Trade Wars

A new partnership for 30 years?


In April, the news that Iraq was mediation longtime rivals Saudi Arabia and Iran have captivated Middle Eastern observers. Iraq’s new role as a Saudi-Iranian intermediary comes as the Saudis have taken concrete steps in recent years to establish a meaningful relationship with their northern neighbor, such as reopening their border last November for the first time since 1990. The relationship with Iraq is indeed remarkable, Iraq has simultaneously forged a regional partnership with two other Arab states: Egypt and Jordan. Indeed, Baghdad hosted a Mountain peak end of June in the presence of Egyptian President Abdel-Fattah el-Sissi and King Abdullah II of Jordan. It was the fourth time that the leaders of the three countries had met since March 2019, and the first time on Iraqi soil. It was also the first visit by an Egyptian president to Iraq in more than 30 years.

At first glance, a partnership between Egypt, Iraq and Jordan seems rather strange. One commentator, not without reason, called it an alliance made up of “curious about the region. “However, Iraq has always had important economic relations with Egypt and Jordan, and in fact the three countries – along with northern Yemen – have come together in a very short-lived partnership called the Arab Cooperation Council. (CAC) from 1989 to 1990. Today, like 30 years ago, economic cooperation is at the heart of the trilateral relationship. But yesterday and today it also had strategic objectives. , the new partnership potentially announces a much more ambitious project to bring together not only Egypt, Iraq and Jordan, but the countries of the Levant more broadly.

Back to the future

Iraq’s close economic ties with Egypt and Jordan date back to the 1980s, during the Iran-Iraq war. Jordan became Iraq economic lifeline at that time, serving as a conduit for oil imports and exports through the port of Aqaba. Jordan has also received most of its own, heavily subsidized oil from Iraq. King Hussein was at the time the closest ally of Iraqi dictator Saddam Hussein, often visiting Baghdad during the war. Egypt, meanwhile, has seen more than a million of its citizens moved to Iraq during the 1980s to fill positions vacated by the massive conscription of Iraqi men into the armed forces – so many that Iraq is the country’s largest source of remittances. ‘Egypt.

Shortly after the end of the war, the three countries, joined by North Yemen, formed the ACC. Each had a political motive for forging the pact. All wanted allies against the Gulf Cooperation Council, the Saudi-led alliance of the six Gulf monarchies created during the war. Saddam owed the Saudis billions of dollars in war loans, while Amman and Sana’a had long worried about Saudi expansionism and interference in their internal affairs.

Nevertheless, economic cooperation was a central pillar of training. CCA was considered as a mechanism to increase trade between member states, as well as to facilitate the movement of labor, in particular from Egypt and Jordan to Iraq.

The ACC had barely started before it collapsed due to Saddam’s invasion of Kuwait in August 1990. But even during the 1990s, when Iraq faced an onerous international sanctions regime, the trade between him and Egypt and Jordan continued. Iraq remained Egypt’s second largest export market, under the United Nations Oil-for-Food program. Jordan remained dependent on Iraqi oil, which it continued to receive with the acceptance of the United States. King Hussein only reluctantly broke up with his longtime friend Saddam when Washington agreed to welcome Jordan again as a close ally.

It is therefore not surprising that Egypt and Jordan were among the first Arab states to establish links with the new Iraq after the 2003 American invasion. In 2005, then Jordanian Prime Minister Adnan Badran , became the highest Arab official to visit Iraq since the invasion; three years later, Abdullah was the first Arab head of state to visit. Egypt and Iraq reestablished trade relations in 2004. The following year Cairo sent an ambassador to Baghdad, although tragically the Egyptian diplomat was murdered by al-Qaida in Iraq a few weeks after his arrival. The Jordanian embassy in Baghdad was also among the first targets al-Qaida in Iraq.

