Iraq and Jordan – Controversy in Trade

The levels of controversy generated by international economic agreements and those respective negotiations have been particularly pervasive in recent times. Headlines in the West are dominated in particular by both the Trump Administration’s suggestions around a NAFTA renegotiation and the UK’s ongoing attempts to build the basis of a free trade deal with the EU.

Although largely an extension of this same dynamic of popular discontent we are seeing across the West, this phenomenon has also been felt in the Middle East, most notably in the form of the US decision to withdraw from the Iran Nuclear Deal and its commitment to provide phased sanction relief. This was a decision whose effects spilled out beyond the borders of Iran and across into neighbouring Iraq, where legislators have been struggling to maintain the vital trade links potentially under threat by the US Administration’s decision that ensure sufficient electricity and gas supplies are maintained.

However, although there is the possibility that the aforementioned dynamic is also at play here as part of Iraqi efforts to reduce economic dependence on Iran, something clearly desired in Washington, a somewhat more localised example has emerged.

Controversy has been bubbling away in Iraq following a flurry of developments in Iraqi-Jordanian relations which have concluded in the ratification of a total of 14 economic agreements between the two countries on February 2nd. In a symbolic move, Iraqi Prime Minister Adel Abdul Mahdi and his Jordanian counterpart Omar al-Razza signed the agreements on the border shared between the two countries, where the establishment of a joint industrial area has been planned.

In terms of what the agreements encompass, The Jordan Times detailed that the agreement entails the supply of oil from the Iraqi oil from the Kirkuk oil field across to Jordan at the rate of 10,000 barrels per day, economic cooperation in the agricultural sector, as well as a commitment to establish a link between the electricity networks between the two countries. Additional areas cited by the Al-Monitor publication include transport, health and finance. The Office of the Iraqi Prime Minister meanwhile said this:

‘During His Excellency visit to Trebil Border Crossing, he underscored that the revenues of the transport and trade movement will be positively reflected in the labour market in Iraq and Anbar province, especially along the way to the rest of the Iraqi cities, to achieve security, stability, and economic prosperity.’

So with benefits seemingly aplenty for Iraq, particularly in reference to the possibility of solving some of the electricity supply issues that have plagued the country, why has there been the controversy with a resultant ‘tense trade atmosphere’ according to some, and could it derail the agreement?

Interestingly, there seem to be parallels to the debate around economic agreements taking place elsewhere in the world, in that there is this sense that one of the two parties is somehow set to unfairly benefit more than the other.

Iraqi parliament member Sadiq al-Sulaiti outlined how ‘Jordan wants to reap the fruits of these agreements without having to pay anything in return’, whilst another parliament member Al-Baiji claimed that ‘only Jordan will benefit [from the deal]’ and that he would ‘stand against these decisions that will harm the Iraqi people.’

Beyond politics, there were also concern emanating from Iraqi business figures with Head of the Iraqi Industries Federation Ali Sabeeh al-Saadi saying ‘the trade agreement offers no benefits to Iraq. How would it be possible to exempt 90% of the Chinese goods whose labels are changed in Jordan? The ports of Basra will stop working because all goods will enter through Aqaba, and this harms the Iraqi economy.’

More fundamentalist voices from the Asaib Ahl al-Haq (League of the Righteous) spoke out in saying ‘the Iraqi citizens will pay the tax of these agreements.’

Outside of the administration there has been however some positivity with Iraqi economists and businessmen reported to have said that the agreements are ‘necessary and important’ in avoiding ‘[remaining] a market for Iranian goods.’ Despite this however, the voices of dissent seem strong in multiple quarters which is no doubt a concern for a government trying to prevent the shortages of such commodities as electricity that caused widespread rioting last summer. Ultimately it may be this desire to ameliorate the public services situation on all sides that ensures the deal is accepted both by the public and by politicians in the Council of Representatives.

 

 

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