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Iraq needs investment, the sustainable kind

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By Thomas Kostigen

SANTA MONICA, Calif. (MarketWatch) — There are more than 208,000 posts on the forum web site about Iraq dinar speculation alone. The top thread is “CNBC’s Jim Cramer is High on Iraq Investment & ETF Dinar Fund.”

Clearly, investing in Iraq is a hot subject and investors are eyeing opportunities as the U.S. declares the war there officially over. The private sector’s queue will certainly pick up where the troops left off. Infrastructure engineering, technology, and consulting firms are set and primed to pounce.

Once the oil law in that country finally gets passed — determining which companies get the oil contracts and concessions — a whole other industry of opportunity will also evolve. It can’t be forgotten that Iraq’s oil reserves make it a very wealthy nation. Indeed, many believe that is why the U.S. got in the war there to begin with (although that seems curious now).

In any event, the most immediate question for armchair investors is going to be what happens with the dinar once Iraq is left to govern on its own.

Click to Play 121511skynewsiraqflag_512x288.jpg

Iraq mission ends with flag lowering in Baghdad

The U.S. flag was lowered Thursday in Baghdad at a ceremony to mark the formal closure of the American military headquarters and end of the Iraq mission.

Impact investors have a slew of other investment considerations. Impact investors typically seek to make private investments in social enterprises that aim to do good and provide a financial return. In Iraq private-education facilities, water purification and delivery systems, and “carbon filtering” are a few examples of the types of enterprises that could be borne out of the war.

In fact, there may be no better place to showcase the power of investing for good than in Iraq. After all, the U.S. engaged in nation building — and has now left the building to others. Why not make it sustainable? Where else in the world are there opportunities to build governance systems, infrastructure, and enterprises from the ground up?

There are hundreds of investment funds that can create enormous impact there with their capital. They can now do good where so much bad has been done.

Al Gore, in an editorial that appeared in The Wall Street Journal on Wednesday, outlined “A Manifesto for Sustainable Capitalism.” He and his partner in Generation Investment Management, David Blood, who co-authored the piece, should put their ideas and philosophy to work in Iraq. Read Gore’s op-ed.

They define sustainable capitalism as “a framework that seeks to maximize long-term economic value by reforming markets to address real needs while integrating environmental, social and governance (ESG) metrics throughout the decision-making process.” Gore and Blood say “such sustainable capitalism applies to the entire investment value chain — from entrepreneurial ventures to large public companies, seed-capital providers to institutional investors, employees to CEOs, activists to policymakers. It transcends borders, industries, asset classes and stakeholders.”

It’s an ambitious call to order.

For others, sure, go ahead and create an exchange-traded fund based on the price of the dinar, or on the Iraq Stock Exchange (where listings, by the way, have grown dramatically since the U.S. invasion and effective takeover). Private investors can seek out their own brand of investments there, too. We should hope that they just make sure investments there are sustainable.

If there is anything Iraq needs, it’s sustainability — in a good way — after such a prolonged period of unsustainable recourse.

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