IRAQS TANGLED

FOREIGN INTERESTS
AND RELATIONS
Paul Salem
DECEMBER 2013

IRAQS TANGLED
FOREIGN INTERESTS
AND RELATIONS
Paul Salem

 2013 Carnegie Endowment for International Peace. All rights reserved.

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CMEC 41

Contents

About the Author

Summary 1
A Splintered Foreign Policy

A Pattern of Centrism?

Primary Foreign Policy Interests

Iraqs Bilateral Relations

15

Looking Ahead

29

Notes 33
Carnegie Middle East Center

36

About the Author

Paul Salem is currently the vice president for policy and research at the
Middle East Institute in Washington, DC. Previously, between 2006
and September 2013, he was director of the Carnegie Middle East Center
in Beirut, Lebanon. He publishes on the regional and international
relations of the Middle East as well as issues of political development
and democratization in the Arab world. This paper was written while he
was at Carnegie.
Salem is the author of a number of books and articles on the Middle
East, including Broken Orders: The Causes and Consequences of the Arab
Uprisings (Beirut: Dar An-Nahar, in Arabic, 2013), Libyas Troubled
Transition (Carnegie, 2012), and Can Lebanon Survive the Syrian
Crisis? (2012). He writes regularly in the Arab press and has been
published in numerous journals, magazines, and newspapers, including
Foreign Affairs, the National Interest, the New York Times, the Financial
Times, the Los Angeles Times, and Politico.
***
The author would like to thank Maria Fantappie, a former visiting scholar at
the Carnegie Middle East Center and currently with the International Crisis
Group, for help in conceiving and planning this research paper. The author
would also like to thank Hicham Chbeir, Marie-Therese Corbani, Ahmad
Farhat, and Marc Sabbaghresearch interns at the Carnegie Middle East
Centerfor their help in the research that helped inform this paper.

Summary
A decade after Saddam Husseins fall, Iraq still lacks a centralized foreign
policy that advances its national interests. Internal divisions, such as those
between the Shia-dominated regime in Baghdad and the Kurdistan Regional
Government in Erbil, have given rise to alternative power centers with their
own policy priorities. Iraqi foreign policy will remain disjointed and incoherent until Baghdad resolves the issues polarizing the country.
Key Themes
Iraqs national interestsin building military capacity, reviving the energy
sector, meeting domestic water and energy demand, and increasing trade
and investment have prompted Baghdad to rebuild relations with regional
and global partners.
Iraqs rapidly growing economy is emerging as an engine of growth in the
Middle East and a key player in international energy markets.
Counterterrorism cooperation with Washington and multibillion-dollar
arms deals with Russia and the United States have become cornerstones of
Iraqs international security posture.
Contracts with Western, Chinese, and Russian energy companies have
revitalized its oil sector, and Baghdad has built relations with Iran, Turkey,
several Gulf countries, Jordan, and Syria to help meet its energy-transport,
water, and electricity needs.
Erbil and many Sunni Arab opposition leaders have pursued their own
foreign relations and international priorities that often conflict with
Baghdads official foreign policies.
Baghdad has moderately supported the Syrian regime while Erbil and Iraqi
Sunnis have sided with the rebels in the ongoing civil war. This has exacerbated Iraqs fragmentation by pushing Baghdad closer to Iran, another
Damascus supporter, while driving Iraqi Kurds and Sunnis closer to
Turkey and the Gulf countries backing the Syrian opposition.

2|Iraqs Tangled Foreign Interests and Relations

Implications for Iraqs Future

Despite its significant economic growth, Iraq will not regain significant
political or strategic influence in the Middle East for some time.
Until Iraq resolves domestic disagreements over energy, internal borders,
and power sharing, Erbil and the Sunnis will continue advancing their
own international agendas and Iraq will lack a coherent foreign policy.
Developments in Damascus will affect Iraqs foreign relations. A resurgent
Syrian regime will strengthen Baghdad and its ties to Iran, while opposition victories will empower Iraqs alternative power centers and force
Baghdad to reconsider its regional alignments.
Any thaw in Irans relations with the Westlike the recent nuclear deal
between Tehran and several world powerswill reduce the tensions in
Iraqs foreign policy.
Iraqs interests are best served by a centrist foreign policy, not a narrow
regional alliance with Iran. Baghdad should continue pursuing strategic and
economic relations with various Middle Eastern and international powers.

A Splintered Foreign Policy

Iraq lies along many key fault linesKurdish-Arab, Sunni-Shia, ArabPersianand it also holds one of the worlds largest oil reserves. As a central
country in the resource-rich and volatile heart of the Middle East, Iraq has the
potential to be either a force for regional accommodation and stability and an
engine for economic growth or a crucible for ethnic and sectarian conflict. As
a result, its foreign policy matters for Iraqis, for countries of the region, and
for the world. However, Iraq will not have a coherent foreign policy until it
resolves deep and lingering internal differences over matters such as power
sharing, territory, and energy.
Iraq has a complex set of foreign interests that relate to building military
capacity; encouraging investment and economic growth, especially in the
energy sector; and securing access to water and electricity. The incoherence in
the countrys current foreign policy stems from the fractured, polarized nature
of its domestic politics and the lingering influences of competing outside powers in both Iraq and its volatile regional neighborhoodespecially with the
war next door in Syria. Iraqs national interests would best
be served by pursuing a centrist foreign policy and building good relations with a wide array of regional and inter- Iraqs national interests would best be served
national partners, and there are some forces in the country
by pursuing a centrist foreign policy and
that appear to be pursuing just such a policy.
building good relations with a wide array
So far, these attempts have been unsuccessful. Iraqi
foreign policy has been neither effectively centralized nor of regional and international partners.
institutionalized. The central government in Baghdad,
currently under Prime Minister Nouri al-Maliki, holds the
lions share of power. It receives large oil revenues, controls the budget, commands the national army, and enjoys the constitutional authority of setting
foreign policy. Within the Baghdad government, the foreign ministry has been
led by the Kurdish politician Hoshyar Zebari, but all important government
foreign policy decisions have been effectively made by the prime ministers
office. This arrangement reflects Malikis efforts to concentrate power in his
hands, a goal he has been pursuing since he first took office in 2006.1
But Baghdads power has been challenged by the Kurdistan Regional
Government (KRG) based in Erbil, currently under President Massoud
Barzani, which has enjoyed a high degree of autonomy since Saddams fall.
It has effectively forged its own external relationships with international oil
companies and regional powers such as Turkey and is pursuing its own policies
3

4|Iraqs Tangled Foreign Interests and Relations

with regard to the civil war in Syria. These policies are separate from and often
in conflict with those pursued by Baghdad.
And the Kurds are not the only domestic players contesting Baghdads foreign policy authority. Various factions and leaders within the Shia and Sunni
political spectrumsuch as Muqtada al-Sadr, leader of the opposition Shia
Sadrist Trend political party; Ahmed Chalabi, a prominent Shia politician;
Ayad Allawi, leader of the opposition Iraqiyya bloc; and former vice president
Tariq al-Hashimi, who was forced out of power by Maliki in late 2011effectively have their own foreign relations, either with Iran or with Saudi Arabia,
Qatar, or Turkey. As a result, the foreign policy pursued by
the Maliki government in Baghdad often does not reflect
The foreign policy pursued by the Maliki a national consensus nor does it always preempt Erbil or
government in Baghdad often does not other politicians pursuing their own foreign relations.
The internal struggle for political advantage among
reflect a national consensus nor does it Iraqs many competing factions also influences the counalways preempt Erbil or other politicians trys foreign relations. In theory, at least, foreign policy
pursuing their own foreign relations. should advance national interests; however, in deeply
divided societies like todays Iraqor indeed todays
Lebanon, Syria, Bahrain, Yemen, and presecession
Sudanforeign relations and foreign policy are often pursued by state or nonstate actors to strengthen their political positions in domestic politics.2 Thus
Maliki has moved closer to the government in Iran as the challenge from the
KRG and other Iraqi Sunni groups has grown; the KRG has moved closer to
Turkey as its differences with Baghdad have increased; and Sunni leaders have
reached out to Turkey, Qatar, and Saudi Arabia in their competition with the
Shia-dominated central Iraqi government.
The influence of external forces in Iraq has further hindered Baghdads
attempts to create a coherent foreign policy. Until its troops left in late 2011,
the United States had considerable influence over both domestic and foreign
policy in Iraq, although this influence has dramatically declined since the
withdrawal. Iran, through extensive political, religious, and security networks,
continues to have a major impact. Saudi Arabia, Qatar, Turkey, and previously
Syria, also have (or in the case of Syria, had) influence with one faction or
another within the country. And each of these external actors has unique
and often contradictoryinterests it would like to see reflected in Iraqs foreign policy.

A Pattern of Centrism?
Despite these challenges, there is a generalone might even say positive
pattern to Iraqs complex and often contradictory emerging foreign policy,
especially when compared to that of the Saddam era. Successive governments
in post-Saddam Baghdad have been trying to effect a transition from the

Paul Salem|5

isolationism that marked Iraqi foreign policy during the last years of Saddams
rule to an openness to regional and international relations and partnerships.
They have also attempted to move from a foreign policy based on military
might, which led to the initiation of multiple wars, to one favoring economic
development and the avoidance of major military conflict. Baghdad has shifted
away from the heavily ideological Arab nationalist foreign policy that put Iraq
in permanent tension with Kurdish, Turkish, and Iranian identitiesand also
justified Iraqi power grabs over Arab states such as Kuwaitand toward a
less ideological, more pragmatic foreign policy based on more mundane and
varied political and economic interests.
Foreign Minister Zebari, in office for the full decade since Saddams ouster,
has been the most consistent voice in expressing the national thread of Iraqs
post-Saddam foreign policy. He has emphasized the need to rebuild Iraqs relations with the regional and international communities as well as the need to
direct Iraqs foreign policy to promote the countrys unity and stability and to
fuel its reconstruction and economic growth. Until his stroke and incapacitation in December 2012, Kurdish leader Jalal TalabaniIraqs president since
2005was also a prominent voice emphasizing this common, positive, and
national thread of Iraqs foreign policy.
In its official statements, Malikis ruling Dawa Party has echoed these goals
of pursuing a foreign policy built on peaceful, cooperative relations with neighbors and the international community and on the prioritization of socioeconomic development over military or geopolitical goals. For the first few years
of his rule, Maliki maintained this line in most of his official positions and in
his schedule of visits, which balanced out trips to Tehran or Moscow with visits
to Turkey, the United Arab Emirates (UAE), Europe, and the United States
(although he has never been received in Saudi Arabia or Qatar). Indeed, this
middle-of-the-road and economically driven foreign policy loosely describes
much of Iraqs complex foreign relations for years after the fall of Saddam.
During this time, Iraq had good relations and growing economic ties with
most of its neighbors, including Iran, Turkey, Syria, Lebanon, Jordan, Kuwait,
and the UAE, as well as with global powers such as the United States, the
European Union (EU), Russia, and China.
But this centrist policy faced a major crisis with the uprising against the
regime of Syrian President Bashar al-Assad. Although Maliki initially tried to
maintain a neutral position in the conflict, this policy came under intense external and internal strain. Externally, Iran and Russia lined up solidly behind the
Assad regime, while Turkey, the Gulf Cooperation Council (GCC), Europe,
and the United States lined up behind the opposition, leaving no foreign policy
middle ground to tread. Internally, KRG President Barzani backed the Syrian
Kurdish rebellion against the Assad regime, and many of Iraqs Sunnis sympathized with the Syrian rebels. They hoped that a Sunni-led toppling of the

6|Iraqs Tangled Foreign Interests and Relations

Alawi-dominated regime in Syria would strengthen their hand in weakening

Malikis monopoly on power in Baghdad. These pressures pushed Malikis
government to offer more support for the Assad regime, as Maliki feared that
Assads fall would spell real trouble for his own rule.
Indeed, the Syrian conflict has ruined Iraqs attempts at maintaining a
good friends with everyone policy. Whether it will force Iraq deeper and
more permanently into closer alignment with the other supporters of Assad
such as Iran, Lebanons Hezbollah, and Russiaor whether the crisis will pass
and Baghdad can resume its preference for the middle remains to be seen.

