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By Michael Knights, for the Washington Institute for Near East Policy. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

The Danger of Letting Iraq's PMF Authority Law Pass

The Trump administration needs to quietly but firmly signal Baghdad that enshrining the militia umbrella group as a de facto "Iraqi IRGC" would pose an unacceptable threat to U.S. interests.

Click here to read the full article.

By John Lee.

Prime Minister Mohammed S. Al-Sudani received a delegation from the U.S. Chamber of Commerce on Wednesday, including American investors and corporate executives, accompanied by the U.S. Chargé d'Affaires in Iraq.

The meeting focused on strengthening economic ties and promoting Iraq as an attractive destination for foreign investment.

The Prime Minister outlined steps taken by the Iraqi government to facilitate business entry, noting the country's broad and diverse market, legal reforms, and investment incentives. He emphasised Iraq's stability, skilled labour force, and ongoing development across various sectors.

According to a statement from the US Embassy, almost 60 U.S. companies are part of the delegation, aiming to. "strengthen U.S.-Iraq private sector ties and foster fair and balanced trade between the U.S. and Iraq."

The U.S. Chamber and the Federation of Iraqi Chambers of Commerce earlier signed a memorandum of understanding (MoU) to "strengthen ties between the US and Iraqi private sectors." It added: "This partnership will foster long-term economic collaboration."

Last week, the US imposed additional tariffs of 39 percent on imports from Iraq (excluding oil).

Full statement from the Media Office of the Prime Minister:

Prime Minister Mohammed S. Al-Sudani Welcomes a Delegation from the U.S. Chamber of Commerce

Prime Minister Mohammed S. Al-Sudani welcomed today, Wednesday, a large delegation from the U.S. Chamber of Commerce, which included a number of corporate executives and American investors, in the presence of the U.S. Chargé d'Affaires in Iraq.

The Prime Minister reviewed the facilitations and measures taken by the government to support the entry of businesspeople and companies into the Iraqi market, which now holds numerous promising opportunities. He noted that Iraq offers a broad and diversified market for various goods, products, and services.

Prime Minister Al-Sudani emphasized that the Iraqi people have made significant achievements in defeating terrorism and laying the foundations for national development. He stressed the importance of maintaining and strengthening bilateral relations with the United States, particularly since Iraq today stands as a distinguished democratic model in the region.

Key highlights from the Prime Minister's remarks:

• Due to the war in the 1980s, the sanctions in the 1990s, and the fight against terrorism over the past two decades, development in Iraq has been delayed across all sectors.
• Iraq is a fertile ground for investment opportunities in all fields.
• The country today enjoys political, security, societal, and economic stability, and is witnessing an unprecedented development boom.
• Iraq has a skilled labor force and promising expertise across various fields.
• The government has worked to improve the business environment and made serious efforts to reform laws to facilitate company registration and operations.
• Iraq's investment law offers numerous incentives to investors, and the government is working on a legislative package to further encourage foreign investment.
• Iraq's trade balance is not in deficit, but structural reforms are needed to reduce reliance on oil.
• Iraq is an industrial and agricultural nation and represents the shortest commercial route between East and West, connecting to Europe through Türkiye.
• The Development Road Project will become the shortest and most cost-effective economic corridor linking Asia and Europe.
• Iraq possesses untapped mineral wealth and ranks first globally in sulfur reserves and second in phosphate reserves.
• Iraq produces 4 million barrels of oil per day, but flares associated gas while simultaneously importing gas to power electricity stations.
• The government has set a vision for strategic projects and signed contracts with international companies to stop gas flaring by early 2028.
• Iraq ranks among the top ten countries in the world in natural gas reserves.
• Some portray a negative image of Iraq, which is not only unfair but also inaccurate.
• Iraq has welcomed numerous investment companies to carry out projects in energy, housing, industry, and agriculture, with the total value of investment licenses reaching $88 billion.
• Sovereign guarantees have been granted to the private sector to support the implementation of projects in various sectors.

