Biggest Container Port in the Middle East: Iraq’s Grand Al Faw Port Nears Completion, 2 OCT

 Biggest Container Port in the Middle East: Iraq’s Grand Al Faw Port Nears Completion, 2 OCT

Grand Al Faw Port, the multi-billion-dollar project in Iraq, is inching closer to completion. The port, which is expected to become the largest container port in the Middle East, is currently two-thirds complete and is being undertaken by South Korea’s Daewoo E&C company. With a planned total of 90 berths, the port is set to become a cornerstone of the Iraqi economy. The first phase, which includes the construction of a five-berth container terminal, is set to be completed by 2025.

Faw Port Project: A Look at the Progress

Located on the Persian Gulf coast of Iraq, the Faw Port project is a major development endeavor that kicked off nearly a decade ago. The project has faced numerous obstacles, including funding issues and political challenges, but progress has been steadily made. As of now, about 68% of the five berths have been completed, up from just 19% three years ago. The first berth is expected to receive its first vessel soon as part of a trial operation.

The port is projected to have an annual capacity of handling 99 million tons, and once fully operational, it will rival some of the largest ports in the world. The ambitious project doesn’t stop at the port; it includes rail and road links extending through Iraq into Turkey and Europe. A 36-mile road connecting to Iraq’s current Port of Umm Qasr is already in the works. Additionally, a 745-mile rail and motorway project known as ‘The Development Road’ that links the Grand Faw Port to Turkey has recently been launched. This $17 billion project aims to transform Iraq into a central transit hub by shortening travel time between Asia and Europe, posing a potential rival to Egypt’s Suez Canal for speed to market.

Economic Impact and the Role of China

China is one of the countries that have shown significant support for the construction of Faw Port and the creation of The Development Road. By striking a $10 billion deal with Iraq, the Chinese government has expressed its intention to contribute financially to both projects. This support is aligned with China’s interests in the region, as the country imports approximately 10 million barrels of crude oil daily, with a majority coming from Middle Eastern countries, including Iraq.

With Faw Port’s completion, China will have more direct access to the oil resources it imports from the Persian Gulf. In 2022, China imported $53 billion worth of oil from Iraq, marking a 43% increase compared to 2021. The new port is expected to provide more opportunities for Iraq, China’s third-largest global oil supplier, to increase its oil exports. Additionally, the trade corridor extending to Turkey and Europe will enable China to deliver its non-oil products to the European market more effectively.

Both the Faw Port and Development Road projects intersect with China’s Belt and Road Initiative, offering an alternative route for China to expand its global trade network through Gulf countries such as Iraq.

The Future of Iraq: Jobs and Economic Growth

The completion of the Grand Al Faw Port is expected to lead to a significant economic leap for Iraq. The port is projected to generate over $5 billion in annual revenue, reducing the state’s dependence on oil. It is also set to open the door for investment and put the country on the path of development and prosperity, especially when integrated with other economic projects such as The Development Road.

The project has already created over 10,000 jobs for Iraqis, with 70% of the workforce coming from the city of Basra. Upon the port’s inauguration, it is expected to provide thousands of more jobs and revitalise the Iraqi labour market. The necessary financial allocations for the port will come from Iraq’s general budget for the next three years, ensuring its completion on schedule.

Prime Minister Mohamed Shaaa Al-Sudani has emphasised the importance of viewing the Faw Port Project in the wider context of overall development. He insists that any agreements or plans to operate the port post-completion must align with the pre-arranged timeline and planned project details, viewing the Port and the Development Road project as components of a single system destined to be a future cornerstone of the Iraqi economy.

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Major Infrastructure Projects in Iraq: The Al-Faw Port and Development Road, 2 OCT

 Major Infrastructure Projects in Iraq: The Al-Faw Port and Development Road, 2 OCT

Iraqi Prime Minister Mohammed Shia Al-Sudani has emphasized the necessity for any agreement to operate the al-Faw Port in the southern region to include the requirements for the development road project. In a high committee meeting, Al-Sudani stressed the significance of viewing the port project and the road project as an integrated system crucial for Iraq’s economic future.

Al-Faw Port and Development Road: Integrated Infrastructure Projects

Prime Minister Al-Sudani insisted that the vision for operating the Port, once completed, must take into account the operational needs of the development road. The meeting saw presentations on the optimal management approach for the port by the Ministry of Transportation. These presentations received endorsement from the High Committee for project implementation, highlighting the government’s commitment to the successful implementation of these key infrastructure projects.

