Subchapters:
- Business Relationships
- Foreign direct investment
- FTAs and Treaties
- Development Cooperation
- Prospective fields of study (MOP)
Business relations
Trade relations with the EU
The EU’s trade relations with Iraq are governed by the EU-Iraq Partnership and Cooperation Agreement, which is the first contractual relationship between the two partners. The text of the Partnership and Cooperation Agreement between the EU and Iraq was signed on 11 May 2012.
- Allcountrylist: Overview of major industries in Iraq, including mining, construction, transportation, tourism, and foreign trade.
The EU is perceived as a very important and sought-after business partner, whose product quality has a great reputation in the country. Iraq’s exports are almost exclusively oil and oil products, on the other hand almost everything is imported into Iraq, including cars, electronics, chemical industry products and food. The decline in trade turnover in 2020 was caused by the global Covid-19 pandemic and a significant reduction in oil demand and the subsequent reduction in production and oil exports according to OPEC quotas. This trend is currently returning to pre-pandemic values.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from the EU (million EUR) | 3,144.70 | 3,210.60 | 3,761.00 | 3,480.50 | 3,987.40 |
| Imports into the EU (million EUR) | 13,094.70 | 16,311.80 | 17,281.40 | 7,209.90 | 12,873.80 |
| Balance with the EU (million EUR) | 9,950.0 | 13 101.2 | 13,520.4 | 3,729.4 | 8,886.4 |
Source: European Commission
Trade relations with the Czech Republic
Imports to the Czech Republic from Iraq are historically minimal. On the contrary, exports have historically hovered above the 1 billion CZK mark. Imports from the Czech Republic are rather sudden and depend on individual contracts. In recent years, cars, engineering products and machines, electronics, medicine, and toilet paper have been imported from the Czech Republic to Iraq, among other things.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from the Czech Republic (billion CZK) | 0 | 1.1 | 1.3 | 1.6 | ON |
| Imports to the Czech Republic (billion CZK) | 1.5 | ON | ON | ON | ON |
| Balance with the Czech Republic (billion CZK) | 1.5 | -1.1 | -1.3 | -1.6 | ON |
Source: CZSO
Trade relations with countries outside the EU
In addition to the EU, Iraq’s main trading partners are China, India, Turkey, the United Arab Emirates and South Korea. Export-wise, Iraq is dependent on the export of crude oil to Asia, especially to China and India. On the contrary, it imports most industrial and consumer goods from there. Turkey is a significant importer of not only food to Iraq.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from countries outside the EU (million EUR) | 45,780.5 | 70 195.4 | 65,586.3 | 36,308.9 | 62,824.3 |
| Imports to countries outside the EU (million EUR) | 34,894.3 | 16,732.5 | 24,723.6 | 27,578.3 | 29,219.9 |
| Balance with non-EU countries (million EUR) | 10,886.2 | 53,462.9 | 40,862.7 | 8,730.5 | 33,604.4 |
Source: EIU, Eurostat
Foreign direct investment
Iraq still faces a number of problems that cannot be solved completely satisfactorily. Lawsuits over contracts last for many years, there are often delays in installments, and foreigners have difficulty accessing public contracts. In addition, the private sector is minimal in the country. Among other complications not only for foreign investors are corruption, complicated registration, unclear and irregular collection of duties and taxes, changing and unclear conditions for granting visas and residence permits, arbitrary application of regulations, absence of alternative options for settling disputes, blackouts in electricity supplies, backward a banking system with a minimal level of digitization and high fees or ever-changing regulations.
This has resulted in minimal FDI in Iraq for years. Nevertheless, Iraq has a lot to offer foreign investors. However, this requires patience. At the same time, autonomous Iraqi Kurdistan offers a significantly more stable and transparent environment for FDI.
FTAs and treaties
Treaties with the EU
In November 2006, negotiations began between the EU and Iraq to sign a partnership agreement that would provide a legal basis for political and economic cooperation. Agreement ( EU-Iraq Partnership and Cooperation Agreement ) was signed in 2012 and entered into force in the summer of 2018. The EU reaffirmed its serious interest in supporting the Iraqi state authorities in the transition to democracy and during the reconstruction process, as well as its willingness to address the causes of political, social and economic instability. Humanitarian assistance is maintained to provide assistance and protection to all Iraqis affected by the conflict to use this humanitarian assistance as a means to strengthen governance, democracy and the rule of law. The stabilization and security of recently liberated areas and the safe, properly communicated, voluntary and dignified return of internally displaced persons are among the highest priorities. The provision of urgent financial aid for the reconstruction of damaged infrastructure and the restoration of the most important public services is linked to the implementation of development aid from EU countries to Iraq.
