At a glance
- Waverley views Iraq as a country of genuine reconstruction and diversification potential - substantial recent foreign-investment inflows, an ambitious NIC-led investment drive, and flagship infrastructure projects like the Development Road - operating alongside an acute, regionally-driven fiscal crisis, a newly installed and still-incomplete government, and an unresolved Iran-backed militia disarmament standoff with real escalation potential.
- For investors able to navigate this volatility and engage through the National Investment Commission's established channels, Iraq offers real upside in infrastructure, logistics and non-oil sectors; for investors requiring government-payment certainty or insulation from US- Iran geopolitical competition, the current environment warrants significant caution.
Key risks
Iraq combines genuine, treaty-backed investment-promotion efforts and substantial recent foreign-investment inflows with an acute, Hormuz-driven fiscal crisis, a newly installed government with an unfilled cabinet, an unresolved Iran-backed militia disarmament standoff carrying real escalation risk, and a chronic Kurdistan-Baghdad revenue dispute.
These risks are structural and political rather than signs of active war inside Iraq itself, but they compound to create a genuinely volatile operating environment.
Suited to investors with high risk tolerance comfortable navigating a politically fragmented, oil-dependent economy with genuine reconstruction and diversification upside, particularly in infrastructure, logistics and non-oil sectors targeted by the NIC.
Where And How To Enter
Key Investment Locations
| Location / Region | Strategic Importance | Priority Sectors |
|---|---|---|
| Baghdad | Capital and political/commercial center; home to the National Investment Commission | Services, finance, government-linked contracting |
| Basra | Southern oil hub and principal export terminal, now constrained by the 2026 Strait of Hormuz disruption | Oil export infrastructure |
| Erbil (Kurdistan Region) | Regional capital with a relatively more liberalized investment climate, entangled in the chronic Baghdad-KRG revenue dispute | Services, real estate, trade |
| Kurdistan oil fields / Ceyhan pipeline corridor | Site of a years-long, intermittently halted crude- export dispute between Baghdad and the KRG | Oil production and export infrastructure |
| Nineveh / Mosul | Post-ISIS reconstruction region with agriculture and manufacturing potential | Agriculture, reconstruction, manufacturing |
| Najaf / Karbala | Shia pilgrimage cities anchoring a large religious- tourism economy | Tourism, hospitality |
| Development Road corridor (Grand Faw Port to Turkey) | Flagship transport-infrastructure project positioning Iraq as a regional logistics hub, bypassing the Strait of Hormuz | Transport and logistics infrastructure |
Source: Iraq Waverley Gateway Guide, PDF page 1. Figures and dates are reproduced from the source document.
Investor Entry Routes
● National Investment Commission (NIC) provides single-window investment facilitation and incentive approval
● Public-private partnership structures increasingly used to ease state-sector dominance of major projects
● Investment-protection treaty membership and a published investment map listing more than 100 strategic opportunities
● Newly approved pipeline routes to Turkey and Syria offering export diversification away from the Strait of Hormuz
● Kurdistan Regional Government's own semi-autonomous investment framework, subject to the unresolved Baghdad revenue- sharing dispute
● Development Road project (Grand Faw Port to Turkey), Iraq's flagship transport-corridor investment initiative
Market-entry Observation
Iraq's economy remains overwhelmingly dependent on oil, which supplied roughly 84% of government revenue in early 2026, even as the National Investment Commission has pursued genuine diversification: Arab and foreign investment topped $100 billion over the two years to mid-2025, and the NIC has targeted up to $250 billion in new investment across industry, infrastructure, housing, energy, education and healthcare over the following two years, backed by a one-stop-shop facilitation mechanism and investment-protection treaty membership. That diversification push has been overshadowed in 2026 by an acute fiscal crisis: Iraq's budget deficit more than tripled from $5 billion at the end of April to $16 billion at the end of June, with first-half 2026 revenue of roughly $27.5 billion against spending of nearly $43.6 billion. Oil revenue fell sharply after Iran's closure of the Strait of Hormuz disrupted crude exports from southern Iraq - 2025 oil revenue had been $85 billion at 3.4 million barrels per day - and public domestic debt reached a record level by
the end of May 2026. Iraq has approved new pipeline routes to Turkey and Syria intended to bypass the Hormuz chokepoint, but these remain under development.
