Received an interesting email blast from Nicholas Vardy’s Global Guru and, while I normally read such with high degrees of skepticism since they are aimed at selling something, I thought some of his comments may spark interest in this market.  Per the report:

“…While the media begrudgingly admits the success of the U.S. military “surge,” Iraq’s “other surge” — the remarkable turnaround in its economy — has been all but ignored. That shouldn’t come as a surprise: media types know that good news doesn’t sell.

As gratifying as the recent fall in violence in Iraq has been, the mother of all surprises is just how well Iraq’s economy is doing. Indeed, the turnaround in the Iraqi economy would make the biggest China Bull blush. At the turn of the millennium, Iraqi GDP stood at $12.3 billion. Seven years later — the U.S. invasion and civil wars notwithstanding — Iraq’s GDP had more than quadrupled, reaching $55.4 billion. Real GDP growth soared 17% in 2006 alone. Thanks to an IMF-led policy package that included exchange-rate appreciation, monetary tightening, and fiscal discipline, inflation, which had spiked to 65% at the end of 2006, plummeted to 5% by 2007.

Evidence of entrepreneurial activity abounds. The number of businesses registered by the U.S. Chamber of Commerce is up fivefold during the last three years. Twelve million Iraqis now have cell phones, putting penetration rates close to 50% — on par with other countries at Iraq’s level of economic development. Financial markets have picked up on the good news. Iraq’s long-dated, dollar-denominated debt has been a safe haven during the worldwide credit crisis, soaring almost 20% in the first six months after the subprime meltdown hit the headlines last August. The Iraqi currency, the dinar, soared 10% against the dollar in 2007, and the Baghdad Stock Exchange jumped almost 40%, even as global stock markets crumbled. In a sign that it had arrived into the modern world, the Baghdad stock exchange even switched to electronic trading in March of this year.

Oil output now is back up to pre-war levels. Thanks to that and the surging oil price, the Government Accountability Office (GAO) estimated that Iraq may earn up to $79 billion in oil sales this year. That’s twice the average annual amount generated from 2005 through 2007. It would also make Iraq one of the few countries in economic history where the fiscal revenues are larger than the economy itself. The GAO estimates that the Iraqi government spent only about 1% of its budget on maintaining critical infrastructure projects and only $1.04 billion during the first six months of 2008 to increase oil production. Iraq has so much money in its coffers that it can’t spend it fast enough on infrastructure, electricity, water and sanitation, education, and healthcare.

With the Iraqi government having more cash on hand since the first Gulf war of 1991, U.S. congressional committees no longer are hauling administration officials to chide them for the chaos in Iraq. Instead, they are asking why U.S. taxpayers still are footing virtually the entire bill for Iraqi reconstruction while Iraq has amassed huge budget surpluses.

Iraq also has had a lot of help from foreign governments. The day U.S. troops marched into Baghdad, Iraq’s foreign debt approached $125 billion. Last year, the Paris Club — an organization of 19 developed economies — agreed to forgive 80% of the $43 billion in debt that Iraq owed to it. Recently, Iraq’s more parsimonious and largely Arab neighbors agreed to write off $30 billion of the estimated $60 billion-plus owed to them. The write offs should reduce Iraq’s debt to $36 billion by 2012 — a manageable 30% of GDP. But relentless naysayers notwithstanding, at least Iraq has set out on the right path.

Developed countries’ largesse notwithstanding, much like oil-rich countries such as Saudi Arabia or Norway, Iraq’s future prospects are intimately tied to its oil wealth. After all, between 2005 and 2007, oil exports provided 94% of the Iraqi government’s revenues. And that won’t change anytime soon.

Recent estimates show that Iraq holds more than 116 billion barrels of oil — giving it the world’s second-largest proven reserves after Saudi Arabia. Iraq also contains 110 trillion cubic feet of natural gas. But it’s Iraq’s future prospects that are the most eye-catching. Up to 90% of Iraq remains unexplored and the latest estimates show that the country could yield an additional 100 billion barrels of oil. Only about 2,000 wells have been drilled in Iraq. That compares with one million wells in Texas alone. Methods such as horizontal drilling have yet to be deployed in Iraq. And unlike more complex offshore developments in countries such as Brazil, production costs in Iraq are less than $2 a barrel. Iraq’s government has estimated that it would need $20 billion to $25 billion of investment — amounts it already has in the government till — to increase production from its current rate of 2.54 million barrels a day to four million barrels per day in about five years. That would put Iraq in the top five oil-producing countries in the world.

That’s not to say Iraq’s future prosperity is assured. Iraq needs oil drilling expertise as much as it needs money. And the appropriate legal frameworks have to be put in place for Iraq’s oil industry to attract the foreign investors with relevant technical expertise. Iraq stands at a crossroads: it could end up as the next Saudi Arabia — or Hugo Chavez’s poverty-ridden Venezuela. The roadmap is clear. Many other countries around the world — from Central and Eastern Europe to former Latin American dictatorships — have gotten their economic acts together, and without the benefit of record oil reserves. Iraq’s road to prosperity will be a bumpy one. But relentless naysayers notwithstanding, at least Iraq has set out on the right path.”