Iraq grows, Iran shrinks

Growing investment interest in Iraq by Gulf states is revealed 
Foto de familia de la Liga Árabe - PHOTO/TWITTER/@MarocDiplomatie
Arab League family photo - PHOTO/TWITTER/@MarocDiplomatie

Final details are being completed on the luxurious Rixos Hotel, which will host the representatives of the 2025 Arab League summit in Baghdad. The construction project has been a strong appeal for the Gulf countries. In fact, the capital required for its financing has been injected directly by Qatar.   

From Baghdad, efforts are focused on raising investment levels. In doing so, attempts to repair a national economy deeply damaged by years of war and instability could finally be realised.

REUTERS/THAIER AL-SUDANI - Manifestantes se enfrentan a las fuerzas de seguridad durante protesta en Bagdad, Irak
Demonstrators clash with security forces during a protest in Baghdad, Iraq - REUTERS/THAIER AL-SUDANI

Calm has never been an attribute of Iraq. Yet 2007 was a crucial year in the country's history. It represents the moment when ISIS was finally defeated. Since then, it can be said that some stability has been achieved in the territory.    

The Iraqi capital intends to turn itself around: to be a meeting and collaboration point between old rivals. It intends to make the most of the current moment and demonstrate discipline and security in order to promote interesting projects and attract investment.   

From Iraq, it is believed that this is the right time to invest. But that is not just a national idea. The president of the Dubai Chamber of Commerce, Abdulaziz al-Ghurair, has acknowledged that Iraq is seen as a territory of enormous potential; a regional partner to be considered. Moataz al-Khayyat, chairman of the board of the Qatari Investment Holding Company, the company responsible for the Rixos project, also said that Baghdad is becoming more secure, committed and possibly one of the great Arab capitals in the next 25 years.  

Producción de petróleo - FILE
Oil production - FILE

Iraq derives a major source of revenue from oil. However, the state's economy has been at an impasse in recent history. It has been fragile and unable to escape the instability that has persisted for the past 20 years. It is therefore Baghdad's goal to attract as much foreign investment as possible.  

Today, Iraq's most important trading partners are China, Turkey and Iran. The latter country boasts a strong presence within Iraq's borders. This can be seen in Iraq's energy sector, which is 40% dependent on Tehran, or in the presence of related groups such as the Shiite Popular Mobilisation Forces (the branch of Islam represented by the Iranian state), as opposed to the Sunni group of Saudi Arabia, the great rival of the Ayatollahs' regime in the Middle East. The key to getting rid of Iran's power is to increase investment in Iraq. 

The country's relationship with the Gulf states has not exactly been 'harmonious'. Rather, it should be defined as a succession of ups and downs. Even so, the group of countries pledges to invest in strengthening the soft power of Abdul Latif Rashid's nation.

In 2023, Qatar and the United Arab Emirates signed multi-million dollar deals with Iraq. They agreed to develop power plants, manage gas flaring, boost oil production, develop natural gas fields in the provinces of Basra and Diyala, and create a solar energy park.

Planta de energía solar - PHOTO/WAM
Solar power plant - PHOTO/WAM

Closer economic relations are also an objective of Saudi Arabia and the UAE. This isolates Iran and, on the other hand, leads to a higher profile for Iraq in the Arab political landscape.

How will Iran react to all this?