Politically, Iraq's November 2025 parliamentary elections returned Prime Minister Mohammed Shia al-Sudani's coalition as the largest bloc, but his path to a second term collapsed after Coordination Framework power-broker Nouri al-Maliki opposed him; when Maliki himself emerged as the Framework's preferred candidate, US President Trump intervened directly, warning that US support to Iraq would stop if Maliki became prime minister. The eventual compromise, Ali al-Zaidi - a 40-year-old political newcomer from the private and academic sectors - was sworn in on May 14, 2026 with only 14 of 23 cabinet seats filled, the interior and defense ministries still unresolved. Al-Zaidi inherited the central US demand to disarm Iran-backed militias within the Popular Mobilization Forces, originally tied to a September 30, 2026 deadline and a scheduled US troop withdrawal; as that deadline approached, al-Zaidi began backing away from a firm date, key factions including Kataib Hezbollah, Kataib Sayyid al-Shuhada and Harakat al-Nujaba rejected disarmament outright, and the ruling Coordination Framework formed a mediating committee to prevent intra-Shia conflict.
Separately, Baghdad's chronic dispute with the Kurdistan Regional Government over oil-export revenue sharing has left the Ceyhan pipeline to Turkey intermittently halted for years, a recurring structural barrier to Kurdistan-linked investment.
Investor Risk & Market Access
Key Entry Barriers
| Issue | Potential Impact | Possible Mitigation |
|---|---|---|
| Acute fiscal crisis | Budget deficit tripled from $5B to $16B in two months (April-June 2026), driven by Hormuz- related oil-export disruption | Monitor fiscal data closely; prioritize revenue structures not dependent on government payment capacity |
| Oil-revenue dependency and Hormuz exposure | Oil supplied roughly 84% of government revenue in early 2026, with exports exposed to regional conflict-driven shipping disruption | Monitor progress on new Turkey and Syria bypass-pipeline routes |
| Weak, partial-cabinet government | PM al-Zaidi took office in May 2026 with only 14 of 23 ministries filled, including interior and defense still vacant | Monitor cabinet completion and ministerial appointments relevant to any sector of engagement |
| Iran-backed militia disarmament standoff | Key Popular Mobilization Forces factions have rejected a US-linked disarmament deadline, with risk of intra-Shia conflict or renewed US pressure | Monitor Coordination Framework mediation and US policy signals |
| Kurdistan-Baghdad revenue dispute | A chronic, years-long disagreement over the Ceyhan pipeline and oil-payment framework has repeatedly halted Kurdistan crude exports | Monitor budget-law implementation and KRG- Baghdad negotiations before committing Kurdistan-linked capital |
| Entrenched corruption | Iraq ranks persistently poorly on international corruption indices; high-profile cases such as the "theft of the century" (~$2.5B) remain only partially recovered | Engage reputable local partners and maintain rigorous counterparty due diligence |
| US-Iran geopolitical crossfire | Iraq remains a primary arena for US-Iran competition, with Washington pressing for militia disarmament and reduced Iranian influence | Monitor US and Iranian policy signals toward Baghdad |
Source: Iraq Waverley Gateway Guide, PDF page 2. Figures and dates are reproduced from the source document.
Investor Risk Note
Iraq combines genuine, treaty-backed investment-promotion efforts and substantial recent foreign-investment inflows with an acute, Hormuz-driven fiscal crisis, a newly installed government with an unfilled cabinet, an unresolved Iran-backed militia disarmament standoff carrying real escalation risk, and a chronic Kurdistan-Baghdad revenue dispute. These risks are structural and political rather than signs of active war inside Iraq itself, but they compound to create a genuinely volatile operating environment.
Market Access
Iraq's National Investment Commission offers a one-stop-shop facilitation mechanism, investment-protection treaty membership, and a published map of more than 100 strategic opportunities across industry, infrastructure, housing, energy, education and healthcare. The Development Road project - a planned transport corridor from the new Grand Faw Port to the Turkish border - is Iraq's flagship bid to become a regional logistics hub. The domestic market is substantial (roughly 45 million people), though purchasing power and non-oil private-sector depth remain limited.
Who Should The Investor Meet?