Primary Foreign Policy Interests

The outlines of Iraqs foreign policy are dictated in large part by its various
interests. These include shifting from a Saddam-era policy of isolation and
engagement in costly wars to one marked by cooperation with foreign powers;
increasing military capacity; encouraging growth in the energy sector; ensuring the countrys resource needs; and boosting trade and foreign investment.
Undoing the Legacy of Isolation
Near-total trade and financial sanctions were imposed on Iraq by the United
Nations (UN) Security Council in August 1990 after Iraqs invasion of Kuwait,
and they devastated the Iraqi economy and society. The majority of these sanctions were removed after the fall of the Saddam regime in 2003, and a main
objective of Iraqs leaders since that time has been simply to regain international
legitimacy and rebuild normal relations with the states of the region and the
world. With a recent memory of the devastating costs and consequences of military adventures (against Iran and Kuwait) and confrontations (with the U.S.-led
coalition), the post-Saddam consensus has been to avoid external military confrontation and the extreme external alignments that might bring them about.
Since Saddams fall, Iraq has also been working to regain internal political sovereignty. The first formal step was handing authority over from the
Coalition Provisional Authority set up by the occupying powers in 2003 to
the interim Iraqi government in June 2004. This was followed by the drafting
of a new constitution, the holding of parliamentary elections in 2005, and the
setting up of the first duly constituted government in May 2006. But foreign
troops remained until the last U.S. units left in December 2011. In June 2013,
the UN Security Council moved Iraq largely out of Chapter VII, which allows
UN-mandated external action, to Chapter VI, which requires cooperation
between states. This move gave Iraq another element of its national sovereignty,
although that sovereignty is still compromised by strong internal divisions, the
states incomplete control of its borders and airspace, and the presence of external intelligence networks and externally backed militias.

Paul Salem|7

Building Military Capacity

Part of Baghdads foreign policy has been driven by its need to purchase arms
and training for the national army. The Maliki-dominated central government has been trying to regain control over borders, territory, and airspace
through further empowering the national army. Over the last year, it has also
been scrambling to face down the challenges of a resurgent al-Qaeda. The
Iraqi army, currently more than 350,000 strong, was built and trained under
U.S. auspices, but it still does not have significant airpower or mechanized
armor capacity and cannot defend against incursions (for example, Turkish or
Iranian) if and when they occur. Its counterterrorism capacities are also low.
In addition, the national army sits uneasily alongside the Kurdish peshmerga
armed forcescurrently over 300,000 strong and lightly armedthat protect
and patrol the KRG. There are also three Kurdish brigades in the national
armytotaling about 24,000 soldiersthat are deployed mainly in disputed
territories in Saladin Province (specifically in the town of Tuz Khormato) and
Diyala Province.
In foreign policy terms, strengthening the national army has meant building and maintaining relations with countries that can provide advanced and
effective weaponry. The United States is, and will probably remain for the foreseeable future, Iraqs main military supply partner. Washington and Baghdad
have a set of active and proposed arms deals worth $18 billion. These include
deals for 36 Lockheed Martin F-16 fighter jets, 25 Bell attack helicopters armed
with Lockheed Martin laser-guided AGM-114 Hellfire missiles, six C-130
Hercules Transports, 140 upgraded Abrams main battle tanks built by General
Dynamics Land Systems, and 160 Guardian armored security vehicles. Three
of the six C-130s have been delivered, and delivery of the first F-16s is expected
to occur later in 2013Iraqi pilots are already training in the United States to
fly these aircraft. The main deal was signed in 2008, but delivery of fighter jets
and battle tanks continues to be delayed.3
In addition, Iraq and the United States have been building cooperation on
counterterrorism. In talks in Washington in August 2013, Foreign Minister
Zebari asked for counterterrorism support that might include the deployment
of U.S. drones to combat al-Qaeda. In an October 2013 visit to Washington,
Maliki emphasized that Iraq and the United States must remain partners in
fighting terrorism.
Baghdad has recently sought to diversify its arms supplies. Malikis government announced in late 2012 a $4.2 billion arms deal with Russia and a
$1 billion arms deal with the Czech Republic. The Russian deal involves deliveries of 30 Mi-28 attack helicopters and 42 Pantsir Zenit missile-launch systems
to Iraq. The deal was frozen for several months but was renewed in April 2013,
and Iraq began receiving the first deliveries in October 2013. Russian media
also reports that Iraq is exploring the purchase of Mikoyan Mig-29 fighter jets.4
The Czech deal involves trainer/light attack aircraft.5 It was also initially put

8|Iraqs Tangled Foreign Interests and Relations

on holdperhaps as a result of pressure from Washingtonbut Baghdad now

says it is again on track and shipments will be received before the end of 2014.
In December 2013, Iraq also announced a $1.1 billion deal with South Korea
to purchase 24 light multipurpose fighters.6 It is clear that
Malikis government is interested in using its oil wealth to
diversify its arms partners while strengthening its military
Iraqs oil revenues render it an increasingly
capacities, and Iraqs oil revenues render it an increasingly
lucrative market for international arms sales. lucrative market for international arms sales.
The arms of the Kurdish peshmerga consist of Sovietera light and heavy machine guns as well as around 2,000
armored vehicles and a small number of helicopters captured from the Iraqi army
during the U.S.-led 2003 invasion. Erbil continues to jealously guard the autonomy of its armed forces, but while it has pursued independent deals with foreign
countries in other areas, such as in the oil sector, it has accepted that arms deals
will have to go through Baghdad.7
While Baghdad and Tehran have close relations and cooperate on security
issuesindeed, they recently announced their intention to sign an agreement
to deal with borders, smuggling, trade, and pilgrimage securityIraq does not
look to Iran in any major way for help in building its military capacity. Tehran
does not have an arms industry that meets Baghdads needs, so Maliki will
continue to depend on other international capitals for arms deals.
The Foreign Policy Imperatives of Oil and Gas
Iraqs rapid economic growth depends largely on reviving its rich energy sector, which suffered during the years of Iraqs isolation and during the U.S.
invasion. Post-Saddam governments have focused on bringing national and
international investment back into this sector and pursing foreign policies that
provide external markets and exit routes for this energy. This has driven Iraqi
foreign policy to seek good relations with all of its neighbors, whom it needs
for energy export routes, and to maintain solid ties to both the United States
and Asian giants like China and India, which are Iraqs main energy clients.
With 143 billion barrels, Iraq has the fifth-largest proven oil reserves in the
world,8 and further exploration could make it an even larger reserve holder. Oil
production had declined during the years of Iraqs isolation, and it collapsed during the U.S. invasion. But it has climbed back to around 3.5 million barrels per
day (mbpd), which was the peak it had reached around 1980. Iraq has already
surpassed Iran as an oil exporter and hopes to reach export levels of around 9
mbpd by 2020.9 The revival of the oil sector has been slow because of a dramatic
brain drain during the post-2003 period and damage to infrastructure.
Baghdad also has challenges getting its oil to market. The two major oil
fields are in Kirkuk in the north and Rumaila in the south. Currently, most
exports go south through the port of Basra to the Persian Gulf and out through
the Straits of Hormuz. But Baghdad has a strategic interest in expanding and

Paul Salem|9

diversifying its oil export routes. It has plans to expand the Basra port to handle more output. This has brought some tension with Kuwait, which also has
plans to expand its own nearby port. Additionally, Iraq would be the main
loser from any closure of the Straits of Hormuz.
Many of Iraqs historical export routes have been shut down or badly damaged. Iraq had a pipeline that ran west to the ports of Banias in Syria and
Tripoli in Lebanon, but that has been closed since the U.S. invasion. There
were attempts to restart pumping during the previous decade, but any plan to
pump oil west must now await the outcome of the war in Syria. Indeed, before
the uprising, Assads Syria had been trying to position itself as an energy hub
in the region, and part of the war for Syria by regional and international powers
is a struggle for a strategic position on the energy map.
A pipeline that ran southeast to Saudi Arabia could have taken up to 1.5
mbpd of Iraqi oil to the Saudi Red Sea port of Yanbu, but it has been closed
since the Iraqi invasion of Kuwait in 1990. Relations between Riyadh and the
Shia-led Baghdad government are poor, and there is little hope for that outlet
being reopened unless they improve.
The KirkukCeyhan pipeline, which carries Iraqi oil north through Turkey
to the Mediterranean, was delivering around 900,000 bpd in 2001, but sabotage
and bombings, either in southeastern Turkey by militants from the separatist
Turkish Kurdistan Workers Party (PKK) or in northern Iraq by various Iraqi
insurgent groups, have repeatedly interrupted that flow.10 A March 2013 deal
between the government of Turkish Prime Minister Recep Tayyip Erdoan
and PKK leader Abdullah calan promises a resumption of higher flows. This
development would be especially welcomed by the Erbil government, which
could then send most of its output north through Turkey by pipeline rather
than transporting it by truck, a much more labor-intensive process it has used
in previous years.11
In April 2013, Iraq and Jordan announced an $18 billion deal to establish
a double pipeline running southwest to the Jordanian Red Sea port of Aqaba.
This pipeline would transport both oil and natural gas, pumping 1 mbpd of oil
and 258 million cubic feet of gas per day.12
In addition to diversifying its export routes, Baghdad has sought to revitalize its energy sector by improving relations with major oil importers and
corporations. One of the outcomes of the U.S. toppling of the Saddam regime
was to open up the massive Iraqi oil market to private international (including
American) oil companies for the first time since the nationalization of the Iraqi
energy sector decades before. Oil giants, such as ExxonMobil, Chevron, and
ConocoPhilips, and energy service companies, including Halliburton, ended
up with large contracts in post-Saddam Iraq.
But the returns have not been as rewarding as these companies expected.
The United States failed to get the Iraqi parliament to pass an energy law that
it favored, and the contract conditions that have been offered by the Baghdad

