Iraq's Development Road Project

Written by Anais Brakha (BSc International Social and Public Policy)

The development road project is set to complete its first phase this year, marking a critical milestone in Iraq’s efforts to become a global transit hub that competes with the Suez Canal and the India-Middle East-Europe Economic corridor (IMEC); strengthening the country’s geopolitical and economic relevance throughout the middle east. The project will establish a comprehensive transportation network- railways, highways, ports and logistics hubs between southern Iraq to Turkey’s border. The network will shorten the travel times between Asia and Europe, providing an alternative to other trade corridors in the region. Iraq aims to transition into a hub for global trade and establish its position both regionally and globally.

The project will connect the Grand Faw Port in southern Iraq, set to be the largest in the middle east, which will serve as the southern terminal of the development road. The network of railways and highways between the Grand Faw Port and the Turkish border at Ovaköy will be 1200 kilometres. The project ultimately involves plans for logistics centres and industrial complexes, with the potential integration of oil and gas pipelines. Estimated at $17 billion, the project is planned in three stages: phase one is set to be completed by 2028 and will include the completion of the Grand Faw Port and initial rail and road connections to the Turkish Border. By 2033, the second stage is forecasted to expand the network and will ultimately be completed by 2050. Due to the railway cost between Gaziantep and Ovaköy possibly reaching $5 billion, it becomes clear that $17 billion is an unrealistic estimate, with $24 billion becoming a more realistic number as the project progresses.

Prime Minister Al-Sudani proposed the development road project during his visit to Turkey in March 2023 where he discussed the initiative with President Erdoğan and was originally named the project ‘Dry Canal.’ In April 2023, a quadrilateral memorandum of understanding (MoU) was signed between Iraq, Turkey, Qatar and the UAE establishing formal cooperation on the project and signifying regional collaboration. In December 2023, Iraq signed a deal with South Korea’s Daewoo engineering and construction to build the Grand Faw Port and additionally partnered with the consulting firm Oliver Wyman to develop the economic model for the project. Erdoğan then further solidified his commitment to the project with a visit to Iraq in 2024, the first in 12 years, where he signed 26 agreements- many related to the development road project.

The development road project represents a monumental opportunity for Iraq to reclaim its historic role as a bridge between Europe and Asia due to its strategic geographic location. Iraq seeks to reclaim its status as a transit hub and unlock new opportunities for economic growth, regional integration and global relevance. Long term stability may be on the horizon as the project is set to generate 100k jobs and $4b annually after decades of conflict, political instability and economic challenges; yet there is more to the project than just infrastructure. Offering an alternative to the Suez Canal, travel times between Asia and Europe will be reduced, providing a faster and more cost-effective option for transporting goods. This year, Iraq will be able to begin reaping the benefits of the completion of the first phase. Building upon their ties with key regional figures Turkey, Qatar and the UAE Iraq will begin to rebrand itself as a stabilizing force in the middle east, whilst diversifying its economy away from oil.

Iraq continues to build upon its relationship Turkey, as the iniative relies heavily on Turkey’s strategic geographic position and infrastructure to provide a gateway to European markets. During Erdoğan’s visit to Iraq, the countries were able to address their shared security concerns over groups such as the Kurdish workers party (PKK) who often use Iraq as base for terrorist activities against Turkey, causing friction between the two nations in addition to the threat of ISIS. The project is set to become a means for renewed cooperation after many disputes, particularly over the Euphrates and Tigris rivers, as Iraq has accused Turkey of reducing water flow by filling dams upstream and creating water and agricultural issues in Iraq.

The Kurdistan regional government adds another layer to the complex political dynamic of the project. Whilst promising economic benefits for Iraq as a whole, the exclusion of the KRG from planning has raised concerns about marginalisation. By reviving its own plans for a railway connecting Iran and Turkey through its territory, it remains determined to play a key role in regional trade, yet possibly create further tension between Iraq and Turkey. The KRG attempts to assert autonomy and economic independence through its control of oil resources and trade with Turkey, depending on how relations between Kurdistan and Iraq evolve, the KRG could continue to leverage its geographic position and existing infrastructure to either challenge or complement the development road project.

