Iran-Iraq Relations in Light of the Upcoming Iranian President's Visit to Iraq

Iran's newly elected president, Masoud Pezeshkian, is set to travel to Iraq, marking his first official foreign visit since taking office. The move underscores the importance of Iraq in Iran’s foreign policy priorities. Notably, the current government in Baghdad, led by Prime Minister Muhammad Shia' Al-Sudani, is considered the closest to Tehran since the downfall of Ba’ath Party rule in 2003. At the same time, Sudani appears to be prioritizing the strengthening of ties with Arab states rather than Iran. This could reflect comfort with the level of support from his Iran-backed political allies, and faith in the strength of his own ties with the Islamic Republic. Mindful of these dynamics, with Pezeshkian and Sudani now at the helm, how will the relationship between Iran and Iraq evolve?

Pezeshkian Regional Policy

Although Pezeshkian is backed by Reformists, his foreign policy appears to differ from that of his pro-reform predecessor Hassan Rouhani (2013-21). Rouhani's government prioritized relations with the west, particularly Europe, over regional ties, especially with Arab states.

In contrast, late Ebrahim Raisi (2021-24) shifted focus towards neighboring countries: normalizing relations with Saudi Arabia as well as enhancing ties with other Gulf Arab states and Jordan, and expanding its relationship with Iraq. This is while Iran’s ties with the west saw a notable deterioration.

Pezeshkian's foreign policy seems to follow in the footsteps of his predecessors, which is highlighted by his decision to choose Iraq as the destination for his first official presidential trip. Indeed, amid strained relations with the west and facing ongoing sanctions, the region—and Iraq in particular—hold strategic significance for Iran's foreign policy as a means to maintain influence and international connections.

Strategic Importance of Iraq for Iran

 Iraq holds strategic importance for Iran in areas such as security, the economy, and as a gateway to the Arab world.

·      Iraq is a promising market for Iranian products.

·      Iraq is Iran’s gate to the Arab world.

·      Iraq is the only country with a majority Shiite population similar to Iran, apart from Bahrain, which is not comparable with Uraq in terms of geopolitics significance and other factors.

·      Iraq is the negotiation table and battleground of Iran with the US.

Key Issues on Pezeshkian’s Agenda

·      Basra-Shalamcheh Railway: It has been a strategic project for Iran since 2003, but most Iraqi governments have not supported it. The Sudani government changed it to a passenger-only railway, while it was supposed to be part of trading routes that connect Iraq to Russia and East Asia and Iran to the Mediterranean.

·      Access to Export Revenues: Due to US sanctions, Iraq cannot directly pay Iran for electricity and gas imports. The former Iraqi government created an alternative payment plan that bypassed sanctions. By mid-2022, Iraq had paid debts to Iran and settled around €800M of Iran’s debt to Turkmenistan. Approximately €1.2B in Iranian funds held in the Trade Bank of Iraq was used to purchase goods for Iran. This process stopped under Sudani, leading to increased Iraqi debt to Iran; Pezeshkian will address this issue.

·      Iranian Kurdish Opposition Groups in Northern Iraq: After discussions in 2022-23, Iran and Iraq reached a security agreement to disarm and relocate these groups deeper into Iraq. The agreement, supported by Baghdad and Erbil, is being implemented. Pezeshkian will ensure the disarmament is thorough and that opposition groups pose no future security risks.

·      Iraq’s Mediation in Arab-Iranian Dialogue: Iraq facilitated talks between Iran and Saudi Arabia (2021-22), contributing to the UN-mediated ceasefire in Yemen and 2023 normalization of relations. Baghdad also hosted three rounds of talks between Iran and Jordan (2020-22) and sought to mediate between Iran and Egypt. Efforts stalled when Sudani took office in Oct. 2022 due to limited connections with Arab leaders. Sudani discussed resuming these talks with Egypt during his recent visit to Cairo, receiving a positive response. Pezeshkian and Sudani are expected to finalize preparations for talks with Egypt and Jordan during the visit.

Sudani's View on Iraq-Iran Relationship

·      Prime Minister Sudani’s foreign policy agenda suggests that it prioritizes ties with Arab states, particularly Egypt, Jordan, Saudi Arabia, and other Gulf states.

·      Sudani tries to maintain Iraq relationship on a low level to prevent provoking the Americans.

·      Sudani is confident that the opportunity created for Iran-backed militias in Iraq to act more freely, will protect him from Iran criticism.

Iran Division Over Relationship with Iraq

Those with a primarily military perspective seem content with the Iraqi prime minister’s policies, chiefly as he provides space for his political allies—including Shiite armed groups—to operate freely in Iraq. However, others in Tehran with a more strategic outlook are dissatisfied with Sudani’s approach, viewing it as a risky development that could undermine Iran's long-term interests in the region. Only time will tell whether the Pezeshkian administration will manage to reshuffle Iraq’s apparent foreign policy priorities.