10|Iraqs Tangled Foreign Interests and Relations

governmentbased not on profit sharing but on remuneration-per-barrel

feeshave dampened enthusiasm. Many American and Western companies
that had concluded large contracts with Baghdad found that the low payout
being offered by the central governmentof around $2 per barreldid not
justify the large investment and risk involved.
Erbil also disagreed with Baghdads post-Saddam management of the oil
sector, and it has not abided by Baghdads decision that all oil contracts must
be approved by the central government. As a result, the KRG has concluded
dozens of contracts with international energy companies on its own.13 Many of
these are the same companies disillusioned by Baghdads oil policies, including
ExxonMobil, Total, and Statoil. They have sold or abandoned contracts with
the central government and signed contracts under more lucrative terms with
the KRG in the north. This strained Baghdad-Erbil relations over energy, but
there appear to be signs of improvement. In December 2013, Iraqi Oil Minister
Abdul Kareem al-Luaibi announced that the KRG had agreed to let the central
government inBaghdadcontrol the amount and quality of crude that Erbil
exports through the Turkish pipeline and manage revenue from its sale.14
While major American and Western oil companies rushed into post-Saddam Iraq hoping to reap massive oil benefits, it is the Chinese who have ended
up holding the lions share of plots and contracts. Chinese companies operate
at much lower costs than their Western counterparts, and their entrance into
Iraqi oil production is not so much driven by profit margins as by the necessity
of securing Chinas long-term energy needs. About 30 percent of Iraqs production now comes from fields owned or operated by Chinese companies, and half
of all exports go to Asia.15 Asian demand will only grow in the years ahead.
In addition to oil, Iraq also has large natural gas reserves of around 6 trillion cubic meters, distributed fairly equally between the KRG and the rest of
Iraq.16 This sector remains vastly underexploited. Iraq produces around 1,000
million cubic meters per day, but about 60 percent of gas from fields in the
south is being burned off by flaring, while the KRG has a no-flaring policy.
Furthermore, there are no pipelines or liquefied natural gas (LNG) facilities to
undertake major exports. Some of this gas is currently being used to meet a
portion of the countrys electricity-generation needs.
The main gas pipeline project is a planned one between Iran, Iraq, and
Syria.17 This would enable Iraq to export gas west through Syria and would also
bring online Irans rich South Pars gas field and open up access to European
markets. The IraqSyria section of the project is on hold until the Syrian conflict comes to an end; Iran and Iraq have explored with Jordan the possibility
of routing their section of this gas pipeline through Aqaba.
The IranIraqSyria pipeline, in the long run, could also enable Iraq to
pump gas east and hook up with proposed Iranian pipelines that would go
from Iran to Pakistan and then to the vast markets of China and India directly.
While the idea of a gas pipeline through Turkey has been broached, no concrete

Paul Salem|11

steps have been taken in that direction. The government in Baghdad has also
commissioned feasibility studies for an LNG facility off its narrow southern
shore for future consideration.
Iraqs present and future dependence on energy exports and its need for
large and diversified export avenues, coupled with its largely landlocked geography, mean that a successful Iraqi foreign policy must seek diversified and
good relations with multiple neighbors and international clients.
The Geopolitics of Water
Iraqs acute water needs also factor into its foreign policy. All of the countrys
overland water flows into Iraq from its neighbors. Its main sources of water
are the Tigris and Euphrates Rivers, both of which originate in Turkey. The
Euphrates flows through Syria before reaching Iraq, and some tributaries of
the Tigris and other smaller rivers that irrigate parts of eastern Iraq originate
in Iran. Unless Iraq maintains good relations with these
neighbors, its already-low water levels could even go lower.
Iraq has 1.9 million hectares of arable land. The birthUnless Iraq maintains good relations
place of agriculture and once the breadbasket of the Middle
East, the country is suffering from severely declining river with its neighbors, its already-low
inflows as well as several years of below-average rainfall. water levels could even go lower.
The declining river flows have several impacts: they dramatically reduce irrigation, increase the salinity of soil, and
reduce hydropower input. Iraqi officials report that less than half of arable Iraqi
land is under productiondown from 100 percent in previous decadesand
the land being used is producing inferior yields.18 Several towns in the south
have been abandoned because water salinity has killed agriculture as well as
farm animals.
In the aftermath of the 2003 U.S. invasion, agricultural productivity
decreased by 90 percent. Several factorsthe workforce shifting toward state
employment, a lack of government subsidization, and the lingering effects of
long years of severe droughttook their toll on agriculture. From 2004 to
2010, Iraq witnessed its driest winters on record.19
Growing aridity and retreating plant cover have dramatically increased the
frequency and intensity of sandstorms. The decline in agriculture has pushed
hundreds of thousands of peasants, already ravaged by war and instability, into
poverty or into the city slums, looking for work. The water decline has hit the
southern marshlands particularly hard, drying them up and sending up to
300,000 marshland residents on the move to look for work or sustenance.20
Thus, as in other parts of the arid Middle East, tensions over scarce water
resources remain one of Iraqs main foreign policy concerns and flashpoints.
The Maliki government has failed to effectively address Iraqs multiple waterrelated challenges through its foreign policy.

12|Iraqs Tangled Foreign Interests and Relations

Early efforts to negotiate with Turkey and Syria have fallen victim to crisis and
worsening relations, and tensions between Baghdad and Erbil make cooperation
over water even harder. Tensions between Turkey and Iraq over water are longstanding, particularly as Turkey has pursued dam construction and irrigation
projects in its eastern provinces. An agreement between the two countries signed
in 1984 committed Turkey to allowing a minimum of 500 cubic meters per
second of water to flow into Iraq, but officials in Iraq insist that levels have fallen
below that and might drop further.21 As the Euphrates has become narrow and
drab,22 rice and wheat output has plummeted. Iraq has turned to Iran for major
food imports, and many farmers have resorted to digging expensive wells, which
in turn negatively impact water tables and soil salinity.
Tensions with Syria over water have been high in the past, as Syria pursued
dam and irrigation projects on the Euphrates. Iraq and Syria almost went to
war over water in 1975. In 2008, Iraq, Turkey, and Syria announced an agreement to establish a common water institution to manage the shared resource,
but with the war in Syria this project is currently on hold.23
In addition, there have been water tensions with Iran. In 2012, Iraqi farmers
blocked a number of border crossings between Iraq and Iran in an area east of
Baghdad to protest Irans diversion of the al-Wind River, which irrigates one of
Iraqs largest agricultural areas.
Water tensions are also a source of conflict between the Kurdish and Arab
regions of Iraq. The Kurdish authorities in the north are proceeding with the
construction of eleven dams, mainly along the Tigris, that will further restrict
flows to the south and increase regional and ethnic tensions. The northern
provinces are the driest in Iraq, and these KRG dam projects aim to boost
agricultural potential and electricity generation.
Meeting Electricity Demand
Ten years after the fall of the Saddam regime, Iraq is still unable to meet its
domestic electricity consumption needs. Until 1990, Iraqs electricity system
was one of the best in the region, with generation capacity exceeding demand;
today it meets only 50 percent of demand. This deficit is a massive drag on
all sectors of the economy. Current domestic production stands around 5,500
megawatts (MW), while demand is around 12,000 MW. There are 28 power
plants operating in the country, and another 41 are under construction or contract. If these projects are completed by 2015, 12,000 MW will be added to
Iraqs supply. By that time, it is estimated that demand will have increased to
20,00021,000 MW.24
Baghdad has tried to narrow the deficit by importing electricity from its
neighbors, and it will probably have to lean on electricity imports for several
years to come. Iran is the main exporter of electricity to Iraq, conveying about
1,000 MW a day from Iranian power plants across the border; Baghdad already
owes Iran about $500 million for this energy. Iran is also constructing, at its

Paul Salem|13

own expense, a 525 MW power plant in the holy Iraqi city of Najaf. Notably,
Iran has great ambitions as an electricity exporter and already provides electricity to other neighbors, such as Turkey, Armenia, Afghanistan, and Pakistan.25
Turkey currently provides 275 MW of electricity to Iraq and plans to boost
that export to 1,200 MW. Turkish companies have also been awarded contracts worth more than $1 billion to construct power plants with a combined
capacity of 2,500 MW in the provinces of Baghdad, Karbala, and Nineveh.
In a $7 billion deal with the United Arab Emirates, Iraq receives 250 MW
from UAE power-generating ships moored outside the port of Basra.26 And
until the conflict in Syria erupted, Iraq was getting around 450 MW from the
Eight Country Interconnection Project, which provided power from Egypt
via a marine cable across the Gulf of Aqaba and linked Egypt, Jordan, Saudi
Arabia, Syria, the Palestinian Territories, Lebanon, Iraq, and Turkey.27
Erbil has done much better than Baghdad in meeting electricity demand.
The Kurdish north produces around 1,950 MW and meets 85 percent of its
regions demand. The KRG is even beginning to sell electricity to several neighboring Iraqi provinces. From the beginning, Erbil accepted the principle of
privatization in this sector and has given successful contracts for power generation to major international companies.28
The Baghdad government tried to stay with the centrally owned and managed power system that had been successful in Baathist days, but corruption
and mismanagement under post-Saddam governments have resulted in little
progress in comparison with the massive amounts spent. Only in 2010 did the
central government open the door for serious outside help and begin awarding
major contracts to foreign companies.
With its massive oil and gas resources, Iraq has more than enough fossil fuel
resources to generate the electricity needed to meet its domestic demand and
to eventually become an electricity exporter. Until then, and if the domestic
energy production sector remains as dysfunctional as it has been, Baghdad will
continue to be dependent on electricity imports from Iran, Turkey, and other
neighbors, and its foreign policy will have to reflect those imperatives.
Building Trade and Investment Relations
Baghdads new elites recognize the need for high levels of international trade
and investment to create high levels of economic growth. Many of them are
themselvesor are closely linked tonew business elites who benefit from these
economic opportunities. A pattern of crony capitalism has emerged in which
politicians and businessmen come together in mutually beneficial alliances.29
The U.S.-led occupying powers pushed economic changes that transformed this
formerly semi-socialist and centrally planned, state-dominated economy into an
open market economy. The new elites have embraced this change.
Attracting a wide array of regional and international trading partners and
investors has been a main trend in Baghdads post-Saddam foreign policy.

14|Iraqs Tangled Foreign Interests and Relations

Despite the instability and insecurity of the past decade, the Iraqi economy is
one of the fastest growing in the region and has provided tremendous opportunities for trade and investment. From a gross domestic product (GDP) level of
around $20 billion on the eve of the 2003 U.S. invasion, the GDP has grown
575 percent to around $115 billion, with almost 70 percent accounted for by
the energy sector. The growth rate for 2013 is estimated at a robust 9 percent.30
Iraqs largest trading partner is the United States, with bilateral trade reaching around $14 billion annually (2011 figures), followed by India, the EU,
China, South Korea, and Turkey. This trade is still dominated by energy
exports. India is Iraqs largest energy-export market, followed by the United
States, the EU, China, South Korea, Japan, and Canada. In terms of imports,
Turkey dominates, followed by Iran, Syria (before the conflict there), the EU,
China, the United States, South Korea, and Jordan. In the Kurdish north,
Turkey dominates the economy55 percent of companies in the KRG are
Turkish, and 80 percent of imports come from Turkey.31
The Baathist economy was completely dominated by the public sector, but
post-Saddam governments in Baghdad as well as in Erbil have opened up
the economy to private investment. As a sanctions- and war-ravaged country, Iraq has massive reconstruction, infrastructure, and development needs.
Furthermore, there are avenues for a rich array of regional and international
investors and companies to participate in Iraqs development.
Since 2007, when a measure of limited stability began to return to Iraq following the surge in U.S. troops, foreign investment has gone from a few hundred million dollars to over $100 billion, and the number of foreign companies
operating inside Iraq has climbed into the thousands. China has the largest
number of firms, followed by Turkey, but the list also includes firms from the
United States, Europe, Russia, India, Iran, Egypt, the UAE, Qatar, and many
others. The largest sector of foreign investment and operation remains that of
oil and gas. But other major sectors include construction and real estate, electricity, defense, transportation, telecommunications, agriculture, education,
and healthcare.
To attract foreign investment into Iraq, the central government has offered
various incentives: ten years exemption from taxes; the ability to repatriate
investments and profits from investments; the right to employ foreign workers
when needed; the ability to obtain three years exemption from import fees for
required equipment; and the guarantee that the government will not nationalize or confiscate investments.32
Baghdad has also signed various forms of investor protection agreements
or memorandums of understanding with 32 bilateral partners and nine multilateral groupings, including the Arab League, Afghanistan, Bangladesh,
Germany, India, Iran, Japan, Jordan, Kuwait, South Korea, Sri Lanka, Syria,
Tunisia, Turkey, and the United Kingdom (UK). Iraq and the United States
signed a Trade and Investment Framework Agreement in 2005, which the Iraqi