(Sources: PMO, U.S. Chamber of Commerce, US Embassy in Baghdad)

By Ahmed Tabaqchali, Chief Strategist of AFC Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Tariffs, Oil Prices, and the Budget

The market, as measured by the Rabee Securities U. S. Dollar Equity Index (RSISX USD Index), was up 1.6% for the month, and 0.2% for the year. The market continued with the process of consolidating its gains that started in December, following a blistering 35.9% rally since late August, and just as in the past two months, spent the month in a tight range of -2.3% and +1.8% around its prior month's close. While, this consolidation could continue over the next few weeks, the market's technical picture continues to be positive, and the likely consolidation or pullback should be within its multi-month uptrend (chart below).

Nevertheless, the process of consolidation could extend towards the lower band of the uptrend, due to the uncertainty over the health of the global economy following the unveiling of the U.S.'s radical tariffs on its trading partners. The tariff's direct impact on Iraq is almost zero, since oil constitutes almost all of its exports to the U.S., which are exempt from reciprocal tariffs, however, the impact will be indirect and felt through a lower oil price as a consequence of expected lower global demand for oil.

Rabee Securities U.S. Dollar Equity Index and Daily Turnover

(Source: Iraq Stock Exchange, Rabee Securities, AFC Research, daily data as of March 27^th. Note: daily turnover adjusted for block trades¹)

This lower global demand for oil, was compounded by supply increases as a result of the unexpected OPEC+ announcement in the wake of the U.S.'s unveiling of tariffs, that the group will triple its planned production increase in May. The actual increase will in fact be much less as a function of over-production by some group members, and the tripling of production, so far, is planned only for May.

Nevertheless, the clear implication is that the group's planned unwinding of prior production cuts will proceed even in the face of the expected weaker demand for oil -versus the market's prior expectations that OPEC+ will delay the unwinding of production cuts when demand is weak. This might seem illogical at first sight, but it will soften the tariffs and potential counter tariffs blow to the world economy, make up for the potential loss of Iranian oil from the U.S.'s tough measures, and help in stimulating the eventual global recovery.

However, it's negative for medium-term oil prices which, as measured by Brent crude futures contracts as of April 4^th, have shifted (orange line, chart below) to the lower end of a three-year range -marked on the upper end by those of supply fears following the invasion of Ukraine (red line, chart below), and on the lower end by those following the emergence from COVID-19 at the end of 2021 (grey line, chart below).

Market Expectations for Future Oil Prices

As measured by Brent Futures Contacts (USD per barrel)

(Source: Investing.com, AFC Research, as of April 4^th; U.S. Energy Information Administration (EIA), as of  March 31^st)

This decline in expectations for future oil prices (orange line, chart above), has negative implications for Iraq's oil export revenues which in 2025 could translate to IQD 17.3 tn (USD 13.3 bn), or 16%, in less oil revenues than in 2024.² Notwithstanding this, it was argued here in "Market Review for 2021 and Outlook for 2022" when expectations for future oil prices at the time were at the lower of this range (grey line, chart above), that they were positive for the country's financial position in that they provide the government with the wherewithal to continue with expansionary economic policies. While prices at the upper end of the range allow for the accumulations of budget surpluses, and at the lower end require the issuance of domestic debt to fund budget deficits, yet the overarching theme was, and remains, is that over the next few years, the direction is for decreasing oil prices. Thus, as reasoned in "What Next after Two Gangbuster Years", this implies increased debt issuance to augment government spending, that will play a big role in developing the country's bond market, which, in turn, with the growth of the equity market, will contribute to the evolution of the country's capital markets.

