Touted as a diplomatic breakthrough, Iranian President's first trip to Iraq last week aimed high on economics and security but seemed to hit more roadblocks than milestones.
Masoud Pezeshkian’s visit to Baghdad was steeped in high expectations, underscored by the announcement that over a dozen agreements were signed with Iraq. Yet, behind the fanfare, sources close to the negotiations revealed to Iran International that the economic objectives of the visit largely fell short.
Despite signing 14 memoranda of understanding, which signal some consensus on several fronts, the absence of concrete cooperation agreements and joint statements suggested a lack of substantive progress.
A critical point of contention emerged during Pezeshkian's meeting with Iraqi Foreign Minister Fuad Hussein. Informed sources disclosed that Pezeshkian proposed settling Iraq's substantial debt to Tehran through a joint currency mechanism, modeled after the Russia-Iraq financial arrangement.
However, the proposal was met with firm resistance from the Iraqi side, with Hussein arguing that such an approach could destabilize the value of the Iraqi dinar. The meeting, which extended 40 minutes beyond its scheduled time, reflected the broader challenges Pezeshkian faces in navigating Iraq's cautious stance toward Iran's economic overtures.
Iran’s economic relationship with Iraq has long been fraught with challenges, primarily stemming from the complex interplay of sanctions and regional politics. Iran exports critical resources such as natural gas and electricity to Iraq, making it a significant energy supplier to its neighbor. According to Iranian domestic media, Iraq ranks as the second-largest destination for Iranian exports after China, with bilateral trade currently valued at approximately $12 billion.
Since 2018, US banking sanctions have complicated Iraq's ability to settle debts with Iran, despite routine waivers under both the Trump and Biden administrations permitting energy imports. The exact amount owed by Iraq remains unclear, with conflicting reports on its settlement status.
Unfulfilled promises and divergent visions
Pezeshkian's broader vision of fostering regional unity through the removal of borders between Islamic countries, analogous to the European Union's Schengen Agreement, found little traction among Iraqi leaders.
His call for a borderless Islamic bloc, first proposed in a meeting with the Iraqi President and later reiterated in public speeches, was met with a lukewarm response at best. The Iraqi leadership, probably wary of Iran's expansive regional ambitions, showed little enthusiasm for a concept that would likely diminish their sovereignty and complicate Iraq's delicate balancing act between competing regional powers.
The lack of a joint statement at the conclusion of Pezeshkian’s visit further underscored the disconnect between the two nations. Typically a symbolic gesture of diplomatic alignment, the absence of such a communiqué hinted at underlying tensions.
Security concerns and engagement with Kurdish leaders
While economic objectives dominated the official narrative of Pezeshkian's visit, security considerations were equally pivotal, particularly in relation to Iraq's autonomous Kurdistan region.
Pezeshkian’s personal touch, including his ability to converse in Kurdish and shared cultural ties, played a notable role in easing some of the tension that had been inflamed by recent IRGC military actions against Kurdish groups.
Pezeshkian's engagements with Kurdistan’s Prime Minister Masrour Barzani and veteran Kurdish leader Masoud Barzani underscored a strategic attempt to mitigate long-standing political misunderstandings and foster a more cooperative relationship. However, this softening of ties appeared to rely heavily on Pezeshkian’s personal rapport rather than a concrete shift in policy or security strategy.
While Pezeshkian’s personal diplomacy may have momentarily eased tensions with Kurdish leaders, the broader objectives of his visit, to secure economic gains and bolster regional influence, remain unfulfilled, casting a reflective light on the nuanced and often challenging path ahead for Iran's new administration on the international stage.