Paul Salem|15

parliament finally ratified and brought into force in 2013. Baghdad and the
EU signed a Partnership and Cooperation Agreement in 2012, and Iraq is in
ongoing negotiations to join the World Trade Organization.
The explosive growth in foreign investment and contracting has occurred
despite a very low level of governance, particularly at the central government
level. The Baghdad government ranks 165 out of 185 countries in the 2013
Ease of Doing Business index, which measures whether a countrys regulatory
environment is conducive to starting and operating a local firm. And with high
costs and the longest time required to export and import, Iraq ranked 179 out
of 185 countries in the Trading Across Borders subcategory.33
Iraq also ranked 169 out of 176 countries and territories in Transparency
Internationals Corruption Perceptions Index. Politics is deeply mixed with
business, and this has taken the form of what one journalist called the direct
looting of national wealth by a new oligarchy composed of conflicting political groups and their economic and bureaucratic clients.34 It is a measure of the
perceived economic opportunities in Iraq, both today and in the future, that
despite these dismal governance realities and despite continued security worries, so much investment and so many international firms have streamed into
the country.35
With over $100 billion annually in oil revenues, Baghdad plans to spend
tens of billions of dollars in the coming years on development and infrastructure projects. The ruling elites in both Baghdad and Erbil are closely integrated
withor in many cases part ofthe emerging Iraqi private sector and hence
have a great interest in maintaining and increasing these international economic ties and potentially doubling or tripling the size of the Iraqi economy.
A coherent Iraqi foreign policy will be increasingly intertwined with the countrys rich and complex economic, investment, and trade relations with regional
and international partners.

Iraqs Bilateral Relations

The drivers and interests that influence Iraqs foreign relations play out in the
bilateral relations between the country and the large number of regional and
international players with which post-Saddam Iraq has engaged. There are
common interests and threads that run through these bilateral relationships,
but each relationship also has its own political and economic contexts. In many
instances, the relations pursued by Baghdad differ from those pursued by Erbil.
Iraq and Iran: Friends Bordering on Allies
After the U.S. withdrawal from Iraq in 2011, there is little doubt that Iran is
the greatest geostrategic winner in Iraq and has the largest amount of political
influence there.36 Iraq washistorically and until 2003Irans main strategic

16|Iraqs Tangled Foreign Interests and Relations

threat, but it has gone from enemy to partner. Many of the current leaders in
both Baghdad and Erbil have a history of good relations with Tehran, and the
Shia-led government in Baghdad sees Iran as a long-term strategic friend in a
potentially hostile Sunni-dominated rest of the region. But as Iraqs strategic
interests also require the maintenance of good ties with Washington, Baghdad
has been squeezed by the contradictory pulls of its relations with Iran and the
United States. As a result, it welcomed the recent interim deal on Irans nuclear
program between Tehran and the five permanent members of the UN Security
Council plus Germany (P5+1). Any reduction in the tensions between Iran and
other regional and international players would alleviate the competing pressures in Baghdads foreign policy.
Iran pursued an ambiguous policy toward the U.S.-led invasion and occupation of Iraq. It did not actively oppose the invasion that toppled the enemy
regime of Saddam Hussein nor did it oppose American spending and training
to equip Baghdads new army. But later Iran used its political and intelligence
influence to undermine the prospect of a long-term U.S. military presence
and to consolidate clout among the new political elite in Baghdad. Many of
the leaders of the Shia post-Saddam government spent years of exile in Iran,
including Nouri al-Maliki and Muqtada al-Sadr, and Iraqi Grand Ayatollah
Ali Sistani is an Iranian native. Iran had also sheltered and supported numerous Iraqi Shia groups, such as the Islamic Supreme Council of Iraq, the Dawa
Party, and the Sadrist Trend. During the U.S. occupation, it supported these
allies politically and provided arms to those organizations that opposed and
fought the American presence.
Tehran also has good relations with the main parties of Iraqs Kurds. Erbil
and Tehran shared a common enemy in Saddam Hussein and developed strong
economic relations after 2003.
As the date of the U.S. withdrawal approached, Iran used its influence in
Baghdad to oppose judicial immunity for U.S. or Western troops in Iraq and
hence to scuttle the possibility of any long-term American military presence
in the country; this was a principal strategic victory for Iran. The Maliki government nevertheless went ahead with a strategic agreement with the United
States despite Iranian objections. But even Baghdads major weapons deals
with Washington are not altogether bad for Iran. The deals will bring fairly
advanced U.S. equipment to Iraq, which will allow Iranian military engineers
access to American military technology. This is important for maintaining and
upgrading Irans own equipment, much of which is American, and for countering potential military threats from the United States and Israel.
Maliki was not Irans favorite Shia politician, nor was the Iranian regime
enthusiastic about the State of Law coalition he formed prior to the 2009 Iraqi
governorate elections. But Tehran gained considerable influence over Maliki
by leaning on its Sadrist allies to enable him to form a government after the
2010 parliamentary elections. Malikis list came in second to the Sunni-backed

Paul Salem|17

Iraqiyya in these elections, but Maliki was able to overtake Iraqiyyas parliamentary plurality by forming a coalition with rival Shia groups, such as the
Sadrist Trend, which joined him largely because of pressure from Iran.
Nevertheless, Maliki initially attempted to maintain an independent foreign
policy, balancing close ties to Tehran with good relations with Washington
and Ankara; Baghdad even sought to reclaim a central role for itself in the
Arab world by hosting the Arab League meeting, first scheduled for 2011 but
postponed and finally held in late March 2012.
The war in Syria polarized the region, however, and as the crisis progressed,
Baghdad moved more clearly into an axis that includes Iran, the Assad regime,
and Hezbollah and is backstopped internationally by Russia and China.
Malikis initial attempts to tread a middle ground gave way to greater support
of the Assad regime. This included allowing Iran to ferry support over Iraqi
air and land routes to the Assad regime and allowing some Iraqi Shia militias
to cross the border and fight for Assad in Syria. Whether this alignment over
Syria will permanently color Baghdads foreign relations or whether its domestic politics and mix of external economic interests will push it to resume a more
independent and centrist foreign policy is yet to be seen. For now, Iraq has
voiced strong support for a proposed UN-backed peace conference, referred to
as Geneva II, to help resolve the Syrian crisis.
Alongside similar interests in Syria, Baghdad and Tehran share energy
interests. In addition to the deal for an IranIraqSyria gas pipeline, they
have formed a partnership in the Organization of the Petroleum Exporting
Countries (OPEC). Both favor high oil prices, while Saudi Arabia and the
GCC favor moderate pricing. Baghdad has also stood with Tehran on issues
of nuclear energy, openly defending Irans right to pursue a peaceful nuclear
program and warning against any attacks on Iran. At the same time, the rise
of Iraqs oil production has actually helped the United States and the international community to impose sanctions on Iran without dramatically impacting
oil prices.
Trade volume between Iran and Iraq reached $8 billion in 2010 and continues to rise.37 As Iran has suffered under sanctions, it has used Iraq as a main
market for a wide range of commodity exports. Although Baghdad has repeatedly insisted that it has respected international economic sanctions against
Iran, there is a large black market across the Iraq-Iran border, and Iran has
likely been using Iraq as a main conduit for circumventing the sanctions. If
these sanctions are gradually lifted, legal trade between the two countries could
supplant black market trade, fostering wider and deeper economic exchange in
various sectors.
Iranian companies have won major construction and infrastructure contracts in Iraq, and Tehran has also offered loans to Baghdad to aid in reconstruction. Iran has a particular interest in the southern Shia region of Basra and
the holy sites of Najaf and Karbala, which hundreds of thousands of Iranian

18|Iraqs Tangled Foreign Interests and Relations

pilgrims visit every year. Iran has offered infrastructure and housing projects in
these sites in addition to its substantial electricity project in Najaf.
Despite this collaboration, there are a number of challenges in the BaghdadTehran relationship. The virtually landlocked and multicommunal Iraq cannot
pursue the same radical policies that Tehran often does. The two countries have
had border differences over water, oil, and security as well. Iranian damming
of rivers and tributaries that flow into Iraq has caused protests among Iraqi
farmers. A dispute over ownership of the Fakka oil field in the Misan Province
almost led to minor armed clashes in 2009. And Iranian attacks against the
bases of Iranian Kurdish separatists in the KRG have elicited repeated protests
from Erbil and Baghdad.
Although there is considerable trade and political closeness between Baghdad
and Tehran, cooperation in other areasfor example, energy, water, or military purchasesis surprisingly limited. Also, there are tensions over several
significant issues. Most IraqisShia includedreject the Iranian model of
velayat-e-faqih (rule by the jurisprudent), which affords a leading role to clerics in government. The two countries also disagree over whether Qom in Iran
or Najaf in Iraq is the true center of Shiism. In addition, Iraqi and Arab nationalism is still quite present in Baghdad, and leaders there bridle at the suggestion
that they are under Irans control. Especially now that Iraqi oil production has
surpassed that of Iran, Iraq sees itself as a major player in the regions history
and future, not as a secondary nation to any other.
The Shifting Baghdad-Ankara-Erbil Triangle
Turkeys relations with Iraq have gone through dramatic changes in the decade
since the fall of the Saddam regime. Indeed, in the space of a few years, the
Turkish-Iraqi relationship has completely changed from one based on AnkaraBaghdad cooperation to curb Erbil to one of Ankara-Erbil cooperation to curb
Baghdad; from one in which Turkey saw Iraqs Kurds as the major threat to
one in which Ankara views Iraqs Kurds as friends and allies while perceiving
the Shia government in Baghdad as the hostile power.38
Turkey opposed the U.S.-led invasion in 2003 and feared that the fall of
the Saddam regime would lead to the breakup of Iraq and the escalation of
Kurdish ambitions in northern Iraq for independence. Worried that Kurdish
independence in Iraq could encourage demands for secession among Turkeys
own restive Kurdish population, Ankara scrambled to build good relations
with the new authorities in Baghdad after Saddams fall in order to help re-create central Iraqi authority to curb Kurdish ambitions. Turkey was also drawn
toward the enormous economic benefits of reconstruction in post-Saddam
Iraq, seeing opportunities to grow Iraq as a major market for Turkish exports
and access its vast oil and gas resources. This policy fit into Turkish Foreign
Minister Ahmet Davutolus zero problems with neighbors policy and also

