Behind the scenes of the London Dialogue
Bank sanctions: Americans stick to their conditions and the Iraqi negotiator is weak.
On Saturday, June 13, 2026, economist Ziad Al-Hashemi revealed details of a dialogue session held in London that brought together the Central Bank and Iraqi banks with an international consulting firm. He highlighted the reasons for the continuation of US sanctions on some banks, attributing the matter to complex conditions related to changing ownership percentages, in addition to the Central Bank's "weakness" in negotiating with the US Federal Reserve, which resulted in a limited number of banks monopolizing dollar transfers.
In contrast to this crisis, Al-Hashemi conveyed the session’s praise for the positive aspects of Iraqi banks, represented by the initiative of the Association of Private Banks, which succeeded in reviving Baghdad’s heritage streets, such as Al-Rashid and Al-Mutanabbi, after decades of government neglect.
The Association of Iraqi Private Banks adopted the “Pulse of Baghdad” initiative in July 2023 in cooperation with the Baghdad Municipality, to rebuild and rehabilitate Baghdad’s heritage areas, including “Al-Sarai Axis, Al-Sarai Market, historical government buildings, Al-Mutanabbi and Al-Rashid Streets.”
Al-Hashemi's Facebook post:
The Central Bank of Iraq and its banks in London, caught between the plan to reform the Iraqi banking system and the reconstruction of the heritage city of Baghdad!
A roundtable discussion session was held a few days ago in London with the participation of directors from the Central Bank of Iraq, some Iraqi banks, and a representative from the consulting firm (Oliver and Ayman). I personally participated in that session along with other invitees!
The gist of what was said was that work is underway to reform the banking system, that many banks have implemented the standards of the American reform plan, and that the next phase may open the door for new banks to deal in various currencies (other than the dollar)!
There are many obstacles that still hinder the full implementation of that plan, the most important of which is changing the ownership percentages of some of those banks. This may have been one of the reasons that have so far hindered lifting the restrictions on dollar transactions for banks that were previously prohibited, despite some of those banks' compliance with other federal standards and conditions!
Another reason for the continuation of these sanctions is also the weakness of the central bank in negotiating, whether with the Federal Reserve or the consulting firm, to restore the rights of compliant banks and lift federal sanctions against them, leaving dollar transfers in the hands of a limited number of banks in a clear monopolistic situation!
Apart from the predicament of sanctions and the weakness of the Central Bank in the face of the Federal Reserve, it was remarkable to hear that there is an Iraqi entity called the (Association of Banks) that took the initiative years ago to revive, rehabilitate and develop the (Baghdad Heritage) area in Al-Mutanabbi Street and Al-Rashid Street!
That area, which has suffered from deliberate neglect by successive governments, has been in a state of clinical death for decades, despite its historical and human importance to Iraq and Iraqis. Al-Rashid, Al-Mutanabbi and Al-Qishla are sites that not only carry the history of Baghdad in their alleys and buildings, but are an area that lives in the conscience of every Iraqi and Baghdadi who knows the value of Baghdad and the history of Baghdad!
Therefore, to see that there are those who have worked diligently and quietly to rehabilitate that area, bring it back to life, and put it back on the list of Iraqi historical and tourist sites, despite the bureaucracy and obstacles of the Iraqi governments, is a work that deserves all praise and thanks, and we hope to see more work and initiatives to revive what remains of that area, for Baghdad and its history deserve all this work and even more!
Explosion heard near Qeshm Island and Sirik in Iran - Breaking
Mehr News Agency reported on Saturday (June 13, 2026) that explosions were heard in areas of southern Iran, specifically near Qeshm Island and the Sirik region.
The agency reported that explosions were heard in the vicinity of Qeshm Island and Sirik, without any immediate official explanation regarding the nature or cause of the explosions.
Iranian authorities have not yet released further details about the incident, while media and security circles are awaiting official statements clarifying the circumstances of what happened.
This news comes amid escalating security and military tensions in the region, particularly in the southern regions of Iran overlooking the Gulf, which include strategic sites, ports, and vital facilities.
Qeshm Island and Hormozgan Province are of particular importance due to their proximity to international sea lanes linked to global energy and trade traffic.
