Alwaght- After years of ups and down in Iraqi-Turkish relations, the assumption of power by Ali al-Zaydi in Baghdad and his government's emphasis on developing the ties with neighboring countries prepare the ground for settling the disputes and ushering in a new stage in their relations.
In this regard, al-Zayed visited Turkey on July 28 and met with President Recep Tayyip Erdogan. The two sides highlighted the need to start a new stage in a push for boosting economic cooperation, trade integration, and bolstering strategic ties.
In the press conference, Erdogan announced signing agreements with Iraq, adding that given the difficult regional conditions, security took the center stage in their talks.
Erdogan declared Turkey's readiness to supply advanced defense industry products to Iraqi forces, emphasizing that Iraq's security and stability are a direct extension of Turkey's national security. He also pointed to ongoing military and security dialogue aimed at combating terrorist threats and achieving a region entirely free of terrorism.
The Turkish leader stressed that the signing of a number of agreements with Iraq marks a historic step in the bilateral partnership, particularly in the energy sector. He noted that trade volume with Iraq has reached $17 billion, and signaled that both countries intend to push it higher.
Under the deals signed between Turkish Trade Minister Ömer Bolat and the Iraqi trade delegation, the two nations agreed to boost bilateral trade to $30 billion in the coming years.
Iraq's water supply also featured prominently in the leaders' talks. Erdogan insisted that Ankara is pursuing a rational, science-based approach to water management grounded in humanitarian principles, guaranteeing sustainable use of water resources while taking Iraq's needs into account. Al-Zaydi confirmed that the signed agreements establish a framework for transparent cooperation to address drought and climate change.
The two sides also underscored the importance of a High-Level Strategic Cooperation Council, the Joint Planning Group, and Permanent Joint Committees, all designed to create an institutional and strategic architecture for sustainably deepening ties.
At the conclusion of the Erdogan-al-Zaydi talks, the parties inked deals spanning energy, transportation, education, and water. They also aligned their political positions on regional issues in Palestine, Syria, and Iran, and reiterated their commitment to preventing regional conflict from spiraling into devastation while doubling down on pathways to development and prosperity.
Oil agreements: Returning to Kirkuk-Ceyhan transit route
Given the growing Turkish need for energy and also proximity of Iraq to it as one of the largest holders of hydrocarbons, supplying oil to Turkey was one of the key parts of the talks.
Al-Zaydi said his country is ready to supply around 1 million oil barrels to Turkey daily, adding that partnership and integration in energy sector shore up ties between Baghdad and Ankara.
The centerpiece of the package is Turkey's entry into the Kirkuk oil field development, with state-owned TPAO purchasing a 15 percent stake in the operating consortium. The deal gives Ankara direct production rights inside Iraq. Erdogan cast it as a "historic" turning point in energy ties.
Concerning the oil deal, Energy Minister Alparslan Bayraktar confirmed a one-year bridging agreement to keep crude flowing through the Iraq-Turkey pipeline, or ITP.
"While efforts for a new long-term contract continue, we have activated a transfer deal with a daily capacity of 750,000 barrels," Bayraktar wrote on X.
The previous 53-year pact expired on July 27. Yet flows never stopped and the pipeline's strategic value spiked as threats to the Strait of Hormuz mounted, and both sides kept the taps open. The new arrangement will be backdated to the expiry date as an addendum, buying negotiators time to hash out a fuller accord.
The extension keeps Baghdad's sole operational export artery alive. Ankara now aims to push the line to its maximum capacity of 1.5 million barrels per day, and officials hint at eventual extensions reaching into southern Iraq's oil-rich provinces.
For now, Turkish data shows about 170,000 barrels daily moving through the pipeline to Ceyhan, on the Mediterranean coast. This pipeline is the only active overland oil exports route of Iraq to the world markets.
After closure of the Strait of Hormuz which is the main route of transit of the Iraqi oil to the global markets, the country's energy exports dropped to record lows from 3.5 million barrels a day to 260,000. So, Kirkuk-Ceyhan pipeline, as the only overland oil export route active in the current conditions, plays a vital role in Iraqi energy exports.
Despite the recent Turkish-Iraqi deal to resume and increase oil supplies to Turkey, the old disputes between Iraq's central government and Kurdistan region remains the biggest obstacle ahead of implementation of this agreement. Those disputes, centered on who holds the authority to export Kurdish crude and how the proceeds get divvied up, have repeatedly choked or halted shipments along the Kirkuk-Ceyhan pipeline.
In 2023, Baghdad's arbitration case against the Kurdistan Regional Government's independent oil sales through Turkey landed a decisive blow: the International Chamber of Commerce ruled in Iraq's favor, and held Ankara liable for cooperating with Erbil without federal consent. The pipeline went dark for months, costing billions in lost export revenue and deepening the fiscal wounds on all sides.
Many analysts argue that the agreement's success depends far more on settling the political and financial feuds between Baghdad and Erbil than on the pipeline's technical specs. Without a breakthrough, they warn, further disruptions remain all but inevitable, and the new framework could easily unravel before it ever delivers real returns.
Iraqi Oil Ministry itself has tempered expectations, acknowledging that the 750,000-barrel-per-day target is conditional on improved security in the Kurdish region, the return of foreign operators, and a resumption of production there. So, as long as Baghdad-Erbil oil disputes are not settled and the recent insecurity in the Kurdistan region, which are driven by broader conflict in the Persian Gulf, does not wind down, the new deal is unlikely to fully yield the economic benefits expected by the two sides.
