Iraq country brief

Overview

Following the First World War and the collapse of the Ottoman Empire, Iraq was established as a British Protectorate in 1920 by the League of Nations. A monarchy was established in 1921, with Iraq gaining its independence in 1932. In 1958, the monarchy was overthrown in a military coup d’état, and the Republic of Iraq was created. It came under the control of the Ba'ath Party in 1968, with General Saddam Hussein gradually assuming control and formally acceding to the Presidency in 1979. He ruled until the collapse of his regime, following US-led coalition military action launched in March 2003 over Iraq’s failure to cooperate in relation to suspected stockpiles of weapons of mass destruction in violation of UN Security Council Resolution 687. Iraq has been led by a democratically-elected government since 2006.

Iraq shares borders with Iran, Turkey, Kuwait, Saudi Arabia, Jordan and Syria. It has a narrow section of coastline measuring 58 km on the northern Gulf. Its capital is Baghdad. It has a total area of 438,317 km² and a population of around 33 million. There are 18 provinces in Iraq, including three provinces under the control of the Kurdish Regional Government (KRG), an autonomous regional government recognised under the Iraqi Constitution.

Political Overview

System of Government

Iraq is a federal constitutional democracy. The Head of State is the President (newly-elected Kurdish politician Fuad Massoum). The Head of Government is the Prime Minister, who is drawn, along with the Cabinet Ministers, from the Council of Representatives (CoR). Ministers forego their CoR seats to serve in Cabinet. The Iraqi people elect the 328 members of the CoR through an open-list, proportional representation electoral process. Eight seats are set aside for representation of Iraqi minorities. Members serve four year terms.

National elections were held most recently on 30 April 2014, despite conflict in some parts of the country. The Independent High Electoral Commission of Iraq (IHEC) estimated that 62 per cent of eligible Iraqis voted across the country. Australia was one of several countries where out-of-country voting took place. After an extensive process of coalition building, Dr Haider al-Abadi was subsequently elected by Parliament as the new Prime Minister of Iraq.

A number of contentious issues remain unresolved by the CoR including proposed legislation to provide a framework for foreign investment in the oil and gas sector, to establish a process for the distribution of oil revenue and to resolve the disputed territories of Iraq. The draft Jaafari Personal Status law, which would constrain women’s rights in marriage and custody access to older children, is still to be considered by the CoR. Prime Minister al-Abadi’s proposal for a new National Guard, to include Sunni tribal elements, is also yet to be confirmed by the CoR.

Security

During late 2013 and 2014 the terrorist organisation Daesh, also known as the Islamic State of Iraq and the Levant (ISIL) seized territory in west and northwest Iraq, including the city of Mosul. Daesh has systematically persecuted ethnic and religious minorities, and committed abuses against vulnerable groups including women and children.

The US-led Global Coalition to Counter Daesh is working, at the request of the Government of Iraq, to support the Government to address the threat from Daesh. Coalition activities in Iraq include air strikes against Daesh targets and advice, assistance and training to the Iraq Security Forces (see ‘Australian Assistance’ below for more information on Australia’s contribution to the coalition).

The Australian Government advises Australians not to travel to Iraq. An Australian diplomatic presence remains in Iraq. Due to the security situation, consular assistance is extremely limited within Iraq. See travel advice for Iraq.

Bilateral Relations

Australia and Iraq enjoy a friendly and diverse relationship, with regular engagement on diplomatic, political, security and economic issues. Australia and Iraq are represented bilaterally through Embassies in Baghdad and Canberra respectively. Iraq has a Consulate-General in Sydney and the Kurdish Regional Government retains a representative office, also in Sydney.

Australia has had diplomatic relations with Iraq in various forms since 1935. Australia opened an Embassy in Baghdad in 1976 and Iraq established an Embassy in Canberra in 1995.

After the closure of the Australian Embassy in Baghdad in 1991, and the closure of the Iraqi Embassy in Canberra in 2003, full diplomatic relations resumed when both Embassies reopened in 2004, following the transfer of authority from the Coalition Provisional Authority to the Iraqi Interim Government.

People to people links

There is a sizeable Iraqi community in Australia. According to census data, at 30 June 2011, 48,167 people born in Iraq were living in Australia. Numbers of Australian residents and/or dual citizens registered to vote in the Iraqi elections suggest the Iraqi community may now total over 60,000. In 2014, there were 1,043 Iraqi students enrolled in Australia.

The resettlement of Iraqis who have fled their home country remains a priority within Australia’s offshore Humanitarian Programme. In the last 10 years, around 22,000 Iraqis who have fled violence and unrest in Iraq have found a new life in Australia. Iraqis were the single largest nationality granted visas under the offshore Humanitarian Programme over this period, with around one in every five refugees resettled in Australia coming from Iraq.

