Iraq has a golden opportunity to "stand on its feet and move forward", former deputy prime minister and foreign minister Hoshyar Zebari has told The National, urging the country to seize the moment to consolidate its stability.
Baghdad has undergone a construction boom in recent years and investors are returning to the country. BP has resumed operations, while talks are under way with international oil giant ExxonMobil and an agreement in principle has been signed with Chevron.
Since early 2023, more than $100 billion in investment has been pledged – $64 billion from foreign investors and $38.6 billion from domestic companies – according to Haider Makiya, chairman of the National Investment Commission.
Several factors are driving this development surge. Security has improved to unprecedented levels; Iraq has never been as calm since 2003.
The relative calm in the country since late 2022, when the government of Mohammed Shia Al Sudani took over, has given authorities the confidence to launch infrastructure projects and introduce reforms aimed at improving the business environment.
This came after decades of war, UN-imposed economic sanctions, corruption and mismanagement that derailed growth in Iraq, despite it being the second-largest oil producer in Opec.
“Iraq is moving on many fronts. This year, Iraq is having national elections to elect a new government,” said Mr Zebari. “Economically, it is inviting foreign investors primarily because there has been better security throughout the country. There are fewer terrorist attacks and disturbances.
"It has also recently encouraged American companies, especially in the oil sector [to come and invest].”
Mr Zebari praised the “goodwill of the Iraqi government”, although the situation has not settled completely. He also warned that the drone attacks that were targeted at US investments in the semi-autonomous Kurdish region of northern Iraq in July could undermine investor confidence.
“The Iraqi government investigated this case, but when the probe concluded, they didn't name any of the culprits, which really discourages investors,” he said.
This summer, multiple explosive-laden drones struck oilfields in the Kurdish region over several consecutive days. Authorities there have blamed militias linked to the Popular Mobilisation Forces (PMF), a coalition of mostly Iran-aligned former paramilitaries now integrated into Iraq’s armed forces. Baghdad has rejected that accusation.
Iran and its proxies have long accused Iraqi Kurdistan of hosting Israeli intelligence bases and have previously struck Erbil with missiles.
“Iraq needs more than anything else a conducive environment for investors, security, the court, the laws and the control of the outlaws and militias,” said Mr Zebari.
Positive change
Last month, the Iraqi government withdrew the PMF integration bill from parliament after strong US pressure. The contentious draft law proposed restructuring and widening the powers of the group.
The US said the law could have undermined Iraq’s sovereignty and entrenched Iranian influence in the political and security realm.
The bill was expected to elevate the PMF, which was established in 2014 to help fight ISIS, to a status on par with the rest of the Iraqi military.
“The American position has been very outspoken recently, unlike before. They used to pass these messages through diplomatic channels. This time they have come openly and publicly that they will not support the passing of the PMF law,” said Mr Zebari.
He also noted a “positive change” in the region and a trend of bringing arms and non-state actors under state control.
Lebanon’s cabinet recently approved an army plan to reassert the state’s monopoly on weapons, including those belonging to the powerful Iran-backed Hezbollah.
In Syria, the transitional leadership under President Ahmad Al Shara is pursuing a campaign to fold remaining militias into a reconstituted national army as part of post-war state-building.
And in the Kurdish arena, the Kurdistan Workers’ Party (PKK) began signalling demobilisation this summer, the first concrete step towards a promised disarmament as part of a peace process.
Regional shifts
Regional power dynamics have shifted sharply over the past year after Iran’s so-called Axis of Resistance suffered a string of strategic setbacks. Hezbollah in Lebanon and Hamas in Gaza were left militarily degraded after wars with Israel depleted their fighters, leadership and capabilities.
Syria – long propped up by Iranian military and financial backing – saw the fall of the Assad regime late last year, removing a central client-state and a pivotal conduit for Tehran’s regional influence that connected Iran to the Mediterranean via Iraq and Lebanon. In Iraq, Iran's hold over the militias has also weakened.
In June, Israel, with US support in follow-up strikes, mounted a focused campaign against Iranian nuclear-related sites and associated military infrastructure, inflicting damage that disrupted Tehran’s programme. But Mr Zebari says the fall of the Assad regime in Syria was a “turning point in the Middle East”.
"It came at a pivotal moment. It came as a surprise to many regional powers, and I think it was a blessing for the entire region, although the new rulers were unknown. But politics accept realities on the ground,” he said. “The new rulers of Syria have made great strides in less than a year. They now enjoy acceptance and recognition within the Arab region and internationally.”