46% non-oil: An ambitious goal for restructuring Iraq's finances
The advisor to the Prime Minister for Financial and Economic Affairs, Mazhar Muhammad Saleh, affirmed that the government program represents an integrated strategic framework for achieving financial and economic diversification, and aims to reduce dependence on oil by enhancing non-oil revenues and expanding the productive base of the national economy.
Saleh added in a special statement to “ Al-Jarida ” that these trends fall within the “Iraq 2050” vision, which is based on reforming public finances and consolidating the principles of a social market economy, in order to achieve a balance between the developmental role of the state and the effectiveness of the market and the private sector, and to establish a long-term structural transformation in the Iraqi economy.
He explained that the vision requires an integrated reform and legislative framework that establishes the foundations of sustainability, efficiency and flexibility in fiscal policy, noting that one of its most prominent goals is to raise the contribution of non-oil revenues to the general budget to no less than 46% of total revenues by 2050, which will enhance financial sustainability and reduce the impact of fluctuations in global oil markets.
He pointed out that the government plan also aims to increase the private sector’s contribution to GDP compared to current levels, reflecting the Iraqi economy’s shift to a model that relies more on investment, individual initiative, job creation, and stimulating sustainable growth.
Saleh explained that achieving these goals will be through activating the national strategy for developing the private sector, and implementing institutional, legislative and regulatory reforms that contribute to improving the business environment, enhancing competitiveness and expanding the base of local and foreign investment.
He stressed that the Market Development Council will play a pivotal role in regulating market institutions according to the principles of governance, transparency and efficiency, creating an attractive investment environment, as well as supporting private sector-led projects in the manufacturing, agriculture, logistics and digital economy sectors.
He concluded by saying that this approach aims to build integration between reforming the financial sector and developing the productive sectors, which will contribute to reducing the rentier nature of the Iraqi economy and establishing a development model based on productivity, competitiveness and partnership between the state and the private sector, leading to building a diversified and sustainable economy that achieves prosperity by 2050.
Source: Al-Zaidi will discuss the US withdrawal and arms control in Washington next month
An informed source revealed on Saturday (June 13, 2026) that Prime Minister Ali Faleh al-Zaidi will discuss a number of important political and security issues during his upcoming visit to Washington next month, foremost among them the future of the American military presence in Iraq.
The source told Baghdad Today that "the issue of the American withdrawal from Iraq will be at the top of the agenda of the talks that Al-Zaidi will hold during his visit to Washington," indicating that "the anticipated meetings will also address security developments and joint coordination between the two countries."
He added that "the Prime Minister will also discuss the issue of restricting weapons to the state, as it is one of the main issues raised in the Iraqi-American dialogue during the next stage."
The source indicated that "the US administration will stress during the meetings the need for the Iraqi decision not to be influenced by Iranian influence," stressing that this issue will be among the topics to be discussed between the two sides.
Government spokesman Haider al-Aboudi confirmed in a press conference followed by “Baghdad Today” that “the Prime Minister’s visit to Washington includes key files, foremost among them the economic aspect,” stressing that “regarding the preparation of a budget for 2026 or going to prepare a budget for 2027, the matter is left to the Ministry of Finance.”
He added, "The timeframe for restricting weapons to the state is clear and a time limit was set for it in September," indicating that "the government adopted a realistic vision for the issues and provided appropriate solutions for them."
He pointed out that "the government is managing its commitments according to a well-thought-out package of measures in light of the security and economic conditions," stressing that "the government has decided to proceed with drafting a program budget in cooperation with the World Bank and the Parliamentary Finance Committee with the aim of improving spending policy."
Iraq commits to US sanctions on Iranian oil, seeks alternative fuel imports: Oil ministry
The Iraqi oil ministry announced on Saturday that the government is committed to the US-imposed restrictions on Iranian oil exports, saying that the country will resort to alternative import routes to address rising gasoline shortages.
“To resolve the outstanding gasoline issue, Iraq will import oil through SOMO [State Oil Marketing Organization,” Salim al-Rukabi, spokesperson of the ministry, told Rudaw, adding that Baghdad is committed to the “decision regarding the sanction on Iran” and hence will not export oil from the neighboring country.
Rukabi noted that daily gasoline consumption has reached 34.5 million litres, while domestic production ranges between 30 million and 31 million litres.
The announcement comes as Iraq has faced significant shortages of gasoline production following the US-Israel war against Iran that began in late February, which led to the withdrawal of foreign companies from southern refineries, according to Rafidh Sadiq, head of the state-run Oil Products Distribution Company at the oil ministry, who spoke to Rudaw on Saturday.
