Iraqi Prime Minister Mohammed Shia’ Sabbar Al-Sudani will visit Moscow in the near future, Minister of Foreign Affairs Fuad Hussein announced after meeting with Russian Minister of Foreign Affairs Sergey Lavrov on the sidelines of the UN General Assembly in New York. “The Iraqi side is working on completing necessary preparations for a visit by Prime Minister Mohamed Shia Al Sudani to the capital Moscow during the coming weeks,” Fuad Hussein said. He emphasized that the talks between the two sides are an appropriate opportunity to discuss cooperation between the countries in political and economic fields. He also said that perhaps a meeting of the joint Iraqi-Russian committee could be held in parallel with the visit.
This somewhat unexpected news for the West has greatly fueled interest in the upcoming visit, and has led to much assumptions and speculation about what the main topics of the talks in Moscow will be. It should be recalled that bilateral relations between Iraq and Russia have existed for decades and cooperation between Baghdad and Moscow is primarily in the fields of energy, military cooperation and security. Major Russian oil companies such as Gazprom Neft and Lukoil operate in Iraq, mainly in the oil-rich south. It is known that Russian companies have huge investments in this Arab country, which have reached $13 billion. Iraq is a major player in the “oil field,” the second largest OPEC crude producer after Saudi Arabia. The US and EU have not yet imposed their vicious and illegal sanctions on Russia’s oil sector as part of punitive measures designed to damage Russian economy and financial system, and apparently oil contracts can now be concluded without much fear.
And, most likely, the issue of economic cooperation between the two countries will occupy one of the main places in the talks, because it is precisely now that Iraq needs a sharp economic boost, by the way, which is what the recently adopted huge budget of the country is aimed at. It is only now, after 20 years of brazen and unprovoked US invasion, that the country’s economy is showing positive signs of recovery. Baghdad needs to capitalize on this by diversifying its economy, attracting foreign investment and spending on rebuilding its infrastructure to create jobs and further improve its economic position. And Russia, which unlike the West has always been and is a reliable partner, can help develop the Iraqi economy.
Iraq has great potential for attracting foreign investment. This can be achieved in part by strengthening the country’s bilateral and multilateral economic and political ties. The upcoming talks can certainly, according to the Iraqi media, not only help Baghdad to pick up the pace of economic growth, but also become a booster for the economy and investment. In this regard, reference can be made to Iraqi-Egyptian relations when Iraq signed 11 memoranda of understanding with Egypt in June, covering several sectors including tourism, finance, administrative development and diplomacy, which immediately involved many Iraqi laborers in the economic sectors.
Another positive development in the country was the multibillion-dollar agreement that was recently signed between the Iraqi government and France’s Total Energies. This will also help address long-standing electricity shortages in Iraq, whose government is aiming to enter a new multipolar world. The $27 billion agreement is considered the largest foreign investment in the country’s history. It is worth noting that under the project, Saudi Arabian ACWA Power will build a 1,000-megawatt solar power plant in central Iraq. But many Iraqi newspapers noted the non-commitment of French companies operating abroad: there have been many cases when these companies, under pressure from the United States, withdrew from one or another country that had bad relations with Washington. The newspapers reported that if a French company gives in to US pressure on any pretext and leaves Iraq, it can be replaced without damage by Russian companies, which always fulfil their obligations.
Such a development would reduce the country’s dependence on gas imports from Iran and ease tensions between Washington and Baghdad over Tehran.
Iraq must get permission from the US to lift sanctions in order to import electricity and pay Iran for it. Baghdad last year agreed to repay a $1.6 billion debt to the Iranian government to ensure a steady supply of gas over the summer. It should be noted that Iraq itself has about 111 trillion cubic feet of proven gas reserves, which is the 12th largest in the world. However, years of conflict, created and for many years artificially supported by the US, have prevented Iraq from investing in its gas industry. It is important to note that the upcoming talks in Moscow will undoubtedly address the issue of cooperation between the two countries in Iraq’s gas complex, in which Russia is known to have extensive experience.
The development could also help address Iraq’s electricity shortages and eventually reduce its dependence on electricity imports from Iran. According to the press service of the Iraqi Prime Minister, both sides (Iraqi and Russian) explored ways to “overcome administrative and financial obstacles, optimize the federal budget to promote vital infrastructure projects in the electricity sector. The meeting included a comprehensive project review with a focus on advanced infrastructure projects related to power generation, distribution and private sector initiatives.”
This positive development provides an opportunity for many Russian and other companies to invest in Iraq. By the way, Baghdad can use its oil in exchange for other services that other international companies can provide, such as participation in the construction of its infrastructure. In addition, Iraq has concluded a multilateral cooperation agreement with Jordan and Egypt, which aims to deepen economic integration. This agreement will certainly benefit each country in various areas such as trade, security and the financial sector. It should be noted that Russia also has close cooperative relations with these Arab states, and in the future it is possible to think about creating some kind of economic union between Russia, Iraq, Egypt and Jordan. The commitment of all these countries to a multipolar world will clearly help create such a political and economic union.
In addition, it is vital for the Baghdad government to diversify its economy with the help of friendly countries such as Russia. Iraq, OPEC’s second largest oil producer after Saudi Arabia, unfortunately depends heavily on oil exports for its income. Oil exports account for almost 95 per cent of Iraq’s federal budget revenues. This dependence on oil puts the country at great risk when prices plummet, as they did in 2020.
It is quite evident that the Iraqi economy is showing positive signs. Baghdad needs to prioritize rebuilding its infrastructure, creating jobs, attracting foreign investment, diversifying its economy away from reliance on oil alone, investing in renewable energy and establishing close cooperation with other countries, especially Russia, with which it has enjoyed decades of fruitful and mutually beneficial cooperation.
Victor Mikhin, Corresponding Member of the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook”.