Paul Salem|19

into Prime Minister Erdoans policy of rebuilding Turkeys relations in the

Muslim world, including with the non-Sunni powers of Iran and Assads Syria.
Ankara made numerous attempts to bolster its relations with both Sunni
and Shia leaders in Iraq. It hosted Sunni Iraqi leaders in 2005 to encourage
them to join the new, Shia-dominated post-Saddam political process and initiated a multinational Neighboring Countries process, which included the
five permanent members of the UN Security Council, the Group of Eight
countries, the UN, the Organization of Islamic Cooperation, the Arab League,
and the European Commission and was designed to help Baghdad rebuild
its regional and international relations. Erdoan reached out to various Iraqi
leaders and visited a Shia shrine in Najaf, declaring, I am neither Sunni nor
Shia, I am a Muslim. Trade boomed between Ankara and Baghdad, reaching
$6 billion in 2010, and Turkey announced that Iraq would be a good addition
to the free trade zone that it had established with Syria, Lebanon, and Jordan.
But this pattern of good relations between Ankara and Baghdad dramatically changed around the turn of the decade. Turkey helped put together and
supported the Iraqiyya list in the 2010 Iraqi elections; when that list finished
first but Maliki outmaneuvered it to form the government, this left both
Erdoan and Maliki angry and accusing one another of playing sectarian politics. Relations deteriorated further as the Syrian uprising was met by bloody
repression. Erdoan had built very warm relations with Assad and urged him
to institute rapid reforms when the protests started in Syria in March 2011. As
the Assad regime ignored this advice and doubled down on violent repression,
Erdoan broke with the Syrian president, offered safe haven and support to
the Syrian opposition, and made clear that Ankara wanted to see the overthrow of the Assad regime. And as Turkey moved to support the Syrian rebels,
Baghdad was allowing Iran to move support across Iraqi land and airspace to
the embattled Syrian regime.
The U.S. withdrawal from Iraq at the end of 2011 only heightened tensions.
Geostrategically, the American withdrawal quickened the regional scramble
for powerAnkara saw Baghdad drifting closer to Tehran and waging war to
protect Iranian and Shia alliances in Syria; Baghdad saw Ankara siding with
Sunni rebels in Syria and Sunni powers in the Gulf and Egypt and feared partial
encirclement. Baghdad also accused Erdoan of meddling in domestic politics
by favoring Sunni politicians and backing Turkmen groups inside the country.39
In addition, Baghdad was concerned about a notable improvement in
Turkish-KRG relations that had taken place over the previous few years. From
2003 to 2007, Ankara and Erbil viewed each other virtually as enemies. Turkey
feared that Iraqs Kurds would take advantage of their new autonomy to push
for independence and help the PKK and their brethren in Turkey to oppose
Ankaras central rule; Erbil was angered that Ankara appeared to be doing all
it could to build good relations with Baghdad, Tehran, and Damascus in order
to keep Kurdish ambitions at bay. Indeed, Turkish relations with those three

20|Iraqs Tangled Foreign Interests and Relations

countries were partly based on the Adana Protocol of 1998 in which Syria
renounced its support of the PKK.
Despite the general distrust, Ankara-Erbil relations were manageable up
until 2003 as Barzani was helping Ankara against the PKK in exchange for
Turkish support of the American-led no-fly zone that protected Iraqs Kurds
from Saddam. In 2003, however, Ankara opposed opening a northern front
against Saddam, partly to prevent U.S. forces working alongside the Kurdish
peshmerga from moving from the north to take control of the strategic and
disputed city of Kirkuk and its vast energy reserves. Turkey feared that Kurdish
control of Kirkuk would give the KRG further economic grounds for power
and independence; in this position Ankara had common ground with Baghdad.
And all this put Turkish-KRG relations on tense footing.
As long as U.S. forces were deployed and dominant in post-Saddam Iraq,
the countrys Kurds felt strategically secure. But in 2008, when a Status of
Forces Agreement between the United States and Iraq made it clear that U.S.
troops would be leaving by 2011, Erbil needed to find new alliances to guard
against the resurgent power of central authority in Baghdad. It moved to try to
build good relations with Ankara. The United States had been working hard
to improve ties between Ankara and Erbil since 2003 in order to help stabilize
the post-2003 situation in Iraq. Erbil offered several enticements to Turkey,
including lucrative construction deals, access to KRG energy resources, and
promises to help moderate Kurdish positions in Turkey and to assist Ankara in
dealing with the PKK.
These overtures began to bear fruit in 2010, when Ankaras relations with
Baghdad started to turn sour. Ankara sought allies against Maliki and growing Iranian and Shia influence, so it moved closer to both the Kurds and Iraqs
Sunnis. Turkish-KRG relations quickly blossomed, with Barzani visiting Ankara
and Turkey opening a consulate in Erbil in 2010. Turkish companies currently
account for 80 percent of imports into the KRG, and Turkey might be the only
strategic bulwark in the future if Baghdad moves to threaten the KRG.40
Indeed, in the space of a few years, Erbil has moved in Turkish calculations from enemy to ally. The relationship was strengthened further in the
course of the Syrian uprising: Erbil helped corral the various Syrian Kurdish
groups, including the Democratic Union Party (which is closely linked to the
PKK), to join a Syrian Kurdish coalition that supports the uprising against
the Assad regime and that does not raise the ante against Turkey. At the same
time, Tehran and Damascus encouraged the PKK to escalate its attacks against
Turkey. In March 2013, Ankara and PKK leader calan reached a historic
agreement to halt the thirty-year Kurdish insurrection and promote political
dialogue, which constituted an important step forward for Turkish-Kurdish
relations in general.
Economic and energy interests are also important to the Ankara-Erbil relationship. While Turkey has been losing ground in the southern governorates of

Paul Salem|21

Iraq, it has doubled down on its energy and economic interests in the northern
KRG region. While the United States had encouraged a general Ankara-Erbil
rapprochement, it has been very critical of the use of this new axis to weaken
central Iraqi government authority in Baghdad and potentially further destabilize and dismember Iraq. Washington has urged all three power centers to
seek accommodation, and there is some evidence that this may come to pass.
Indeed, in an October 2013 visit to Ankara, Iraqi Foreign Minister Zebari
announced that the two countries strained relations were improving and
that Baghdad and Ankara would cooperate to curb the rising threat of jihadi
extremism spilling over from Syria into their countries.41
Tense Neighbors: Iraq and the GCC
Relations of the new Shia-dominated government in post-Saddam Baghdad
with the Sunni monarchies of the GCC have been predictably frosty.
Nevertheless, these relations range from borderline hostile (Saudi Arabia and
Qatar) to fairly businesslike (Kuwait and the UAE). The GCC countries shed
no tears for Saddam but were alarmed when it became clear that his fall meant
the rise of Shia domination over Iraq, the marginalization of the countrys
Sunnis, and a major geostrategic advance for their regional rival, Iran.
Saudi Arabia severed diplomatic relations with Iraq in 1990 after Saddam
invaded Kuwait. Despite American urgings after the 2003 U.S. invasion,
Riyadh refused to accept the new power realities in Baghdad or receive Maliki.
Saudi Arabia backed Ayad Allawi and the Iraqiyya list in the 2010 elections
and was dismayed when Maliki, with Iranian help, managed to form a government without Iraqiyya. As the Arab Spring unfolded, the two capitals differed over the uprising in Bahrain: Saudi Arabia backed the Sunni Al Khalifa
monarchy and engineered a GCC military mission to quell the protests while
Maliki expressed sympathy for the Shia-majority demonstrators.
Baghdad and Riyadh also differed sharply over the uprising in Syria, especially as it moved from protests calling for democracy in 2011 to civil war in
20122013. There was a brief thaw in the run-up to the Arab League summit
held in Baghdad during which Saudi Arabia finally restored diplomatic relations, although only by sending its ambassador to Jordan to visit Baghdad
occasionally. But Riyadh had used its clout to cancel the first Arab League
summit, scheduled to take place in Baghdad in May 2011, and participated in
the March 2012 summit only through a low-level delegation.
Relations are unlikely to improve. Malikis hostile moves against Sunni
leaders in Baghdad after the U.S. withdrawal, such as the arrests of Hashimi
and of several bodyguards to former finance minister Rafi al-Issawi, who had
criticized and boycotted Malikis government, have angered Saudi Arabia. And
Malikis indirect support for the Assad regimewhich Riyadh opposeshas
sealed the current hostility between the two capitals. King Abdullah has been
reported on WikiLeaks describing Maliki as an Iranian agent, and Riyadh

22|Iraqs Tangled Foreign Interests and Relations

has consistently held the position that it does not trust Maliki and effectively
refuses to do business with him.42
Saudi Arabia has better relations with Erbil and the Kurdish north and
has encouraged the Ankara-Erbil rapprochement as a way to curtail Shia and
Iranian influence in Iraq. Saudi Arabia also has close ties with Sunni groups
and leaders in Iraq; in addition, many of the jihadi fighters that joined the
Sunni insurgency against the Shia-dominated Baghdad government and occupying U.S. forces were Saudi citizens who crossed the long and porous SaudiIraqi border.
The current economic interests between the two countries are very limited.
Saudi Arabia has prohibited direct trade with Iraq for most of the past decade,
and there is an unpaid $20 billion Iraqi debt to Riyadh from the days of the
Saddam regime. Baghdad has a keen interest in reopening the closed Iraq
Saudi Arabia pipeline, but no progress has been made on that front. The two
also do not see eye to eye on production quotas and pricing in OPEC, with
the Iraqis trying to push their production consistently higher while also favoring high prices. Iraq is already the third-largest exporter of oil to Asia. Saudi
Arabia is worried that as Iraqs production mounts, it could close in on Saudi
Arabias dominance in global markets.
Although Baghdads relations with Qatar have been marginally better than
with Saudi Arabia, they are nonetheless very strained. Unlike Saudi Arabia,
Qatar maintained cordial relations with Iran and established diplomatic relations with the post-Saddam state in Baghdad. But the Doha-based Al Jazeera
television station carried negative coverage of the U.S.-led invasion and the
toppling of Saddams regime. It remained critical of the American-protected
governments and later of Maliki and generally sympathetic to the Iraqi resistance. Qatar also backed the Iraqiyya list in 2010 and later gave a red-carpet reception to Tariq al-Hashimi in Doha after he was pushed out of power
by Maliki.43 Baghdad and Doha also stand on opposite sides in the crisis in
Bahrain and the war in Syria, and they do not share significant direct economic interests.
Kuwait and the UAE have taken a less political and more pragmatic and
businesslike approach to relations with the new Baghdad. Kuwait has a tangled
and difficult history with its large neighbor, and Iraq has a keen interest in
maintaining and increasing its export capacity through the narrow strip of
Iraqi shoreline between Kuwait and Iran. Kuwait restored diplomatic relations
with Iraq after 2003, and the countries have exchanged delegations trying to
resolve outstanding issues. Baghdad has still not formally recognized the land
border demarcated by the UN, nor have all issues relating to outstanding Iraqi
debts and missing Kuwaiti persons since the 1990 invasion been resolved.
In relation to maritime issues, the two countries have disagreements over
the exact demarcation of their shared port space. The conflict over Iraqs intention to build one of the worlds largest ports in the area of al-Faw and Kuwaits