Sadiq also said that an abrupt suspension has occurred at the Fluid Catalytic Cracking (FCC) project in southern Basra province - which takes heavy, leftover fuel oil and cracks it into high-standard premium gasoline.
“Regional security incidents and the withdrawal of foreign companies” from southern refineries have resulted in a loss of 4 to 5 million liters of “high-octane premium gasoline,” according to Sadiq.
In November, Iraq announced curbing all gasoline, gas oil, and kerosene imports, declaring a state of self-sufficiency in refining capacity to address domestic needs.
The imports ban was announced weeks after the FCC had become operational, making it integral to the decision.
It also coincided with the deadline set by the US government against purchasing energy from Iran.
However, the companies managing the FCC halted operations in the face of the ongoing regional hostilities.
On February 28, the United States and Israel launched a military campaign against Iran, sparking direct regional confrontations that lasted for nearly six weeks before Washington and Tehran agreed to a ceasefire on April 8.
Iran responded by attacking US interests in the region, including western oil companies operating in Iraq.
The hostilities have drastically reduced Iraqi oil exports to approximately 10 million barrels in April, as opposed to its peacetime equilibrium of over 90 million barrels monthly.
Declining oil revenues have readily impacted the Iraqi government’s ability to subsidize gasoline prices, with Baghdad absorbing the financial loss directly through its state budget, setting fixed, highly discounted retail prices for standard fuel at the pump.
Of note, the Kurdistan Regional Government (KRG) provides gasoline and kerosene from its own refineries independent from Baghdad.
Halting imports from Iran has recently caused gasoline prices in the Region soar from an average of 850 Iraqi dinar ($0.65 cents) to 1175 ($0.90 cents) per litre for regular unleaded gasoline.
Communications: Five giant mobile screens to broadcast the national team's matches in public places
Sand said in a statement received by Al-Furat News that: "In coordination with Channel 4 and the governors, five giant mobile screens have been provided to broadcast our national team's matches to the public in public places, as follows:
- Baghdad, Tahrir Square, Earthlink Company
- Basra, Al-Khora Gardens opposite the mall, FiberX Company
- Nineveh, Al-Muthanna Park, Noor Al-Bidaya Company
- Dhi Qar, Nasiriyah Corniche, Supercell Company
- Anbar, Fallujah Stadium, Al-Rahma Company
Sand called for “taking into account the special nature of the holy month of Muharram during gatherings and celebrations, especially the timing of the national team’s matches, which coincide with days of particular sorrow for the Iraqi people and lovers of the Ahlulbayt in various countries around the world,” offering his apologies to the other governorates, as this is what is currently available.
Al-Zaydi's advisor: No return to rentier budgets, new plans to diversify income sources - Urgent
On Saturday (June 13, 2026), the Prime Minister’s Advisor for Financial Affairs, Mazhar Muhammad Salih, expressed his optimism about a plan developed by Prime Minister Ali al-Zidi to diversify the country’s sources of income, indicating that al-Zidi confirmed that there is no going back to the rentier budget that depends on selling oil.
Saleh told Baghdad Today, “It is shameful that we still import some oil derivatives to this day, in addition to our reliance on selling crude oil, at a time when, if a barrel of crude oil were to be put into manufacturing and conversion processes into petroleum products, its value could rise to nearly seven times its price.”
He added that "the price of a single barrel, after being converted into petroleum products, could exceed $400, which would boost the financial revenues of the Iraqi state's general budget."
Saleh pointed out that "the Prime Minister, as a son of the economic sector, will proceed with activating the various economic aspects in the country, and the economic mindset will change, as President Al-Zidi has a youthful vision, and will proceed with plans capable of reviving the economy of the Iraqi citizen, which is the least that the citizen deserves."
The Iraqi economy relies mainly on oil revenues, which constitute the largest share of the general budget resources, while Iraq continues to import part of its needs for oil derivatives despite having large oil reserves.
Over the past years, successive governments have put forward plans to develop the refining and petrochemical industries with the aim of increasing the added value of crude oil and reducing dependence on imports.
