Iraq's golden opportunity: A new dawn for regional influence

Shafaq News

3 days ago

Shafaq News
In the wake of the 12-day confrontation between Israel and Iran, which ended in a regional ceasefire, Iraq stands at a delicate yet promising juncture. The temporary calm has sparked cautious optimism among Iraqi experts and officials, who view the current environment as a "golden opportunity" for Baghdad to assert its central role in the Middle East, revitalize its economy, and recalibrate its national security vision.
But this potential, while real, is far from guaranteed. Translating regional de-escalation into tangible national gains will require Iraq to confront long-standing domestic obstacles—from institutional corruption to armed group interference— proving it can anchor its own recovery on a foundation of internal reform.
According to Mudhhir Mohammed Saleh, the financial advisor to the Prime Minister, the relative détente among key regional actors could exert a direct and positive influence on Iraq's economy. 'The regional de-escalation in the Middle East—particularly among Iraq's neighbors—can have direct and profound effects on Iraq's economy,' he stated to Shafaq News.
Saleh pointed out that countries such as the Gulf States, Turkiye, and Iran might now be more willing to invest in Iraq, particularly in sectors like infrastructure, energy, transport, and agriculture. He also highlighted the ambitious "Development Road" project as a potential flagship for this investment influx, offering Iraq a chance to enhance both its economic connectivity and geopolitical weight.
Saleh further noted that improved regional security could attract Arab and foreign capital to Iraq's industrial and economic zones tied to the Development Road, mitigating investment risks and offering higher degrees of stability. 'The more attractive and stable the environment is for foreign investors, the more costs decline while profit opportunities grow,' he explained.
Among the more promising areas for external investment, aside from hydrocarbons, are Iraq's underdeveloped natural resource sites—an arena he described as both vital and untapped. 'One of the best external investment opportunities in addition to the Development Road is joint investment in underground natural resource sites—excluding oil and gas—as they represent a vital and promising field for investors.'
Additionally, over the past year, Iraq's non-oil GDP has shown signs of recovery, growing by 4.3% in 2023, driven in part by higher consumer demand and modest public investment. The World Bank projects Iraq's overall GDP to expand by 5.2% in 2025, assuming a stable oil market and modest progress in structural reform.
Powerhouse in the Pause
Hussein Al-Saabri, Deputy Chairman of the Parliamentary Investment Committee, told our agency that the end of hostilities between Iran and Israel has contributed to a calmer regional atmosphere. 'The Iraqi government must use this environment to become a central link between all sides to support regional development,' he added.
Al-Saabri viewed the present as a strategic moment for Iraq to act as a diplomatic and economic bridge, facilitating broader developmental cooperation across the Middle East. He further stressed that the opportunity should not be squandered. 'This is a time for Iraq to take up its essential role in the region and capitalize on this golden opportunity.'
A similar view was expressed by economist Ahmed Eid, who framed the regional calm as a potential relief for Iraq's strained economy. 'The truce can lower insurance and transport costs, improve market sentiment, stabilize the dinar's exchange rate, reduce pressure on the federal budget, and temporarily boost investor confidence,' he remarked.
However, these are preliminary benefits that could quickly evaporate if the government fails to enact reforms. Eid emphasized that entrenched corruption across state institutions continues to sabotage investment prospects, stall critical projects, and paralyze the business environment.
'Translating this calm into real economic rewards requires meaningful internal reform. External stability is important, but it does not compensate for the entrenched corruption across Iraqi state institutions. Corruption consumes investment opportunities, paralyzes projects, and weakens the business environment,' he cautioned.
Further illustrating the depth of the challenge, Iraq consistently ranks among the most corrupt countries in Transparency International's Corruption Perceptions Index, placing 154 out of 180 countries in 2023. The country reportedly loses an estimated $10–15 billion annually to corruption-related leakages, according to government audits and parliamentary oversight reports.
These losses have not only undermined basic service delivery but also severely discouraged foreign direct investment, which remains one of the lowest in the region as a percentage of GDP.
Eid also warned that increased foreign investment and lower financial risk in Iraq will depend on two critical variables. First, the longevity and credibility of the regional calm whether investors believe it is more than a transient pause. Second, the Iraqi government's ability to introduce credible reforms that improve business conditions and reduce the interference of armed groups.
'Yes, to a certain extent—but two conditions must be met,' he explained. 'First, investors need to be convinced that this is not a temporary calm. Second, the government must follow through with domestic reforms to improve the business climate and curb interference by security forces and armed groups.'
If these conditions are met, Iraq could see improvements in its credit ratings and attract Gulf, Turkish, and Iranian capital previously deterred by instability.
Rethinking Security
Beyond the economic realm, the current lull presents an opening for Iraq to reimagine its national security framework. Military expert Alaa Al-Nashou, speaking to Shafaq News, emphasized the importance of responding to the shifting regional landscape with a comprehensive security doctrine. 'The region remains vulnerable to rapid developments amid regional and international polarization,' he said. 'Iraq must build a new national security vision.'
This includes enhancing intelligence capabilities, improving information security, and refining command and control systems. 'States rely on security capabilities such as intelligence, accurate data, leadership, cybersecurity, and the protection of infrastructure and personnel. All of these enhance national security,' he observed.
He further added that Iraq's security strategy should be rooted in balanced foreign relations, the rejection of external interference, and alignment with shared regional interests. 'Iraq needs a security vision tied to a balanced foreign policy based on shared interests, while rejecting interference or submission to any external power.'
Finally, Al-Nashou urged Iraq to strengthen cooperation with Arab, regional, and global partners as a safeguard against future instability. 'Iraq must chart a path forward based on genuine security principles that protect Iraqi society and deepen cooperation with Arab, regional, and international security frameworks.'