On February 15, 2023, the Atlantic Council’s Iraq Initiative hosted His Excellency Fuad Hussein, Deputy Prime Minister and Minister of Foreign Affairs, Republic of Iraq, for a conversation with Abbas Kadhim, Director of the Iraq Initiative within the Atlantic Council’s Middle East Programs. Hussein discussed the new Iraqi government reform programs in energy, infrastructure, and climate, and the future of US-Iraq, and regional relations, with an emphasis on economic cooperation as the priority of his trip to Washington DC. “Our visit to Washington was made to protect and develop relations between Iraq and the US”, stated Hussein.
Kicking off the conversation, Hussein spoke about the importance of strengthening economic ties between the two countries by highlighting the record of US-Iraq cooperation in various security and military issues. He described the US as Iraq’s leading partner in combating violent extremism. He also explained that Iraq could only defeat ISIS remnants with the ongoing support of the US and other ally countries. He described the current Iraqi government’s conditions for implementing reform policies and benefiting from the US economic and political support as “exceptional” for three main reasons:
First, almost all Iraqi political parties are represented in the government. Hussein said that all parties are “participating based on a clear program which [they] agreed upon, and that’s the result of a lengthy discussion among the political parties and leaders in Baghdad.” Additionally, he asserted that the program these political parties and leaders have agreed upon succeeds, in one hand, in covering all issues facing the Iraqi government, and on the other, in reflecting the desire of all participating parties.
Second, the new Iraqi government has the support of almost 280 Iraqi parliament members, making it easier for the government to get approval for its reform policies.
Third, the political council consists of government and parliament members, who meet weekly, evaluate the measures taken, and plan future actions.
These features have made the Iraqi government pursue measures such as enacting monetary reform policies, budget laws, and hydrocarbon laws that have been raised for a long time. Still, actions need to be taken to implement these measures, according to the minister.
Iraqi government reform priorities
While pointing out the importance of the Budget Law approval, Hussein stated that the Iraqi government had committed itself to approve the Iraq Oil Law, also referred to as the Iraq Hydrocarbon Law, within six months, which has been reflected in the government’s plan. He believes that passing the Iraq Hydrocarbon Law would resolve many disputes between the federal government of Iraq and the Kurdistan Regional Government (KRG). According to him, the root cause of this tension is the lack of an explicit law to regulate oil production, trade, and income.
The lack of an effective oil law has led the Iraqi government to refer to the old law which belongs to the previous regime, which is very centralized and “does not coordinate with the liberal spirit of the constitution”. The new oil law would be able to solve this problem according to the constitution, explained Hussein. Additionally, he expressed his satisfaction with the steps taken so far regarding this matter, emphasizing that the Iraqi government reform policies were discussed in his recent trip to Washington, DC, and supported by the United States.
In response to a question from Kadhim on what has prevented the Hydrocarbon Law’s approval so far, Hussein explained that he hoped that an effective dialogue between the Iraqi federal government and the KRG side would lead to a consensus. The previous versions of this law will be available to the discussants and will be analyzed and reviewed to reach the best arrangement for all groups.
The necessity of conducting an accurate census and amending the constitution was also discussed, as the two steps would contribute significantly to Iraq’s economic development. Hussein attributed the census postponement in the past to political hurdles and recognized it as important as the implementation of the Hydrocarbon Law. He also proclaimed a consensus for conducting and implementing the census but did not mention a specific time.
Advocating for Iraq’s liberal constitution, Hussein recognized Iraq’s constitution as one of “the best in the Middle East”. However, he acknowledged that the implementation of the constitution remains challenging since 50 articles have yet to be translated into enforceable laws. Moreover, existing laws belonging to Saddam Hussein’s regime which do not fit with the current liberal constitution are still being enforced, while other articles require immediate amendment, which is currently being discussed by a group of experts formed by the president.
Devaluation of the Dinar
Responding to a question on the reasons behind the dinar’s devaluation compared to the US dollar in the past weeks, Hussein argued that the local currency’s devaluation occurred due to the market’s economic and psychological reaction to the monetary policies of the Central Bank of Iraq, the implementation of the SWIFT system in cooperation with the US Federal Reserve, and the Treasury’s control of the US dollar transfer. “There was less supply of dollars in the market, and the demand stayed as it was; because of psychological reactions, people started buying dollars, and the price rose,” explained Hussein.
The Deputy Prime Minister also stated that the US dollar transaction control ultimately benefits the Iraqi economy. He also emphasized that the Biden administration and the US Treasury continue to support the Iraqi government’s political and economic reform measures. He then predicted that the exchange rate would stabilize soon.
Referring to the white paper, which is a comprehensive program that sets economic reform policies targeting Iraq’s long-standing challenges, he clarified that it is part of the government’s plan for economic reforms.
US-Iraq relations prospects
During his visit to Washington, DC, Hussein sought partnership opportunities for various sectors of Iraq’s economy, specifically in the oil and gas industry. Noting his successful meetings with American officials and private companies, he also mentioned receiving “supportive reactions from Iraq”. Stressing that the American companies promised to partner with Iraq’s public and private sectors, Hussein seemed optimistic about the prospects of the US-Iraq relations, reaffirming that “the friendship and partnership with the United States will continue.”
The Minister of Foreign Affairs claimed that becoming a “combination of an oil and gas [producing] country would give the Iraqi economy huge power, politically and strategically.” Additionally, he referred to buying gas and electricity from Iran, which costs around four billion dollars annually. He also linked the high number of cancer cases in Basra to the lack of capacity for gas production, emphasizing that burning gas posed many threats to the environment and public health. He concluded by stating that “investing in gas extraction would solve many problems” and reflected on his meeting with the Council of Ministers in which they discussed renewing contracts signed with various international companies to invest in gas production along the Iran-Iraq border. Referring to substantial gas fields in Iraq, he pointed out that the Iraqi delegation members had good meetings with various companies in Washington, DC, so that they could assist them is prospective gas production projects.
Hussein also reflected on the issue of climate change and water resources in Iraq, saying that he had a great meeting with John Kerry, the US Special Presidential Envoy for Climate, and started to tackle several projects and a potential memorandum of understanding addressing climate change impact in Iraq.
He also noted that water resources and climate change issues constitute national threats to Iraq and the rest of the Middle East. He said he has had good discussions with the Turkish side regarding water shares, and stated that he does not think “the Turkish government did not use water as a political agenda against other countries like Iraq”. He also pointed out that both sides are ready to discuss the issue further as Iraq and Turkey closely cooperate in many fields.
Fighting violent extremism
In response to the question on ISIS remnants in the region and the threats they pose, he stressed that while the so-called Islamic State (ISIS) has been defeated “that does not mean that we defeated ISIS as a terrorist organization.” He emphasized that “fighting a terrorist organization is completely different from fighting a state,” as it depends on extensive intelligence research and information exchange. He argued that it is easier for Iraq to fight the terrorist organization as “we got a lot of information about them.” Still, he pointed out that “ISIS is not only a military organization; it is also an ideological one”, and the challenge lies in successfully defeating that ideology.
Finally, he concluded that Iraq has started to bring back many Iraqi families from Al-Hawl camp in Syria to a camp near Mosul and is trying, with the help of many other international organizations, to reinstate within children the mindset of reintegration within the Iraqi society. Hussein also stated that people of various nationalities continue to live in the Al-Hawl camp, and that he has had discussions with other countries, mostly European, to find repatriation solutions for those remaining in the camps.
Mahnaz Vahdati is a Young Global Professional with the Middle East Programs at the Atlantic Council.