The current state of the investment climate in Iraq: problems and development prospects

the investment climate in Iraq in 2025 continues to combine significant opportunities related to its vast oil and gas reserves, infrastructure modernization, and growing international partnerships, with persistent challenges such as corruption, regulatory opacity, security risks, and economic volatility. Thanks to moderate GDP recovery in 2024 following a decline in 2023 and recent announcements of $450 billion in investment opportunities across various sectors, Iraq is positioning itself for diversification beyond the oil sector. Imports from the US reached $1.7 billion in 2024, highlighting potential in energy, agriculture, construction, and consumer goods. The semi-autonomous Iraqi Kurdistan Region provides a more investor-friendly environment with 100% foreign ownership, although disputes with the central government over oil revenues continue. This study analyzes Iraq's evolving economic landscape using the U.S. Department of State's 2025 Investment Climate Statement and scholarly literature to provide foreign investors with insights to navigate the political, economic, and regulatory dynamics. The objectives include assessing the impact of political stability on investor confidence, analyzing economic diversification measures, and critiquing regulatory barriers. The research findings can be practically applied to develop risk mitigation strategies for investing in Iraq, promoting sustainable economic growth and regional stability. Overall, the study emphasizes the need for reforms to attract foreign direct investment and diversify the economy, which is particularly relevant in the context of the global transition to green technologies.

investment climate, Iraq, foreign direct investment, economic diversification, political stability, corruption, renewable energy, infrastructure