Estimates from an international research center reveal that the recent intensive dialogues sponsored by the US Federal Reserve, between Baghdad and major banks in the Middle East, within the “dollarization” crisis, will strengthen the balance of trade and investment exchange with India, China and Turkey, against Tehran’s ambitions, and that matters are taking place under “American auspices.” “To adjust economic relations within a large and promising market in Iraq, with an understanding of the plans of the Islamic Republic when it wants to adapt to the new rules in the world of finance, sanctions, and raging wars.
According to Mehdi Dheghmi, head of the Iranian Trade Development Organization, Tehran will try to increase its contribution to the volume of trade and investment exchange with Iraq to rise to $40 billion in the year 2035 ($13 billion currently).
Therefore, the administration of US President Joe Biden is working to dismantle the episodes in which Iraq depends on Iran, starting from the energy sector, through Iraq investing its large reserves in the field of natural gas, which amount to 133 trillion cubic feet.
If this is achieved, Iraq will be able to achieve self-sufficiency in energy within the next five years, saving approximately 8 billion dollars annually, the value of gas imported from Iran to generate electricity.
In this area, the Central Bank of Iraq has been engaging in talks for weeks with a number of central banks in the region and the world to discuss the issue of expanding the basket of currencies that Iraq deals with in its foreign trade.
These discussions are taking place under the direct supervision of the US Treasury, where an understanding was reached with the central banks of Iran, Turkey, the Emirates, China, India, and the European Union regarding the currencies that will be used in Iraq’s foreign trade.
China occupies the forefront of trade exchange between Iraq and the countries of the world, as the numbers rose to reach 53.37 billion dollars, most of which is based on oil exports, while trade exchange with India reached approximately 37 billion dollars annually, especially with the increase in Delhi’s imports of Iraqi oil.
As for the exchange between Iraq and the European Union, it rose to the level of 24 billion euros last year, at a time when the numbers are expected to rise to double, especially with Iraq’s willingness and intention to export natural gas as part of Europe’s alternatives to Russian gas imports.
Iraq also recently joined the European Development and Reconstruction Bank, as this membership allows Iraq to develop its banking sector and create the appropriate climate for investment.
As the scope of trade between Iraq and the countries of the world expands, the connection of international interests to the Iraqi market increases, ensuring its stability and ensuring global energy security.
Geography plays an important role in the trade relationship between Iraq and Iran. The long borders between the two countries, the large number of commercial outlets, and the cheapness of Iranian goods compared to Iraqi products push towards increasing Iranian exports to Iraq. Iraqi goods exported to Iran are not equivalent to a tenth of Iranian goods exported to Iraq, which tilts the balance of trade in favor of Tehran.
This leads to an increase in the monetary supply of the Iraqi dinar in the Iranian market, where it is later used to buy the dollar and withdraw it from the Iraqi market.
Expanding the scope of trade between Iraq and the countries of the world would reduce the volume of trade with Iran in the medium and long term by 30%, thus reducing the volume of trade exchange between the two countries.
It is expected that China, India, and Turkey will control the volume of trade exchange with Iraq, at the expense of trade with Iran. The development path that Iraq intends to embark on will increase the volume of trade between Europe and Asia via Turkey. It will also increase the access of goods to the Iraqi market, reducing their cost and arrival time and enhancing competition for the benefit of the Iraqi consumer.
Within the framework of this equation, the government of Iraqi Prime Minister Muhammad Shia al-Sudani will have to search for and maintain a point of balance in its international and regional relations.
Developing Iraq’s trade relations with the countries of the world will be the fundamental turning point in Iraq’s foreign policies and ensuring its ability to manage its local files in accordance with the national interest.
