Twenty years after the US-led coalition invasion of Iraq in 2003, which resulted in the overthrow of the Baath regime and the formation of a new government framework and state constitutions, the Iraqis’ dream of enjoying political, financial, and security stability has yet to come true.
Iraq, the second-largest crude oil producer in OPEC after Saudi Arabia and with the world’s fifth-largest proved crude oil reserves at 145 billion barrels,, continues to face a variety of challenges, ranging from a lack of sovereignty to failing to provide the basic necessities for its people, despite the fact that the state’s revenue has surpassed USD 1,000 billion since 2005.
While Iraq’s index for government integrity is only 19.0, placing it in 162 out of 183 countries, the state stands in 157th place out of 180 countries for the corruption perceptions index, and the poverty rate among children rose to 38% when the poverty rate in Iraq reached 25 percent. The country’s unemployment rate increased to 13.0%, while direct foreign investment inflow has gone negative again since 2019 and reached $-2,613.0 million in 2021. In contrast, only 59.66% of Iraqis will have access to safe drinking water in 2020, a 0.31% increase from 2019. This is a disappointing situation for the fourth oil-rich country, despite its oil production being raised to above 4.2 million barrels per day in 2021.
Iraq’s Difficulties in Development:
Whereas the failures of Iraqi governments in establishing and developing a modern government are primarily related to the political structure formed by the Coalition Provisional Authority, led by the US convoy to Iraq, some analysts point to other causes, such as the country’s ruling political leadership’s indifference (3) to those critical conditions, while others point to the role of long-term internal conflicts (within and between Shia, Sunny, and Kurdish parties) and the later war against ISIS, but some of the analysts blame the ruling system established after 2003. The administration, which has not only failed to restore sovereignty, but has also been involved in widespread corruption at the highest levels of government, costing the country more than $150 billion in oil revenues since 2003.
While Iraq’s oil production capacity is more than 4.6 million barrels per day, with more than 130 trillion cubic feet of natural gas reserves, the state’s electricity production is only 34,000 megawatts per hour, which is still significantly lower than the peak demand amount of 40,000 MWh in 2022, and the state is still noticeably dependent on importing electricity and fuel for power generation from neighboring countries, particularly Iran, but Iraq is still the second largest flaring country after Russia, with more than 17,500 bcm in 2021, according to world bank report, which is about double the state import of natural gas and could be enough to produce more than 9,000 MWh of electricity.
Because of the state’s weak energy security, governments have been forced to increase annual purchases of electricity imports from neighbors Iran, Kuwait, and Saudi Arabia, as well as negotiate the import of more fuels, such as LNG, natural gas, and diesel, which could make the country more reliant on its neighbors in terms of energy security.
Iraq’s Role in Global Energy Security and New Government’s Efforts:
But, despite Iraq’s failure in internal energy security, the country could have an important role in global energy security, not only because of its large oil production but also because of its geopolitical advantages. Despite some analysis pointing to Iraq’s geological position as the main reason for hosting regional and global actors’ confrontation in Iraq, the state could have a great role in the future of world energy supply, critically after the Russian-Ukrainian war era. The EU members’ critical need to diversify their energy sources and replace some parts of Russian natural gas with new sources, while Iraq’s neighboring Turkey as a potential hub of EU energy supply, provides an opportunity for the state to play a more effective role in the future of EU energy security.
Prime Minister Al-Soudani’s plan to develop the state’s natural gas fields began with kicking off production in the mega field of Akkas, which has around 5.6 trillion cubic feet of reserves, as well as several contracts signed recently to develop other states’ fields and raise the power generation capacities. For improving the state’s electrical production and distribution network, the Iraqi government inked contract with Siemens Energy to increase the state’s power generation by 11,000 MWh, which was followed by a five-year contract between the Iraqi ministry of electricity and USA G.E. Company to maintain the power plants it installed, increase their capacity, and install new plants in the future. In the next steps, the Iraqi government could negotiate with Qatar to fund and move forward Iraq’s mega contract with Total Energy to develop the state’s energy infrastructure. Soon, the Al Soudani could lead a contract with Crescent Petroleum to develop three oil and gas fields in Dilaa and Basra, which could be enough to supply power stations nearby in future years, while the Crescent company is a main shareholder in Pearl Petroleum, which is operating in the Kurdistan Region’s Khormor gas field. If Al-Soudany could successfully execute those contracts, he could significantly change the state’s energy security condition and enable Iraq to enjoy its geopolitical opportunities. In another part of Iraq, the semi-autonomous The Kurdistan Regional Government (KRG) is following its ambitious plan to export natural gas to Europe through Turkey from the Khormor gas field, which has been operated by the Pearl Petroleum consortium, including the UAE’s Dana Gas and Crescent Petroleum. The plan has faced internal and regional challenges and has been attacked at least five times in the last year by Iraqi militias.
