U.S. Embassy & Consulate
in Iraq

U.S. Ambassador to Iraq Alina Romanowski’s Remarks

Virtual Roundtable Discussion with the U.S.-Iraq Business Council

I am pleased to meet with members of the U.S.-Iraq Business Council.  You represent some of the finest companies in the United States, and some of you know Iraq very well.

Let me begin by providing a brief overview of where things stand in the U.S.-Iraq bilateral relationship.  In short, we are committed to the relationship for the long term.  Iraq plays an important and strategic role in the region.  We are closely engaged with the new Iraqi government and the Iraqi people in our mutual desire to see a democratic, peaceful Iraq that is stable, secure, and sovereign.

An important part of our work is to facilitate trade and investment in Iraq and thus promote Iraq’s growth.  While Iraq’s investment climate has its challenges, there are some positive trends.  An estimated 60 percent of the population is younger than 25 years of age, and the Iraqi youth are Iraq’s most valuable resource for building a prosperous, inclusive Iraq.  Now that a new government is in place under the leadership of Prime Minister Sudani, we are working with Iraq’s leaders on a range of common goals, with economic and commercial issues taking a prominent place in our agenda.

In my meetings with Iraq’s new leaders, I have emphasized that the Iraqi government must respond to the legitimate demands of the Iraqi people.  I have also assured Prime Minister Sudani of our readiness to collaborate with his government on a whole range of shared interests.  We have further demonstrated our willingness to work with the Sudani government with the recent visit of National Security Coordinator for the Middle East and North Africa Brett McGurk and Special Presidential Coordinator for Global Infrastructure and Energy Security Amos Hochstein, who met with Prime Minister Sudani and other Iraqi leaders in Baghdad and Erbil in January.  The prime minister made it clear that our goals and his significantly overlap.

We are currently working with the Iraqi government to finalize plans for a visit to Washington in early February by a delegation led by Deputy Prime Minister and Foreign Minister Fuad Hussein.  In planning the delegation’s visit — and in our bilateral relations in general — we are increasing our focus on issues such as economic cooperation and climate change.

The Iraqi people look to their government to provide greater economic opportunity, and it is important for the Sudani government to make the promotion of diverse economic growth a priority.  Economic and regulatory reform is needed to rebalance the economy from its reliance on oil, to deal with chronic shortages in electricity, and to address climate change.  We firmly support Iraqi efforts in these areas and strongly encourage the Iraqi government to partner with U.S. companies — with their tremendous expertise, capacity, and experience — in meeting these energy and environmental challenges.  We know that strengthening the investment climate is crucial to attracting U.S. and other foreign investment in these areas, and we engage with our Iraqi partners on this issue as well.

The impasse in forming a government after the previous elections impeded the national governments’ budget process.  The Sudani government is now preparing a 2023 budget that could open the doors for progress on infrastructure projects and other vital programs.  That budget holds the potential for progress as well as peril.

Higher oil prices in 2022 boosted government revenue — another development that can potentially aid Iraq’s progress.  But, as might be expected, the government is under pressure to add new jobs to an already bloated public sector.  If it does not exercise caution, inflation might accelerate, putting the economy on shaky ground.  The government should act prudently in authorizing new projects, while vigorously addressing corruption and seeking to rein in salary expenditures.

We have seen positive signs from the Sudani government on the economic front.  For years, the United States has worked closely with the Central Bank of Iraq (CBI) to prevent criminal and corrupt actors from accessing the international banking system and to bring Iraqi banks into compliance with international standards.  In coordination with the CBI, we implemented regulatory changes that improve transparency into financial transactions.  These changes were planned for over two years and not related to the timeline for government formation.  An immediate consequence of these and other anti-corruption measures is that the United States and CBI have successfully limited the ability of bad actors to misuse the Iraqi banking system to launder funds.  And despite strong criticism of the government and conspiracy theories claiming sinister U.S. motives for the dollar exchange rate issue, the new government has strongly supported CBI’s new measures and is trying to rein in actors who are hoarding dollars or taking other measures to artificially increase the spread on the informal market.

Under the new government, we have seen the strongest levels of U.S. wheat purchases we have seen in some time.  They also approved an energy contract that was negotiated under the previous government with a U.S. firm.

Further, just hours after local sources began circulating U.S. press stories about the unlicensed Starbucks cafes in Baghdad, the prime minister’s spokesperson issued a strong statement condemning their operations, and the unlicensed cafes were closed within hours.

Some remain skeptical of Iraq’s private sector.  I, however, see hopeful signs.  Iraq’s entrepreneurship and innovation ecosystem is growing rapidly.  USAID now offers a diverse series of business development programs to support that ecosystem. Since 2020, more than 10,000 entrepreneurs have received business support services from USAID programs, including support for setting up, formalizing, and sustainably scaling up their businesses.

We saw impressive growth in Iraq’s tech and e-commerce sectors during the surge of COVID.  In response, we are helping Iraqi businesses present themselves to the U.S. and other markets as viable investment opportunities.  Since 2021, USAID has mobilized about $41 million in investments to local firms with contributions from U.S.-based venture capital.

We are doing much more to support the development of Iraq’s private sector. USAID has allocated approximately $2 million to partner with business development hubs — including Five One Labs, The Station, Science Camp, and Mosul Space — to build the resilience capacities of the private sector, focusing on increased opportunities for women and youth and providing business management skills and access to finance opportunities.  This work is ongoing throughout Iraq, including in the Iraqi Kurdistan Region.

Despite the economic and political challenges facing Iraq, the newly formed government, the expected passage of a new budget, increased oil revenue, and progress in Iraq’s private sector are positive developments.  I’m confident that opportunities exist for U.S. businesses to export products and services to Iraq.  Specifically, the embassy has identified franchising, agriculture, education, renewable energy, healthcare, defense, and energy as sectors with potential for U.S. trade and investment in Iraq.

And with support from our consulate in Erbil, the American Chamber of Commerce-Kurdistan is growing and developing into an effective advocacy organization for reform, inclusive growth, and diversification of the economy.

In addition to the traditional services offered by the U.S. Commercial Service, our embassy has launched a new initiative to promote U.S.-Iraq business endeavors.  On November 15, we hosted the first in a series of Forums to Improve Iraq’s Business Climate, which brought together representatives of U.S. businesses and Iraqi businesses.  At that virtual forum, we focused our discussion on Iraq’s customs system and the impediments it presents to trade.  A representative of the United Nations Conference on Trade and Development, UNCTAD, spoke to the forum participants about his organization’s project to automate Iraq’s customs process.  Supporting this project, known by its acronym ASYCUDA, should be a goal of the business community as well as the U.S. Embassy and likeminded embassies in Baghdad.  The project has the potential to revolutionize the customs process, decrease opportunities for corruption, and facilitate trade while enhancing Iraqi government revenues.  ASYCUDA will surely face resistance as it is rolled out.  We plan to use this series of forums to develop support for improvements like automation of the customs process.

We are keen to address the challenges of the private sector’s growth in Iraq, particularly unlocking financing opportunities for SMEs.  Last June, USAID convened financial experts, donors, government, and private business leaders to discuss securing capital for local businesses, establishing the first access-to-finance forum in Iraq.  This March, USAID will hold a follow-on event in Erbil to present solutions and innovative approaches to increase lending to the private sector and advance financial inclusion.

I do not want to present an overly rosy picture of the business environment in Iraq.  U.S. companies doing business here face significant challenges, as some of you know all too well.  We are engaged on several fronts to advocate for U.S. businesses.  But I do believe there are positive developments.  And I can assure you that my team at the embassy and I stand ready to support you.