Paul Salem|23

similarly ambitious plans for a nearby port of its own has led the two countries
to international arbitration. Several Kuwaiti companies are engaged in Iraq,
particularly in the Kurdish north andthrough Kuwaiti Shia family businessesin Basra and the Shia south of Iraq. Unlike other GCC countries,
Kuwait cannot afford to antagonize Baghdad because of its geographic proximity to Iraq. It must maintain good relations with its large neighbor.44
The UAEs relations with post-Saddam Iraq have also favored pragmatism
over politics. The UAE canceled Iraqs debt and restored diplomatic relations
with Baghdad in 2008. In addition to the electricity deal between Baghdad and
the UAE, Emirati leaders have recognized the business potential in oil-rich Iraq.
Trade between the two countries has grown to almost $4.5 billion and includes
construction and building materials, iron and steel, and other products.45
Emirati companies have also entered into the KRG market in northern Iraq.
The Abu Dhabi National Energy Company, TAQA, purchased a 53 percent
stake in the Atrush oil bloc in northern Iraq.46 True to the largely commercial profile of its two main emiratesAbu Dhabi and Dubaithe UAE has
favored business over politics.
Despite this diversity in diplomatic and business relations with GCC
countries, the GCC as a political blocdominated by Saudi Arabiastill
regards the Baghdad-led government with suspicion that borders on hostility.
Geostrategic tensions between Saudi Arabia and Iran and sectarian tensions
over Sunni-Shia relations throughout the Middle Eastmade worse by the
war in Syriaensure that Baghdad-GCC relations are likely to remain very
strained for the foreseeable future.
Iraqs Relations With Syria, Jordan, and Egypt
Syrian-Iraqi relations under Saddam were those of bitter enemies, and several
leaders of todays Iraq (such as Maliki and Jalal Talabani) had received refuge
in Damascus while Saddam was in power. Nevertheless, Syria opposed the
U.S. invasion that toppled Saddam, fearing the U.S. army might next turn
against it. Damascus provided refuge for many Iraqi Baathist leaders and
allowed jihadists to cross its border and join the insurgency. And although
Damascus welcomed a friendlier government in Baghdad, it still harbored
fears of domination by its historically powerful neighbor and cultivated relations with Iraqs Kurds and Sunni tribes, along with supporting elements of
the insurgency, to keep Baghdad hemmed in. Through its close alliance with
Lebanons Hezbollah, Damascus also had good relations with some of Iraqs
Shia groups that rivaled Maliki.
Baghdad and Damascus nevertheless restored diplomatic relations in 2006
and began to build cooperation.47 Their most important joint interests were
in energy, including the now-stalled attempts to resume pumping oil through
the IraqSyria pipeline and the agreement to build an IranIraqSyria gas

24|Iraqs Tangled Foreign Interests and Relations

pipeline. They also explored cooperation on trade, roads, rail networks, and
border security.
But the relationship was late in blossoming and only began to improve significantly in 2010 and 2011. Syria, which had supported Iraqiyya in 2010,
abandoned its support for Allawi and joined Iran in backing Maliki in the formation of his government. By this time it was clear that all U.S. forces would
be leaving Iraq, so Damascus no longer had to worry about that risk. And
by 2011, Syria and its allies were focused on the Syrian uprising. Damascus
increasingly needed Tehran and Baghdad as the regions Sunnis, including
Kurds, turned against it, and Baghdad and Tehran needed to help Damascus
lest Syria fall under a hostile Sunni-dominated regime.
Baghdads official position toward the conflict in Syria has consistently been
to urge negotiation and a political resolution, and it has not openly taken sides as
Iran and Hezbollah have done. However, Maliki began to lean more toward the
embattled Assad regime as fears of a hostile takeover in Damascus increased. This
shift altered Baghdads foreign relations, pushing Maliki closer to Iran, reversing warm relations with Ankara, and ending any short-term hopes of rebuilding
strong relations with the GCC or the wider Arab Sunni world.
The war next door also dramatically worsened Malikis internal situation.
Erbil, seeing the potential for Syrian Kurdish autonomy, was emboldened by
the empowerment of its Kurdish brethren. Allying with Syrias Kurds, who
enjoy a fair amount of independence in relatively oil-rich northeast Syria, also
expanded Erbils reach and brought the KRG a few steps closer to Mediterranean
access.48 In addition, grievances against Maliki, who had antagonized the
Kurds over oil and gas issues and the disputed, resource-rich area of Kirkuk,
encouraged them to support the Syrian opposition against Baghdads wishes.
Many of Iraqs Sunnis, feeling marginalized by Malikis rule, openly supported the Syrian uprising in hopes that a Sunni resurgence in Syria would
empower them against their own Shia-dominated central government. Maliki
feared that a Sunni-dominated power in Syria would give Iraqs Sunnis backing to challenge hisand the Shia communityshold on power in Baghdad.
And this prospect was especially dangerous because it came at a time when
Malikis moves against Hashimi and other prominent Sunni politicians and
his use of the army against Sunni protesters in some of Iraqs northwestern
provinces had enraged Iraqi Sunnis and threatened to reignite the sectarian
civil war in Iraq that had only recently been calmed.
Malikis government has also been alarmed that the fighting in Syria has contributed to a resurgence of al-Qaeda in Iraq. The war against the Assad regime
has prompted thousands of foreign jihadi fighters to make their way to Syria,
and many of them have come through Iraq or now go back and forth across the
porous Iraqi-Syrian border. Al-Qaeda in Iraq, which had declined somewhat in
recent years, rebranded itself al-Qaeda in Iraq and the Levant in 2012 and has
become one of the strongest armed groups in northern Syria. Fighting al-Qaeda

Paul Salem|25

has become a primary concern of the Maliki government and is now driving
many of its discussions with other countries in the region and around the world.
Baghdads post-Saddam relations with its other western neighbor, Jordan,
have been businesslike. Although Jordan previously had intermittently good
relations with Saddams regime, it also had strategic relations with the United
States and was one of the operational territories for the U.S. invasion and
occupation of Iraq. Jordan thirsted for Iraqs energy resources, and Iraq valued
Jordans access to the Red Sea. The Jordanian economy also
benefited from exports to Iraq and provided banking and
business services for firms hesitant to operate directly in Fighting al-Qaeda has become a primary
the dangerous Iraqi environment. Jordan already receives
concern of the Maliki government and is now
some oil from Iraq, and one-fourth of Jordanian industrial
driving many of its discussions with other
exports go to Iraq.
But Amman worries about the security implications countries in the region and around the world.
of radical jihadi groups in the turbulent Anbar Province
and has had to handle the influx of over half a million
Iraqi refugees into Jordan. Politically, Jordanian King Abdullah has remained
closely aligned with the GCC and has spoken out against the so-called Shia
crescent, or the idea that the Shia-dominated alliance of Iran, Iraq, Hezbollah,
and Assads Syria might gain more influence in the region.
As Syria has descended into conflict, Iraqi-Jordanian relations have taken
on more importance as the overland route through Syria is no longer available. And given the planned BasraAqaba double pipeline and the possibility
of rerouting the IranIraqSyria gas pipeline through Jordan,49 Baghdad and
Jordan appear set to remain important economic partners.
Iraqs relations with the largest Arab country, Egypt, were businesslike
under former Egyptian presidents Hosni Mubarak and Mohamed Morsi. The
two countries do not share a border, so Egypt has been able to prioritize economic over immediate security interests. The outlines of this relationship are
unlikely to change dramatically in the wake of the ouster of President Morsi
by the military in July 2013.
After the U.S. invasion of Iraq, Cairo generally tried to encourage Iraq back
into the Arab fold. In 2004, Egypt hosted a conference on Iraq as part of a bid
by Mubarak to regain a regional leadership role, which was ultimately unsuccessful (Egypts influence remains a shadow of its former self and its power is
eclipsed by Iran, Turkey, and Saudi Arabia and is rivaled by Qatar, the UAE,
and other small powers). In 2005, Egypt was the first Arab country to restore
diplomatic relations with Baghdad.50
Morsi came to power in June 2012, and his Muslim Brotherhood government eventually cut Cairos diplomatic ties to the Assad regime in Damascus
and differed sharply with Maliki over the Syrian crisis. But both sides sought
to rebuild economic relations between Baghdad and Cairo, which had slowed
considerably. After Morsi was removed from power, the military-backed

26|Iraqs Tangled Foreign Interests and Relations

government in Cairo moderated its position on Syria. It is likely to continue to

seek good business relations with Iraq.
In the better years of Egyptian-Iraqi relationsparticularly in the 1980s
Iraq absorbed hundreds of thousands of Egyptian workers and was a source of
cheap oil. Trade now is at a modest $2 billion, although both sides aim to boost
it, and the number of Egyptians working in Iraq, given the security situation,
is quite limited.51
Egypt also has strong relations with the Iraqi Kurds. Cairo was the first
Arab capital to establish a consulate in Erbil, and Egyptian firms have been
working in the KRG region as well as in Iraqs southern half.
Iraq and the United States
After a military engagement that left over 4,500 American soldiers dead,
33,000 wounded, a trillion dollars in direct expenses and several times that
in indirect costs, the United States has relatively little to show for its investment in Iraq. With no combat troops left in the country and little money left
to expend on it, the United States has very limited influence over the new Iraq.
The ambition that post-Saddam Baghdad would be a staunch American ally in
the region or a pliant client has come to naught. Maliki has resisted U.S. diktats and pursued his own policies both internally and externally. This became
apparent after the U.S. withdrawal when the United States was unable to get
the Maliki government to call for Assads departure in Syria or to stop Iranian
overland and air transfers of military support to the Assad regime.
U.S.-Iraq relations are governed by two agreements signed in 2008: the
Status of Forces Agreement that stipulates a full American military withdrawal
from Iraq by December 2011 and a strategic framework agreement defining
relations on economy, culture, science, technology, health, and trade. The number of personnel in the massive U.S. embassy complex (and three consulates)
is dropping rapidly. From 16,000 in 2012, there are expected to be no more
than around 5,500 by the end of 2013and most of those are security and
other contractors. Iraq no longer registers as a high priority in Washington.
The Obama administration seems satisfied that it extricated the United States
from what it perceives as a disastrous and ill-conceived adventure and seeks
mainly to keep Iraq out of the headlines and to curb Baghdads support for the
Assad regime. There is little strategic ambition in the relationship any more.
Nevertheless, the United States is still an important factor in Iraqi foreign relations. Washington is Baghdads main arms partner, and they share
a revived concern about a resurgent al-Qaeda in Syria and Iraq. The two also
have important economic and energy relations. They trade extensively, with
Iraqi oil exported to the United States and a range of U.S. products being
imported into Iraq. But Iraq also imports products from a wide range of other
countries, East and West.

Paul Salem|27

The U.S. relationship with the Kurdish north was strong before 2003 and
remains strong today. The United States led the creation of the northern nofly zone during Saddams days, and after 2003 it pushed a federal constitution for Iraq that allowed extensive autonomy for the KRG. Washington had
been pushing a rapprochement between Ankara and Erbil for years, especially
as U.S. ambitions for strong relations with post-Saddam Baghdad had been
disappointed. The drift of American oil companies north has also deepened
U.S.-KRG interests.
Russias Mideast Resurgence
Russia was a longtime ally of Saddam Hussein and helped build up his regimes
military and energy capacities. Although the relationship withered after the
Iraqi invasion of Kuwait and Iraqs subsequent UN-mandated isolation, Russia
feared that the U.S. invasion would shift post-Saddam Iraq decisively into the
American camp and out of Moscows reach. The Kremlin spoke out against the
invasion but took no major action to stand against it. Russia was just emerging
under President Vladimir Putin from a decade of internal troubles and global
retreat, and Putin still put much stock in the future of the relationship with
the United States and then U.S. president George W. Bush, with whom he had
found areas of common concern over the war against al-Qaeda, the Taliban,
and Islamist radicalism.
But as Russian-U.S. relations cooled over Russian perceptions of American
support for the velvet revolutions in Eastern and Central Europe, the eastward
extension of the North Atlantic Treaty Organization, and missile defense systems, the U.S. military adventure in Iraq had unforeseen positive consequences
for Russia. It exhausted American hard power, sapped its soft power, and drove
oil pricesand Russian energy revenuessky high. By the end of the decade,
the United States was in strategic retreat, Baghdad emerged as decidedly not
a U.S. lackey or ally, and Russia could begin reexploring its interests in Iraq,
which centered on gaining a share of the countrys energy and arms markets.
To reengage with Baghdad, Russia made two concessions: it forgave Iraqs
$10 billion debt and decided not to pursue its complaint that Iraq had cancelled a major oil agreement that Russian oil company Lukoil had signed with
Saddams government before the U.S. invasion. In 2009, Lukoil and another of
Russias major energy companies, Gazprom, joined the bidding round and won
rights to develop parts of two of Iraqs main oil fields, West Qurna and Bedra.
In July 2013, Maliki visited Moscow reportedly to convince Russian companies to replace ExxonMobil, which is looking to reduce its stake in the West
Qurna field. Baghdad was angered over Exxons agreements with the KRG and
was apparently eager to play off of Russian-American rivalries.
Indeed, Russia is rebuilding its profile as a strategic player in the Middle
East, and relations between Baghdad and Moscow might be part of that trajectory. Maliki is eager to counterbalance American weapons purchases and oil