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Program and performance budgeting: A qualitative shift in financial resource management
The Program and Performance Budgeting (PPP), which Prime Minister Ali al-Zaidi directed to be adopted, is a comprehensive system for allocating government financial resources based on actual achievements. It is also a modern financial planning and management tool that links financial allocations to realized results. Instead of blindly funding traditional line items (such as salaries and maintenance), this system allocates funds to specific goals and projects, thereby helping to rationalize spending, enhance transparency, and measure the efficiency of government performance.
Experts in the government's shift to program-based budgeting see it as an important step to address the imbalances that have plagued traditional budgets in recent years, stressing that its success hinges on implementing institutional reforms. Integrated technical and administrative systems.
A necessary transformation
In this regard, financial expert Dr. Mustafa Akram Hantoush stated that adopting a program-based budget is a necessary shift after decades of operating with a line-item budget, which saw the allocation and expenditure of enormous sums on projects, many of which remain incomplete. He explained that the essence of the new budget lies in linking government spending to specific objectives and measurable results by focusing on a limited number of priority projects and sectors and ensuring their completion within clear timeframes. This contributes to reducing financial waste and increasing efficiency.
Using public resources.
Hantoush added, in an interview with Al-Sabah, that this approach could provide a more effective basis for implementing major strategic projects, especially in the infrastructure, energy, and transportation sectors, such as electricity projects, the Grand Faw Port, and the Development Road, thus enhancing economic growth opportunities and supporting diversification efforts. Sources of national income.
Information system
Meanwhile, banking expert Dr. Nabil Rahim Al-Abadi stated that the shift to program budgeting is not limited to changing the budget preparation mechanism, but requires building an integrated financial and administrative system capable of monitoring implementation and measuring performance in real time. He explained that one of the most prominent challenges facing government spending in recent years has been the accumulation of obligations and the disruption of disbursements due to weak systems.
Administrative and oversight aspects necessitated the development of a unified government financial information system that links all state institutions to the public treasury and provides accurate and immediate data on progress rates.
And spending levels.
In his interview with Al-Sabah, Al-Abadi stressed that the success of the program budget hinges on the state's ability to develop the banking sector and enhance digital transformation and e-governance. He pointed out that directing spending towards productive investment projects can have positive effects on economic growth and monetary stability, while weak or delayed implementation could lead to increased liquidity without returns.
Real economy.
In a related vein, economic researcher Dr. Mustafa Muhammad Ibrahim considered program and performance budgeting to be one of the most important paths required to achieve economic reform in Iraq, especially given the continued heavy reliance of the national economy on oil revenues. He explained that this type of budget provides more accurate mechanisms for measuring government performance and monitoring spending efficiency, in addition to its role in enhancing transparency and accountability.
Within public institutions.
Ibrahim added, in an interview with Al-Sabah, that implementing program budgeting requires professional independence in budget preparation and utilizing specialized economic and financial expertise, in addition to developing the legal and administrative environment that ensures the implementation of programs according to clear objectives and indicators.
Measurable performance, indicating that true reform is not achieved merely by adopting the concept, but rather by providing the executive will capable of transforming it into a practical reality that is reflected in the level of services.
Economic development.
He argued that program and performance budgeting presents a significant opportunity to restructure and improve the efficiency of public spending. However, he noted that its success requires a set of essential conditions, foremost among them government digitalization, the development of banking and regulatory systems, enhanced transparency, and linking spending to results. This ensures a shift from managing resources based on financial allocations to managing them according to performance indicators and development goals, which constitutes a fundamental pillar for achieving economic reform.Sustainable in Iraq.
A budget unlike any before: Al-Zaidi's government pursues unprecedented economic reforms to control government spending.
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The Iraqi government is proceeding with a reformulation of its public budgeting philosophy, gradually shifting from the traditional spending model to a "program-based budget." Economic circles view this move as potentially laying the foundation for a new era based on linking public funds to objectives and results, enhancing spending efficiency, and rationalizing expenditures in line with the requirements of financial and administrative reform.
This approach comes at a time when the region is facing rapidly evolving economic and regional challenges, compelling governments to adopt more flexible resource management policies. Baghdad affirms its continued commitment to safeguarding financial stability and ensuring the financing of essential obligations, while simultaneously developing future budget proposals that adapt to local and international developments.
