KPMG chief leads commission to redevelop southern
Iraq

KPMG International chief executive Michael Wareing has
been appointed the inaugural commissioner of a new body that aims
to help Iraq revitalise its ailing economy.

The Basra Development Commission (BDC) is a high-level group of
global business advisers that will focus on implementing a
strategic plan for economic development in the southern city,
involving both the public and private sectors. It was recently
established by the UK and Iraq governments to help the business
community progress despite ongoing infrastructure and security
problems. Located near most of the country’s oil fields, a sea port
and an international airport, Basra is a vital economic gateway for
the country. The commission is being trialled in this region as a
potential model for other parts of the country.

At this early stage, the BDC comprises teams of senior advisers
from the UK Department for International Development (DFID), the
Iraq government and a specialised external consulting
organisation.

Development roadmap

Wareing, the only commissioner who has been appointed to date, told
IAB that over the next three to six months the body will
focus on drafting a blueprint for development in the region.

He said: “[The aim is] to bring together all of the different
things that need to be done, both from an industry point of view,
including the oil and gas industry, the ports and shipping
industry, the agriculture industry, and the banking and finance
industry, and also in terms of the individual issues, for example,
higher education and training. There’s an enormous agenda
potentially in terms of things that need to be looked at and
addressed.”

The commission will identify and tackle a range of problems
associated with Iraq’s economic stagnation. Wareing highlighted the
poor state of infrastructure, Iraq’s legal framework, a lack of
higher education and investment as key areas where he hopes global
business leaders can help.

“There are quite a lot of issues around the legal framework –
everything from land ownership to passing legislation through the
Iraqi government, which will set out the framework to how the oil
and gas industry will be operated within the country. From an Iraqi
and Basra point of view, [this] is really significant,” he
explained.

“We’re creating something called the Basra Investment Promotion
Agency, and also the Basra Development Fund. That will provide
direct finance to small- and medium-sized businesses looking to
either set up or expand within the area. The British government has
announced that it will put an amount of money into that fund in
order to get that working. That will be very much local employment
as well, where a lot of this needs to be targeted.”

As well as supporting local business, the commission is looking
further afield to find business expertise with an affinity for the
country. Wareing explained: “There’s quite a lot of interest in
terms of looking at expatriate Iraqi businessman who have, for
varying reasons, relocated outside of Iraq and are currently
operating in nearby countries. We are intending, over the next few
months, to engage with those people to look at what the
circumstances would be that would encourage them to go back
in.”

On the education issue, he said there are problems with the current
education system, contributing to a lack of higher education and
under-developed institutions.

He said it was important to “equip young people for jobs in
business but also to make sure they are doing something creative
with their lives and they’re not just unemployed and sitting out in
the streets”.

He continued: “In a number of those areas there are a lot of best
practice things that you can take from the UK and also from other
countries from around the world where things like this have been
done. Northern Ireland would be an obvious example. Also, by happy
coincidence, it had something to do at some level with my
appointment [as] I’ve been quite involved in the UK in a number of
charities involved in homelessness and youth unemployment. If we
can do something which actually touches that, then that in itself
could have quite a positive effect.”

In addition to charity expertise, Wareing brings a vast amount of
international business experience to the role. He joined KPMG in
1973 and held a number of senior positions in the UK firm before
taking up regional and international roles. He was appointed global
chief executive in 2005. He will continue in his KPMG role but also
make time to visit Basra and neighbouring countries as the head of
the BDC.

Economic hub

The southern city of Basra is a located near 70
percent to 80 percent of Iraq’s oil reserves, one of the country’s
most important natural resources. According to the US Energy
Information Administration, Iraqi oil reserves run to 115 billion
barrels, the world’s fourth-largest proven amount. Therefore,
revitalising this industry, which had slowed to a crawl as a result
of years of UN-imposed economic sanctions, and was then further
devastated by the recent Iraq conflict, is widely accepted as vital
in the redevelopment of the war-torn country.

Home to an estimated 1.7 million people, Basra is Iraq’s
second-largest city and is serviced by an international airport and
the country’s only deep-sea port, which spills into the Persian
Gulf. The city is the last of the four provinces held by UK forces
since the 2003 conflict to transfer responsibility for security to
Iraqi-led forces. Wareing says it is for these reasons that Basra
and this project is an important litmus test for the rest of the
country. Although the security situation is improving, he remains
realistic about the dangers of a region the UK government is
warning travellers to avoid.

“Obviously, business has been very much affected by the security
problems and also by problems with the infrastructure… I can only
go on the briefings that I have been given so far and I think it’s
pretty clear that the security position has improved during the
last 12 months – certainly in terms of attacks on coalition forces
within the last six months,” Wareing says.

“Having said that, the situation is somewhat confined to a small
number of areas within that [region] where the forces are basically
constrained to, so we don’t have people openly travelling around
the city as was the case a couple of years ago. If you are
comparing to two years ago then it is still very difficult.

“There’s a lot of potential there from an economic point of view.
The belief and hope, which has been proven to be right elsewhere,
is that if we can do something to help improve the economic
environment, it could and should have a direct impact on the
security environment.”

Wareing plans to visit the Basra this year but has been advised not
to publicly disclose details of his trip. He will be offered levels
of security similar to those granted to high-level government
officials.

Perception battle

Another challenge for the BDC, Wareing admitted, is to ensure the
project isn’t perceived as an attempt by the West to influence the
redevelopment of Iraq’s oil fields for political reasons. The UK
government has already poured vast amounts of funds into
infrastructure projects across the country since 2003. According to
the DFID, the UK government has committed £744 million ($1.5
billion) to Iraq, which includes a commitment of £1 million for the
initial start-up costs for the BDC and its partnering economic
initiatives.

In total, global donors have pledged about $15 billion towards
Iraq’s reconstruction, according to the US Government
Accountability Office.

Wareing said he wouldn’t have taken the role if he believed it was
for the wrong reasons. He said the support of the UK government was
one of the reasons that convinced him the formation of the BDC was
a genuine attempt to help the Basra business community find its
feet.

However, he said Iraqi involvement and control is key: “That is why
we were so anxious to make sure that the Iraqi government really
genuinely owned and were fully supportive of the commission itself
because clearly this is only something that can work if it’s Iraqi
people doing things to help the situation in Iraq. It can’t be done
for them from the outside.”

Arvind Hickman