Iraq's investment story: From security to opportunity

Shafaq News

5 hours ago

Shafaq News – Baghdad
Iraq's improving security conditions, combined with economic policy shifts, are turning the country into an increasingly visible investment destination. Over the past two years, the near elimination of large-scale terrorist operations, relative political stability, and steady monetary policy have built a foundation for foreign capital to re-engage.
But while energy continues to dominate, a broader picture is emerging: logistics, digital infrastructure, tourism, and financial compliance reforms are shaping Iraq's evolving investment narrative.
Security as a Foundation
Financial adviser to the Prime Minister, Mudhir Mohammed Saleh, describes security as the cornerstone of Iraq's economic revival. He told Shafaq News that the country's natural wealth and strategic location, combined with declining violence, now provide 'a stable business environment that enables long-term planning and reduces risks of project disruption or asset loss.'
Saleh stresses that investment in security is itself an investment in Iraq's future, pointing to modernizing the security apparatus, activating economic zones, and simplifying procedures through digital governance as essential tools for turning stability into sustained growth.
A Surge of Deals in 2025
Recent agreements highlight the extent to which Iraq is once again attracting major international players. In February, Iraq and BP signed a redevelopment plan for four Kirkuk oil and gas fields, worth up to $25 billion. In May, a consortium led by China's Geo-Jade Petroleum reached a deal to expand production at the Tuba field and build a 200,000-bpd refinery alongside petrochemical and fertilizer plants in Basra. And in August, Iraq signed an agreement in principle with Chevron to develop blocks in the Nasiriyah project and the Balad field.
In the power sector, April saw an MoU with Washington covering 24,000 MW of power projects and a separate 3,000 MW solar initiative with UGT Renewables. The UAE's Masdar is also advancing negotiations on 1 GW of solar capacity, while Iraq continues to partner with Siemens and General Electric to stabilize the grid.
Beyond hydrocarbons, Turkiye's Wealth Fund and the Iraq Development Fund signed an MoU to invest jointly in infrastructure, renewables, ICT, logistics, and agritech. Iraq and Turkiye are also expanding their bilateral energy framework, linked to the Development Road project, which aims to connect the Grand Faw Port to Europe via rail and road.
Digital infrastructure is also on the agenda. In March, Iraq's Communications Ministry signed with Qatar's Ooredoo to establish the country's fourth submarine cable, while in May, Zain Omantel International announced a new telecom corridor linking the Gulf to Europe through Iraq. Analysts say these 'data highways' mirror the Development Road by transforming Iraq into a digital transit hub.
2025 has also seen a notable expansion of US–Iraq business engagement. In May, the US Embassy led a delegation of 46 Iraqi business leaders to Washington to participate in the SelectUSA Investment Summit, a flagship US event for foreign direct investment. The group represented a wide range of Iraqi sectors, including the Kurdistan Region, reflecting what the Embassy described as 'the broad scope of potential cooperation and investment between the United States and Iraq.'
The trip was part of a broader campaign. Earlier in May, the US International Development Finance Corporation sent a mission to Baghdad, while in April, more than 100 companies joined an Iraq–US business forum organized under the American-Iraqi Chamber of Commerce.
Tourism and Diversification
While energy and infrastructure dominate Iraq's investment map, the government is also positioning tourism and hospitality as new growth sectors. In 2025, Prime Minister Mohammed Shia al-Sudani met with Rixos Hotels Group Chairman Fettah Tamince to discuss expanding international investment in Iraq's tourism sector. al-Sudani highlighted ongoing regulatory reforms and infrastructure upgrades, noting Iraq's archaeological sites, religious landmarks, and cultural assets as underexploited economic resources.
The Iraq Development Fund (IDF) has taken a lead role in turning this vision into practice. Executive Director Mohammed al-Najjar told Al-Sharq TV that the Fund is facilitating $7 billion worth of projects, including a $4 billion package under discussion with a French business delegation in healthcare, environment, public transport, and smart agriculture.
For tourism specifically, the Fund has launched the Hadara (Civilization) initiative, aimed at building investment companies to develop resorts around Iraq's 12,500 UNESCO-listed sites. Officials expect up to $1 billion in new tourism investments in 2025, supported by 21 planned projects tied to Baghdad's designation as Arab Tourism Capital 2025.
Tamince noted that international hospitality chains are increasingly interested in Iraq, calling it an 'attractive frontier destination.'
Easing Market Access
In addition to sectoral diversification, Baghdad is working to remove practical barriers for investors. In 2024, the Ministerial Council for Economy endorsed a plan to streamline visas for businessmen and investors. Interior Minister Abdul Amir al-Shammari announced that the Ministry of Interior had launched a fully electronic visa system, linking all relevant agencies to speed up approvals.
Officials say the reform reduces red tape at points of entry and makes Iraq more competitive with regional peers.
Security Alone Is Not Enough
Despite these advances, experts caution that Iraq must avoid overreliance on security gains. Economist Manar al-Obaidi observed that foreign investors prioritize transparency and regulatory clarity as much as physical safety. He pointed to bureaucracy, inconsistent regulations, and weak dispute-resolution mechanisms as barriers that still limit long-term commitments.
Al-Obaidi told Shafaq News that "security strengthens citizens' confidence and contributes to creating job opportunities, which indirectly supports the economic cycle," noting the "urgent need to develop infrastructure and improve the business climate to ensure the continuity of growth."
International economics professor Nawar al-Saadi added that regional tensions—from US–Iran competition to the Israel–Iran conflict—remain a drag on multinationals' decisions. 'US scrutiny of financial transfers and contracts to curb Iranian influence continues to shape Iraq's investment environment.'
Both analysts argue that durable inflows require comprehensive reforms, stronger legal institutions, and a strategy to insulate Iraq from regional rivalries.
Iraq's Next Test
Iraq's 2025 investment landscape reveals clear priorities:
-Energy remains the anchor, with oil, gas, power, and solar projects dominating new commitments.
-Logistics and corridors, through the Development Road and telecom projects, signal a long-term bid to monetize Iraq's geography.
-Tourism and services, backed by the Iraq Development Fund and global hotel groups, reflect a push to diversify revenues and jobs.
-Financial reforms, through partnerships with firms like K2 Integrity and the arrival of the EBRD, aim to improve compliance and bankability.
The country's ability to sustain this momentum will hinge on project execution, governance reforms, and insulating itself from geopolitical turbulence. As Al-Saadi noted, 'Iraq has become an investment story too significant to ignore—but still too complex to enter without caution.'