Iraq, UK Agree on Trade Package Worth up to $15bn

Iraq and Britain have finalized a comprehensive trade and defence package valued at up to £12.3 billion ($14.98 billion), marking a significant milestone in bilateral relations. The announcement followed discussions between Iraqi Prime Minister Mohammed Shia al-Sudani and UK Prime Minister Keir Starmer at 10 Downing Street.

Key Aspects of the Agreement

• Power Transmission and Grid Interconnection:
  A £1.2 billion project will use British-made power transmission systems to link Iraq's electrical grid with Saudi Arabia. This move is expected to improve Iraq's energy security and integration within the region.
• Water Infrastructure Development:
  A UK-led consortium will spearhead a £5.3 billion project to build water infrastructure in Iraq’s southern and western regions, addressing severe water shortages in arid areas.
• Military Cooperation:
  A £500 million initiative will modernize Iraq's Al-Qayyarah air base in northern Iraq. Additionally, the defence agreement establishes a framework for future military collaboration, following the planned conclusion of the U.S.-led coalition's operations in Iraq by 2026.

The defence deal represents a "new era in security cooperation," according to the joint statement. It will focus on bolstering Iraq's self-reliance in military operations and enhancing UK-Iraqi coordination on security issues.

The trade package also aims to elevate Iraq's infrastructure and economic capabilities, increasing bilateral trade, which was significantly lower in 2024.

The agreement comes amid widespread geopolitical shifts in the Middle East. Iraq is navigating its role as a stabilizing force in a region marked by conflicts involving neighboring Iran-backed groups and shifting power dynamics. Prime Minister Sudani emphasized Iraq’s intent to avoid becoming a battleground and instead focus on regional cooperation and development.