Another Day, Another New Consulate

The Associated Press is reporting that U.S. Ambassador to Iraq James Jeffrey has opened a new U.S. Consulate in Irbil today:

IRBIL, Iraq — The United States has opened a permanent consulate in Iraq’s northern Kurdish region in what officials say will help boost business investment in the nation.

U.S. Ambassador to Iraq James Jeffrey opened the consulate on Sunday, a few hours after investors from Marriott International signed agreements to open two hotels in the Kurdish capital of Irbil in three years.

Iraq’s semiautonomous Kurdish region is considered one of the nation’s most stable areas because it largely escaped years of fighting between Sunnis and Shiites.

Since we have long had an existing facility in Irbil, a Provincial Reconstruction Team, this news just means that the PRT is being elevated to consulate status. However, I'm still waiting to see that news from Embassy Baghdad's website, the Department's official spokeswoman, or from any other official source.

Just last week, Ambassador Jeffrey announced that he had opened another new consulate, one in Basrah. The funny thing is I can't find a press release from the Department in Washington announcing that good news, either.

Which makes me wonder how official these new consulate openings are. Are they so-called 'soft openings' in which we begin to use new facilities before we have the really official openings? Maybe.

Be that as it may, all news reports today agree that the Irbil (AKA Erbil) Consulate is promoting U.S. investment in the region. From the Wall Street Journal:

On Sunday at the new U.S. consulate in Erbil in northern Iraq, Marriott International Inc. plans to disclose two of its brands, Marriott Hotels & Resorts and Marriott Executive Apartments, will join a large real estate development project. That follows an announcement in May that Best Western International Inc. plans to open its first hotel in Erbil.

Sounds like business is booming. But, not so fast:

The Marriott hotels will be part of a $1 billion real estate development currently under construction, called Empire Iraq, that will include villas, apartments, an office tower and a motorsports track.

The project includes a 200-room five-star hotel, now partly completed. It will be called Erbil Marriott and will have four restaurants and lounges. The hotel will open in 2014, Peshraw Agha, chairman of the Empire Iraq project said in an interview.

As is standard in the U.S. hotel industry, Marriott has agreed to provide its name and manage the Erbil hotels, but will not be directly investing in the project. Mr. Agha said the Empire Iraq project includes Iraqi and Turkish investors. He said there was room for a number of new Western-branded hotels in the city, given that much of the development occurring there attracts Iraqis, foreign contractors and investors to town.

Still, despite efforts from the Pentagon and U.S. Department of State, few American brands have entered Iraq beyond oil, gas and defense-related companies. That is due primarily to both unrest and to perceptions of corruption in the business community. In Erbil, that corruption problem is a serious hindrance, according to several experts.

"It's a problem because you can do all the encouraging you want but if the environment is not conducive it's not going to happen," said Eric Davis, a professor at Rutgers University who studies Iraq's economy.

Marriott International will lend it's name but not its money to Empire Iraq? That's a big clue to how a major player sees the investment environment in the Kurdish region. U.S. Consulate Irbil has its work cut out for it if it intends to promote U.S. private sector investment there.