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DUBAI - A U.S. defense official on Thursday encouraged Israelis to pump investments into the devastated Iraqi economy. Paul Brinkley, U.S. deputy undersecretary of defense for business transformation, told a business conference here that Israelis and any other investors were welcome in a country crying out for investment

"Israeli business people, any business people, we would encourage them to come," said Brinkley, speaking on the sidelines of a conference aimed at spurring investment into Iraq's northern Kurdish-ruled region. Brinkley leads the task force charged with reinvigorating Iraqi industry.

"If they find business opportunities, as I think they will, we encourage them to reach out and engage their Iraqi business partners," he said.

Israel is believed to maintain discreet ties to Kurdish groups, including those in Iraq, although Kurdish officials in the country deny such links.Earlier this month, Brinkley said he organized a business networking mission last month in which the U.S. Army airlifted 43 international businesspeople around the country in Black Hawk helicopters to meet Iraqi business leaders.

The aim of the visit was to provide expertise to the Iraqi government to revive state-run factories and other enterprises to put more Iraqis back to work, a move the U.S. military believes would help calm the violence.

In a speech at the conference, Brinkley compared the northern Kurdish region to the then stagnant Asia-Pacific region in the early 1990s, just before their economic boom.The Dubai conference is part of the U.S. strategy to use private investment to replace U.S. taxpayer funding for Iraq's economic revival. The current plan calls for upgrading Iraqi manufacturing and agribusiness enterprises to meet demands of the domestic market.

In time, those enterprises may be able to expand to international markets if the security situation improves.

"Security and investment is a bit of a chicken and egg situation," said Robert Pingeon, Amman based president of Mestre Associates, a consultancy for large infrastructure companies.

"It can't be secure until you get people to work but a lack of security scares international companies away.We're taking a risk because we feel you've got to break this cycle," Pingeon said.

Although much of Iraq remains in turmoil, security in the three Kurdish-run provinces is much better, and the region offers better opportunities for investment.

Thirty-five million ethnic Kurds live in the region straddling Iraq, Syria, Turkey and Iran. They are the largest ethnic group in the world without a national homeland, although Iraqi Kurds have enjoyed self-rule in the north since 1991.

This is the second Iraq business conference in Dubai. During the first, in January, U.S. Agency for International Development reported that startup negotiations were held, but reported no investments from the oil-rich Emirates, flush with cash from a few years of high oil prices.