By Hiwa M. Khalil
On July 28, 2026, Iraqi Prime Minister Ali Zaydi traveled to Turkey and finalized a series of energy and investment deals with Ankara. Among them was an agreement on the “development road” project running from Basra and Rabia into Turkey. The excluding the Kurdistan Region from this route isn’t really about economics — it’s a political move meant to prevent the Region from becoming a major economic hub, both regionally and within Iraq.
Even though a Kurdish representative was part of Zaydi’s delegation, the Kurdistan Region has still been left out of the so-called “Dry Canal or development Road”— a key channel for moving Iraqi oil and gas to European markets. A conference on Faw Port held in Basra in late 2022 concluded that routing trade through Kurdistan was actually more practical than routing it through Syria, partly because Syria has multiple competing power centers in its north. Even under the previous Assad government the conference took place, Syria’s stability hasn’t improved much under the current leadership of Ahmad al-Sharaa.
The Iraqi government has offered another justification: rerouting the Road through Kurdistan would supposedly add three years to the timeline and roughly $2 million to the cost. However, Kurdistan’s population — over seven million people — represents a large market. Spreading a $2 billion cost across that population comes to under $300 per person, which the author frames as a small price relative to the market’s size. By contrast, that same amount is negligible against Iraq’s 2023 budget of $154 billion (Iraq, the piece notes, still lacks a formal annual budget). So, keeping the Development Road away from Kurdistan is a political choice, not a financial necessity.
Also, for Europe to actually benefit from Iraqi energy exports, Baghdad and the Kurdistan Regional Government need to first resolve their long-standing disputes — especially given that the Strait of Hormuz has been closed to Iraqi oil shipments. Ultimately, Kurdistan will end up folded into Iraq’s Development Road project, which itself connects to China’s Belt and Road Initiative, since Iraq has openly signaled its interest in participating.
On Israel’s potential stance toward this project, it could be ties to China-Iran trade relations, which it says haven’t actually grown much. Contrary to expectations that U.S. sanctions on Iran would push China to expand trade with Tehran, this hasn’t materialized — Chinese companies and banks are heavily invested in maintaining access to the U.S. market and the dollar system, which limits their willingness or ability to circumvent sanctions on Iran. As a result, Israel is described as more focused on its own national security than on any China-Iran trade relationship, particularly in the context of the 2020 Abraham Accords and its role as a stabilizing force in the region. An eventual U.S.-Iran conflict would compel Baghdad to factor in Kurdistan’s geopolitical importance — otherwise, Iraq’s economy could face long-term collapse.