Increasing diplomatic engagements between Iraq and Egypt are helping to advance a more ambitious regional project with Jordan, but Gulf economic and statecraft dominance will shape the initiative’s objectives and ambitions.
On June 13, Iraqi Prime Minister Mohammed al-Sudani took his second trip to Cairo in less than a hundred days. Eleven ministers and dozens of Iraqi businesspeople accompanied the prime minister. While Iraq and Egypt signed 11 memorandums of understanding to expand trade, tourism, and investment, the trip was part of a larger effort among Iraq, Egypt, and Jordan focused on regional integration.
Over the years, the Iraqi-Egyptian relationship has had periods of collaboration, rivalry, and shifting dynamics driven by leadership aspirations and regional politics and conflicts. Despite these complexities, the two countries have recognized the importance of continued diplomatic engagement to explore venues of cooperation. In 1963, Egypt and Iraq, along with Syria, attempted to forge aregional Arab alliance to strengthen their security and stability and boost their economic output through trade liberalization. In a bid to compete with the Gulf Cooperation Council, Egypt, Iraq, Jordan, and Yemen founded the Arab Cooperation Council in 1989. However, the alliance was short-lived due to Iraq’s invasion of Kuwait the following year.
In the 1980s, as the Iran-Iraq War depleted Iraq’s workforce, the regime of Saddam Hussein removed visa restrictions for Egyptians and brought in 1.5 million Egyptian workers to keep the Iraqi economy afloat. In July 1988, Egypt and Iraq established the Egyptian-Iraqi Joint Higher Committee to advance their economic, security, and commercial interests. However, Iraq’s invasion of Kuwait disrupted the work of the committee.
Iraq and Egypt recently revived the Joint Higher Committee with a meeting in October 2020 in Baghdad. At the meeting, Iraq and Egypt signed 15 cooperation agreements on issues including investment, industrial cooperation, commerce, maritime transportation, infrastructure, and water. The committee held its next meeting during Sudani’s June visit to Cairo and signed 11 agreements. Although the specifics of the agreements are not clear, they nevertheless demonstrate both countries’ determination to strengthen economic and political ties.
The work of the Joint Higher Committee could pave the way for further collaboration between Iraq and Egypt. The committee could serve as a developed framework for high-level discussion, idea sharing, and decision-making procedures, allowing Baghdad and Cairo to find areas of common interest for collaboration, deal with obstacles, and develop strategies. The Joint Higher Committee makes it easier for delegations to travel back and forth to Iraq and Egypt, hold business gatherings, and form partnerships, all of which can boost bilateral trade, spur economic expansion, and create jobs in both countries.
Iraq-Egypt Labor Cooperation and Investment
Iraq is classified as a rentier state, relying heavily on revenue from oil sales. Consequently, it grapples with substantial unemployment challenges, particularly affecting its youth, a common issue in other oil-rich countries as well. Despite the elevated unemployment rate, some citizens show reluctance to accept certain job opportunities due to the social stigma associated with lower-status roles. As a result, the Iraqi private sector has resorted to hiring more than 1.5 million foreign laborers, including nearly 25,000 Egyptians. Looking ahead, as part of an oil-for-reconstruction framework, Cairo has ambitious plans to increase the number of Egyptian laborers in Iraq to over 1.5 million, with the expectation that Egyptian investments in Iraq will draw a large number of Egyptians to the country. However, this situation highlights the complexities of addressing unemployment and labor dynamics in Iraq and the significance of foreign labor in the country’s economic landscape, making solutions to empower the domestic workforce and create attractive employment opportunities for Iraqis all the more important.
Resolving outstanding financial payments to retired Egyptian laborers who worked in Iraq’s public and private sectors is essential for comprehensive labor cooperation between Iraq and Egypt. A July 1988 agreement between Cairo and Baghdad entitles Egyptian workers to Iraqi retirement and pension benefits. However, Baghdad owes a considerable amount of money to thousands of Egyptians who worked in Iraq up to 2003, which has caused tensions and may complicate Iraqi-Egyptian labor movement and cooperation. In May, Iraqi Minister of Labor and Social Affairs Ahmed al-Asadi and his Egyptian counterpart met for 48 hours of intensive discussions on resolving the pension issue and strengthening labor and investment ties.
Conflict-torn Iraq is in dire need of foreign investment and labor to support its reconstruction efforts. Egyptian investment and labor could play a vital role in this regard. Given historical, cultural, and linguistic ties, many Egyptian workers feel a deep connection to Iraq, making them well suited to integrate into Iraqi society. This close affinity can contribute significantly to Iraq’s rebuilding process, fostering cooperation and benefiting both Iraq and Egypt.
In addition, Iraq has allowed the Egyptian General Petroleum Corporation to defer payments for oil purchases. This arrangement, which began in 2016 and was renewed in March, is a form of financial assistance to Egypt, which is currently facing a dire economic crisis.
Trilateral Cooperation
Sudani’s trip to Egypt was also part of broader efforts by Iraq, Egypt, and Jordan to establish a trilateral cooperation mechanism for regional integration. The three countries’ leaders have met four times since 2019 to establish the groundwork for an economic bloc. The countries’ foreign ministers have also gathered for trilateral summits aimed at deepening cooperation, and an Iraqi-Jordanian-Egyptian coordination council held its first meeting in September 2020. This increase in high-level diplomacy highlights how committed Iraq, Egypt, and Jordan are to forging strong ties and suggests they want to deepen their relations by forming an economic alliance similar to the one they formed with Yemen in 1989.
Such an undertaking has economic, security, and political considerations, including electricity interconnectionbetween the three countries. But more significantly, what Baghdad, Cairo, and Amman really want is to reclaim their former status as major political, diplomatic, and economic powers in Arab affairs. Iraq has a wealth of oil, but decades of internal and regional strife have weakened its infrastructure and economy. Egypt, the Arab world’s most populous country, has experienced persistent economic hardship in addition to the upheavals of the Arab Spring. Jordan has played a significant role as a regional power broker and mediator, but the country’s size, economy, and geography have constrained its ability to project power at the regional level.
While there may be nostalgic sentiments for the past, as Iraqi President Abdul Latif Rashid recently lamented, the current reality presents severe social, political, and economic challenges for Baghdad, Cairo, and Amman hindering their ability to exert influence within and beyond their borders. For these reasons, it is clear that maintaining ties with the Gulf Cooperation Council countries is critical for economic development and regional stability. GCC countries’ strong economies, wealth concentration, and political stability have given these states increasing regional and international prominence. Meanwhile, Iraq and Egypt have seen their historical roles in the Arab world transition to supporting roles due to the shift of power and influence to the GCC states.
The possible formation of an economic bloc comprising Egypt, Iraq, and Jordan presents a promising opportunity for collaboration with the GCC states to enhance economic interdependence, trade, and investment. However, this will require fresh thinking that rejects the destructive zero-sum calculations that have repeatedly characterized Middle Eastern alliance politics. To achieve its objectives, the new bloc should ensure that its initiatives and policies align with the interests of the GCC.
The surge in diplomatic engagements among Iraq, Egypt, and Jordan is advancing a more ambitious regional project and highlights their increased trust and shared goals and vision. It is a clear indication of the concerted effort being made by the three countries to forge a deeper and more comprehensive partnership, which could benefit their own populations and the region as a whole. Continuing to work closely with GCC countries even as these three countries build out their new partnership remains the most direct – and likely the sole – path to success for this venture.
Source: AGISW