Iraqi Prime Minister Seeks Economic Reform and Distance from Iran
Iraqi Prime Minister Ali al-Zaidi, praised by U.S. President Donald Trump, is attempting to pivot Iraq away from Iranian influence. The focus is on major energy deals and combating systemic corruption.
Ali al-Zaidi, the Prime Minister of Iraq who has been in office for only a few months, received praise from President Donald Trump two weeks ago at a special summit at the White House, during which energy deals and long-term partnerships were signed between the two countries.
In a new episode of the 'Money Axis' podcast, we discussed the changing Iraq — a country trying to fight terror, recover economically, and increase oil production, but still not ready to clearly choose a side between Iran and the USA.
'The new Prime Minister of Iraq is a businessman who did not grow up in military or security mechanisms, nor was he a member of parliament; he was the chairman of an Islamic bank. Al-Zaidi was essentially chosen as a compromise after general elections failed to produce a government. This symbolizes an understanding within Iraq that the country's economic potential must be realized,' says Calcalist commentator Doron Peskin.
A few days before his visit to the White House, al-Zaidi was in Tehran for the funeral of Ali Khamenei, indicating that despite the desire to get closer to the USA, Iraq is still unable to move completely away from Iran. Nevertheless, the visit to the White House included the signing of 60 billion dollars in agreements, mainly in the energy sector, with several large American companies.
'Iraq is one of the countries with the largest oil reserves in the world, and it is not realizing its potential in terms of production and export volumes. In the USA, they understand this; there is great potential for developing oil fields and a new market,' says Peskin. Iraq is heavily dependent on the energy sector, with oil revenues accounting for about 80% of all state income.
To diversify, Iraq is pursuing logistics projects like the 'Development Road,' an estimated 17-20 billion dollar project in partnership with the UAE, Qatar, and Turkey, alongside the expansion of religious tourism.
Corruption remains a major hurdle. Estimates suggest that since 2003, about 300 billion dollars in oil revenues have disappeared in Iraq. Al-Zaidi has declared war on this, though his ability to confront the Shiite groups involved is limited.
Beyond economic challenges, the primary task for al-Zaidi is security: taking control of pro-Iranian militias and stopping Houthi infiltration. 'Economic recovery goes through security recovery. Reports in recent weeks about the establishment of the Houthis in Iraqi territory are certainly something that should also worry Israel,' says Peskin.