The al-Faw Port project and the development road project are seen as pivotal for Iraq’s economic future. The al-Faw port is a significant project, and its management and operation are of national importance. As such, the vision for its operation, once completed, must consider the operational needs of the development road, which is seen as an integral part of the overall infrastructure development plan.

Government’s Commitment to Timelines and Detailed Plans

The government has reiterated its commitment to ensuring the successful implementation of these key infrastructure projects. It has emphasized the crucial importance of adhering to predetermined timelines and detailed plans for both major and secondary projects. This meticulous approach underscores the government’s commitment to the seamless integration and successful implementation of these projects, which are seen as crucial for Iraq’s economic future.

Regional Infrastructure Cooperation: The Development Road Project

The development road project is another significant initiative that the Iraqi government is pushing forward. It is a part of the government’s broader efforts to strengthen regional infrastructure cooperation. The project involves the creation of a major road and rail network that will stretch approximately 1,200 kilometers across the country, linking Turkey to the Gulf.

The development road project has invited countries in the region to join, strengthening the links between Asia and Europe. The project is seen as a pillar of a sustainable, non-oil economy and a contribution to economic integration efforts in the region. Prime Minister Al-Sudani has announced the project during a conference with Transport Ministry representatives from Iran, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, Syria, Turkey, and the United Arab Emirates.

Addressing Infrastructure Challenges and Looking Ahead

Despite the ambitious plans, Iraq faces significant infrastructure challenges. These include environmental issues like pollution, water shortages, and an overburdened electrical grid. However, the government remains committed to addressing these challenges and improving the country’s infrastructure.

The return of Syria to the Arab League and the country’s commitment to international laws and UN Security Council decisions offer a glimmer of hope. With Syria back in the Arab League, Iraq can work with Syria and the Gulf states to expand investment in roads and rail, potentially overcoming some of the current challenges. The successful implementation of the al-Faw Port project and the development road project will be crucial in these efforts, marking significant milestones in Iraq’s infrastructure development journey.

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Turkey Signals Potential Resumption of Iraq’s Critical Oil Pipeline, Easing Global Market Tensions, 2 OCT

 Turkey Signals Potential Resumption of Iraq’s Critical Oil Pipeline, Easing Global Market Tensions, 2 OCT

Turkey Signals Potential Resumption of Iraq's Critical Oil Pipeline, Easing Global Market Tensions

After months of contention, Turkey might resume operations of a critical pipeline carrying oil from northern Iraq to the Mediterranean. 

The pipeline, which transports nearly half a million barrels of crude oil per day, has been offline since March because of a payment dispute between Ankara and Baghdad. The shut-off has caused losses close to $5 billion for producers and the government, and its resumption could help alleviate pressure on the global oil market. However, the issue is not as straightforward as it seems.

The Crux of the Dispute

The roots of this dispute stretch back years, with the pipeline at the heart of a legal battle between Turkey and Iraq. The stalemate began when an arbitration ruling by the International Chamber of Commerce (ICC) ordered Turkey to pay $1.5 billion to Iraq. This ruling was the result of Turkey allowing oil from fields in areas controlled by the Kurdistan Regional Government (KRG) to be exported without Iraq’s consent, violating a 50-year-old pipeline transit agreement. Despite the ruling, Ankara has refused to pay the damages and has instead asked the KRG to cover the cost. Since the ruling, Ankara has blocked about 500,000 barrels per day from the KRG in northern Iraq headed to global markets through its port in Ceyhan.

Implications for the Oil Market

The shutdown of this pipeline holds significant implications for the global oil market. The pipeline was carrying about 10% of Iraq’s overall exports, which amounts to approximately 0.5% of global production. The immediate consequence of the halt was a surge in global oil prices above $70 a barrel. As the blockade continues, it is helping to drive oil prices higher, particularly impacting the European Union, which had increased its imports of Iraqi oil to replace Russian gas. Now, with the KRG oil flow cut off, Europe finds itself in a precarious situation with no quick resolution in sight.

