Russia’s Play for Iraq’s Future

Moscow wants to influence Iraq’s reconstruction in pursuit of its own strategic imperatives.

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With a war raging in Syria, it’s easy to lose track of Iraq’s reconstruction underway right next door. Iraq is climbing out of the devastation inflicted by the yearslong U.S. war there and subsequent arrival of the Islamic State. Other countries are vying to help shape the future of Iraq to suit their own interests. With this in mind, Russian Foreign Minister Sergey Lavrov will pay a visit to Iraq and Iraqi Kurdistan in early October.

For Russia, playing a critical role in Iraq’s reconstruction would complement Moscow’s longer-term objectives in the Middle East. First, Iraq presents an opportunity for Russia to solidify its influence in the Middle East for years to come, enabling it to continue weighing in on regional affairs. Russia has cultivated lukewarm ties with multiple regional states, positioning itself as a sort of moderator in the region. In Syria, for example, Moscow has used this flexibility and influence to maintain ties with both Israel and Iran even as the two attack each other. Second, a foothold in Iraq will better position Russia to counter expansionary efforts by regional rivals – namely, Iran and Turkey. But it needs to act soon. So, despite its somewhat limited means, Moscow is trying to secure a place in Iraq’s reconstruction.

The Competitors

Russia faces staunch and growing competition in Iraq, particularly in the country’s energy sector. Oil production brings in important revenue for the government, but issues with electricity generation have impeded economic development. Iraq understands that rebuilding its economy requires massive amounts of investment and financing, so it’s courting multiple potential patrons. Indeed, players from around the globe have offered their services to help build out this sector. Turkey, which has already run a series of military operations in Iraqi Kurdistan, recently agreed to start trading electricity with Iraq once the latter’s infrastructure receives “necessary updates.” Such updates could take years to complete, but this move reaffirms Ankara’s interest in Iraq’s future well after military operations cease. German firm Siemens is in the first phase of a three-part plan to add 11 gigawatts to Iraq’s electrical grids; it’s already added 700 megawatts. Meanwhile, Iran has been serving as a major supplier of oil for electricity generation; this precipitated U.S. pressure on Baghdad to find alternative sources sooner rather than later as Washington tires of repeatedly renewing waivers so that Iraq can import Iranian oil. Russia, too, wants influence in oil markets. Moscow knows it can never fully control oil markets, but the more output and pipelines Russia can control or impact, the more clout it has when negotiating oil production and policies with other countries. To that end, Russia is also pursuing oil projects in Iraq and Iraqi Kurdistan.

Iran’s early entry in Iraq has given it a bit of a head start, and it presents some longer-term obstacles to Russia’s foray into Iraq. Though Moscow and Tehran have carefully cooperated in Syria, that Iran has the upper hand and indirect control over forces in Iraq makes Russia uneasy. Iran’s pursuit of regional expansion has included efforts to build an overland route from Iran to the Mediterranean, which would include Iraq, Syria and Lebanon. Iran has therefore spent much time and many resources on building up its presence in Iraq. Tehran established several militias with strong Iranian loyalty that ended up under the umbrella of the Iraqi state-backed Popular Mobilization Forces, and Tehran has backed political parties and candidates. Iran also has the power to manipulate border crossings, which can impact trade, and it has positioned itself as a critical energy supplier to Iraq. However, there are groups within the Iraqi government opposed to Iranian influence, including nationalists and pragmatists who see the value in maintaining ties with Iranian rivals like the United States. In other words, while Iran has a powerful presence in Iraq, it is by no means pulling all the strings.

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U.S. sanctions, a domestic economic crisis and regional pushback against its proxy groups have weakened Iran’s ability to project influence across the Middle East. And this, in turn, has opened Iraq to other outside actors seeking to establish or grow influence there. Iranian proxies have come under more intense fire from those opposed to Iran’s expansion, like Saudi Arabia and Israel. Houthi forces have strategically retreated in Yemen to focus their diminishing resources on the most important battles. Israel regularly attacks Iran-linked forces, especially Hezbollah, in Syria. And, in just the past few weeks, Iranian proxy groups in Iraq have come under attack as well. Since mid-July, there have been five aerial attacks on PMF and Iran-linked military targets in Iraq, including weapon depots suspected of housing missiles. According to Israeli military intelligence, Iran shifted the bulk of its missile system deployments outside the country to Iraq from Syria, because of sustained Israeli attacks. As Iraq finds itself more frequently in the crossfire, it will look for third parties to help protect its interests. Russia is well-positioned to serve this purpose given the fine line it has walked in the Middle East.

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But Moscow also has a larger strategic imperative. If Russia finds itself crowded out of the Middle East as a result of an empowered Iran or Turkey, either of those countries could turn their focus to the Caucasus. The Caucasus is a critical buffer zone for Russia; if Iran or Turkey chooses to project influence there, Russia will see it as a direct threat. To Russia, then, staying in the Middle East allows it not only to project influence in its rivals’ spheres of influence but to deflect those rivals’ resources and attention away from the Caucasus.

Russia’s Role

Russia has somewhat limited options in terms of how it can influence Iraq’s reconstruction. Moscow’s diplomatic efforts have yielded some political influence in Iraq, but it cannot rely on diplomacy alone. Military operations are not an option for Russia; Iraq’s economy is not particularly stable and social unrest is on the rise, so a military campaign there would not only be costly but would also provoke serious social backlash. Plus, Russian missteps in Syria and Russia’s current domestic climate further preclude military intervention as an option. It will therefore focus on its area of expertise: energy. Iraq’s energy needs and potential align well with both Russian expertise and its interest in increasing its influence over oil production and flows.

Indeed, Russia’s plans for Iraq are starting to take shape. Moscow started laying the groundwork early last year; since then, its exchanges with Iraq have evolved from mere talk to signing substantive agreements. Iraq’s Oil Ministry recently signed a 34-year contract with Russia’s Soyuzneftegaz to explore and develop an oil and gas block in Anbar province. Initial estimates of oil reserves range from 2 billion to 4 billion barrels of oil equivalent, as gas accounts for 60-70 percent of the reserves. Russian energy firms Lukoil and Gazprom Neft also have operations in Iraq. And just this week, Moscow announced it and Baghdad had resolved problems involving oil exploration and production contracts between Rosneft and Iraqi Kurdistan. Rosatom also revealed this month that Russia and Iraq have resumed discussions on the peaceful use of nuclear energy. Outside of energy, Iraq has also expressed a desire to purchase the S-300 air defense system from Russia.

Russia’s endeavors in the Middle East are ultimately rooted in supporting two of the country’s major needs – keeping Iran and Turkey from seriously challenging Russian influence in the Caucasus and having greater influence over oil production and flows. The timing of Russia’s recent moves and their increased chance of effectiveness are related to the increasing economic, political and military pressure on Iran. The jostling for position in Iraq’s reconstruction will continue for years to come, and Moscow’s current push into Iraq is a sign that it wants a piece of the pie.

Allison Fedirka
Allison Fedirka is a senior analyst for Geopolitical Futures. In addition to writing analyses, she helps train new analysts, oversees the intellectual quality of analyst work and helps guide the forecasting process. Prior to joining Geopolitical Futures, Ms. Fedirka worked for Stratfor as a Latin America specialist and subsequently as the Latin America regional director. She lived in South America – primarily Argentina and Brazil – for more than seven years and, in addition to English, fluently speaks Spanish and Portuguese. Ms. Fedirka has a bachelor’s degree in Spanish and international studies from Washington University in St. Louis and a master’s degree in international relations and affairs from the University of Belgrano, Argentina. Her thesis was on Brazil and Angola and south-south cooperation.