weighted score 5.4 · five dimensions
Geopolitical & Concentration Risk
Iraq
Geopolitical conflict, supplier concentration, climate exposure, sanctions risk and policy continuity intelligence for Iraq-origin supply chains.
Geopolitical conflict
6
Iran-backed militia influence persists. US-Iran proxy confrontations on Iraqi territory. Turkish military operations in northern Iraq against PKK. Post-ISIS stabilisation incomplete.
Supplier concentration
7
Oil accounts for 93% of government revenue. Non-oil economy underdeveloped. GDP declining 2025 due to OPEC cuts. Extreme commodity concentration.
Climate & physical risk
4
Water stress severe — Tigris and Euphrates flows declining. Extreme heat (50C+). Electricity shortages chronic. Desertification accelerating.
Sanctions exposure
3
Iraq not comprehensively sanctioned but numerous entities on OFAC SDN list. Sanctions contagion risk from Iran-linked militia economic networks.
Policy continuity & property rights
7
Government formation typically takes months. Coalition politics fragmented. Militia influence on institutions. Property rights enforcement weak outside Kurdistan Region. IMF engagement ongoing.
Geopolitical Exposure
Geopolitical Exposure
- Iran-backed militias
- Iran-aligned Popular Mobilisation Forces (PMF/Hashd al-Shaabi) remain a powerful parallel military and political force. Militia influence extends to border crossings, government ministries, and economic activity. Periodic US-Iran proxy confrontations occur on Iraqi territory.
- Kurdish autonomy
- Kurdistan Region of Iraq (KRI) operates with significant autonomy including its own security forces, oil exports (historically via Turkey pipeline, now disputed), and trade policies. Federal-KRI tensions over oil revenue sharing remain unresolved.
- Regional proxy arena
- Iraq serves as a primary theatre for Iran-US competition. US military presence continues. Iranian influence over Iraqi political and security institutions is deep. Turkish military operations against PKK in northern Iraq are ongoing.
- Buyer implication
- Any investment or sourcing relationship in Iraq carries exposure to militia interference, federal-KRI jurisdictional disputes, and potential sanctions contagion from Iran-linked entities. Due diligence on counterparty relationships is essential.
Supply Chain Concentration
Supply Chain Concentration
- Oil dependency
- Oil accounts for 93% of government revenue and the vast majority of exports. Non-oil economy is underdeveloped. This extreme commodity concentration creates fiscal vulnerability to OPEC production decisions and global oil price movements.
- GDP trajectory
- GDP declining in 2025 due to OPEC+ production cuts. Iraq's economic output is almost entirely determined by its oil production quota, making economic planning highly dependent on OPEC decisions.
- Reconstruction partnerships
- Gulf states (UAE, Saudi Arabia, Kuwait) are investing in reconstruction projects. Chinese and Turkish companies active in infrastructure and energy. These partnerships are diversifying economic activity but from a very low non-oil base.
- Concentration risk signal
- Iraq is not a sourcing origin for most manufactured goods. Concentration risk is relevant primarily for crude oil buyers and companies with reconstruction or infrastructure exposure.
Climate & Physical Risk
Climate & Physical Risk
- Water stress
- Tigris and Euphrates river flows are declining sharply due to upstream dam construction in Turkey and Iran, combined with climate change-driven drought. Southern marshlands — a UNESCO World Heritage site — are drying. Agricultural output is severely affected.
- Extreme heat
- Summer temperatures regularly exceed 50C in southern Iraq. Basra has recorded some of the highest temperatures on Earth. Extreme heat limits outdoor work capacity and creates chronic energy demand for cooling that the grid cannot meet.
- Electricity shortages
- Chronic power shortages persist despite decades of investment. Iraq imports electricity and gas from Iran (subject to sanctions complications). Power grid inadequacy constrains any manufacturing or industrial development.
- Desertification
- Iraq is one of the most climate-vulnerable countries in the Middle East. Dust storms are increasing in frequency and severity. Agricultural land loss is accelerating.
Sanctions & Policy Continuity
Sanctions & Policy Continuity
- US sanctions context
- Iraq is not comprehensively sanctioned, but numerous Iraqi entities and individuals are on the OFAC SDN list — primarily Iran-aligned militia leaders and their economic networks. Due diligence on counterparties is essential.
- EU sanctions
- EU sanctions on Iraq are limited. The EU maintains restrictive measures on some individuals. The broader concern is sanctions contagion from Iran-linked entities operating within Iraq's economy.
- IMF engagement
- Iraq maintains IMF engagement and has implemented some fiscal reforms. However, oil revenue dependency and militia influence over economic institutions limit the scope and credibility of reform commitments.
- Policy continuity
- Government formation typically takes months after elections. Coalition politics are fragmented across sectarian, ethnic, and militia-aligned factions. Policy continuity for foreign investors is low. Property rights enforcement is weak outside the Kurdistan Region.