By Tahseen Wsu Abdullah
The withdrawal of coalition forces from Iraq concluded in September 2026, and with the last military convoy leaving Iraqi soil, a 20-year financial, political, and security umbrella disappeared with it. This withdrawal is not merely a military event, but the beginning of a highly sensitive economic phase in which Iraq must, for the first time alone and without international guarantees, deal with the market, investors, and its own currency. For more than two decades, the presence of the coalition acted as a guarantee for energy giants like ExxonMobil and TotalEnergies to remain in the south, but today that assurance is gone and companies are demanding a risk premium.
The cost of extracting a barrel of oil in the fields of Basra has risen from $12 to nearly $18, and any small attack on the Kirkuk-Ceyhan pipeline cuts $25 million a day from the country’s revenue, while 90% of Iraq’s budget still depends on oil. Alongside oil, the biggest shock has been to confidence and the currency. After the withdrawal, the price of the dollar on the local market jumped from 1,520 dinars to 1,680 dinars, and the Central Bank was forced in a short period to inject more than two billion dollars into the market to protect the value of the dinar, a move that depletes the country’s foreign reserves and is a temporary solution, not a strategy.
Foreign investors, especially from Turkey and the UAE, who for years had invested in real estate, energy, and trade in Baghdad and Erbil, have now suspended their projects and, under the pretext of re-evaluating the security situation, some have left Iraq. One Emirati company alone suspended an $800 million project in Basra. This is a socio-economic catastrophe in a country where 40% of young people are unemployed and 700,000 new graduates enter the job market each year.
At the same time, a shadow economy is growing in the security vacuum. According to World Bank estimates, about 30% of Iraq’s domestic trade is now under the control of various armed groups that collect taxes from trucks at main roads and unofficial border crossings. This has made goods 25% more expensive from Basra to Duhok, and the ordinary citizen pays the price. For the Kurdistan Region, the impact is direct, because the central government is shifting a large part of the budget that was previously supported by the coalition to buying weapons and increasing salaries for security forces and the Hashd al-Shaabi. This means a reduced share for the Region, delayed salaries, and stalled investment projects.
The withdrawal of the coalition is not the end of the story; it is a real test to see whether the Iraqi state can live without a bodyguard and become a normal state whose income comes from production, not from weapons and oil.