God's grace is a tuna icon
Researcher in the affairs of the Middle East
Iraq has suffered for a long time from a lack of investment due to the burdens of occupation and political instability, in addition to corruption and the fight against terrorism. Even Basra, the largest major contributor to the federal budget, has been denied essential investments. With the election of Prime Minister Muhammad Shia al-Sudani, Iraq has an opportunity to change that, as the government program emphasizes the timely implementation of strategic projects, such as the Great Port of Faw and the Dry Canal (Iraqi Silk Road). Connecting the large port of Faw with the port of Umm Qasr through submerged tunnels, if implemented, will help in the development of all of Iraq, not just the south.
It is estimated that by 2025, the first cargo ship will dock in the large port of Faw, and in 2038 it will be fully operational. The dry canal is also expected to be fully operational in 2029. This new trade route is expected to replace the Red Sea-Suez Canal. In addition to reducing the travel time by 20-25 days. The large port of Faw will be able to accommodate larger cargo ships due to its depth, as it has a larger draft than the Suez Canal.
Since non-oil exports constitute only 4% of the Iraqi budget, a diversification of income sources can be achieved through projects that exploit the geographical location of Iraq, as these interrelated projects aim to be integrated. As the large port of Faw will allow the transfer of large strategic shipments to the submerged Khor Al-Zubayr tunnel, which will be able to transport them, by removing the tortuous road between the large port of Faw and the port of Umm Qasr, from the Al-Zubayr bridge, which is located in the southern part of the city of Basra.
The dry canal will create a land corridor with a highway and rail line to the Turkish border, which will enable goods to be transported, via existing ports and rail infrastructures, to Turkey.
According to the General Company for Iraqi Ports, by 2038, with full use of the Greater Faw port and the Dry Canal, Iraq will benefit from direct revenues of more than four billion US dollars without taking into account indirect revenues. This number may increase with the construction of integrated industrial zones and a cargo airport, in addition to the fact that the extension of the project may also include a Syrian land corridor to the Mediterranean Sea, which may double the estimated revenues of the project.
There are always great challenges along with the many advantages for Iraq, apart from the fact that Iraq will become a transportation hub, there is a real threat of regional competition with Iraq's Gulf neighbors. In this regard, the agreement reached with Kuwait regarding the port of Mubarak Al-Kabeer may have calmed the southern neighbor of Iraq, but the aspirations of other Gulf countries may cause the emergence of new differences in the region, as the emergence of larger Iraqi ports may nullify or reduce the importance of the countries’ ports Therefore, deterrent policies can be expected from the aforementioned countries.
As for within the country, there may be new or re-emerging obstacles to implementing projects in a timely manner and benefiting from the completed parts in the future. As the depreciation of the Iraqi dinar against the US dollar represents a major challenge for Iraq because it relies heavily on its imports. Moreover, the potential drop in oil prices due to lower production rate in China due to new waves of the COVID-19 pandemic may force Iraq to appear in a vulnerable position due to its dependence on oil exports for income. The fragile security environment also poses a threat to the continued exploitation of the dry canal, as it will be a corridor extending from the south to the northern parts of the country. Therefore, any security problem in any area within the scope of the corridor may cause the corridor to stop completely.
Iraq suffered from a lack of investments that would enable it to diversify its economy, as many projects aimed at diversifying the economy failed due to corruption. However, holding corrupt officials accountable and applying sentences such as the sentencing of Shakir al-Zamili, the former head of the Investment Authority in Baghdad, to four years in prison with other ongoing court cases for other alleged wrongdoing, suggests that Iraq's direction could be changing. Iraq is ready to continue strategic investments as well as develop the public sector with new jobs, which is why the Faw Grand Port project is critical for the country in order to diversify its sources of revenue. However, it will face domestic and regional challenges.
Added 2023/02/09 - 8:15 PM
Updated 02/10/2023 - 12:33 AM
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