by Rami Ayyub, an analyst at Global Risk Insights
ISIL’s recent territorial gains pose a significant threat to the security and stability of Iraq and its neighbors. For Iran, however, ISIL threatens to topple its most significant regional trading partner and economic lifeline. This article is part of a GRI series on ISIL, Iraq, and the Middle East.
The vast territorial gains made by ISIL in recent weeks threaten to further disintegrate Iraq, a country whose political and economic fabric have been at risk since the withdrawal of US troops in late 2011. Militants from the Al-Qaeda-linked Sunni group ISIL, or the Islamic State of Iraq and the Levant, overran the key Iraqi city of Mosul in just a matter of days. They have since gained control of border crossings with Jordan and Syria, and desert towns just 130 kilometers from the border of Saudi Arabia.
Violence and unrest has displaced hundreds of thousands of Iraqi citizens as the militants continue their onslaught against the Shiite backed Iraqi government, led by Prime Minister Nouri al-Maliki.
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The uprisings and violence underscore a greater sectarian rift between Sunnis and Shiites across parts the Middle East. Iraq’s Sunni Muslim minority has long accused al-Maliki and his government of vast discrimination and oppressive policies against their sect. And with ISIL continuing to gain ground and momentum toward toppling the Iraqi government, Iraq’s closest ally in the region, Iran, finds itself at risk.
Iran, whose Shiite-led government staunchly supports al-Maliki, has a vital interest in keeping Iraq stable and intact. While much of Iran’s interest comes from security concerns and religious ties, viewing the countries’ strong relations as merely religious solidarity fails to address their pragmatic, and deeply economic, mutually beneficial relationship.
Since the overthrow of Saddam Hussein in 2003, Iraq and Iran have forged a unique economic partnership. Bilateral trade exceeded $12 billion in 2013, and the Iraqi government only expects this number to increase. “Iran hopes to have $20 billion of commercial exchanges with Iraq by the end of 2017,” according to Mahmoud Bahzar, the head of the Commerce department in the Iranian embassy in Baghdad.
While much of Iraq-Iran bilateral trade consists of consumer goods, construction materials, and light industrial products, the two countries have developed a substantial energy relationship, as well. Iraq and Iran signed a natural gas agreement last year, with the hopes of exporting 25 million cubic meters of gas to Iraq on a daily basis. The deal involves the construction of a pipeline that will feed power plants in the Eastern Diyaya province.
Amid sanctions aimed at curbing Iran’s nuclear program, exports to Iraq have become an essential economic lifeline for Iran. According to the Iranian Trade Development Organization, 72 percent of Iran’s non-oil exports go to Iraq. ISIL poses a significant threat to Iranian economic security, for this reason, as it could undermine Iran’s access to a once-reliable export market.
[Listen to: James Hamilton on Iraq, Another Oil Shock, and the U.S. Economy]
The United States and its P5+1 partners have been cautious in negotiating a nuclear deal with Iran, leaving the country exposed to sanctions on its economic and financial sectors. Coupled with recent gains by ISIL, Iran finds itself at great risk and has taken matters into its own hands militarily.
Iran recently deployed forces from its Revolutionary Guard to help wrestle back control of Tikrit, an Iraqi city just 140 km north of Baghdad. Revolutionary Guard troops are also positioned on full alert along Iran’s entire border with Iraq, should ISIL rebel forces attempt to encroach on Iranian territory.
Western governments, who generally support al-Maliki’s Shiite government, have neither condemned nor condoned Iran’s military encroachment in Iraqi territory. “We’ve asked them to play a constructive role in Iraq,” said US State Department Spokeswoman Jen Psaki in Geneva.
For Iran, a constructive role will be to ensure the survival of a staunch ally and reliable trade partner in Iraq, while maintaining the integrity of nuclear talks. The threat of further ISIL gains loom large, and Iran has a lot at stake.