Finance Minister Faleh Sari announced during his discussions with the US Chargé d'Affaires in Baghdad the government's intention to prepare a program-based budget and gradually transition from the traditional system. This aims to increase spending efficiency and link allocations to performance and results, within a reform vision supported by international institutions and seeking to improve the state's financial management.
In this context, MP Hussein al-Khafaji, a member of the Parliamentary Finance Committee, revealed that “the Finance Committee will discuss with the relevant executive bodies various indicators and data related to the financial situation, to ensure that decisions are based on accurate information and a comprehensive vision.” He explained that “there are important files related to strategic projects, contracts, and government commitments that require careful study to ensure the continuity of work and serve the public interest.”
He added to Iraq Observer that “the upcoming meetings will provide a clearer picture of the financial trajectory in the coming period, especially in light of the current economic conditions, which will help to formulate a realistic vision regarding the budget and government spending.”
Observers believe that adopting a program-based budget represents a qualitative shift in public finance management, as it focuses on measuring results and achieving objectives instead of merely distributing financial allocations. This contributes to raising the efficiency of government institutions, reducing waste, improving spending priorities, and enhancing transparency in the implementation of development projects and plans.
Experts also point out that the ongoing coordination between the government, the parliamentary finance committee, and the central bank reflects an institutional framework for managing public finances, particularly given the commitment to securing essential expenditures and safeguarding economic stability. This is being done in parallel with reviewing spending priorities and developing financial planning tools to keep pace with current changes.
While technical discussions regarding the upcoming budget continue, the government appears determined to implement structural reforms aimed at modernizing financial management, improving resource efficiency, and creating a more sustainable environment for public spending. This will ensure the continued implementation of vital projects, support essential services, and bolster confidence in the national economy in the coming period.
Tom Barrack begins a tour of Baghdad and Erbil to discuss security and energy issues.
The US President's Special Envoy to Syria and Iraq, Tom Barrack, is preparing to visit Iraq and the Kurdistan Region next week as part of a tour that includes meetings with government officials and political leaders. The anticipated talks will focus on a number of security and economic issues, including the situation of armed groups, the future of cooperation in the energy sector, and regional developments in Syria and Iraq.
A report published by the American website “Al-Monitor” stated that Barak will visit Iraq on Monday, and extensive talks are scheduled to be held with Iraqi Prime Minister Ali al-Zaidi and senior political leaders, where the American side will focus on demanding the disbanding and disarmament of armed factions, especially those involved in the attacks that targeted American diplomats last April.
In his second stop scheduled for Tuesday, the US envoy will travel to Erbil for high-level meetings with President Masoud Barzani, Regional President Nechirvan Barzani, and Regional Government Prime Minister Masrour Barzani.
The report also revealed a prominent regional agenda that includes a planned meeting between Barak in Erbil with the commander-in-chief of the Syrian Democratic Forces (SDF), Mazloum Abdi.
These accelerated diplomatic moves come amid severe economic complications, as Iraqi oil exports have fallen to a record low of 3.3 million barrels per day from 600,000 barrels per day due to current tensions in the Strait of Hormuz and the repercussions of US sanctions.
On the political front, observers cautiously noted the flexibility shown by the Sadrist movement and armed groups such as “Asaib Ahl al-Haq” regarding the handover of weapons, placing these steps within the framework of an Iranian tactic to maneuver and alleviate international pressures coinciding with the nuclear negotiations.
Economic explanation: The Iraqi government lacks the time and revenue necessary to approve the 2026 budget.
Iraqi economist Haider Al-Sheikh said that the Iraqi government currently does not have sufficient financial revenues or the necessary time to prepare the draft general budget law for 2026.
Sheikh explained in a statement to “Roj News” that the closure of the Strait of Hormuz has disrupted maritime traffic and directly impacted Iraqi oil exports, noting that the volume of exports has decreased from about 3.5 million barrels per day to less than one million barrels of crude oil.
He added that the government needs about 140 trillion dinars annually to cover operating budget expenses, in addition to 50 trillion dinars for the investment budget, indicating that providing these amounts has become extremely difficult in light of declining revenues.
He pointed out that monthly oil and non-oil revenues have decreased, according to his estimates, from about 10 trillion dinars to only about 2 trillion dinars, which poses major challenges to financing public expenditures and preparing next year’s budget.
Standard & Poor's affirms Iraq's sovereign rating and removes it from negative watch.
