The Kurdistan Region must continue to push for economic diversification, forge stronger regional alliances, and attract foreign investment.
By Saadula Aqrawi
Of course, the global economy is a delicate and interconnected system, influenced by geopolitical shifts, market forces, and global trade policies. The current era of economic tension, marked by trade wars, protectionism, and shifting alliances, has had far-reaching implications for countries and regions around the world. One region that has felt these reverberations keenly is the Kurdistan Region and, by extension, the broader Iraqi economy.
I believe when the countries impose tariffs or other trade barriers on each other in response to perceived unfair trading practices, with the goal of gaining a competitive advantage. In recent years, the most notable trade war has been between the United States and China, but other regions, including Europe and emerging markets, have also engaged in trade conflicts. These trade disputes often involve tariffs on goods, restrictions on technology transfer, and limitations on foreign investments.
U.S. tightens monetary policy or raises interest rates and the capital flight and higher costs of foreign borrowing. And of course, this trade conflict has had numerous effects on global trade flows, investment patterns, and market stability. While large economies are better equipped to withstand these pressures, smaller and emerging markets, such as Iraq and the Kurdistan Region, face unique challenges and risks. Iraq and the Kurdistan Region are vulnerable to shifts in the global economy due to their dependence on oil exports, reliance on international trade, and complex political situation.
Yes, Iraq’s economy is heavily reliant on oil exports, with oil accounting for over 90% of government revenues. The global trade war has exacerbated price fluctuations in the oil market, which has a direct impact on Iraq’s financial stability. The Kurdistan Region also maintains strong economic ties with Turkey, particularly in terms of oil exports and trade. Turkey’s position in the trade war between the U.S. and EU has led to instability in the regional trade environment, affecting the Kurdistan Region’s ability to secure favorable trade agreements and investment opportunities. I believe that the Kurdistan Region’s political environment is complex, with its own government engaging in negotiations with Baghdad while also navigating pressures from external actors like Turkey, Iran, and the U.S. The global trade war and shifting geopolitics have made investors more hesitant to engage with the region.
Yes, also I do believe that the ongoing global economic and trade war, combined with Iraq’s internal challenges, has had a significant impact on the country’s economic stability and future prospects. For the Kurdistan Region, its unique position as a semi-autonomous entity facing both internal and external pressures makes it particularly vulnerable to shifts in global trade dynamics. To weather these challenges, Iraq and the Kurdistan Region must continue to push for economic diversification, forge stronger regional alliances, and attract foreign investment. While the path ahead remains uncertain, with the right policies, the region can potentially emerge stronger from these global economic disruptions.