The Complex Geopolitics of Iraq's $17B Suez Canal Rival

Over the last decade, Iraq has built a massive new shipping hub off its southern coast. It's the gateway to the development road. An ambitious plan to construct a new trade route connecting Asia to Europe. If successful, it could serve as an alternative to the chokepoint at the Suez Canal. And potentially provide Iraq with billions of dollars of revenue that's not directly tied to the price of oil. Because of the relative stability in the last few years in Iraq, this project represents an opportunity to gain some autonomy and gain some power. But along the route is a patchwork of rivaling armed factions, all of whom may want something different out of this project. And there's plenty of competition from its neighbors, racing to build their own shortcuts across the Middle East. You could almost think about it like in the eye of a storm. Things seem stable after years of conflict. The question is, will this continue? This is Iraq's $17 billion plan to construct a new path forward. Iraq sits at the heart of the global shipping trade between Europe and Asia. Iraq was a huge trading hub. This is such a historic route. In the Middle Ages, Baghdad was a key link along the Silk Road. And from the 1900s until the early 2000s, you could travel between Iraq and the rest of Europe by train. But today, Iraq's railways are old and in need of repair. With just a handful of passenger and cargo lines in operation. Because of all the conflicts and all the wars, there hasn't been much attention given to this type of infrastructure. Up to $33 trillion worth of goods make their way around the world every year. In 2024 alone, $762 billion of goods moved between Asia and Europe. The countries with canals, roads or railways are able to charge shippers billions of dollars a year just to pass through. Right now, the shortest maritime route between Europe and Asia is the Suez Canal in Egypt. But shippers have had to avoid it in recent years. That's because Houthi rebels have been attacking ships in the nearby Red Sea. The group claims they are making the attacks in solidarity with the people of Gaza. That instability led Egypt to lose $7 billion in shipping revenues last year. Regardless of the conflict, the amount of goods being shipped around the world is expected to keep rising. All of that has created an opportunity for someone else to step in. When we talk about Middle East conflict today, the stories are of Israel, Palestine, Iran, Yemen, Syria. Iraq isn't in the headlines. If you walk around Baghdad today or other parts of Iraq, you're seeing restaurants coming out, bridges being built, infrastructure being built. So it is a sort of an aberration of what has been the norm for Iraq for several decades. The Iraq Development Road would be a parallel road and railway stretching 740 miles from the newly constructed port in the south up to the northern border with Turkey. From there, it would connect to the wider transit network across Europe. Iraq has already invested billions on the new Grand Fah port. And it's currently building an underwater tunnel to better connect the port to roads leading to Jordan and Turkey. But the development road is much bigger and more complicated. The government says the project would cost around $17 billion to complete, which would be paid for by a combination of Iraqi and Turkish government money and outside investment. For the last few years, Iraq's annual budget has been well above $100 billion. Iraq is an incredibly wealthy country because of how much oil and gas it produces. Theoretically, can Iraq afford this? Yes, a few billion dollars is nothing for Iraq's economy in the grand scheme of things. However, if the price of oil goes down, the country will be in disarray and it will be in a crisis. Turkey, Qatar and the UAE have all expressed their support for the project so far. There are many opportunities. They're having a good relationship with such a wealthy country is to gain. This is a way to connect to Europe in a different way. But there are a lot of countries having a lot of meetings about their own proposed trade routes. The U.S. government is backing the IMEC, which would connect India to Europe via rail, ship and road, passing through Saudi Arabia, Israel and Greece. Meanwhile, Russia wants to connect with India through Iran and Azerbaijan. The Middle Corridor, which already connects China and Southeast Asia to Europe, is being upgraded to increase capacity. And China is funding a series of megaprojects under the Belt and Road Initiative to link up with the rest of Asia, Europe and Africa. There are many other competing projects and many other countries that have a more coherent government that could have a better chance at such an initiative, first being fulfilled but also being attractive. A lot of things basically have to go right for this project to ever be achieved. One big challenge to this project's success is whether Iraq is able to So the Iraqi state, after the U.S.-led invasion and occupation, is a federal state. And the political system is an ethnic and sectarian power-sharing system where each party is meant to get what they believe their population base gives them. The tensions arise over who gets what. The metaphor that's often used is splitting the pie. Because the budget is so massive, so significant, there's a lot of pie, but there are a lot of parties. The route presents both logistical and political challenges to construction. Mosul, one of the most populated cities in Iraq, is still rebuilding its infrastructure after it was devastated by a takeover by the Islamic State. And mapping the route poses a lot of political challenges. You start going up the road. You're going to go through territories that are controlled not by the government or the prime minister's office as such, but by different armed groups. All of these groups will want a piece of this. Take Iraqi Kurdistan, for example. It's a semi-autonomous region whose people have long been fighting for independence. Rather than stopping in Erbil, the capital of Iraqi Kurdistan, the development road route avoids it entirely. There are lots of mountains in the region, which make construction difficult. But it could also be seen as a way to exclude the Kurds from economic development. It's a very strong message. And what it says is we don't have a significantly trustworthy relationship between federal Iraq and the Kurdistan region. And of course, there's the challenge of corruption, affecting who will actually profit off the new trade routes. The different political leaders and parties that took over the government after 2003 have seen this country as an incredibly wealthy opportunity to become rich. And so what that means is, oh, this project for a road here, how do we get a cut? And when all the cuts are given out, very little is actually left for building the infrastructure. Projects like this take years, even decades, to complete. And with so many different groups vying for power in Iraq, there's no shortage of challenges. But if it can pull it off? Many Iraqis look at the Gulf, for example, and they say, well, we have a lot of oil, too. Why is it that we don't have that type of infrastructure or that type of economy? But of course, another side of it is these grand projects won't fix some of the more structural but essential crises that Iraqis continue to live in, such as electricity cuts or lack of clean water. If it is fulfilled, the Development Road Initiative is a symbol that this is a new Iraq we're talking about.