Standard & Poor's Global Ratings affirmed Iraq's sovereign rating at "B-/B" and removed the long-term rating from its negative watch list.
The agency gave a negative outlook, citing the risks of conflict in the Middle East over the next six to twelve months, including continued disruptions to export trade routes through the Strait of Hormuz and the potential for damage to infrastructure.
Iraq’s economy remains heavily dependent on the oil sector, which means it is suffering greatly from the decline in crude exports through the strategic waterway, according to Reuters.
The agency predicted that oil production would average 2.9 million barrels per day for the entire year in 2026, down about 28% from the pre-war average of 4 million barrels per day recorded in 2025, attributing its forecast to current production levels and the fragile recovery expected in the second half.
The agency said that given that oil flows constitute more than 90% of budget revenues and merchandise exports, Iraq’s financial situation and balance of payments are likely to remain under pressure this year, forecasting a 15% contraction in real GDP this year.
Higher average oil prices during 2026 would provide some support for fiscal and external revenues, assuming oil exports gradually recover in the second half, which Standard & Poor's said remains its baseline scenario.
The agency had placed Iraq’s long-term sovereign rating of “B-” on negative watch in March, citing the risk of a downgrade following a sharp drop in oil production linked to escalating conflict in the region.
Iran: Four major banks targeted in cyberattack
Iranian authorities reported on Saturday evening that four major banks were subjected to a cyberattack that led to disruptions in a number of electronic banking services, stressing that no data or banking information leaks were recorded.
The Iranian Students' News Agency (ISNA) quoted official sources as saying that Bank Melli, Bank Saderat, Bank Tejarat and Bank Tanmiyat al-Sadr faced technical problems from the early hours of Saturday morning that affected mobile banking applications and some other electronic services, causing difficulties for customers in carrying out their transactions.
The banks concerned explained that they sent text messages to their customers to apologize for the disruptions, stressing that technical teams are working around the clock to address the problem and restore services to normal as quickly as possible.
According to sources at the Iranian Central Bank, the disruptions were caused by a cyberattack targeting the infrastructure of some banks, stressing that initial investigations have not shown any indications of customer data leaks or information database breaches.
Amid concerns that financial settlement operations may be affected, the Central Bank of Iran announced emergency measures to ensure the continuation of deposit and transfer operations, noting that funds for beneficiaries who had previously registered reserve accounts in the affected banks would be deposited into those accounts by the end of the day.
The Central Bank explained that shop and business owners who deal with the affected banks will be able to receive their financial dues through pre-registered reserve accounts, ensuring that commercial settlement operations and daily payments are not disrupted.
The monetary authorities confirmed that monitoring of banking systems and digital infrastructure is ongoing, while technical teams continue their efforts to fully restore services and ensure the stability of electronic systems in the country.
The Kurdistan Democratic Party announces its full support for the al-Zaidi government and its reform measures.
The Development Fund: Will Al-Zaidi succeed in creating a new financing arm for Iraq?
Al-Mada/Mohammed Al-Obeidi:
The government's move to establish a "Development Fund" in Iraq is sparking widespread debate in economic and financial circles, given the country's financial crisis and the general budget's heavy reliance on oil revenues. While the government sees the project as an opportunity to attract investments and stimulate economic growth, experts are raising questions about its launch timing, funding mechanisms, and its ability to achieve its objectives under current financial pressures.
This move coincides with political and economic initiatives led by Prime Minister Ali Faleh Al-Zubaidi, who is seeking to garner domestic and international support for the fund as an investment platform aimed at financing infrastructure projects, creating jobs, and diversifying sources of economic growth away from traditional dependence on oil. Government officials have spoken of international contributions and guarantees that could reach between $100 and $150 billion, in addition to hopes of attracting further investments and partnerships in the coming phase. Regarding
the Washington visit
, financial and banking researcher Haider Al-Sheikh told Al-Mada that "the Development Fund is an investment fund based on contributions from foreign and Arab companies, and the government has set a minimum capital of $100 billion."
He added that “the Prime Minister’s upcoming visit to the United States could contribute to enhancing the project’s chances of success, particularly through meetings with representatives of American and foreign companies and inviting them to invest in Iraq.” He explained that “the entry of American companies could pave the way for more Arab and foreign companies to participate in investment projects through the Development Fund.”
