18-05-2025
From rhetoric to reality: Iraq's economic ambitions following Arab League summit
Shafaq News/ Iraq used the Arab League summit in Baghdad to reinforce its bid for regional economic integration and foreign investment, a senior official said.
Mudhir Mohammed Salih, economic adviser to Prime Minister Mohammed Shia al-Sudani, described the summit as a 'strategic opportunity' to signal Iraq's political and economic stabilization. 'It marked a shift from crisis management to development-focused diplomacy,' he told Shafaq News.
Salih identified the $17 billion Development Road project, a 1,200-kilometer trade corridor linking the Grand Faw Port in southern Iraq to the Turkish border, as a pillar of Iraq's economic transformation.
He also cited momentum for economic coordination with neighboring states, including Jordan, Egypt, and Iran, calling the summit 'a launchpad for cross-border investment dialogue.'
Despite the high-level push, Iraq's investment performance remains relatively low. According to the World Bank, the country recorded a net foreign direct investment (FDI) outflow of $5.27 billion in 2023, driven by 'legal uncertainty and security risks.'
'Iraq is making the right overtures, but talk alone won't unlock capital,' said Ranj Alaaldin, a fellow at the Middle East Council. 'Investors need legal predictability, regulatory enforcement, and protection mechanisms.'
Iraq's energy sector constraints only add to the issue. More than 50% of electricity generated is lost in transmission, according to the International Monetary Fund (IMF), amid Iraq's heavy dependency on Iranian electricity imports, a vulnerability heightened by the expiration of US sanctions waivers in early 2025.
'These deficits directly limit industrial productivity and undermine long-term competitiveness,' the IMF noted in its May 2025 review.
While the Arab League summit did help Iraq in its economic project, experts remain skeptical of near-term results, arguing that regional visibility must now be matched by measurable reforms in infrastructure and market regulation.
