Iraq Defence and Security Report Q4 2008

In the past quarter Iraq's defence industry has not grown appreciably. BMI predicts that it will be a decade or so before the country's indigenous defence industry is fully established. Until then, Iraq will be dependant on donations from other countries, such as the US, for its arms. The largest player in the native Iraq defence industry is the Dabin Group, a commercial consortium primarily involved in the construction of hotels, retail and leisure facilities. The Dabin Group holds a 42% stake in Seabird Aviation Jordan, specializing in both civilian and defence aerospace projects.

The security situation in Iraq remains tenuous, with suicide bombings an all too frequent occurrence. On July 28, 25 Shi'ite pilgrims were killed by suicide bombers in Baghdad; in a separate attack, at least 25 Iraqi's were killed in Kirkuk on the same day. Nevertheless, there are signs that the security forces, under the command Prime Minister Nuri al-Maliki, are improving their hold on the country, as well as exercising increased levels autonomy relative to the US forces in Iraq. Despite the improvements, nobody expects to see an end to the violence any time soon. Similarly, not many people expect Iraq's 600,000 strong security forces to take full responsibility for the whole country any time soon, nor for the coalition forces to withdraw from the country on any large scale. As of August 2008, 144,000 US troops are in service in Iraq.

On the macroeconomic front, Iraq's post-war bounce looks set to continue over the coming years, as real GDP grows by an average 8.5% annually, on the back of strong growth in the non-oil sector and an even better performance in the hydrocarbons industry. We expect Iraq's post-war economic recovery to continue over the coming years and are forecasting real GDP growth of 10.6% in 2008, up from 5.4% in the previous year on the back of increasing oil production and strong growth in the non-oil sector.