Sheikh clarified that “the project is inherently investment-oriented, and the government’s role is to create a suitable environment for investors and enable them to implement projects, thereby contributing to stimulating the economy and expanding the investment base.” He pointed out that “the Fund is not primarily focused on direct operational spending, but rather aims to attract capital to productive and developmental projects.”
The idea of establishing a sovereign wealth fund or a development fund is not new to Iraq. In recent years, successive governments have proposed similar initiatives and ideas aimed at investing oil wealth, diversifying income sources, and promoting long-term investments.
However, most of these projects remained within the realm of official pronouncements and declarations, failing to materialize into effective institutions on the ground. This was due to challenges related to financial crises, mismanagement, fluctuating oil prices, high operating costs, and political and administrative disputes. Regarding
the timing dilemma
, economist Dirgham Muhammad believes that "the establishment of development funds or sovereign wealth funds is usually linked to the
existence of financial surpluses after covering the needs of the general budget."
He added to Al-Mada that "the situation might be different if the funds are in the form of grants rather than loans," explaining that "grants allocated to sovereign wealth funds are conditional on directing them towards investment and developing investment portfolios with guaranteed returns, and not using them to finance operating expenses."
Experts point out that the success of any development fund of this size hinges on the nature of its funding sources, legal guarantees, governance, and management mechanisms, as well as the state's ability to provide a stable investment environment that attracts and retains
capital. This comes at a time when Iraq faces challenges related to the budget deficit, fluctuating oil prices, and the need for structural
reforms in economic management.
These proposals are made as the government has announced that the development fund will be an investment vehicle independent of the general budget, relying on international contributions and guarantees aimed at achieving economic stability through investment. This will be done in conjunction with efforts to reform financial management and adopt a program-based budget in coordination with international bodies and local institutions.
A strategic move: ExxonMobil opens the door to massive investments in Iraqi oil.
Baghdad/Al-Masalla Translation: ExxonMobil executives met with the new Iraqi Oil Minister, Basim Khudair.
The American giant had signed a preliminary agreement last year to develop the Majnoon field, which has a production capacity of 450,000 barrels per day, in addition to exploring the development of infrastructure for Iraq’s oil exports.
Since taking office last month, Khodair has called on American companies to resume trade talks that had begun under the previous government.
According to informed sources, the meeting took place in Baghdad on June 7, where the two sides discussed ways to expedite the implementation of the preliminary, non-binding agreement signed in October 2025 with the Basra Oil Company and the Iraqi State Oil Marketing Organization (SOMO). The agreement focuses on developing the giant Majnoon oil field, which holds estimated reserves of approximately 38 billion barrels, with the potential for a significant increase in production in subsequent phases.
The Majnoon oil field, one of the world's largest, is located in Basra Governorate in southern Iraq. The partnership aims to utilize cutting-edge technologies to improve recovery rates and reduce associated gas flaring, as well as upgrade export infrastructure including ports, pipelines, and storage facilities, and potentially explore joint marketing opportunities in Asian markets.
These talks come as part of a wave of major American companies returning to Iraq, such as Chevron, which is holding exclusive talks for the West Qurna 2 field, as part of the government's efforts to modernize the oil sector and offer more attractive investment terms.
The importance of strengthening cooperation for the Iraqi economy
Strengthening the partnership with ExxonMobil represents a vital strategic step for the Iraqi economy, which relies on oil for over 90% of its budget revenues. Iraq aims to increase its oil production to 6 million barrels per day by 2029, compared to approximately 4 million barrels currently, and the development of fields like Majnoon, through investments of billions of dollars, will contribute to achieving this goal.
This cooperation also helps modernize export infrastructure, reducing operational losses, increasing export capacity, and opening new markets. It brings advanced American technical expertise to improve production efficiency, develop associated gas for power generation, and reduce environmental emissions, thus supporting long-term economic diversification.
For its part, ExxonMobil sees Iraq as an opportunity to access large, inexpensive oil reserves, thus bolstering its global portfolio. Analysts emphasize that such agreements have both political and economic dimensions, as they strengthen Iraq's geopolitical balance and attract Western investments that contribute to stability and economic growth.
Negotiations are ongoing to transform the initial agreements into binding contracts, with a focus on ensuring mutually beneficial returns amidst security and administrative challenges. This cooperation is seen as part of a broader strategy to rebuild Iraq's energy sector and strengthen its position in the global market.
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