Recognising the humanitarian impact of Daesh activity in Iraq, Australia committed to resettling in 2014-2015 at least 2,200 Iraqis fleeing violence. Priority for these places will be for those with close family links to Australia proposed under the Special Humanitarian Programme and refugees referred for resettlement by UNHCR, including women at risk. As in previous years, most of the Iraqis and Syrians resettled by Australia will be from vulnerable religious and ethnic minorities.

Australian assistance

Australia is making a significant contribution as part of the Global Coalition to Combat Daesh. Around 300 Australian military personnel are participating in the ‘Building Partner Capacity’ training mission in Iraq. The Australian personnel are working alongside New Zealand colleagues to build the capacity of regular Iraqi Security Forces to retake and hold territory. This builds on Australia’s participation in coalition air operations in Iraq, including air strikes on Daesh targets, and contribution of around 170 Australian Special Forces personnel, who are advising and assisting the Iraqi Counter-Terrorism Service. These personnel have provided training to 465 Iraqi soldiers, and supported over 250 Iraqi missions.

Australia has provided an additional $30 million in humanitarian assistance to Iraq since June 2014 to assist in addressing the humanitarian crisis caused by the activities of Daesh. Australian assistance has helped to deliver food, medical services, shelter and protection. This includes support to address the specific needs of women and girls, such as offering obstetric services to around 250,000 pregnant women and scaling up services for survivors of sexual and gender-based violence.

Between 2003 and 2014, Australia provided $335 million in development and humanitarian assistance to Iraq to re-establish services to over 1.3 million people, including over half a million refugees and internally displaced people. This was in addition to $987 million in debt relief to support Iraq’s transition to a stable and democratic nation after decades of war and dictatorship. Australia has worked in partnership with the Government of Iraq to improve agriculture research and rural development, public sector governance, education, landmine clearance and basic services delivery. Given Iraq’s ability to fund its own development, bilateral aid from Australia was phased down and ended in 2013-14.

Economic Overview

Iraq has the world’s fifth largest reserves of oil and gas, typically earning around US$8 billion a month in oil revenues. Progress from a centrally planned economy to a more market oriented one remains uneven. Key challenges for the Iraqi Government include ongoing security concerns, further increasing oil production, encouraging private sector development, and improving service delivery (especially water and electricity).

The impact of conflict across the country and the resulting humanitarian crisis, in conjunction with falling oil prices, has presented significant challenges for Iraq in maintaining growth. Due to these factors, the IMF estimates that Iraq’s GDP contracted by more than two per cent in 2014, which contrasts with a pre-crisis prediction of real GDP growth of more than six per cent for the year. The IMF now expects only modest growth of one per cent in 2015, despite a better than expected performance of the oil sector.

Oil remains critical to the Iraqi economy, accounting for more than 95 per cent of government revenue and over 90 per cent of export revenue. Iraq exported an average of 2.45 million barrels per day in 2014. Despite recent record production levels, however, falling oil prices have resulted in declining oil revenues.

The Iraqi Dinar has replaced the US dollar as the main currency in Iraq, and a functioning but small banking system and stock exchange now operate. Outside of Daesh-occupied areas, year-on-year inflation was low in 2014, at less than two per cent, though the IMF expects inflation to rise in 2015 due to the effect of increased duties and other regulatory changes.

The key challenge for Iraq will be to continue to build capacity to use its substantial oil reserves to the benefit of current and future generations. As a middle income country Iraq has advanced to the point, where, in future years, it will be able to fund its own capacity building and development.

For more information on the Iraqi economy, please see our Iraq fact sheet [PDF 50 KB].

Trade and Investment

Historically, Australia's primary commercial interest in Iraq has been wheat, which it has exported to Iraq for over 50 years. Australia’s wheat exports to Iraq in 2014 were valued at $262 million. Additionally, over $7 million in dairy products were exported to Iraq in 2014.

The Australian and Iraqi Governments continue to work to broaden bilateral trade relations. In 2007, Iraq announced the opening of an Iraq Trade Liaison Office in Canberra and the appointment of a senior trade official to Australia. At the same time, the Australian Embassy in Baghdad and Austrade continue to facilitate commercial links between Australia and Iraq.

Australia actively supported Iraq's successful bid for observer status in the World Trade Organisation and will continue to assist Iraq to engage with the global economy.

Information on doing business and opportunities in Iraq

High Level Visits

Prime Minister Tony Abbott and Minister for Defence Kevin Andrews visited Baghdad in January 2015. Mr Abbott met with Prime Minister al-Abadi and thanked personally Australian armed forces personnel involved in capacity building training of Iraqi Security Forces. Minister for Foreign Affairs Julie Bishop met with government leaders, including the Prime Minister and Minister of Foreign Affairs, during her October 2014 visit. Iraqi Foreign Minister al-Ja’afari visited Australia in February 2015, and met with Prime Minister Abbott, Foreign Minister Bishop and Minister for Immigration and Border Protection Dutton.



Last Updated: 18 August 2014