The government is yet to submit the updated budget tables for 2025 as part of the expansionary three-year 2023-25 budget. However, the projections should be for slightly increased expenditures and decreased revenues in 2025 over 2024 in line with the changes of 2024 over 2023; and as such would lead to a deficit of Iraqi dinar (IQD) 65.0-67.0 tn (USD 50.0-51.5 bn, based on the official exchange rate of USD = IQD 1,300). However, in practice, there is a world of difference between budget projections and actual budget executions, mostly due to the historically low execution rates of investment spending and the plodding pace of the Iraqi bureaucratic machine. In both 2023 and 2024, the budget called for a deficit of around IQD 64.0 tn (USD 49.3 bn), however, the actual budget execution was vastly different. Actual deficits were significantly lower than projected, and were financed by the cash balances at the Ministry of Finance's (MoF) account at the Central of Iraq (table below).

Actual Budget Data 2022-2024

(Notes and data sources³)

Accordingly, estimating actual budget execution for 2025 can be made by using current market projections for oil prices², and assuming actual expenditures would be 10% higher than those for 2024, which implies a budget deficit of IQD 35.8 tn (USD 28.0 bn). This would be easily financed through the issuance of domestic debt, increasing domestic sovereign debt from IQD 83.1 tn (USD 63.9 bn) at the end 2024 up to IQD 118.9 tn (USD 91.5 bn) by the end of 2025 -a better outlook than initially estimated a few months ago, primarily due to better than expected budget performance in 2024.

The 2025 budget, like that of 2023 and 2024, should continue to support the two key dynamics driving the transformation of the Iraqi economy, and subsequently the equity market. The first is the cumulative positive effects of the relative stability that the country has enjoyed over the past few years, which created a stable and predictable macroeconomic framework for businesses and individuals to operate in and to plan for capital investments on a scale last seen in the 1970's and early 1980's before the onset of the decades of conflict. The second is the significant structural fundamental development accelerating the adoption of banking and bringing about a transformation of the sector and its role in the economy.

The equity market, as measured by the Rabee Securities U. S. Dollar Equity Index (RSISX USD Index), having surpassed its 2014 peak by 7.1% by the end of March, has the potential to rally further reflecting the powerful dynamics discussed here over the last few months. However, significant risks remain given Iraq's recent history of conflict, extreme leverage to volatile oil prices, as well as the risk that the widening of the current Middle East conflict will not be contained and evolve to destabilise the region

Notes:

• Daily market turnover is first adjusted by removing block, pre-arranged trades conducted during the special session following the regular trading session; subsequently, it is adjusted further by removing high-volume trades during regular market hours that show a pattern consistent with those of pre-arranged trades. High-volume trades are defined as those that are significantly higher than a given stock's average daily turnover; and as such are subjective. Moreover, trading volumes, and trading turnovers are used interchangeably here, and defined as the values of trading turnovers in Iraqi dinars (IQD).
• The figure is highly dependent on actual oil exports, which can vary depending on Iraq's compliance with production agreements made by OPEC+, which in turn are likely to change further in 2025 depending on evolving oil market dynamics.
• Budget data, budget specifics, and sources are based on "Iraq's 2024 budget: Not what it appears when it first meets the eye", Ahmed Tabaqchali, The Atlantic Council, November 6^th, 2024. Data for budget execution for 2024 has been updated since then using actual MoF data up to November 2024 and making estimates for December 2024.

Please click here to download Ahmed Tabaqchali's full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the Chief Strategist of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years' experience in US and MENA markets. He is a Visiting Fellow at the LSE Middle East Centre, Senior Fellow at the Institute of Regional and International Studies (IRIS), and a Senior Non-resident Fellow at the Atlantic Council.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.

By Simon Watkins for OilPrice.com. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Can Iraq's Gas Projects Survive Trump's Iran Crackdown?

With US waivers on Iranian energy imports revoked, Iraq is under pressure to rapidly develop its own non-associated gas fields..

Click here to read the full report.

By John Lee.

The United States will apply an additional duty rate of 39 percent to imports from Iraq, as part of President Trump's wide-ranging new tariff regime announced on Wednesday.

The new rate, which comes into effect on Saturday, 5th April, does not apply to imports of oil, gas and refined products, according to a report from Reuters.

