Will closer cooperation with Iran become a financial necessity?

Iraq’s Economy Nears Collapse

Will closer cooperation with Iran become a financial necessity?


Iraq devalued its currency against the dollar by 18.5 percent on December 19 in an attempt to stimulate its faltering economy. Iraqi government officials acknowledge they have a major problem. Yet not all nations view it that way. Iraq’s difficulties are Iran’s opportunities.

2020 has been a disaster for Iraq’s economy. The International Monetary Fund estimates that Iraq’s economy contracted by 11 percent during 2020. "We supported the devaluation since the economic situation is collapsing," Iraqi finance committee member Jamal Kojar told Al-Monitor.

The people of Iraq are aware that their economy is close to collapse. "Everyone is afraid to buy or sell," one resident of Baghdad told the New York Times. He said that Baghdad’s Shorja market, which normally sees many customers, hardly has any at the moment. The majority of clients who frequent this market are government employees.

The Iraqi government’s debt to Iran, the source of most of its electricity and natural gas, is also dangerous. Iran claims Iraq owes $5 billion worth of electricity and gas.

Iraq's debt to Iran can be exploited. As electricity shortages grow worse and wages are left unpaid, unrest will grow.


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