Iraq's Strategic Moment – Part II

Following the Second World War, Japan rebuilt its economy through manufacturing, technology, and global trade despite possessing few natural resources. Singapore transformed a small island with virtually no natural resources into one of the world's premier logistics and financial centers by investing in institutions, ports, and human capital. Norway converted petroleum wealth into an enduring national financial asset, while the United Arab Emirates used energy revenues to build globally competitive infrastructure, transportation networks, and commercial centers. Qatar leveraged natural gas to become one of the world's leading energy exporters while expanding its influence through investment, logistics, and international partnerships.

Each nation followed a very different path. Yet their experiences demonstrate a common principle:

Natural resources create opportunity. Strategy determines whether that opportunity becomes national power.

Iraq now stands at such a moment in its own history.

Prime Minister Ali al-Zaidi's recent visit to Washington highlighted the possibility of a new chapter in U.S.-Iraq relations, one increasingly defined by economic partnership rather than military cooperation, and by energy diplomacy rather than conflict. More than 50 agreements and memoranda of understanding totaling over $60 billion were announced during the U.S.-Iraq Business Summit, spanning energy, healthcare, technology, infrastructure, and other sectors. Major international energy companies also announced or advanced investments involving oilfields, natural gas, pipelines, and alternative export infrastructure.

Yet the significance of that visit extends well beyond the agreements themselves.

It raises a far more important question:

What kind of country does Iraq want to become?

The answer is often framed in familiar terms: produce more oil, attract more investment, increase exports, and develop additional infrastructure. These objectives are important, but they are not, by themselves, a national strategy. They are individual components of something much larger.

For Iraq, the objective should not simply be to become a larger energy producer. It should be to become a stronger nation—one that uses its extraordinary energy resources to build lasting prosperity, resilient institutions, and greater strategic independence.

Energy has become national power.

For much of the twentieth century, energy was viewed primarily as a commodity. Nations produced it, exported it, and used the resulting revenue to finance government. Today, energy plays a far broader role. It shapes industrial competitiveness, technological innovation, supply-chain resilience, national security, foreign investment, and geopolitical influence. Countries that can reliably produce, transport, process, and deliver energy possess strategic advantages extending well beyond the energy sector.

Few countries are better positioned to capitalize on that reality than Iraq.

With one of the world's largest proven oil reserves, substantial natural gas resources, a strategic location connecting the Arabian Gulf with Türkiye, the Levant, and Europe, and a young population seeking opportunity, Iraq possesses many of the ingredients necessary to become one of the Middle East's leading economic powers.

Yet Iraq also illustrates one of the great paradoxes of global energy: it is energy rich while remaining electricity constrained.

Iraq exports millions of barrels of crude oil while still relying in part on imported natural gas to satisfy domestic electricity demand. At the same time, it continues to flare associated gas that could instead generate electricity, support petrochemical and industrial development, create skilled employment, and strengthen national energy independence.

These are not merely operational inefficiencies. They are strategic vulnerabilities.

Iraq's energy dependence also has consequences beyond electricity. The country remains deeply economically connected to Iran, including through billions of dollars in annual natural gas purchases, while simultaneously relying upon access to the U.S.-led financial system and holding substantial reserves in the United States. That leaves Baghdad exposed to decisions made in both Tehran and Washington involving energy supply, sanctions, financial access, and regional conflict.

Developing Iraq's own gas resources should therefore not be understood as an anti-Iran policy. It is a pro-Iraq policy. Greater energy self-sufficiency gives Baghdad more freedom to maintain constructive relationships with both Washington and Tehran without allowing either relationship to determine Iraq's economic choices.

Every cubic foot of associated gas captured rather than flared represents economic value retained in Iraq. Every additional megawatt of reliable domestic power strengthens industry and investment. Every reduction in dependence on imported fuel expands Baghdad's freedom of action.

The solution is not simply producing more oil. The solution is creating more national value.

That value requires an integrated national energy strategy.

Oil production will remain the foundation of Iraq's economy for decades. Yet crude exports alone cannot maximize national prosperity. Lasting value is created when energy resources support domestic manufacturing, reliable electricity, transportation, logistics, advanced industry, healthcare, education, digital infrastructure, and private enterprise.

Natural gas illustrates the opportunity particularly well. Associated gas should no longer be treated principally as a by-product of oil production. It is one of Iraq's most strategic national assets. Capturing and processing it could simultaneously reduce energy imports, improve electricity reliability, expand industrial capacity, provide feedstock for petrochemical manufacturing, reduce flaring, and improve Iraq's long-term fiscal position.

Reliable electricity is equally transformative. Modern economies depend upon confidence that power will be available whenever it is needed. Manufacturers cannot compete without it. Hospitals, water systems, telecommunications networks, universities, financial institutions, logistics hubs, and emerging digital and artificial intelligence infrastructure all require affordable and dependable electricity.

