The last thing that the business sector in Lebanon needed was the recent worsening of the Iraqi crisis and its repercussions, especially on the security level. It is true that companies operating in Iraq, especially Lebanese ones, are used to security fluctuations and have adapted to them. But recent events are different with their wide geographical breadth and sectarian dimensions, factors that may have long-term implications.

At the beginning of the year, the Iraqi economy looked promising despite the political tension. The International Monetary Fund (IMF) predicted that it would grow by 6% in 2014. Oil production in February exceeded all expectations and reached record levels as it passed the 3.6 million barrels-per-day mark. But this was before the turmoil.

After the crisis began, those expectations were replaced by caution and concern.The Sunni uprising and simultaneous military actions affected key areas in the oil-production network, such as Kirkuk, Mosul and Beiji, where the biggest refinery in Iraq is located. Iraq, which has the world’s fifth largest oil reserves at 141 billion barrels, still mainly depends on oil production, which accounts for 95% of the government’s revenues. The events affected the global oil markets, as indicated by the fluctuations in crude oil prices that soon stabilized despite expectations that it could reach $150 a barrel.

But the events mostly impacted long-term investments, not only in terms of oil production, but also in sectors such as food and real estate. The political situation is reflected in sluggish investments in major projects, which are the Iraqi economy’s real growth engines and main impetus for the activity of the companies operating there, especially Lebanese companies.