Iraq remains a rising regional player as the project allows it to redefine its relationship with the GCC countries. Saudi Arabia and the UAE were often suspicious of Iraq, wary of its cooperation with Iran in many areas, yet have recognised the projects potential and have begun to engage with Iraq and become key stakeholders investing in infrastructure such as the Grand Faw Port with potential for more investment in railways, highways and logistics hubs, reflecting a broader trend in the region toward economic integration and de-escalation. GCC economies rely heavily on imports and exports therefore the project offers a new cost-effective means of trade and transportation, whilst rivalling ports such as Jebel Ali and King Abdullah port. By fostering closer ties with the GCC, Iraq can reduce its dependency on Iran and strengthen its position in the Arab world aligning with the shared goal of a more interconnected and prosperous middle east.

Discussion on the project continues to develop outside of the region, with Iran, Russia and China occupying positions. The prosperity brought about the DRP challenges Iran’s dominance and Iraq’s dependency on the nation. Iran has its own trade ambitions, the Chabahar port – an attempt at diversifying its economy and attracting foreign investment. Iranian officials have expressed interest in participating in the project, yet Iran- backed militias like the popular mobilisation forces have previously attacked infrastructure projects and foreign investments in Iraq, raising the question on how Iran will choose to respond. The development road project could offer economic benefits if it is integrated with the international north south transport corridor, which would connect South Asia to Europe via Iran and leverage its geographic position to attract investment.

Russia has a strategic interest in the middle east and has sought to establish alternative trade routes that bypass western-controlled chokepoints such as the Suez Canal. Russia has the opportunity to create a seamless trade corridor that enhances its connections with the middle east and South Asia. Russia’s close ties with Iran mean that if Iran becomes opposed to the project, Russia may find itself caught between its strategic interests and its alliance with Tehran. The project however offers the opportunity to strengthen its relationship with Turkey, and to counterbalance Western influence in the middle east. If Russia beats Western investors to the project, its expertise in infrastructure development could boost its influence.

China is Iraq’s largest investor, with $34 billion in direct investments, primarily the oil and gas sector, making it a key potential player in the development road project. Despite this, China has refrained from making any commitments to the project, concerned over security and political instability. Beijing has been very selective with its investments, yet the project presents an opportunity to complement its own belt and road initiative, which connects China to Europe via central Asia, the Caspian Sea and Turkey - yet it seems that the lack of synergy demonstrates a competitive element to regional infrastructure development. China may choose to become a competitor or a stakeholder.

Europe has also acted with interest in addition to caution. The project aligns with its goals of diversifying trade routes and reducing dependency on the Suez Canal whilst strengthening economic ties with the middle east. The project promises to connect Europe to Asian markets and for those in Southern and Eastern Europe, the project could open up new opportunities for trade and investment. On the other hand, political and security concerns have deterred significant investment, demonstrating a preference for more secure and reliable partners. Projects such as the India-middle-east-Europe economic corridor (US-backed) offer a safer investment option.

For the US, the project could offer a means of countering Chinese influence, reducing Iran’s dominance in Iraq, and promote economic integration in the Middle East. The US could strengthen its ties with Iraq and Turkey, whilst undermining the belt and road initiative. The US additionally has the desire to stabilise Iraq, reducing the risk of renewed conflict and terrorism. In spite of that, the IMEC remains its priority and remains a more strategic means of countering China and connecting Asia to Western economies. Despite this, the US has expressed support for Iraq’s reconstruction efforts with diplomatic encouragement, investment in the project may come later it offers a more financially sustainable and timely opportunity to counter China, whilst creating jobs and reducing extremism in the region.

The development road project provides a transformative means for Iraq to redefine its role in the middle east and reshape global trade routes. The involvement of key players from across the globe demonstrate the significance of the project – nations who are currently cautious of embracing the project are likely to begin investments as the first stage completes, as attempts to be an influential player in the Middle East become trendier.