Gulf Arab states test waters with Iraq investment

STORY: This is the future home of the Rixos Baghdad - a luxury hotel financed by Qatar in the city's heavily fortified Green Zone.

Iraq hopes to host Gulf Arab monarchs and other Middle Eastern emissaries in the hotel's 470 luxury rooms and suites when they arrive for a planned Arab League summit next year.

The Iraqi government has been pushing for more investment from the Gulf Arab states.

After years of war and instability, Iraq is now benefiting from record oil revenues...

which is helping to spur demand for consumer goods from its rapidly growing population of at least 43 million.

The country's top trade partners are currently China, Iran and Turkey.

But Gulf Arab states, which have had a complicated relationship with Iraq, have recently pledged a string of investments as they seek to grow soft power in a country where regional rival Iran has unparalleled influence.

In 2023, Saudi Arabia said it had set aside $3 billion for investment in Iraq via its Public Investment Fund...

and announced a $1 billion mixed-use project including offices, shops and more than 6,000 residential units.

Gulf nations have also signaled growing interest in Iraq's energy sector, a key zone of influence for Iran which supplies up to 40% of Iraq's power.

More deals include developing oil production, carbon capture, power plants, natural gas fields, and a solar farm.

Iraq is in the process of linking its power grid to Kuwait and, in the future, to Saudi Arabia.

Questions remain over how Iran will react to Iraq's growing presence in the region, while an upswing of violence has highlighted the fragility of Iraq's relative stability.

There have been more than four months of attacks by Iran-aligned armed groups on U.S. forces stationed in Iraq.

Many investors also have concerns about rampant corruption and stifling bureaucracy in Iraq, making everything from signing a contract to getting paid exceedingly difficult.