28|Iraqs Tangled Foreign Interests and Relations

contracts with Russian ones. More importantly, the war in Syria has affected
Baghdads and the regions strategic alignments as they relate to Russia.
Between the two U.S. Gulf Wars of 1990 and 2003, Russia was notable
for its strategic absence; in the Syrian uprising, however, Russia has taken a
major stand.52 Russia went along with a UN Security Council resolution in
2011 to support a no-fly zone in support of rebels opposing then Libyan leader
Muammar Qaddafi, but Putin felt that the West betrayed the resolution and
waged an aerial war to undertake direct regime change there. When the Syrian
uprising escalated and debate began as to whether the international community should intervene against Assad, Russia took a firm position against any
intervention. Moreover, Russia moved to provide open political and military
support to the embattled Assad regime. As the region polarized, Russia ended
up being the international patron of the regional alliance backing Assad, which
includes Tehran, Baghdad, Damascus, and Hezbollah. Whether, within this
context, relations between Baghdad and Moscow will deepen further is yet to
be seen.
China and Iraqs Energy Future
If the Iraq War was at least partially fought for oil, then the winner would have
to be declared China. Beijing currently imports about 315 thousand barrels
of Iraqi crude per day, but that figure could climb to around 2 million over
the next two decades. Iraq has become increasingly important to Beijing as
Chinese oil imports from Iran have declinedpartly the effect of sanctions
on Irans output capacity and partly the international complexity of importing from Iran through the net of sanctions. China has firmed up its relations
with Baghdad by forgiving 80 percent of Iraqs $8.5 billion debt and signing
multibillion-dollar trade deals and contracts in electricity production, transport, infrastructure, and housing.53 Potentially, Baghdad could be a future customer of Chinas budding defense export industry. In the long term, energy
and defense cooperation could help define new strategic balances in the region.
For now, the relationship is all business.
Europe and Iraq: Resuming Business
Europe was divided over the 2003 U.S. invasion of Iraq. The UK backed the
United States from the beginning and was joined by Spain and Italy, while
France and Germany led the camp opposing the invasion. The UK, Spain,
and Italy participated with troops and some postwar aid, but the EU as a body
remained initially disengaged. After the toppling of Saddams regime, the EU
provided humanitarian and relief aid and pushed for a transfer of authority
to the UN, which did not occur. Eager to find a political process it could
endorse, the EU provided funding for the first postwar elections in 2004 and

Paul Salem|29

has maintained steady funding and technical support for subsequent referenda
and elections.
As the Iraqi economy picked up, trade between Baghdad and the EU countries increased. Maliki and the EU signed a Memorandum of Understanding
on Energy Cooperation in 2010. In 2012, after years of negotiations, they
signed a more comprehensive Partnership and Cooperation Agreement that
provides a framework for cooperation in many areas, including trade and
investment, health and education, energy, environment, and the fields of justice and security. Iraq and the EU have become important trading partners:
Europe is the second-biggest exporter to Iraq, after the United States, and Iraq
has become the tenth-largest provider of energy for Europe. European countries have an interest in stability and further growth in Iraq and share a concern
for the continued internal tensions in the country and the potential impact of
the Syria crisis.

Looking Ahead
In the immediate future, Iraqs tangled foreign relations are not likely to undergo
a systemic transformation. The country needs to maintain working relations
with a wide array of states and economies in the region and the world, but its
factions will continue to jockey for internal advantage and seek favor among
regional rivals. This will likely thwart Baghdads attempts to centralize power.
Iraqi foreign policy is unlikely to be unified anytime soon. Major decisions
will be made by the prime minister in Baghdad, but Erbil will continue to set
its own course as much as it can, and Sunni parties will continue to be empowered by events in Syria to pursue their own foreign relations. Until Iraqis can
resolve major remaining issuessuch as power sharing, internal borders (particularly Kirkuk), decentralization or federalism, sharing of oil revenues, and
control of the armed forcesIraqs foreign relations will be as tangled and
contested as its internal politics.
Overall, the press of economic interestsof which the various ruling elites
and their crony clients are main beneficiarieswill continue to impose a fairly
broad sense of pragmatism and interest-based foreign policy on Iraqs decisionmaking centers. Leaders in Baghdad and Erbil have a preference for pursuing
external relations that build their economy and benefit them at the same time,
and they appear to have little interest in, or appetite for, becoming full players
in rigid regional or international axes that might bring new waves of confrontation and warfare. Internally, Iraqis have little choice but to eventually learn
how to coexist peacefully; similarly, externally, Iraqs leaders have little choice
but to learn how to balance and manage their various, and often contradictory,
foreign interests and relations.
Iraq faces a difficult path if it hopes to become an influential player in the
region or internationally. Although it made a bid to regain a regional role for

30|Iraqs Tangled Foreign Interests and Relations

itself in 2012 by hosting the Arab League summit and P5+1 talks on Irans
nuclear program, Iraq has not been able to capitalize on that momentum.
The Syrian crisis has polarized the region and pushed
Baghdad into a position of virtual hostility with much
Iraqs leaders have little choice but to learn how of the Arab world. Also hindering Iraqs ability to regain
external influence are its acute internal divisions and its
to balance and manage their various, and often
inability to control its borders and airspace. Promised arms
contradictory, foreign interests and relations. deliveries may help Baghdad exert control, but the road
to overcoming Iraqs internal division has no clear timetable. Parliamentary elections are set to occur in 2014, but
whether they will provide an opportunity for reconciliation and a new start or
be another step along the path to an increasingly authoritarian Malikis consolidation of centralized power remains to be seen.
Nevertheless, the country is already casting a significant economic shadow.
Its economy is growing fast and has drawn in massive regional and international investment; if it continues to grow at this pace it will emerge as one
of the major economies of the region, alongside Turkeys, Irans, and those
of the Gulf monarchies. The interests and relations built into this economic
growth should be important factors in pushing for regional accommodation
and avoiding costly confrontation. And perhaps more significantly, Iraq will
become an increasingly important player in global oil markets. Despite its
internal dysfunctions, Iraq will be a producer to pay attention to in the global
economy of this century.
The future of Iraqs foreign relations also much depends on outcomes in its
surrounding region. Iraq has already been impacted by the war in Syria both
internally, in terms of heightened tensions with the Kurdish and Sunni communities and the resurgence of al-Qaeda, and externally, in terms of trying
to accommodate contradictory external pressures and considerations. If the
Assad regime holds on in Syria and that country enters a long period of internal
division without any side winning outrighta situation not dissimilar to the
balance between Baghdad and ErbilIraq could probably coexist with that
reality (although with recurring internal crises). But Iraq has much to gain
from a negotiated resolution to the war in Syriathrough Geneva II or any
other mechanismand in regional and international cooperation in combating al-Qaeda.
Baghdad would also benefit from a thaw in Irans relations with countries in
the Middle East and the West. Any such development would reduce the contradictions in Baghdads own foreign interests, which require good relations
with Iran as well as with many of Tehrans erstwhile opponents. The course of
Irans nuclear talks with the P5+1 could therefore dramatically affect Iraq, and
Baghdad warmly welcomed the interim agreement reached in November 2013.
If the parties eventually reach a permanent deal that gives international guarantees about the future of Irans nuclear programespecially one that leads to

Paul Salem|31

the lifting of sanctions imposed on Iran and the reintegration of Tehran into
the global and regional communitiesIraq will benefit even further. If Irans
relations with key players in the Middle East and around the world improve,
the United States, Russia, and other regional powers may be more willing to
step back from their proxy war in Syria and find a negotiated outcome to the
conflict. Any reduction in regional polarization would also tamp down internal tensions in Iraq by reducing the impetus for various powers in the Middle
East to back rival Iraqi factions. And improved Iran-GCC relations would
increase the chances for better political and economic relations between Iraq
and the Gulf monarchies, particularly Saudi Arabia, which refuses to deal with
Baghdad as long as it perceives Maliki as part of a hostile Iranian axis. In addition, Iraq would benefit from increased trade and economic opportunity if the
Iranian economy were to rebound.
But if the talks were to lead to a dead end and international tensions with
Iran were to escalate once again, Iraq would be at renewed risk. Most importantly, if any combination of countries eventually launched an attack on Iran,
the impact on Iraq would be very negativethe internal political implications
in Iraq would be hard to predict, the Baghdad government would have to stand
with Tehran in one way or another, and, most importantly, the closure of the
Straits of Hormuz would cut most of Iraqs ability to export oil. Iraq might not
be able to survive such an attack.
In the meantime, the leaders in Baghdad have their hands full managing
internal political differences, facing down a renewed al-Qaeda threat, reintegrating Iraq into the region and the world, building profitableboth for them
and, in some cases, for the public interestforeign economic relations, and
trying to avoid especially disruptive internal or external conflict. The challenge
of overcoming internal differences and building national stability and cooperation will remain a principal one; and the challenge of preventing external
regional differences from fomenting internal wars or major regional confrontations will also be important. In some cases, the best that can be hoped for is to
muddle through without conditions becoming considerably worse.
As it is, Iraq has made tremendous progress since 2007. Although it still has
major internal dysfunctions and problems to overcome, Iraq has come a long
way, especially considering the countrys very difficult political past and the
tense regional environment in which it has to operate.
International actors should appreciate the complexities and contradictions
of Iraqs foreign relations but also take note of the large margin of pragmatism and centrism that influences its foreign relations. This is especially important in a region where all players have taken combative sidesespecially over
Syriaand in which previously pragmatic and centrist countries, like Turkey,
for example, have also abandoned the middle. Baghdad and Erbil have both
abandoned that middle as well over the past year, but Iraqs interests would be

32|Iraqs Tangled Foreign Interests and Relations

better served by it becoming a centrist player in the long run than by aligning
rigidly with one set of countries against others.
In the coming years, and despite recent polarization both internally and
externally, Iraq will continue to have strong relationships internationally with
the United States and the West in general, as well as with Russia, China, and
India. Regionally, it will remain close to Iran, but it would prefer to also be able
to reconstruct the web of relations it was building before the war in Syria
which included good relations with Iran, Turkey, Syria, and some members of
the GCCthan to have to pick sides.
Like much in the Middle East, the building of Iraqs foreign policy is still
a work in progress, but Iraq can be an engine for regional economic growth
as well as a force for regional accommodation and long-term stabilization.
Whether its own leadersor the leaders of regional or international powers
will be able to move forward in that direction is a challenge that the following
months and years will reveal.

