Al-Hurra website highlighted the trend of Gulf funds towards investing in various Iraqi sectors during the past two years, indicating that this trend raises many questions about its economic feasibility.
The website mentioned in a report seen by Shafaq News Agency: Gulf capital has been going to Iraq at an accelerated pace over the past two years, which reflects the attractiveness of Baghdad as a new investment destination for the Gulf Cooperation Council countries.
After decades in which Iraq suffered from the scourge of wars and internal violence, Saudi Arabia, Qatar and the UAE entered forcefully through massive economic investments in a country where Iran was able to gain a foothold after the fall of Saddam Hussein’s regime in 2003.
Last Friday, the Iraqi Ministry of Planning announced the signing of 12 memorandums of understanding with Saudi Arabia for “specific investment projects,” according to a statement received by Shafaq News Agency.
The ministry said that the signed memorandums of understanding “came with the aim of enhancing cooperation in a number of qualitative investment projects in Iraq.”
Financial and political returns
But this great Gulf demand for Iraq opens the door to questions about the economic feasibility of these huge investments in a country that has suffered from political and security instability over the past years.
Analysts who spoke to the Al-Hurra channel website believe that Iraq has promising investment opportunities that enable the GCC countries to achieve financial and political returns from these projects that flowed in various fields.
Middle East Policy Research Fellow at the International Institute for Strategic Studies, Hassan Al-Hassan, told Al-Hurra website that “Gulf countries often use investments as a tool to achieve financial and political returns at the same time.”
He added, “Through their increasing investments in the energy and real estate sectors in Iraq, the Gulf states are seeking to benefit economically from the developing Iraqi market and expand their influence in Baghdad to compete with Iranian influence.”
The Iraqi government is looking forward to attracting more investments from countries in the region with the aim of treating the country’s economy, which has been damaged by decades of wars and unrest, according to Reuters.
In this context, Ihsan Al-Shammari, professor of public policy at the University of Baghdad, said that “Iraq is a fertile land for foreign investment,” especially in light of a significant decline in the investment sector, which was affected by several factors, including security unrest, internal violence, and the war against ISIS, according to the report. His expression.
Speaking to Al-Hurra website, Al-Shammari continued, saying: “Iraq has great investment opportunities, and these are most of the proposals of Iraqi officials during foreign visits, because the state needs the entry of foreign investment companies at all levels of public life.”
The Gulf states withdrew from Iraq after their invasion of its neighbor, Kuwait, in 1990, and this continued until the past few years, before relations gradually improved significantly during the era of the former Iraqi Prime Minister, Mustafa Al-Kadhimi, specifically after he moved in the Gulf capitals.
Billion investments
In 2022, the Saudi sovereign wealth fund announced the establishment of a new company with a capital of $3 billion to invest in Iraq, which is part of a Saudi program to invest in 5 Arab countries.
These investments cover various fields, including infrastructure, mining, agriculture, real estate development, and financial services.
The UAE, which recently strengthened its investments in Iraq, said that it is “keen” to strengthen its strategic partnerships with Baghdad “in all fields.”
Thani Al-Zeyoudi, who holds the position of Minister of State for Foreign Trade in the Emirates, said: “There is a mutual keenness to develop economic relations in a way that serves common interests and provides more opportunities for the business communities and the private sector in both the Emirates and Iraq, which was reflected positively in the trade data.” Non-oil infrastructure and mutual investment flows,” the official Emirates News Agency (WAM) reported.
In 2021, Abu Dhabi announced the pumping of investments worth $3 billion into Iraq as part of “a new effort to strengthen economic and investment relations between the two brotherly countries,” according to a joint statement issued by the two countries.
For its part, Qatari funds flowed into Iraq after a visit by the Emir of the country, Sheikh Tamim bin Hamad Al Thani, to Baghdad in June 2023.
Hours after that trip, 3 Qatari companies and the Iraqi National Investment Authority agreed to develop projects worth $9.5 billion in Iraq, including building two electricity generating plants with a total capacity of 2,400 megawatts, according to Reuters.
In July 2023, Qatar entered into a huge deal launched by Iraq with Total Energy Company, worth $10 billion, in a project aimed at generating electricity from solar energy and gas burned in oil fields.
Visiting fellow at the European Council on Foreign Relations, Hamza Haddad, who follows Gulf investments in Baghdad, believes that there is “political acceptance” on both sides to pump this money.
Haddad told Al-Hurra website that the Gulf countries, for their part, finally accepted the idea of the Iraqi Shiite political system that was formed after 2003, adding that “the Sunnis and Kurds (inside the country) also accepted that and are dealing with it.”
He explained that these factors contributed to achieving internal security stability in Iraq, which reflected on it as an attractive destination for Gulf investments, especially since the country has a large population.
Competition with Iran
Iraq suffers from dilapidated basic infrastructure and rampant corruption throughout the country, which has a population of 43 million people, a large segment of whom live below the poverty line.
Iraq is ranked 154th among 180 countries suffering from corruption in the world during the year 2023, after advancing 6 places compared to 2022, according to a report issued annually by Transparency International.
According to the United Nations, a third of Iraqis live below the poverty line despite their country’s large oil resources, which have membership in the Organization of the Petroleum Exporting Countries (OPEC).
In this regard, the Saudi writer and political analyst, Saad Al-Hamid, said, “The influx of Gulf capital into Iraq came after suffering from the interference of neighboring countries inside Iraq, which affected the economic and development situation there.”
He continued his speech to the Al-Hurra website that “any economic success must come through a stable political situation,” noting that “in light of the relative stability in Iraq now, there are many qualitative opportunities that benefit from Saudi Arabia and the Gulf Cooperation Council countries.”
Also, Saudi Arabia is looking forward to achieving a good climate for investment in neighboring countries so that it is reflected throughout the region, which will also help Riyadh achieve the outcomes of the Kingdom’s Vision 2030, according to Al-Hamid.
Al-Hamid also said that through these investments, which amount to billions of dollars, “the Arab Gulf states are trying to a great extent to restore Iraq to its normal state and stop Iranian interference inside Iraq,” especially in light of the good relations between Tehran and Riyadh now, he said.
Al-Shammari goes in a similar direction, saying that these Gulf investments are “part of the competition for Iranian political and economic expansion in Iraq.”
Economically, Baghdad depends on Tehran to import a third of its natural gas needs to operate various power plants in the country, which is considered unable to achieve self-sufficiency in the field of energy.
Haddad cited Doha’s entry into the huge Total Energy deal as evidence of the Gulf’s desire to invest in Iraq, especially since Baghdad “burns the same amount it buys from Iran in its fields,” he said.
He said that this deal “reduces Iranian pressure (on Iraq) regarding its threats to cut off gas supplies.”
Gulf “ocean insurance”.
But the extent to which the Gulf states are able to compete with Iranian influence politically and economically is still unclear, given that these investments are in their infancy.
Al-Shammari, who is also head of the Center for Political Thinking in Baghdad, believes that the Gulf states’ ability to influence Iraqi policies “will be gradual, not direct.”
He continued by saying that “some of the parties in charge of the political decision still have a different vision, which may be the continuation of Iranian influence at the expense of returning to the Arab environment,” adding that investments “will gradually affect when governments change and the influence of Iran’s allies inside Iraq weakens.”
Here, Al-Hassan pointed out that “the spread of deep Iranian influence in Iraq hinders the attempts of the Gulf states to change the balance of power.”
However, he said that the Gulf states “cannot completely abandon their efforts to find a state of closer rapprochement with Iraq economically and politically in order to secure their strategic surroundings.”
shafaq.com