This is where reliability becomes more than an engineering objective. It becomes economic policy. Countries increasingly compete not simply through labor costs or tax incentives but through the reliability of their infrastructure. Investors seek environments where factories remain operational, supply chains function predictably, and interruptions are exceptional rather than routine.

Reliability itself has become a strategic asset.

History Offers a Different Lesson

Natural resources alone do not create prosperous nations. They create choices. What separates countries that translate resource wealth into lasting prosperity from those that remain exposed to commodity cycles is what they choose to do with those choices.

The United Arab Emirates' experience illustrates the principle. Hydrocarbon revenues provided substantial initial capital, but sustained investment in ports, airports, electricity, water infrastructure, logistics, education, industrial zones, and commercial institutions helped build an economy whose international influence today derives as much from connectivity and commerce as from hydrocarbons. The lesson is not that Iraq should follow the UAE's path. It is that energy wealth can finance capabilities whose value ultimately extends far beyond energy.

Norway followed a very different course. Recognizing that petroleum resources were finite, it developed institutions intended to preserve wealth across generations. Fiscal discipline, transparent governance, and long-term stewardship helped convert petroleum revenue into an enduring national asset.

Qatar provides another lesson. Its development of natural gas, LNG infrastructure, shipping capacity, and long-term commercial partnerships demonstrates how a nation can convert a resource into sustained economic and geopolitical influence. But the current disruption of Qatari LNG exports through the Strait of Hormuz illustrates another principle as well: even a highly successful energy system remains vulnerable when its access to global markets depends overwhelmingly upon a single geographic chokepoint.

For Iraq, that lesson is especially relevant.

These countries did not succeed because they followed a common blueprint, and Iraq should not attempt to replicate any of them. Its history, political system, population, geography, institutions, and strategic environment are uniquely Iraqi.

The opportunity is to take the underlying lessons and build an Iraqi model.

Few countries combine Iraq's oil and natural gas resources, agricultural potential, access to the Arabian Gulf, position between Asia and Europe, growing workforce, and proximity to major regional markets. These advantages provide the foundation for something far larger than increased hydrocarbon production.

They provide the foundation for nation-building.

The opportunity is to transform energy wealth into national capability: modern ports and maritime infrastructure, reliable electricity, domestic gas development, transportation networks, stronger healthcare and education, competitive industries, private investment, and institutions capable of sustaining growth long after today's hydrocarbons have been consumed.

For decades, oil has largely been viewed as Iraq's principal source of government revenue. In the decades ahead, energy should increasingly be viewed as the catalyst for building a diversified economy.

The objective is not to maximize production. It is to maximize national value.

That distinction has become particularly important.

Prime Minister al-Zaidi recently outlined an ambition to increase Iraq's oil production capacity from roughly 4 million barrels per day before the current regional conflict to between 8 and 10 million barrels per day within six years. Baghdad has also approached OPEC about the production allowances that would be necessary to accommodate such growth.

That ambition is understandable and potentially transformative. But production capacity should be viewed as a means rather than the ultimate measure of success. An additional barrel that finances reliable electricity, gas infrastructure, industrial development, transportation, education, or long-term investment creates greater national value than an additional barrel whose principal contribution is another dollar of government revenue.

The strategic question for Iraq is therefore not simply whether it can produce 8 million or even 10 million barrels per day.

It is what Iraq intends to build with the wealth that production creates.

Success should consequently be measured differently: how much associated gas is captured rather than flared; how many additional hours of reliable electricity reach Iraqi homes and businesses; how many industrial facilities are powered by domestic energy; how many skilled jobs are created beyond the oil fields; how much private investment enters the country; and how effectively Iraqi infrastructure connects its economy to regional and global markets.

Those indicators reveal whether energy is strengthening sovereignty rather than merely generating revenue.

From the Wellhead to the World

This same principle applies across the entire energy value chain. Discussions of Iraq's energy future often focus heavily on upstream production while overlooking the infrastructure that ultimately determines whether natural resources become national strength.

Pipelines create flexibility. Storage improves resilience. Refineries create higher-value products. Transmission systems distribute economic opportunity. Ports connect Iraq to international markets. Tanker capacity and maritime transportation protect export capability. Logistics networks strengthen commercial competitiveness.

Each component reinforces the others.

A nation does not become an energy power simply by producing oil. It becomes an energy power by reliably converting resources into value and connecting that value to markets.

For Iraq, maritime infrastructure therefore deserves particular attention. The country's southern ports and offshore export facilities are not merely commercial infrastructure; they are strategic national assets. Every barrel exported, every vessel serviced, every logistics corridor expanded, and every improvement in port efficiency strengthens Iraq's position within the global economy.

