Iraq's dealings with Spain: Promises and challenges in economic cooperation

Shafaq News/ The recent Rapprochement between Iraq and Spain was marked by the visit of Prime Minister Mohammed Shia al-Sudani to Madrid and the signing of several key memorandums of understanding. However, experts warn that despite these promising agreements, Iraq’s political instability, security concerns, and military influence pose serious challenges to their successful implementation, threatening to undermine efforts to attract foreign investment and foster long-term economic growth.

MoUs And More

Prime Minister al-Sudani, heading a high-level delegation, concluded a visit to Madrid which his office described as successful.

al-Sudani and his Spanish counterpart Pedro Sánchez led their respective delegations in discussions held Thursday in Madrid. The meeting was attended by ministers of foreign affairs, interior, transport, and trade from both sides.

The two countries oversaw the signing of key memorandums of understanding (MoUs):

● A cooperation agreement between the Sovereign Guarantees Initiative Committee and the Spanish government.

● An MoU between the Iraqi Federation of Chambers of Commerce and the Spanish Chamber of Commerce.

● An MoU between the Iraqi Federation of Industries and the Spanish Confederation of Business Organizations (CEOE).

● An MoU on security cooperation between the Ministries of Interior of Iraq and Spain.

● An MoU between the Iraqi Commission of Integrity and the Spanish State Prosecutor General.

● A cooperation agreement between Wasit Governorate and the Spanish Imathia Construccion.

● A bilateral MoU between Al Iraqia University and King Juan Carlos University of Spain.

Economic Forum Highlights

During the Iraqi-Spanish Business Forum, organized by the Spanish Chamber of Commerce in Madrid, al-Sudani highlighted the delegation’s composition as “a strong message of Iraq’s genuine interest in strengthening cooperation with Spain.” He also underscored Iraq’s commitment to learning from Spain’s “successful corporate experiences across various sectors, with a focus on advancing toward a comprehensive strategic partnership.”

“Iraq has attracted $62 billion in foreign investments, supported by a secure and stable environment.” He said in his remarks.

Al-Sudani said that the government secured a $250 million rail project connecting Basra to Iran with a Spanish company and ongoing negotiations involving Spanish firms for the Karbala-Najaf railway project.

Moreover, Al-Sudani discussed initiatives such as the Iraq Development Fund and projects aimed at boosting infrastructure and housing, underscoring opportunities for Spanish businesses. He also emphasized Iraq’s focus on advancing sectors like food, pharmaceuticals, and construction.

In turn, Iraqi Transport Ministry spokesperson Maytham al-Safi told Shafaq News Agency, al-Safi, “There are numerous shared interests with the Spanish side. In recent days, the 13th session of the Iraqi-Spanish Committee was held in Baghdad, during which several memorandums of understanding were signed. The Ministry of Transport plays a crucial role in managing files related to this committee.”

Highlighting key developments, al-Safi pointed to the signing of a contract by the Iraqi Railways Company to construct the Basra-Shalamcheh railway, a 36-kilometer project intended to facilitate the transport of over five million passengers and visitors between Iraq and Iran. Additionally, a memorandum of understanding was signed to begin studies and designs for the Mehran-Kut-Karbala railway, the Karbala-Najaf elevated train, and the broader development project.

Al-Safi pointed out, “Many Spanish companies have submitted proposals to implement or participate in these projects and others. Spain is a leader in modern railway systems, with numerous successful projects in the region and neighboring countries.”

He added that Iraq’s engagement extends beyond Spain to broader European cooperation, “reflecting efforts to serve Iraq’s interests.”

Gateway to Global Markets

Economic expert Diaa al-Mohsen stressed Spain’s industrial strengths, particularly in maritime and railway transport, and its potential as a valuable partner for Iraq. “Spain is a key member of the European Union with a robust industrial base in the transport sector. Iraq stands to benefit if these agreements and relationships are utilized effectively,” al-Mohsen told Shafaq News Agency.

He noted that Spain’s involvement might steer clear of the commissions and unofficial fees that have hindered many projects in Iraq. “The Iraqi government must pay attention to this, as the country has lost numerous projects due to external pressures on companies attempting to invest here,” he said.

“Spanish companies could help market Iraqi production internationally…These firms have established global markets, and Iraq should capitalize on this by fostering partnerships with Spanish companies,” he said.

Discussing Iraq’s Development Road initiative, al-Mohsen explained the substantial financial investment required, which Iraq might struggle to fulfill alone, pointing out that “the agreements signed with Spain represent a significant boost for this project, paving the way for future progress.”

Internal Challenges

Economic researcher Ahmed Eid expressed cautious optimism about the memorandums of understanding signed by Iraq’s Prime Minister in Madrid, despite their potential for international cooperation and development. He warned of internal obstacles that could hinder progress.

“The signing of these agreements reflects a clear desire to enhance international collaboration, but they face major challenges given Iraq’s domestic conditions,” Eid told Shafaq News Agency.

“Security and political instability are critical concerns…the presence of weapons outside state control and weak government authority in certain regions undermine the feasibility of implementing these agreements with Spain.”

Eid added that “regional tensions and the lack of clear strategies to support investments further complicate efforts to translate the agreements into tangible projects that could strengthen Iraq’s economy.”

Moreover, according to him, administrative corruption is a persistent issue that “reduces Iraq’s attractiveness to foreign companies aiming to implement projects effectively.”

“Non-State Groups” Influence

Ahmed Eid stressed that for Iraq to fully benefit from these agreements, substantial progress must be made in bolstering security, stabilizing political conditions, disarming non-state groups, and implementing genuine business reforms.

“The presence of militias not only undermines security but also extends their influence into economic sectors, interfering in contracts and investments,” Eid explained to Shafaq News Agency.

“This disrupts projects and limits foreign investment opportunities, as international companies may hesitate to undertake long-term ventures due to the heightened risks tied to Iraq’s security situation and the state’s limited capacity to enforce the law and combat corruption.”

Eid warned that “the considerable influence of militias creates an uneven competitive environment, complicating the enforcement of laws and international obligations linked to the memorandums of understanding.”

“Addressing the root causes of these security and political challenges is essential for transforming these agreements into tangible achievements that contribute to Iraq’s economic growth and development,” he concluded. “Otherwise, these agreements risk remaining unfulfilled promises.”