. Baghdad Mall has over one hundred retail outlets, dozens of restaurants and cafés and a luxury five-star hotel. Harthiya, too is seeing a revival and while driving through the area I saw one of the many signs of new construction that reflects the city’s confidence in its future.


New construction in Al Kindi Street, Harthiya, next to Baghdad Mall



Open air food court in Baghdad Mall, quite early on a Friday morning


However, Baghdad is far from being back to normal as the ubiquitous security checkpoints, blast walls and Bremer-Walls serve as a constant reminder of the potential for violence to erupt. Baghdad residents are so used to them that they don’t notice how different this is from the rest of the world. For instance, Iraqi officers’ military equipment is so different from other security officers elsewhere. Every time I pass by them I cannot help but feel that Iraq security officers are like portable armadas with all kinds of imaginable military hardware (Photo below & security detail in The Station photo above).


Iraqi security officer at a checkpoint in Baghdad


As this has been a trip to explore the revival of Baghdad and not a narrative of the city's violent past, I must clarify that I haven’t been to Baghdad’s poor or no-go neighbourhoods which are in worse shape than the run-down street in Karrada seen in the photo below. The reconstruction of the poor and neglected parts of the capital is a massive challenge, yet an essential part to the revival of the city.


Salman Fayeq Street, Karrada, near the ISX


It’s difficult for those who don’t visit Baghdad to imagine that now it’s a thriving city reclaiming the life it lost over the last three decades, especially following the trauma of the brutal 3-year ISIS conflict. Baghdad’s infrastructure was first damaged in the Second Gulf War (1990-1991) from harsh aerial bombardment and then stagnated as the 14-year UN economic sanctions took their toll on the city’s ability to provide services or to maintain its infrastructure. Further damage was inflicted during the ground and air campaign of the Third Gulf War (2003). After that was a repeat of the sanction years as civil strife engulfed the country and the new political class was consumed with sectarian infighting that eventually led to the ISIS occupying a third of the country in 2014.

With the fall in violence over the last few years (chart below), Baghdad and its peoples are reclaiming life. The city, until recently, has seen very selective investment capital to rebuild focusing on malls, residential buildings, and hotels. However, the bulk of the city has not seen much reconstruction and as such there is much promise in the new signs of construction and reconstruction.


UN Casualty figures for Baghdad November 2012 - January 2018

(Source: United Nations Assistance Mission for Iraq (UNAMI), 8 months from 2015, in some cases, UNAMI could only partially verify certain incidents)


I, as a native of Baghdad, despite having spent the bulk of my life in so many beautiful cities in the world, can only marvel at how it maintained its grace, charm and much of its beauty in-spite of all the calamites that have befallen her. I hope the photos and the narrative has shown the promising aspects of Baghdad and its potential.