The KRG’s success in running its plan to connect the Turkiye-Europe gas pipeline could be critical in exploiting Iraq’s geopolitical advantages, which could make Iraq a corridor of gas exports from the Persian Gulf Countries to Europe. The concept of gas export through a pipeline from Qatar to Turkey, approaching Europe, has been paused due to a lack of secured passage after sparking the internal war in Syria (since 2011), but an alternative way through Iraq, whether it is joined to the Kurdistan gas pipeline, could bring the plan back to the table, which has a chance to receive strong support from US and EU members, making the prospect of delivering natural gas from Qatar, the UAE, and even Saudi Arabia to Europe.
The Qatar-Europe pipeline could supply Iraq’s lack of natural gas for power generators in the beginning, but would be reversed soon if Iraq could run its energy plans, mainly in natural gas fields, as well as domesticating associated gas from giant oil fields in the south of Iraq.
This regional cooperation, which could strengthen economic and political ties between neighbors with Iraq, would also lay the groundwork for future developments, such as connecting new sources of products or delivering to new markets in Syria and Jordan, and would play a significant role in regional stability and peace. But internally, the state requires significant improvement in its governance and cooperation among internal actors, far from current confrontations.
U.S. Role in Iraq’s New Era
While remaining neutral in US-Iran and west-Russia conflicts, the new Iraqi government is attempting to strengthen ties with all neighbors and global powers.PM Al-Soudani’s visits to Iran and Saudi Arabia, followed by his visits to France and Germany, and hosting Russia’s Lavarof and his plan to visit Washington, are part of his pragmatic efforts to maintain and expand relations with all neighbors and influential global countries. Also, his close relationship with KRG’s leaders and their mutual cooperation in preparing the state’s 2023 budget and oil and gas law are significant steps toward de-stressing the relationship between Erbil and Baghdad.
Baghdad and Erbil’s ambitious steps toward improving energy security, increasing oil and gas production, and gathering regional potentials to approach the EU market are necessary but insufficient for stabilizing the state, fostering Iraq’s political and economic growth, and enabling them to play a role in global energy security. Active global involvement is vital to the project’s destiny.
Historically, the U.S. presence in Iraq has been a guarantee of the state’s stable security, as occurred between 2003 and 2011, but the U.S. withdrawal in 2011 caused a religious war as a result of the power vacuum in the region. More than security issues, it could be an assurance of having better democratic context for Iraqi people to have less fear of oppression from the government and Iraqi security forces, or another (10). Of course, in a stable situation, far from rocket attacks on the oil and gas fields, the development plan would be ramped up and more attractive for foreign investment.
Having a long-term plan for improvement in Iraqi federal administration, as well as defining the role of the US in supporting Iraqi federal and Kurdistan governments in planning and running a robust development, is required in the new US’ return to Iraq. In the absence of those plans, and in the case of the US leaving the country after decreasing Iraq’s importance for the US, when the Russia-Ukraine war ends, the country could be in a more critical situation, compared to the US leaving Iraq in 2011. More than that, the US should play a role in establishing a long-term and mutually beneficial relationship between the KRG and the Iraqi federal government, particularly in the areas of federal budget and oil and gas regulation. The KRG’s autonomous authority in oil and gas development will benefit Iraqi federalism while also preventing the state from becoming a centrally consolidated autocratic power, a step back to before 2003 or a condition between 2011 and 2014. But global support for improving the local administration of oil and gas is vital to ensuring the successful approaching the development plan, dedicating it for public benefits, and finally securing it from endemic corruption, which was addressed as a reason for leaving some big projects to international oil companies.
Iraq’s stability and growth will bring new opportunities for cooperation with western companies, mainly in but not limited to the energy sector, while also backing world order and the West’s interest in global energy security.
A developed and stable Iraq, both politically and economically, will be a better choice for the U.S. and the EU and their interests in the region or globally. That’s why Iraq is still important for the U.S. and will remain so in the future.
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