Contracts with the Czech Republic
Agreement on economic cooperation and trade promotion – signed in 2012, entered into force in 2014.
Agreement on the support and mutual protection of investments – in March 2018, during the 2nd meeting of the Czech-Iraqi Joint Committee for Economic Cooperation, a meeting of experts from both parties took place. Based on it, the MoF of the Czech Republic sent the agreed text to the Iraqi partner in April 2019. In December 2019, the MoF received a communication from the Iraqi Embassy in Prague accompanied by a new draft of the proposal, which does not take into account previous exchanges and problems that have already been agreed upon. ZÚ invited the Ministry of Finance to prepare a response in the form of a note.
Agreement on the prevention of double taxation in the field of income taxes and on the prevention of tax evasion and tax avoidance – both parties are ready to sign.
Agreement on air transport between the Czech Republic and Iraq – final text agreed on the Czech side, signature is awaited.
Developmental cooperation
The Czech Republic provides aid to Iraq within the framework of bilateral cooperation and also cooperates with a number of international organizations that strive to reduce poverty, help returnees after the war with ISIS, and improve their living conditions. It is particularly involved in the development activities of the European Union, the United Nations, international financial institutions, the OECD and other intergovernmental organizations.
In addition, the Czech Ministry of Foreign Affairs is trying to get involved in the reconstruction of Iraq through the multi-year government Program to Support Czech Participation in the Stabilization and Reconstruction of Syria and Iraq, which is currently approved for the period 2022-2024. Czech companies can contribute to the reconstruction of Iraq after decades of conflict in the form of a tied monetary donation within this program or through tenders of international organizations and non-governmental development organizations (in this case, we recommend contacting specific organizations directly). The B2B program of the Czech Development Agency is also trying to help with entering the Iraqi market and thereby help with the reconstruction of Iraq.
Prospective fields of study (MOP)
Mining, mining and oil industry
Iraq is extremely dependent on the export of oil, which, like all other mineral wealth, is state-owned. In addition to significant deposits of oil (approx. 10% of world reserves), there are also significant deposits of phosphates, sulfur and natural gas in Iraq. After decades of wars and sanctions, the extraction of these raw materials, with the exception of oil, is minimal and obsolete, but the Iraqi state is interested in modernizing and expanding their extraction and processing. The Iraqi side has considerable interest in cooperation with Czech companies, especially in the field of the petrochemical industry, mining of phosphates, sulfur and geological exploration. Czech companies interested in this area will therefore have to cooperate with the Iraqi state administration and state enterprises, for which it is recommended to find a capable and trustworthy local partner.
Energy industry
Iraq is currently in a complicated energy situation, with frequent power outages for technical reasons, but also due to a lack of domestic electricity production. Projects for the reconstruction, construction or modernization of distribution networks and power plants offer numerous opportunities to Czech companies. In addition, the connection of the Iraqi distribution network with neighboring countries is being built or investments in photovoltaic power plants are planned. Especially in Iraqi Kurdistan, interest in ecological and renewable energy sources has grown significantly in recent years.
Defense industry
In Iraq, the Czech defense industry traditionally has a very good reputation. České zbrojovky has a number of opportunities with the modernization and maintenance of older technology, but also with new products, especially in the field of drones and anti-drone equipment. Two annual fairs, IQDEX and ATSO, open the door to Iraq for Czech companies, and Czech companies exhibit at IQDEX every year under the auspices of the embassy. In addition, there is a significant demand for civil protection in Iraqi Kurdistan, especially for fire and police equipment and supplies, including fire engines.
Water management and waste industry
Due to the long-term shortage of water, Iraq is a country with a high interest in the renewal and modernization of the water infrastructure. This also applies to Iraqi Kurdistan, where there are also a number of water dams, the system of which the local government plans to expand. In addition, a number of international organizations work in the field of water in the country, which are an alternative to the Iraqi state in this area. In addition, there are opportunities in the field of recycling in Iraq.
Healthcare and pharmaceutical industry
Iraq’s hospitals are largely outdated and inadequately equipped. The country also suffers from a lack of even basic medicines. Iraq is therefore interested in equipping hospitals and medicines and is considering the possibility of localizing pharmaceutical production directly in Iraq. In general, it can be said that private hospitals are better financed and communication with them is easier, but the Iraqi Ministry of Health is also interested in cooperation.
Tourism
With the slowly improving security situation in the country, the potential for tourism is also growing. There are a number of important historical monuments in Iraq, Iraqi Kurdistan, where the security situation is significantly better than in the rest of the country, but also offers opportunities for mountain tourism.
You can find more information on promising industries in Iraq in the latest edition of the Industry Opportunities Map on the Export.cz server, or you can contact the ZÚ Baghdad and ZÚ Erbíl at any time for more information.
