The subject of war-torn countries is one which has come to the fore over the last 20 years with a number of serious conflicts which have plunged some countries across the world into panic, destitution and effective bankruptcy. Many of these countries have attracted substantial property investment and business investment when they have been at their weakest but are these “bottom fishing” investors really helping these countries or just vultures looking for their next profit?
This is a subject that attracts many differing views and opinions but one which needs to be discussed with all of the various implications, benefits and downsides brought into the open. There are many aspects to consider, many angles to appreciate and ultimately many differing end games.
The risks involved
Whether you are looking at something like war-torn Iraq or the conflicts we saw in Yugoslavia many years ago, no matter how low these countries may fall in terms of economic activity there is still a risk that they will not recover or such a recovery would be prolonged. Countries such as Iraq have attracted the interest of many property and business investors from overseas but there are suggestions that the conflicts and friction among certain factions in the area will continue for decades to come.
Against this background, there are substantial risks that anyone investing in property or business in the country could stand to lose everything if the powers shift in the future and a new regime takes over. Whether this happens or not is debatable but countries such as Iraq may have attracted a number of investors when there was “blood on the streets” but what kind of return they will receive is very much open to debate.
Any economy around the world requires a base from which to build and very often that base is the acquisition of property as seen in countries such as the UK, US and any other developed country. Whether we are looking at domestic property or business property there is a need for certainty of ownership which will give confidence to the population and the business community to build for the future. Property experts in both of these fields are vital to the recovery of some of the world’s poorest economies and troubled regions.
There is no doubt that a property market is perhaps the purest reflection of the strength and prospects of any underlying economy in the world and offers a very interesting signal for the future. We have seen over the last few months that the property market is very often the first to react to changing situations, before they hit the overall economy, with the US sub-prime mortgage situation a prime example.
One of the more obvious implications of a long drawnout conflict or war in any region of the world is the amount of money it can take from the economy and the country as a whole. We are talking about the cost of funding a war, recovering from a war and the massive rebuilding programs which are required. Very often overseas investment is vital but no overseas investor would part with any money unless there was some kind of financial or social benefit to be had, whether this be a property investor from the UK or the European Central bank offering financial assistance to a near bankrupt country.
No economy or country can prosper without a solid business base and very often the funds required for this will come from overseas sources. While there will be some perceived financial benefit to these investors this can very often be overshadowed by the long-term benefits to the population of a struggling country whereby the creation of a new economy should, if successful, benefit all for many years to come. Even though some of the individual investor returns may seem immoral and obscene at times these are dwarfed by the longer term benefits to the country’s economy which has literally started from nothing.
Confidence breeds confidence
While many of the more premature investors to enter war-torn bankrupt countries often attract the most criticism these can in fact be the leaders that are required to pull in more and more overseas investment. Again taking Iraq as an example, the EU and the United Nations can pour as much money as possible into the region but without external investor confidence this money will at some stage run out.
Confidence in a new market breeds confidence in others which can then snowball into enormous investment into any region giving the area a greater chance of recovery and prosperity. Again, those who took the step to invest initially stand to make impressive gains if all goes to plan but nothing is ever guaranteed.
Moral issues and investment
In many ways investment strategies and morality issues are at different ends of the social spectrum. If each and every investment in the world was based upon a moral point of view there would be discussions, arguments and delays in much-needed investment which could cause more problems in the long run. As disappointing to some as it may be there is a need in some cases for investment and potential investment returns to come before morals and other issues.
As we mentioned earlier in this article, some individuals may see substantial returns when they invest into war-torn countries which are literally on their knees but if investors make money then the underlying economy is improving and the collective benefit would be greater for the country and the population as a whole.
The harsh reality of the investment world is that nobody will invest unless there is some kind of investment return whether this be in monetary form or social form. While “early bird” investors into war-torn and struggling countries may attract unflattering headlines in the press and create much debate and argument they can often be the catalyst for a recovery in a countries economy and future prospects.
As the saying goes, “wealth is not created, it is just transferred”, which is something that can give hope to struggling countries and war-torn areas of the world. In many cases it could take one small investment to attract others which will attract others and then possibly mushroom into substantial overseas investment which does and has on many occasions resulted in the recovery of a rock bottom country and economy.