Iraq

What does the map enable, and what does it threaten?

Iraq sits on the land of Sumer, the world's earliest civilization, and Baghdad, founded in 762, was once the capital of the Islamic world¹⁰. The same rivers and plains have made it a battleground: for most of Ottoman rule it was fought over by rival empires¹⁰. Its great asset is oil, but its exports are bottled up: before the 2026 war it shipped 3.5 million barrels a day, and with Hormuz closed only about 300,000 a day went out through the pipeline to Ceyhan⁵. By August, exports had recovered only to 60% of pre-war levels¹¹. Rich ground, a bad position.

Is the population growing, skilled and staying?

About 48 million people with a median age of about 21^1,2. They are poor for an oil state: the IMF puts GDP per head at about US$5,300 in 2026³. Work is scarce: the Ministry of Planning said unemployment fell from 16.5% in 2022 to 13% at the start of 2025, before the war⁹. Public wages depend on oil revenue that arrives with a lag of two to three months⁵. A young people the economy cannot yet employ; data quality is weak, hence low confidence.

What habits does the society reward?

Institutional habits are weak. Iraq scored 28 on Transparency International's 2025 index, up two points but ranking 136th of 182¹². Graft reaches the top of the oil sector: in 2026 the US sanctioned Iraq's deputy oil minister, accusing him of diverting Iraqi petroleum for sale on behalf of Iran and its militias⁵. Successive governments have stalled on structural reforms, and analysts say political will remains the main obstacle⁵. Survey data on trust and work norms was not gathered, hence medium confidence. This score is about institutions and social habits, not about any group.

Who rules, how are they chosen, and are they competent?

Judged by deeds, Iraq's leaders squandered decades of oil money. They built so little storage that fields had to shut when Hormuz closed, and output fell 66%, the steepest drop in OPEC⁵. Unlike its Gulf neighbours, Iraq has no sovereign wealth fund; an investor put it bluntly: the state spends every penny it has⁵. After the November 2025 election it took months of deadlock before Ali Al-Zaidi, 40, won a confidence vote in May 2026 with only 14 of 23 ministers approved⁶. He has promised economic reform and diversification; those are words so far⁶. A new team with a poor inheritance.

Is there rule of law, low corruption and predictability?

The state does not hold a monopoly of force. Iran-backed armed groups attacked US facilities in Iraq more than 600 times during the 2026 war, and Washington struck their bases⁶. Prime Minister Zaidi has promised to restrict weapons to state control, but a bloc close to Kataeb Hezbollah rejects doing so under US pressure⁶. The Islamic State was defeated in 2017, though a low-intensity insurgency continues in the north and west¹⁰. Nationwide protests in October 2019 left at least 93 dead¹⁰. Order holds in the capital; the guns are not all the state's.

Where are the fault lines, and how stable are they?

Iraq is held together by power-sharing, not by a settled national identity. After the 2003 invasion it slid into a civil war between Sunni and Shia militants from 2006 to 2008¹⁰. The Islamic State seized Mosul and much of the north in 2014¹⁰. Kurdish nationalists rebelled for autonomy from 1961, and in 2026 the pipeline from Kurdistan to Ceyhan in Turkey was the only export route still open^10,5. Parties form governments slowly: the 2026 cabinet came after months of wrangling, with a US veto of a former premier⁶. Calmer than a decade ago, but divided along lines that have drawn blood.

Why does the world need this country?

Iraq matters because of oil and its place between Iran and the United States. It was OPEC's second-largest producer, a big supplier of Basra crude to Asia⁵. It has long walked a tightrope between those two powers, and both welcomed its new government in May 2026⁶. Its oil now reaches markets slowly: exports were at 60% of pre-war levels in August¹¹. Iraq's weight depends on the strait staying open, and its militias made it a front in the 2026 war⁶. Important to others for what it holds, not for what it decides.

What does it need, want and fear?

Need: to restore oil exports, which fund about 90% of the budget⁶, and to reopen the Strait of Hormuz or build routes around it, such as the planned pipelines through Jordan and Turkey⁵. Want: an IMF programme to finance the deficit⁷; continued US dollar flows, which Washington has tied to disarming designated armed groups⁵; and better ties with Gulf states angered by militia attacks⁶. Fear: a renewed US-Iran war fought on its soil^11,6; inflation from printing money to pay wages⁵; and a return of the Islamic State insurgency¹⁰.

Who are its patrons, rivals and hedges?

Iraq balances because it must, not because it chooses. The 2003 invasion gave the United States great sway and also opened the way for Iran to install its Shia allies in Baghdad⁶. Its leaders have struggled to balance the two ever since⁶. In 2026 Washington vetoed the frontrunner for prime minister, suspended dollar shipments and sanctioned officials, while Tehran's foreign minister congratulated the new government^6,5. Gulf states protested attacks from Iraqi soil⁶. A state pulled between patrons, with little room to set its own course.

Can it deter, or does it depend on others?

Iraq spends about 2.45% of GDP on defence, by SIPRI's estimate for 2025⁴. Its forces retook the north from the Islamic State by December 2017¹⁰. But the state does not command all the guns: Iran-backed groups fought their own war against US forces in 2026, and the government's programme to restrict weapons to state control is contested⁶. It could not stop US strikes on armed groups on its own territory⁶. Readiness data was not gathered, hence low confidence. An army that can hold ground, inside a state that cannot keep the peace.

Rising, stagnant or declining, and how fast?

Judged by results, Iraq is falling. The IMF forecasts the economy will shrink by 16% in 2026, and Iraq is preparing a new bailout programme, after its last ended in 2019^7,3. Oil revenue fell by more than 70% after the war began, and the government is expected to borrow from state banks, financed by the central bank⁵. Exports recovered to 60% of pre-war levels by August, and non-oil revenue rose after customs reforms¹¹. Recovery depends on a strait Iraq does not control¹¹. A hard fall, with a rebound only if the region calms.