Big bad wolf, or is it? Iran’s economic footprint in Iraq in context

Ahmed Tabaqchali

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: It is asserted that Iran exercises dominance over Iraq’s economy to further its political hegemony and to circumvent the sanctions imposed on it. Three economic exchanges are almost always cited to support such assertions. Foremost is Iraq’s critical dependence on imports of Iranian electricity and gas; followed by large and growing imports of Iranian goods; and finally, the exploitation of the Central Bank of Iraq’s US dollar auction to siphon dollars. Such assertions are grounded in a Western, primarily US-led, narrative born out of the conflict with Iran, arguing that Iran was the true beneficiary, at the expense of the US, of its invasion of Iraq in 2003. As such, guiding policy decisions, often overlooking Iraq’s own political and economic dynamics, with often detrimental consequences. The US-Iranian conflict is likely to intensify under the Trump administration and the return of the maximum pressure campaign, which will likely spill over into US relations with Iraq. This piece seeks to put these three exchanges in context, arguing that Iran’s large economic footprint is a symptom of Iraq’s structural economic imbalances, and as such instead of confronting these symptoms through an ‘ideology of confrontation’, the focus should be on addressing the root causes of these imbalances. However, this requires pursuing rational policies, grounded in an understanding of the underlying economic structures.

JEL-codes: N0 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2025-01-29
New Economics Papers: this item is included in nep-ara
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