Iraq’s development of economic relations with Egypt and Jordan has been significantly hampered by its sectarian civil war in the 2000s and the rise of the Islamic State group in the 2010s. again took significant steps to rebuild economic ties. In 2017, Egypt has started receiving oil from Iraq, after its oil supply was cut off by Saudi Arabia. Jordan began taking delivery of Iraqi oil in 2019. Since then at least 2017, the three countries are planning to undertake a major joint energy project, connecting Iraq’s Basra oil fields to Aqaba via a pipeline, which could be extended to Egypt. Meanwhile, Iraq has also turned to Egyptian and Jordanian companies for the massive reconstruction projects it will need to undertake to recover from four decades of wars. There is also plans connect Iraq to the Jordanian and Egyptian power grids in order to reduce its dependence on electricity exported from Iran.

Nevertheless, all three countries are strapped for cash – a a major challenge for their ambitions. At the end of last year, Egypt and Iraq agreed, in fact, to exchange Iraqi oil for Egyptian reconstruction aid. In the longer term, the three countries will have to look to third parties for funding.

As Iraq heads for elections this fall, most of its leaders seem excited about the partnership’s economic promises. Discussions on the project were already underway during Haider al-Abadi’s tenure as prime minister. Subsequently, Adel Abdul-Mahdi, on his first trip abroad as Prime Minister in March 2019, attended the first trilateral summit in Cairo. President Barham Salih met with al-Sisi and Abdullah in New York, on the sidelines of the United Nations General Assembly, in September 2019. Current Prime Minister Mustafa al-Kadhimi was headlining Iraqi participation in the third summit in Amman in August 2020.

A new Levant?

Economic cooperation is the engine of training, but as in 1989, each of the three has a political incentive to come together. Iraq wants to diversify its regional relations beyond Iran – although it is important to stress that Baghdad does not aim to develop its relations with its Arab neighbors to the detriment of its relations with Tehran. Iraq wants friendly relations with the two. The Iranians, for their part, might in fact look favorably on Iraqi economic cooperation with Egypt and Jordan – if, in time, they can also benefit economically. On the other hand, if Egypt and Jordan, and for that matter the United States, seek to use training as a means of isolating Iran, Tehran will undoubtedly cause trouble. The extent to which Iran might be allowed to benefit from it will ultimately depend on the outcome of its ongoing negotiations with the Biden administration.

Egypt and Jordan, meanwhile, want to reduce their dependence on Saudi Arabia. For Jordan, this is particularly critical following reports of Saudi involvement in a recent plot to destabilize the country and replace King Abdullah with former Crown Prince Hamza. The new formation would give Jordan, as well as Egypt and Iraq, greater leverage vis-à-vis Saudi Arabia and other Gulf countries.

But the most important political goal, even if it remains implicit, may be to provide a longer-term means of rehabilitating Syria. The leaders of the three countries began to call their formation “the new Levant” or “al-Sham al-Jadid“in Arabic. Sham refers to the city of Damascus, and more broadly to Syria and the Levant. By definition, there can be no new” Sham “without Syria. Perhaps unsurprisingly, Egypt, Iraq and Jordan have indicated that the partnership in their new bloc will be open to other countries in the region, without specifying which ones. In fact, this aspect of the new formation also has roots in the ACC experience of short term. ACC Member States did not consider their partnership to be exclusive and some anticipation that Syria and Lebanon could have joined at some point.

The Egypt-Iraq-Jordan formation is in many ways the resurrection of the old ACC, which was disrupted for 30 years by instability and the war in Iraq. The United States has welcomed and should continue to support this growing partnership of three of its close partners in the region. In the longer term, if Syria and Lebanon were invited to join, American support would be complicated by the maintenance in power of Bashar al-Assad, rightly considered a war criminal. Nevertheless, the “New Levant” project could eventually serve as a means to undertake the massive reconstruction needed in Syria and to reduce the considerable economic misery of the population there and in Lebanon.

After a decade of war in Syria and four decades of war in Iraq, there has never been a greater need for a new vision for the region. The core of a new start may well lie in an economic partnership launched more than 30 years ago.