The Regional Fallout

The dispute’s effects are not confined to the global oil market. A prolonged embargo could devastate northern Iraq’s economy and potentially lead to the collapse of the semi-autonomous KRG. For years, the KRG economy has been struggling with budget cuts from the Iraqi federal government, and the loss of oil revenues could result in a disruptive wave of migration, with tens of thousands of Iraqi Kurds already having migrated to Europe. The financial fallout could also lead to catastrophic instability in the region, potentially fueling further destabilization and providing opportunities for militant groups such as the Islamic State.

Looking Ahead

While there’s some optimism following an agreement between Erbil, the KRG’s regional capital, and Baghdad in early April, progress has been slow. The stakes are high, as a continued dispute risks economic destabilization, the collapse of U.S. investments in Iraq and leaves a geopolitical vacuum that Russia and Iran could potentially fill. As the crisis drags on, Iraq’s reputation among investors could suffer. Moreover, the KRG, which is heavily reliant on oil revenues, could collapse, triggering a bureaucratic conflict between the two main rival factions, the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP), and potentially escalating into a full-blown civil war.

In conclusion, the Turkey-Iraq oil pipeline dispute is more than just a regional issue. It has significant implications for the global oil market, regional stability, and geopolitical dynamics. While a resolution is needed urgently, the complex nature of the dispute and the high stakes involved make finding a quick and agreeable solution a challenging task.

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Iraq and Iran Continue to Implement Groundbreaking Security Agreement, 2 OCT

 Iraq and Iran Continue to Implement Groundbreaking Security Agreement, 2 OCT

A key meeting between the Supreme Committee for the implementation of the security agreement between Iraq and Iran recently took place in Tehran, marking a significant step in the ongoing positive relations between the two nations. The importance of this security agreement, which is the first of its kind since 1991, was emphasized by National Security Adviser Qasim Al-Araji who pointed out that Iraq highly values Iran’s security.

According to Al-Araji, the Prime Minister of Iraq is closely following the implementation of the security agreement with Iran, highlighting the importance and high-level attention this agreement is receiving. The ultimate goal of the agreement is to ensure that Iraq’s territories are not used as a launch pad to destabilize the security of any neighboring countries, including Iran.

During the meeting, Ali Akbar Ahmadian, Secretary of Iran’s Supreme National Security Council, called for the agreement to be implemented in a thorough and precise manner. Ahmadian’s emphasis on the preciseness of the implementation further demonstrates the significance of this agreement for the security of both nations.

Unprecedented Security Agreement

This security agreement, signed in late March, serves as a roadmap for eliminating insecure elements in the two countries and the region. The agreement commits both nations to safeguarding the principles of good neighborliness and protecting the common border. It specifically addresses the illegal presence of anti-Iranian armed groups and elements affiliated with the Zionist regime in the Iraqi areas adjacent to Iran’s northwestern border regions.

Under the agreement, Iraq agreed to disarm Kurdish groups deemed by Iran as terrorists and based in the Arab country’s Kurdistan Region, and relocate them to an alternate camp by the expired deadline of Sept. 19. Ahmadian stated that the agreement has helped guarantee security along the Iran-Iraq common border, serving as a suitable roadmap for eliminating insecure elements in the two countries and the region.

Furthering Bilateral Relations

The two leaders also touched on established deals in other fields and discussed the two countries’ capacities and potential for improving relations. Al-Araji reaffirmed the commitment of the Iraqi government and its national security establishment to fully execute the security agreements reached between the two nations. He added that Iraq will seize every opportunity to develop and deepen relations between Tehran and Baghdad.

Furthermore, both leaders discussed the various agreements between Iran and Iraq, especially in the economic field, stating that there are significant opportunities to comprehensively improve bilateral relations across different sectors. This can be achieved through joint and intensified efforts, leading to an era of sustainable security and paving the way for further economic benefits for both nations.

Successful Implementation

Since the agreement’s inception, significant strides have been made in its implementation. The Iraqi Border Guards Command announced the securing of about 1500 kilometers of its border area with Iran. This marks a significant step towards the successful execution of the security agreement and the enhancement of stability in the region.

Ahmadian stressed the need for the full and accurate implementation of the security agreement, stating that it guarantees the security of the common border and serves as a rational and appropriate roadmap to eliminate the factors that create insecurity in the two countries and the region.

With the implementation of the security agreement to a large extent, Iran and Iraq appear to be heading toward an era of sustainable security which is expected to pave the way for further economic benefits for both nations.

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