Institutional Landscape
| Actor | Why It Matters | Waverley Engagement Angle |
|---|---|---|
| Prime Minister Ali al-Zaidi | Sworn in May 2026 as a political newcomer; must balance US and Iranian pressure while completing his cabinet | Relevant to any high-level policy or sector- specific engagement |
| National Investment Commission (NIC) | Central single-window investment-facilitation and incentive body | Primary entry point for structuring any new investment |
| Ministry of Oil (Minister Basim Mohammed) | Oversees the oil sector that supplies the large majority of government revenue | Relevant counterpart for any energy-sector engagement |
| Coordination Framework (Shia alliance, incl. Nouri al-Maliki) | Dominant force in government formation and a key mediator in the militia-disarmament standoff | Central to political-risk monitoring |
| Popular Mobilization Forces and Iran-backed factions | Kataib Hezbollah, Kataib Sayyid al-Shuhada and Harakat al-Nujaba, subject to a contested US- linked disarmament push | High-risk; not a realistic engagement channel for conventional investors |
| Kurdistan Regional Government (KRG) | Semi-autonomous regional government, party to the chronic oil-export revenue dispute with Baghdad | Direct engagement channel for Kurdistan-linked projects |
| US and Iranian diplomatic missions | Both actively shaping Iraqi government formation and policy | Relevant to any politically sensitive sector engagement |
Source: Iraq Waverley Gateway Guide, PDF page 3. Figures and dates are reproduced from the source document.
Current International Business Channels
Engagement channels run through the National Investment Commission, the Iraqi Federation of Chambers of Commerce, and sector- specific ministries, notably Oil; for Kurdistan-linked projects, engagement also requires direct KRG channels given the territory's semi- autonomous investment framework.
Investor Profile Best Suited
Suited to investors with high risk tolerance comfortable navigating a politically fragmented, oil-dependent economy with genuine reconstruction and diversification upside, particularly in infrastructure, logistics and non-oil sectors targeted by the NIC. Less suited to investors requiring government-payment certainty, security-sector stability, or insulation from US-Iran geopolitical competition playing out inside Iraq.
From Intelligence To Engagement
STEP 1: Engage the National Investment Commission Approach the NIC for project screening and incentive structuring.
STEP 2: Assess fiscal and payment risk Evaluate government-payment capacity for any state-linked contract given the current budget crisis.
STEP 3: Monitor political and security signals Track cabinet completion and the militia-disarmament standoff for policy and security-risk developments.
STEP 4: Engage KRG channels for Kurdistan projects Work directly with the Kurdistan Regional Government and monitor the Baghdad revenue-sharing dispute.
STEP 5: Conduct enhanced anti-corruption due diligence Apply rigorous counterparty due diligence to all local partners.
Waverley's Role
● Investment facilitation and introductions to the National Investment Commission and relevant ministries
● Fiscal and payment-risk monitoring for state-linked engagement
● Political and security-risk monitoring of the militia-disarmament standoff and cabinet formation
● Kurdistan-Baghdad dispute tracking for energy-sector investors
Investor Call To Action
Investors should request an updated fiscal-risk briefing from Waverley before structuring any state-linked contract or payment stream in Iraq.
Investors considering Kurdistan-linked energy projects should engage Waverley for ongoing monitoring of the Baghdad-KRG revenue dispute before committing capital.
Waverley Investor Intelligence & Opportunity Pipeline
Near-term opportunities are concentrated in the Development Road transport corridor, non-oil diversification sectors targeted by the NIC's $250 billion two-year investment drive, and reconstruction-linked agriculture and manufacturing in Nineveh and other post-ISIS areas. Opportunities tied directly to government payment streams or the Kurdistan export pipeline warrant particular caution given current fiscal and political uncertainty.
Positioning
Waverley views Iraq as a country of genuine reconstruction and diversification potential - substantial recent foreign-investment inflows, an ambitious NIC-led investment drive, and flagship infrastructure projects like the Development Road - operating alongside an acute, regionally-driven fiscal crisis, a newly installed and still-incomplete government, and an unresolved Iran-backed militia disarmament standoff with real escalation potential.
For investors able to navigate this volatility and engage through the National Investment Commission's established channels, Iraq offers real upside in infrastructure, logistics and non-oil sectors; for investors requiring government-payment certainty or insulation from US- Iran geopolitical competition, the current environment warrants significant caution.
Selected Sources
● AGBI, "Iraq Budget Deficit Triples to $16bn as Oil Revenues Slump," August 2026
● RUSI, "Iraq Elections Return Incumbents, Testing US and Iranian Influence"
● Al Jazeera, "Iraq's Parliament Approves New Ali al-Zaidi Government," May 2026
● Al-Ahram, "Iraq's Push to Disarm Militias Stalls," September 2026
● Iraqi News Agency / Iraq Business News, "Iraq Targets $250bn in New Investments Over Two Years," August 2025
About this assessment
Lord (JD) Waverley is an international trade and investment advisor, working at the intersection of business diplomacy and public policy. His work focuses on connecting commercial opportunity with trusted local partnerships, and helping businesses navigate the complexities of international trade. He has a particular interest in emerging and frontier markets.
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