IRAQ

Iraq has the world’s fifth largest oil and twelfth largest natural gas reserves. The country is a founding member of the Organisation of Petroleum Exporting Countries (OPEC) and, in recent years, has become its second largest producer. The Iraqi government is considering to expand the oil and gas sector in the coming years, thereby increasing production capacities even more, although experts as well as members of the government call for diversifying the Iraqi economic and energy sector.

Iraq plays an important role for the stability of global energy markets, which is also of great importance for Germany as a successful technology and export nation.

Iraq is also a country that is significantly affected by climate change and the related consequences, for example regarding water supply. In addition to rising temperatures, these consequences include prolonged periods of drought, widespread desertification and the salinisation and reduced flow rate of rivers. Both the Tigris and Euphrates originate in eastern Turkey, whose dam projects produce further conflicts over water in the region. Similarly, Iranian dams reduce the water volume in two major rivers running through the northeast of Iraq and joining the Tigris. In addition, pollution and the absence of a wastewater infrastructure make it difficult to supply the population with drinking water. Last but not least, the oil industry contributes to water scarcity due to the high water consumption of oil production facilities.

Moreover, Iraq has so far met more than 90 percent of its growing domestic energy demand with fossil fuels. There is also a significant need for modernisation in the areas of energy efficiency and pipeline stability. Iraq’s relevance for Germany becomes obvious when it comes to implementing a comprehensive climate protection policy, that supports countries in reducing their CO2 emissions and in managing the consequences of climate change.

Germany also has an interest in Iraq achieving sustained domestic stability and becoming an anchor of stability in the Middle East in the long term. How successful these ambitions will be, depends not only on domestic and security policy challenges and the immediate fight against the consequences of the Covid pandemic, but also on whether the country succeeds in modernising its energy sector, thereby creating positive socioeconomic prospects, ensuring security of supply, and dealing with ecological challenges, especially those that are water-related.

Germany and Iraq have close and friendly relations, especially in the economic sector. Germany is highly regarded for its expertise in industry and technology, especially in the energy sector. In addition to being appreciated for its good economic cooperation, Germany also enjoys a high reputation in Iraq for its support in the fight against the so-called Islamic State (IS).

In general, the Iraqi government is prepared to fully support foreign investors. The electricity and water sectors are given priority. There is considerable need for action here, which is also partly reflected in corresponding national strategies. In 2014, the Iraqi Ministry of Water Resources developed a strategy for water and land resources in Iraq (SWLRI), which includes actions on water, food and energy security, along with environmental protection, for the period 2015 to 2035. Implementing the government’s projects would require 4 billion US dollars per year. Iraq also plans to source 10 percent of its electricity from renewable energies by 2028. The investment required for this is estimated at 50 billion US dollars. In the long term, the share of renewable energies is to be increased to up to 40 percent.

Whether these strategies can be implemented successfully, depends not only on issues of political stability but also on the availability of expertise and capacities. There is scope here for sustainable and long-term partner projects within the framework of German-Iraqi cooperation.

The current focus of German engagement in Iraq is primarily on humanitarian issues and security policy. In the period between 2014 (at the height of the IS reign of terror) and 2018 alone, the German federal government provided more than 1.7 billion euros for humanitarian aid, stabilisation measures, and long-term development cooperation. This makes Germany the second largest donor after the US. However, only about 4 percent of the BMZ’s total budget for Iraq has so far been allocated to local and selective water and wastewater-related infrastructure projects.

Energy policy cooperation with Iraq is currently focused on modernising the power grid and developing power plant capacity, with the additional objective of reducing CO2 emissions and thus contributing to climate protection. The private sector also plays a key role in these efforts. The German technology company Siemens, for example, won a first contract worth 700 million euros for the construction of a gas-fired power plant near Baghdad, as part of the Iraqi road map for reconstructing the power grid. The country plans to invest a total of 12 billion euros in its power grid.

Basically, there is an urgent need for investment in almost all public sectors in Iraq, including electricity and water supply, which is still suffering from the destruction of decades of war and conflict.

The reconstruction and upgrading of these infrastructures creates opportunities for German-Iraqi cooperation projects: both in public development cooperation when it comes to reconstruction aid or to improving the water supply for the Iraqi population, and in the private sector, as exemplified by Siemens’ commitment to the Iraqi energy sector. Projects that have already begun – such as those aimed at stabilising the drinking water and sanitation supply for refugee camps and surrounding host communities in the Autonomous Region of Kurdistan (ARK) – provide a model for larger-scale infrastructure projects in all of Iraq.

Iraq faces significant challenges that the country is not able to meet on its own and that are not limited to water scarcity, the consequences of climate change and a deficient energy infrastructure.

Nevertheless, Germany should continue to expand its engagement in these sectors by implementing specific projects. This should also include strong support for Iraq in building up capacity for monitoring the implementation of national strategies in these sectors. In this way, problems can be identified and readjustments can be made during operational implementation

The nationwide wave of protests that started in 2019 was also fueled by the population’s dissatisfaction with poor water and electricity supply. Improvements in these areas are a necessary condition for diversifying the Iraqi economy, reducing its dependence on oil and creating much-needed jobs. Political reforms and anti-corruption measures also need to be implemented in Iraq – in addition to bolstering the ailing health care sector – in order to stabilise the country. Germany should therefore actively call on Iraq to address these issues, while pointing out that, otherwise, the engagement of the German private sector and the implementation of development policy projects would be made far more difficult.

Only if progress is made in alleviating the country’s key socioeconomic and environmental problems and in creating a new basis of political legitimacy, can Iraq become an anchor of stability in the Middle East and a partner for managing global resources and climate issues.

Gregor Jaecke headed the KAS Syria / Iraq office from January 2019 until April 2022.
Judith Butzer was a research assistant at the KAS Syria / Iraq office.

Last update: 5 May, 2022