Investments in ports, navigation, storage, tanker capacity, maritime services, and transportation should be viewed as investments in sovereignty as much as commerce.

The current regional crisis has made that argument more urgent.

Iraq is now pursuing multiple alternatives to its heavy dependence on the Strait of Hormuz, including expanded exports through Türkiye to Ceyhan and proposed routes through Syria to Baniyas on the Mediterranean and Jordan to Aqaba on the Red Sea. The Iraq–Türkiye pipeline is already Iraq's only functioning crude export pipeline outside the Gulf, although its current volumes remain relatively modest.

The significance of these projects is not simply how many barrels any individual pipeline can transport. Together, they point toward something much more important: a deliberately diversified national export architecture.

If Iraq ultimately intends to support substantially greater production, then increased production capacity must be accompanied by equally ambitious investments in pipelines, southern export terminals, storage, ports, tanker capacity, and alternative transportation corridors. Increased production has limited strategic value if Iraq cannot reliably move those barrels to customers.

Recent disruptions in the Strait of Hormuz have demonstrated the costs of geographic concentration with unusual clarity. Qatar's LNG experience is an extreme example. Despite possessing one of the world's most sophisticated natural gas industries, its LNG exports have been severely constrained because almost all of that export capacity depends upon passage through a single maritime chokepoint.

Iraq has the opportunity to design greater resilience into its system before future capacity is built.

Strategic redundancy is not duplication. It is sovereignty.

A Different U.S.–Iraq Partnership

This strategy also carries important implications for the United States.

For more than two decades, U.S. engagement with Iraq understandably emphasized security cooperation and counterterrorism. Those efforts remain important, particularly as Baghdad confronts the difficult but essential task of ensuring that the Iraqi state maintains authority over armed groups and critical national infrastructure.

Yet the Washington visit demonstrated the potential for a different dimension of the relationship.



American technology, engineering, project management, capital, education, and private investment can help Iraq build national capacity rather than dependency. The energy agreements announced in Washington—including investments involving major international oil and gas companies and proposed alternative export infrastructure—provide an opportunity to translate the bilateral relationship into physical assets, commercial relationships, jobs, and institutions that can endure beyond any individual administration.

This should be the next phase of U.S.–Iraq engagement: not replacing security cooperation, but complementing it with economic statecraft.

For Washington, helping Iraq become more energy self-sufficient and economically resilient is not simply commercial policy. A stronger Iraq that can generate its own electricity, finance its development, diversify its export routes, and make sovereign economic decisions is inherently better positioned to resist external coercion and contribute to regional stability.

For Baghdad, American engagement should similarly be viewed not as a choice against Iran or any other neighbor, but as one element of a diversified foreign and economic policy designed to expand Iraq's options.

Ultimately, however, no external partner can substitute for Iraqi leadership.

The Government of Iraq must continue strengthening the rule of law, improving regulatory certainty, reducing bureaucratic barriers, protecting investors, combating corruption, and ensuring that state institutions exercise clear authority over the nation's security and critical infrastructure. Sustainable development requires confidence that projects will be completed, contracts honored, capital protected, and government institutions allowed to function.

That is where the promise of the Washington visit will ultimately be tested.

The weeks since the visit have already begun to reveal the scale of the opportunity. Iraq is discussing substantially greater oil production, expanded gas development, new pipeline corridors, major international energy investment, and multiple routes to global markets. These should not develop as a collection of disconnected projects. They should become components of an integrated national strategy.

Momentum creates opportunity. Execution creates history.

History will not judge this moment by the number of memoranda signed, the production targets announced, or the value attached to prospective investments. It will judge whether Iraq transformed those commitments into reliable electricity, productive industries, modern ports, resilient export infrastructure, stronger institutions, skilled employment, and greater prosperity for its citizens.

Every generation inherits assets, but few inherit the opportunity to redefine a nation's future.

Today's Iraqi leadership has that opportunity. The decisions made over the coming decade—how energy revenues are invested, how institutions are strengthened, how export routes are diversified, and how infrastructure is modernized—will determine whether Iraq remains primarily an energy producer or emerges as one of the Middle East's most influential economic and strategic powers.

Iraq's greatest natural resource is not oil. It is the opportunity that oil provides.

Oil made Iraq an energy power. An integrated national strategy can make Iraq a strategic power.

Rick Westerdale has more than 30 years of experience across the federal government as well as in the global energy industry. As a Vice President at Connector, Inc., a boutique government relations and political affairs firm based in Washington, D.C., Rick advises clients on strategy, investment, and policy across healthcare, hydrocarbons, LNG, hydrogen, nuclear, and the broader energy transition.