Beginning in 1980, Iraq endured years of conflict, including the Iraqi-Iranian War, the Kuwait Invasion, the U.S.-led military invasion and ethnopolitical violence. After the U.S.-led invasion, Iraq’s annual gross domestic product (GDP) growth dropped from -8.2% in 2002 to -36.7% in 2003 when the invasion began.

Poverty became a major concern and as of 2024, 17.6% of the population still lives below the poverty line, a decline from 21.5% in 2022. The government is taking steps toward Iraq’s reconstruction and development in light of these challenges. In January 2025, Prime Minister Mohammed S. Al-Sudani met with prominent U.K. business leaders to showcase the steps Iraq is taking to improve the investment climate.

Iraq’s Reconstruction and Development Efforts

During the Iraqi-Iranian War, Iraq accumulated significant debt. After the war, Iraq invaded Kuwait, which made the United Nations (U.N.) place severe sanctions on Iraq. The sanctions banned all imports and exports with Iraq, which rendered Iraq unable to obtain building materials from abroad to begin reconstruction.

In the following years, the U.S.-led invasion and ethnopolitical violence further deteriorated the remaining infrastructure, strained the economy and displaced countless Iraqis, pushing many into poverty. After the 2003 invasion, very little was done to support Iraq’s reconstruction and development. It was after the Islamic State in Iraq and Syria (ISIS) was defeated in 2017 that the prime minister announced that the rebuilding effort would require $88 billion.

The destruction covered around 80% of some cities and significant funding was required to remove the war remnants, including unexploded bombs, land mines and IEDs that had remained after the conflict.

The National Development Plan

However, in 2018, Iraq released its National Development Plan, which included a reconstruction and development framework for 2018-2030. The plan comprises 19 pillars that will target areas like education, employment, industry, social protection, health and more. The plan highlights many areas that can improve the quality of life for its citizens and promote economic growth.

Some of these include clearing “explosive hazards,” rebuilding damaged housing and buildings, upgrading electricity infrastructure and strengthening transportation and logistics services to encourage private sector recovery and expansion. It also involves initiating labor force surveys to identify the workforce’s needs, enhancing local inclusive governance and planning community needs, including those of displaced persons, youth and women.

Iraq-UK Partnerships and Investment Opportunities

In January 2025, Iraq’s Prime minister met with U.K. business leaders to explain the country’s plan to attract foreign investment and improve the Iraqi business environment. The two countries signed a Partnership and Cooperation Agreement (PCA), including a range of export agreements and a trade deal of more than $12 billion. This agreement built upon a history of economic collaboration between Iraq and the U.K.

In 2024 alone, the U.K. participated in $1.5 billion worth of projects in Iraq. One notable initiative was a partnership with Vodafone, a multinational telecommunications company based in the U.K. In late 2024, Iraq authorized Vodafone to launch the country’s first 5G network, marking a significant step in the nation’s technological advancement. Beyond telecommunications, U.K. firms have expanding prospects in the construction, petrochemicals and energy sectors. In Iraq, building material accounts for around 30% of imports. Additionally, natural gas projects are progressing in nearly every oil field in the country, providing opportunities for U.K. firms.

During the meeting, the Prime Minister of Iraq also explained that “Reforms have been carried out in the taxation and customs systems, company registration processes and all approvals related to investment opportunities.” Alongside these reforms, Iraq will provide sovereign guarantees to the private sector, utilize “global intermediary banks” to conduct all financial transactions and allocate $100 billion to the investment budget. These reforms and financial commitments create an environment where U.K. firms can significantly contribute to Iraq’s economic growth and poverty reduction.

Conclusion

Iraq’s efforts to attract foreign investment, particularly through its U.K. partnership, are key to stimulating economic development and reducing poverty. U.K. firms can help those living under the poverty line in Iraq by contributing to construction, energy and petrochemical-based projects. Improved roads, ports, electricity and overall economic conditions can provide Iraqis with increased access to new markets domestically and internationally. The World Bank highlights that trade and investment can stimulate developing economies, increase higher-quality job opportunities and raise productivity.

With 60% of Iraq’s population falling within the working-age bracket (15-64), the country presents U.K. firms with a substantial labor force. Beyond economic benefits, this also creates an opportunity to address social challenges. Expanding employment prospects can help prevent youth from being pushed into violence, terrorism and poverty due to a lack of quality job opportunities, fostering greater stability in the region.

– Haley Parilla

Haley is based in Cape Coral, FL, USA and focuses on Business and Politics for The Borgen Project.

Photo: Pexels