Development Road, a challenging agreement
Ankara and Baghdad have been actively expanding their economic partnership in recent months, zeroing in on boosting trade volumes and launching strategic mega-projects. Iraq’s prime minister has announced the direct, operational start of the “Development Road” project, a 1,200-kilometer corridor cutting across a wide swath of Iraqi territory. Al-Zaydi described the initiative as a “third river,” alongside the Tigris and Euphrates, designed to form a commercial spine linking East and West.
The Development Road is one of the largest joint infrastructure ventures between Iraq and Turkey, connecting the Grand Faw Port to the Turkish border and onward to European markets. Valued at an estimated $17 billion, the project aims to transform Iraq into a transit hub between the Persian Gulf and Europe.
Economically, the plan is geared toward expanding bilateral trade. Iraq is banking on transit revenues, job creation, and foreign investment to wean its economy off oil exports, and the Development Road could go a long way toward turning those ambitions into reality.
Ankara, for its part, is pushing to elevate ties with Baghdad beyond security and political cooperation into a long-term economic partnership. By plugging into Iraq’s infrastructure drive, Turkish firms are strengthening their foothold in the market and unlocking fresh investment opportunities.
Turkey’s trade minister noted that “Iraq is Turkey’s fifth-largest trading partner and ranks third among countries where Turkish contractors have undertaken the most projects. Turkish companies have completed over 1,150 projects in Iraq worth nearly $40 billion to date. Streamlining customs procedures and expanding road, rail, and energy transmission corridors could therefore accelerate trade and investment flows between the two countries.”
The geopolitical stakes are equally significant. Baghdad is maneuvering to leverage its geographic position, recasting Iraq from an arena of regional rivalries into a connective commercial node.
According to Carnegie Endowment for International Peace, the Development Road is a push to increase Iraq's geopolitical weight and transform borders into regional connection routes.
For Turkey, this project is part of a broader strategy of Ankara to transform into Eurasia transit hub. Analysts believe that by supporting this corridor, Turkey is aspiring to take on alternative routes like India-Middle East-Europe Economic Corridor and to establish its role in the Asian-European trade chains.
Some observers believe the project's vast economic upside could shift Baghdad-Ankara relations away from their traditional pattern of security and border disputes toward a genuine "strategic partnership."
That said, serious hurdles remain. They include financing gaps, bureaucratic corruption, Iraq's persistent internal insecurity, and competition from other regional transit corridors, all of which rank among the biggest threats to the project's success.
The most critical obstacles include:
1. Political challenges
From the very start, the Development Road project has faced pushback and skepticism both inside Iraq and beyond. Some experts argue that Iraq's internal insecurity drives up insurance and transport costs, eating away at the route's economic edge.
On top of that, weak administrative structures, tangled bureaucracy, and rampant corruption have called into question the government's ability to pull off a project of this magnitude. Iraq's track record since 2003 shows that major infrastructure ventures have consistently been plagued by inefficiency and delays.
Domestic political rivalries could also throw a wrench in the works. Some factions have little interest in seeing the project succeed under Prime Minister Ali Al-Zaydi's banner. Add to that widespread fears of graft in execution contracts and the potential siphoning off of the massive budgets involved.
2. Economic challenges
Iraq's financial crunch looms as one of the project's most formidable hurdles. The sheer scale of funding required, coupled with the need for long-term commitments and operational and legal guarantees, comes at a time when Baghdad is already grappling with mounting fiscal pressure from public salaries, running costs, budget deficits, and domestic debt.
The country faces serious economic headwinds. Soaring internal debt, an economy dangerously overdependent on oil revenues, and volatile crude prices have all made financing the venture an uphill battle.
On top of that, Iraq's infrastructure has been battered by years of war, occupation, ISIS insurgency, and sheer neglect. Railways, airports, and much of the transport network are in dire need of a complete overhaul.
Another major roadblock in the Grand Faw Port not being completed. This port as the project's starting point remains unfinished. Until the port becomes fully operational, the Development Road cannot be implemented in its entirety.
As Ziyad al-Hashimi, an Iraqi international transport expert, put it, "the biggest obstacle so far is attracting investment. Actually, regional and international players still harbor serious doubts about getting involved in a mega-project of this scale inside Iraq."
3. Security challenges
Security instability in Iraq is one of the biggest threats for the project. Continued regional tensions, militia groups' attacks, and the likely return of ISIS terrorist organization to Iraq dissuade foreign investors from participating in the project.
Also, the disputes between Baghdad and Erbil over the route of the project pose another key obstacle. Kurdistan region opposes being omitted or limited in this project and this dispute can slow down the implementation or even fully halt it.
On top of all that, despite recent signs of de-escalation between Ankara and the Qandil mountains, the presence of PKK elements in certain border areas between Iraq and Turkey poses additional security risks for both construction and eventual operation of the route. Meanwhile, the mountainous terrain along the Turkish border is driving up rail construction costs and stretching out the project timeline even further.
4. Competition against other regional corridors
The Development Road is not just a transit project, it is a competition against a number of big transit projects, including:
- China's Belt and Road Initiative
- US and European-supoorted India-Middle East-Europe Economic Corridor
- Iran's plans to transform its ports to transit hubs
- rivalry of Kuwait's Mubarak Port with Iraq's Grand Faw Port
These rivalries could overshadow the existing expectations for attracting investment and diminish the project's overall appeal.
