In October 2019, the streets of Baghdad were filled with protestors to bring down their respective corrupted, irresponsive leaders and government. In the next two months, many geopolitical events changed the situation in the region. The violent protest on the United States Embassy in Baghdad, the murder of a US contractor, the assassination of Major General Qassem Soleimani of Iranian Quds forces and Al-Muhandis of Iraq’s Popular Mobilisation Units (PMU), the missile attacks targeting the US missions in Iraq and other events surrounding it aggravated the regional geopolitical tensions. In the meantime, along with these events, the new year witnessed a progressive spread of the novel coronavirus across the region and world- further deteriorating the regional economy. The Great Lockdown forced the Iraqi economy to a slowdown and affecting businesses across the region. The shutdown even stopped the production of oil, Iraq’s most substantial revenue-earning sector.
The protestors pressurized the change of leadership while many players were also involved in lobbying, especially concerning the closeness of Shia groups in Iraq and Iran and the US in the other side given the history of installation of the political structure since 2003. Following the protests, the former Prime Minister Al-Maliki was replaced by new Prime Minister Mustafa al-Kadhimi in April. Interestingly, new PM lived most of his life in exile in the UK and US, and while he was the head of Iraq’s Intelligence Service, he managed to cement his connections in the western world and somehow balanced by bolstering his ties with Tehran as well. Even now the incumbent Iraqi Prime Minister would be trying out to balance his relations between US and Iran, given that both are important in his foreign policies. While speaking to the US ambassador in Baghdad, Mathew H. Tueller, after he swore-in, he mentioned that “Iraq will not be a ground for settling accounts and launching attacks on any neighbouring or friendly country”- referring to the assassinations mentioned earlier. At the same time, Prime Minister Kadhimi reiterated the same while meeting with the Iranian Ambassador as well. However, his first foreign visit as a Prime Minister to Tehran was on 20 July 2020, and this showcases the importance while he pressed on the fact that “Iraq would not allow any threat to Iran coming from its territory”.
Interestingly, a month later, the Iraqi PM is meeting with the US President Donald Trump. In a statement from White House, mentioned that “The visit comes at a critical time for both the United States and Iraq as we continue our collaboration to ensure the enduring defeat of ISIS and address the challenges from the coronavirus pandemic. As close partners, the United States and Iraq will look to expand our relations across a range of issues, including security, energy, health care, and economic cooperation”. Iraq would be willing to discuss the withdrawal of the remaining 5000 US troops, which is still there to fight against ISIS, from the country. Iraq and the US signed the agreement of strategic framework in 2008 that paves the way for the exit of US forces since 2011; the various geopolitical issues have made the troops installed in the country even now with further strategic interests in the region. The above statement by the Press Secretary of the white house gives a clear hint that the US would not be interested in pulling out the remaining troops anytime soon. With the US elections approaching, President Trump might discuss on the Iran angle and economy-related issues, especially on US firms’ investments in Baghdad, given the coming elections.
Earlier this year on 10 January 2020, Morgan Ortagus, spokesperson, the US Department of State, mentioned that “At this time, any delegation sent to Iraq would be dedicated to discussing how to best recommit to our strategic partnership—not to discuss troop withdrawal, but our right, appropriate force posture in the Middle East”. Therefore, it sends a clear message that the US continues its commitment to not discuss on the withdrawal, while it would like to strengthen the strategic partnership in other areas especially on Energy Ties which is hindered by Geopolitical issues. Given the trembling financial situation in Iraq, Prime Minister Al-Khadimi would also be more concerned about the economy-related issues and would be interested in requesting financial aid as well. Interestingly, Iraq’s oil sector has remained state-owned and guided by the oil ministry; however, even the US companies have to compete for a licence in open tenders, as fierce competition exists. Many efforts by the past US administrations and even the current Trump administration advocated for bilateral negotiations for promoting the interests of US-based companies, which were unsuccessful. However, this is an opportunity for the Trump administration to put forward this aspect as well. Surprisingly only Exxon Mobil is the US Company that has been able to play a substantial role in Iraq’s oil sector, as it has been operating in the giant West Qurna field 1 in Southern Iraq and jointly operating another field with Norway’s DNO in semi-autonomous Kurdish Region in Northern Iraq.
To note, European and Asian companies dominate the energy sector in Iraq. The influence of British Petroleum and China National Petroleum Corporation jointly operated the giant Rumaila field, which produces 1.5 million barrels per day(b/d) out of 5 million b/d, which is Iraq’s estimated capacity. Iraq’s major oil exporters are China and India. Over the last few years, Iraq has emerged as the top suppliers of oil to India, competing with Saudi Arabia for the top position; However, Saudi Arabia has emerged to the top supplier in April 2020 due to the pandemic and deep discount provisions offered by them to the refineries. Consistent instability in the oil sector would affect the Indian economy and may compel the south Asian nation to search for other options, being a significant consumer of Iraqi oil. Moreover, this indicates that Iraq’s energy sector is critical not only for the US but also for the emerging economies.
Baghdad’s close relations with Tehran has always played a complicated role in Iraq-US ties relations and has been receiving US waivers for importing gas and electricity from Iran since 2018. Putting sanctions on these imports would likely destabilize the relationships and further leading Baghdad closer with Tehran politically. However, the US has extended the waivers keeping this in mind. The energy sector is Iraq’s lifeline, and with this current financial instability and health crisis, Iraq would require tangible financial assistance, and in the US it sees a potential friend who can provide the necessary support. Therefore, both Iraq and the US would be hopeful for a positive outcome from the meeting, given the political circumstances and economic situation across the region.
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