Notes

See Toby Dodge, State and Society in Iraq Ten Years After Regime Change:
The Rise of a New Authoritarianism, Royal Institute of International Affairs,
2013, www.chathamhouse.org/sites/default/files/public/International%20
Affairs/2013/89_2/89_2Dodge.pdf.
2 Iraqi Foreign Policy: Actors and Processes, Royal Institute of International Affairs,
November 2012, www.chathamhouse.org/sites/default/files/public/Research/
Middle%20East/1112iraq_summary.pdf.
3 Iraq Seen as Major Arms Buyer by 2020, United Press International, January 4,
2013, www.upi.com/Business_News/Security-Industry/2013/01/04/Iraqs-seen-asmajor-arms-buyer-by-2020/UPI-91261357319593/?rel=68701357323613.
4 Iraq to Resume $4.2bn Russian Arms Deal, RT, April 1, 2013, http://rt.com/news/
russia-Iraq-arms-contract-146.
5 Ibid.
6 Iraq Signs $1.1 bn Deal to Buy S. Korean Fighters, Agence France-Presse,
December 12, 2013, www.google.com/hostednews/afp/article/ALeqM5gS491WjDK
ZTE4fAeRWdxabkDlhkQ?docId=6e00c1f5-39e9-436a-a952-e87e3eccdd0b.
7 Ahmed Hussein, Barzani Informs Russia About KRs Inability to Purchase Weapons
Without CGs Approval, Iraqi News, February 25, 2013, www.Iraqinews.com/
baghdad-politics/barzani-informs-russia-about-kr-s-inability-to-purchase-weaponswithout-cg-s-approval.
8 International Monetary Fund, Iraq: Selected Issues, IMF Country Report no.
13/218, July 2013, www.imf.org/external/pubs/ft/scr/2013/cr13218.pdf.
9 Iraqs Oil Plan to Rival Russia and Saudi, Sky News, June 12, 2013, http://news
.sky.com/story/1102691/iraqs-oil-plan-to-rival-russia-and-saudi.
10 Daren Butler, Blast Hits Kirkuk-Ceyhan Pipeline, Oil Flows Continue, Reuters,
January 21, 2013, www.reuters.com/article/2013/01/21/us-turkey-iraq-oil-idUS
BRE90K0CD20130121?feedType=RSS&feedName=environmentNews&utm_
source=feedburner&utm_medium=feed&utmcampaign=Feed%3A+reuters%2Fenvir
onment+%28News+%2F+US+%2F+Environment%29.
11 Orhan Coskun and Humeyra Pamuk, Iraqi Kurdistan Poised to Pipe Oil to World
via Turkey, Reuters, April 17, 2013, www.reuters.com/article/2013/04/17/us-iraqkurdistan-oil-idUSBRE93G08Q20130417.
12 John Lee, Iraq, Jordan Sign Oil $18bn Pipeline Deal, Iraq-Business News, April 9,
2013, www.Iraq-businessnews.com/2013/04/09/Iraq-jordan-sign-oil-18bn-pipelinedeal.
13 Lawrence Kumins, Iraq Oil: Reserves, Production, and Potential Revenues, CRS Report
for Congress, April 13, 2005, www.fas.org/sgp/crs/mideast/RS21626.pdf.
14 Nayla Razzouk, Iraq Controls Kurdish Oil Exports Under New Accord, Luaibi
Says, Bloomberg, December 3, 2013, www.bloomberg.com/news/2013-12-03/iraqcontrols-kurdish-oil-exports-under-new-accord-luaibi-says.html.
33

34|Iraqs Tangled Foreign Interests and Relations

15 Thomas Grose, Iraq Poised to Lead World Oil Supply Growth, But Obstacles
Loom, National Geographic, October 9, 2012, http://news.nationalgeographic.com/
news/energy/2012/10/121009-iraq-oil-production.
16 Tamsin Carlisle, Turkey Seeks Gas From Iraq to Diversify Supplies: Officials,
Platts, May 21, 2012, www.platts.com/RSSFeedDetailedNews/RSSFeed/
NaturalGas/6313786.
17 Iran Signs $10 Billion Gas Deal With Syria, Iraq, Huffington Post, July 25, 2011,
www.huffingtonpost.ca/2011/07/25/iran-gas-iraq-syria_n_908314.html.
18 Martin Chulov, Water Shortage Threatens Two Million People in Southern Iraq,
Guardian, August 26, 2009, www.guardian.co.uk/world/2009/aug/26/watershortage-threat-iraq.
19 Omar al-Shaher, Iraqi Agriculture in Crisis, Al-Monitor, January 29, 2013, www
.al-monitor.com/pulse/originals/2013/01/iraq-farmers-abandon.html.
20 Chulov, Water Shortage Threatens Two Million People in Southern Iraq.
21 Iraq: Drought Hits Rice, Wheat Staples, IRIN, August 31, 2009, www.irinnews
.org/Report/85925/IRAQ-Drought-hits-rice-wheat-staples.
22 Chulov, Water Shortage Threatens Two Million People in Southern Iraq.
23 Zeynep Gurcanli, Turkey-Iraq-Syria to Form a Water Institution, Hurriyet Daily
News, March 2008, www.hurriyet.com.tr/english/turkey/8447636.asp.
24 Nasir Hassoun, Iraq: Accusations of Squandering $28 Billion on Power Projects,
Al-Hayat, August 2, 2012, available at www.al-monitor.com/pulse/contents/articles/
politics/2012/08/iraq-accusations-of-squandering.html#ixzz2ZHnmcHpa.
25 Iran Builds Power Station in Iraq, Turkish Weekly, July 20, 2012, www
.turkishweekly.net/news/138902/iran-builds-power-station-in-iraq-.html.
26 Iraq to Import Electricity From UAE, Iraq Business News, May 16, 2012, www
.iraq-businessnews.com/2012/05/16/iraq-to-import-electricity-from-uae; Iraq and
UAE Sign Electricity Contract, Albawaba Business, April 16, 2012, www.albawaba
.com/business/uae-iraq-electricity-contract-421108.
27 Khalid al-Taie, Iraq Connects Electricity Grid to Regional Network, AlShorfa, July 2, 2012, http://mawtani.al-shorfa.com/en_GB/articles/iii/features/
iraqtoday/2012/02/07/feature-02.
28 Joel Wing, Iraqs National Electrical Grid Continues to Struggle, While Kurdistans
Flourishes, Musings on Iraq, November 12, 2012, http://musingsoniraq.blogspot
.jp/2012/11/iraqs-national-electrical-grid.html.
29 Harith Hasan, Iraqs Dysfunctional Elite, Al-Monitor for Iraq Pulse, August 9,
2013, www.al-monitor.com/pulse/originals/2013/08/iraq-political-elites-dysfunctionelectricity-shortage-fraud.html#ixzz2efTsAvAJ.
30 International Monetary Fund, Iraq: 2013 Article IV Consultation, IMF Country
Report no. 13/217, www.imf.org/external/pubs/ft/scr/2013/cr13217.pdf.
31 Hasan Turunc, Turkeys Global Strategy: Turkey and Iraq, LSE Ideas, 2011, http://
eprints.lse.ac.uk/43503/1/Turkey%27s%20Global%20Strategy_Turkey%20and%20
Iraq%28lsero%29.pdf.
32 The New Iraq: 2011 Discovering Business, Allurentis, November 2010, www
.dunira.com/documents/TheNewIraq2011DiscoveringBusiness.pdf.
33 Ease of Doing Business in Iraq, World Bank Group, 2012, www.doingbusiness.org/
data/exploreeconomies/iraq.
34 Hasan, Iraqs Dysfunctional Elite.
35 World Trade Indicators 20092010: Iraq Trade Brief, World Bank, 2010, http://
info.worldbank.org/etools/wti/docs/Iraq_brief.pdf.
36 Javad Heydarian, Iran Gets Close to Iraq, Diplomat, January 24, 2012, http://
thediplomat.com/new-leaders-forum/2012/01/24/iran-gets-close-to-iraq.
37 Aref Mohammad, Iran Eyes Doubling Iraq Trade to $8 Billion in 2010, Reuters,
February 21, 2010, www.reuters.com/article/2010/02/21/us-iraq-trade-iranidUSTRE61K1PE20100221.

Paul Salem|35

38 John Hannah, Turkey, Kurdistan and the Future of Iraq: Time for Washington to
Tune Back In, Foreign Policy Shadow Government, May 31, 2012, http://shadow
.foreignpolicy.com/posts/2012/05/31/turkey_kurdistan_and_the_future_of_iraq_
time_for_washington_to_tune_back_in.
39 Mehmet Yegin and Hasan Selim zertem, Turkey-Iraq Relations:

From Close Partners to Adversaries, German Marshall Fund of the United
States, January 7, 2013, www.gmfus.org/wp-content/blogs.dir/1/files_
mf/1357578164Ozertem_Yegin_TurkeyIraq_Jan13.pdf.
40 Turunc, Turkeys Global Strategy: Turkey and Iraq.
41 Humeyra Pamuk and Tulay Karadeniz, Turkey, Iraq Eye Closer Cooperation
on Syria as Relations Thaw, Reuters, October 25, 2013, www.reuters.com/
article/2013/10/25/us-turkey-iraq-idUSBRE99O0HX20131025.
42 Roy Gutman, As U.S. Departs Iraq, It Leaves Two Allies That Arent Speaking,
McClatchy, December 18, 2011, www.mcclatchydc.com/2011/12/18/133219/as-usdeparts-iraq-it-leaves-behind.html.
43 Iraq, Qatar Ties Strained Over Fugitive al-Hashemi, Hurriyet Daily News, April 3,
2012, www.hurriyetdailynews.com/iraq-qatar-ties-strained-over-fugitive-al-hashemi
.aspx?pageID=238&nid=17493.
44 James Calderwood, Kuwait and Iraq Work to Repair Relations, National, January
14, 2011, www.thenational.ae/news/world/middle-east/kuwait-and-iraq-work-torepair-relations.
45 Daniel Canty, UAE Trade With Iraq Hit $4.5 Billion in 2011, arabianoilandgas
.com, January 18, 2012, www.arabianoilandgas.com/article-9859-uae-trade-withiraq-hit-45-billion-in-2011/#.UmqR5fmmgbg.
46 Nicole Leonard, Investing in Kurdistans Oil Boom: A Good Idea for Abu Dhabi?
Your Middle East, April 29, 2013, www.yourmiddleeast.com/features/investing-inkurdistans-oil-boom-a-good-idea-for-abu-dhabi_11888.
47 Richard Weitz, Syria-Iraq Relations Without Saddam, SLD, September 2, 2012,
www.sldinfo.com/syria-iraq-relations-without-saddam.
48 Michael Knights, Syrias Eastern Front: The Iraq Factor, Washington Institute for
Near East Policy, July 6, 2012, www.washingtoninstitute.org/policy-analysis/view/
syrias-eastern-front-the-iraq-factor.
49 Interview with Jordanian minister of planning Ibrahim Saif, May 2013.
50 Egypt-Iraq Relations, World Politics Review, December 10, 2010, www
.worldpoliticsreview.com/trend-lines/7299/global-insider-egypt-iraq-relations.
51 Iraq to Increase Trade With Egypt, Nuqudy, April 17, 2012, http://english.nuqudy
.com/Gulf/Iraq_to_Increase_Tr-1628.
52 Fyodor Lukyanov, What Russia Learned From the Iraq War, Al-Monitor, March
18, 2013, www.al-monitor.com/pulse/originals/2013/03/russia-iraq-10-yearanniversary-putin-bush-syria.html.
53 The Chinese National Petroleum Company, International Resource Journal, March
10, 2013, www.internationalresourcejournal.com/features/features_march_10/
the_chinese_national_petroleum_company.html.

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