A statement from President Trump said:

"It is the policy of the United States to rebalance global trade flows by imposing an additional ad valorem duty on all imports from all trading partners except as otherwise provided herein ... These additional ad valorem duties shall apply until such time as I determine that the underlying conditions described above are satisfied, resolved, or mitigated."

See also:

Whitehouse statement

Whitehouse fact sheet

Country-by-country list of new reciprocal tariffs

(Sources: White House, Reuters)

By John Lee.

The London School of Economics (LSE)'s Middle East Centre has hosted a talk by Ahmed Tabaqchali, exploring the economic and financial interactions of the Iraqi economy with the outside world, particularly the use of the dollar in relation to Iran and the US.

While the US' Iraq policy is still fluid, there have been signs that America's 'maximum pressure campaign' towards Iran will have spillover effects in Iraq, with the Trump administration viewing policy towards Iraq solely through the lens of a perceived threat of Iranian dominance in the country. Iran's economic footprint in Iraq, both perceived and real, will be an issue for Iraq and its relationship with the US and the West.

According to Tabaqchali's data, in 2024 China imported about 95 percent of Iran's 1.55 mbpd of oil exports, worth $36 billion; $3bn of LPG, and $11 billion in other imports, for a total of $50 billion, using an extensive global financial web. In the same period, Iraq imported $3 billion in gas and electricity (which Iran does not receive and which are governed by waivers for humanitarian goods), and $7.7 billion of private sector imports. "So," argues Tabaqchali, "which is the lung here?"

The session, chaired by Toby Dodge, ended by a lively 40 min Q&A session.

Click here to view the full discussion.

(Source: LSE)

By Ahmed Tabaqchali, Chief Strategist of Asia Frontier Capital (AFC) Iraq Fund, for the London School of Economics (LSE) Middle East Centre.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Empire Strikes Back: Trump 2.0 and Iraq's Dollar Accounts at the Federal Reserve

This piece [provides] an overview of Iraq's oil revenue and the foreign reserves accounts held at the Federal Reserve Bank of New York (FRBNY), given T1's other threat to Iraq in 2020 that it could lose access to these accounts.

Click here to read the full article.

By John Lee.

Back in January, Iraq Business News ran an online survey asking opinions on a revaluation of the Iraqi dinar following the inauguration of US President Donald Trump.

This survey did not pretend to be scientific, as respondents were self-selecting, leading to a high risk of sampling bias, but it served to show that among dinar speculators there was some currency (pun intended) to the idea that the re-election of Trump to the White House would have a bearing on developments.

Astonishingly, more than half of respondents expected the Iraqi dinar to revalue by at least 1,000x in the first 100 days of Trump's term. You can see a graph of the responses below.

More than two months into that period, Trump has not done or said anything to support this theory, despite false claims to the contrary on the internet.

But rather than finally accepting that they have paid good money for the false hope of ludicrous returns, dinar speculators (or 'dinarians', as they sometimes like to call themselves) continue to reinforce each other's beliefs on online message boards and dismiss all logical arguments against their position.

Please let us know your thoughts in the Comments Section below.

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

See also: The Iraqi Dinar Revaluation Scam: False Hope, Financial Deception

To learn what's really happening in Iraq, check out our news here, and our library of reports here.

By Hamdi Malik and Michael Knights, for the Washington Institute for Near East Policy. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Iraq's PMF Law Is No Substitute for Real Security Reform

The Trump administration should not be duped by the supposed "reforms" that militia leaders are considering in parliament, which threaten to turn the PMF into another Iranian "Revolutionary Guard" and keep U.S.-designated terrorists in key posts.

Click here to read the full report.

By John Lee.

US National Security Advisor Mike Waltz held a call with Iraqi Prime Minister Mohammed S. Al-Sudani on Sunday, reaffirming Washington's commitment to strengthening bilateral relations with Baghdad.

Mr. Waltz extended Ramadan greetings and expressed concern over recent flooding in Baghdad. Discussions focused on economic cooperation, with Prime Minister Al-Sudani outlining his government's reforms to foster a stable, transparent, and investment-friendly environment. He reiterated Iraq's commitment to expanding economic ties with the US and attracting American investment.

Mr. Waltz linked the non-renewal of the sanctions waiver on Iranian electricity exports to President Trump's "maximum pressure" strategy against Iran, citing concerns over nuclear development and regional security threats. He encouraged Iraq's energy independence and called for greater US private sector involvement in Iraq's oil and gas sectors.

He also urged Baghdad to resolve contract disputes with the Kurdistan Regional Government (KRG) and settle arrears owed to US energy firms. Additionally, he proposed the appointment of an investment coordinator to facilitate US business operations in Iraq.

Both sides reaffirmed their strategic partnership, stressing the importance of building a self-reliant Iraq capable of maintaining sovereignty and stability.

Full statement from the Media Office of the Iraqi Prime Minister:

Prime Minister Mohammed S. Al-Sudani received a phone call today, Sunday, from U.S. National Security Advisor Michael Waltz, during which both sides reaffirmed their commitment to strengthening and deepening the strategic partnership between Iraq and the United States.

The discussions focused on enhancing bilateral cooperation in economic and security matters. Prime Minister Al-Sudani reiterated Iraq's commitment to expanding economic relations with the United States, encouraging American companies to invest in Iraq's growing market. He also reviewed key reforms and initiatives implemented by his government to create a stable, transparent, and investment-friendly environment.

For his part, National Security Advisor Waltz encouraged Iraq to engage more with American companies and work to resolve obstacles facing U.S. businesses operating in the country, including in the Kurdistan Region. He stressed the importance of facilitating their work and investment in Iraq.

Both sides also emphasized joint efforts to build a strong Iraq capable of self-reliance. The discussions covered resolving outstanding issues and the role of American companies in supporting Iraq's economic development. The United States reaffirmed its commitment to supporting Iraq's energy independence and expressed readiness to cooperate in accelerating progress toward this goal.

On security matters, Waltz reiterated the United States' unwavering commitment to Iraq's security and stability amid regional and international challenges. Both sides underscored the importance of continued cooperation to safeguard Iraq's sovereignty and long-term stability, especially given the current regional conditions.

Waltz also noted that the decision to end the waiver for Iranian-supplied electricity aligns with the Maximum Pressure Policy, emphasizing the need for bilateral coordination to mitigate any potential impact on Iraq's stability.

The call reaffirmed the strong partnership between Iraq and the United States, with both sides expressing a shared vision for a secure, prosperous, and sovereign Iraq.

Full statement from U.S. National Security Advisor Michael Waltz:

National Security Advisor Mike Waltz spoke on Sunday morning with Iraqi Prime Minister Mohammed Shiaa al-Sudani.  The National Security Advisor wished Prime Minister Al-Sudani a Ramadan Kareem, and expressed his concerns regarding the recent flooding in Baghdad.

Mr. Waltz emphasized the importance of moving towards a win-win relationship based on mutual security interests and enhanced trade.  Mr. Waltz noted that the decision to not renew the waiver of sanctions on Iranian electricity exports was consistent with President Trump's "maximum pressure" strategy on Iran, and that pressure on Iran would increase if Iran continued to develop a nuclear weapons capability and support terrorism across the region, including in Iraq.

Mr. Waltz welcomed the Iraqi Prime Minister's efforts to achieve energy independence for Iraq, and encouraged the Iraqi government to welcome more western and U.S. energy companies into Iraq's oil and gas sectors.  The National Security Advisor urged the Iraqi government to work with the Kurdistan Regional Government to address remaining contract disputes and pay arrears owed to U.S. energy companies, and also requested that the Iraqi government retain an investment coordinator to work with U.S. companies seeking to invest and operate in Iraq.

The National Security Advisor thanked the Prime Minister for his commitment to the bilateral U.S-Iraqi relationship, and emphasized the Trump administration's commitment to deepening energy and economic ties between the two countries to benefit both the American and Iraqi peoples.

(Sources: PMO, @MikeWaltz47)