Why Great Iraq?

Executive Summary

This chapter begins with a testable hypothesis: Iraq is not poor in assets; rather, it faces a profound gap between what it possesses and what it converts into national capability. The final 2024 census records approximately 46.118 million people, compared with an unofficial estimate of around 31.6 million in 2009. This population gives Iraq a large domestic market and a potential workforce, but becomes a source of pressure when jobs, services and productivity are inadequate.¹

The human development gap is clear: Iraq's Human Capital Index is estimated at 0.41, learning-adjusted years of schooling do not exceed four years, and utilization-adjusted human capital stands at just 0.16, falling to 0.03 for women. Approximately 36.7% of young people are not in education, employment or training. These are not separate social indicators; they directly measure the state's ability to turn its population into production, wealth and stability.²

Economically, oil still accounted for approximately 53% of real GDP, 88% of government revenue and 91% of merchandise exports in 2025. GDP contracted by 2.4% in the first nine months of 2025, while non-oil growth slowed to 1.5% under pressure from water and electricity shortages and liquidity constraints. Oil wealth therefore provides Iraq with a financing base, but does not automatically deliver a strong economy or stable public finances.³

Five Governing Findings

• Natural wealth provides a foundation for strength and financing, but becomes a source of vulnerability if revenue and exports remain tied to a single resource.
• The demographic opportunity is time-limited; every delay in education and employment raises the eventual cost of transformation.
• Geographic location becomes an economic asset only when connected to railways, roads, ports, logistics zones and effective border governance.
• A large domestic market does not generate growth by itself; incomes and productivity must rise, and demand must connect to Iraqi value chains.
• The difference between a state of potential and a state of strength is implementation capability: consistent data, protected priorities, sustainable financing and regular accountability.

The Five Strongest Initial Actions

1. Adopt a fiscal and development compact that reduces dependence on oil and protects priority investment expenditure.
2. Launch a national demographic opportunity programme connecting education, training and private-sector employment across governorates.
3. Treat water and energy as matters of national economic security, rather than two separate service portfolios.
4. Transform the Umm Qasr–Baghdad–Mosul corridor into an integrated platform for transport, industry and logistics services.
5. Establish a central delivery unit and a national indicators platform linked to the budget and to ministry and governorate plans.

1. Scope and Evidence Methodology

The chapter addresses six required themes: Iraq is not poor in assets; natural wealth as a foundation of strength; population and youth as future potential; territory and strategic location; the domestic market and growth potential; and the difference between possessing potential and converting it into a great state. It does not replace the subsequent sectoral chapters. Instead, it establishes the founding logic and governing objectives that the parts on the economy, people, infrastructure and governance will develop in detail.

Map of Primary Iraqi Sources

Source: Prepared by the Iraq Vision 2045 team under the evidence protocol in the operational manual.

Baseline Year and Conflicting Sources

The year 2024 is established as the common baseline because it combines a complete fiscal year with final census results. Data from 2025–2026 are treated as updates showing the direction of shocks or progress, not as a replacement baseline. Where sources conflict, final Iraqi data take precedence for population and spatial distribution; international sources are used for comparative series and composite indicators. A figure is recorded as provisional when its full methodology has not been published.

Distinguishing the Layers of the Text

• Fact: A figure or event documented in a specified source.
• Analysis: A causal explanation that stays within what the evidence supports.
• Assumption: An explicitly stated estimate used to construct a scenario or target.
• Recommendation: A proposed political and institutional choice, with an owner, timeframe, financing and indicator.

2. Iraq Is Not Poor in Assets

Fact: Iraq covers approximately 438,000 square kilometres, combining desert and mountainous terrain with fertile plains. Alongside oil and gas, it has phosphate and sulphur resources. It also lies between the Arabian Gulf, Türkiye, Iran, Syria, Jordan, Saudi Arabia and Kuwait, at the meeting point of energy markets, ports and land corridors in West Asia.⁴

Analysis: The value of these assets is measured not by their geological or geographic existence, but by the state's ability to convert them into stable flows of income, production and employment. Oil can finance education, infrastructure and reserves, yet may entrench rent dependence if used to fund expanding current expenditure rather than productive assets. Extensive territory can support agriculture, cities and industry, but may become a maintenance and service burden if urban growth is unplanned. Location can create a corridor economy, but remains mere transit in the absence of industry, services and logistics governance.

Natural Wealth as a Foundation of Strength

The Vision does not propose abandoning oil, but changing its function. In the first phase, oil remains the largest source of financing. In later phases, it should serve as transformational capital: financing infrastructure, reducing fiscal risks, investing in education, health and technology, and stimulating energy-linked industries, petrochemicals, fertilizers and construction materials. The governing rule is that every additional oil dinar should increase the economy's future ability to operate with revenue that is less dependent on oil.

Portfolio of National Strength

Source: Analysis by the Iraq Vision 2045 team; area and general resource data from OPEC's Iraq country profile.⁵

3. Population and Youth as Future Potential

Fact: Iraq's population grew from approximately 8.2 million in 1965 to 23.5 million in 2000 and 40.2 million in 2020. The final census then recorded 46.118 million people in 2024. The Human Capital Review cites a projection approaching 70 million by 2050.⁶⁷

Analysis: This trajectory gives Iraq three simultaneous advantages: a large domestic market, a broad base for savings, demand and investment, and a young workforce able to adopt technology, manufacturing and services. At the same time, it increases demand for schools, water, electricity, housing, transport and jobs. Population growth therefore becomes a source of strength only if productivity grows faster than the cost of supporting and serving the population.

4. The Human Capital and Youth Utilization Gap

Fact: According to the Human Capital Index, a child born in Iraq can achieve only 41% of their potential future productivity if current education and health conditions persist. Actual utilization of this capital falls to 0.16 because employment is weak, and to 0.03 for women.¹⁰

Analysis: The problem is not simply inadequate education or health, but a broken chain between education, skills and employment. Approximately 36.7% of young people are not in education, employment or training, rising to around 52.3% among females compared with approximately 22% among males. Unemployment among those aged 15–24 also approaches 36%. In an economy where employment has long depended on the state, these figures represent fiscal, social and political risks, not merely a labour market malfunction.¹²

The Required Response

• Prioritize actual learning and foundational skills instead of relying on enrolment numbers and qualifications alone.
• Create a pathway from school and university to training and private-sector employment, linked to employer demand in each governorate.
• Remove service and regulatory barriers to women's employment: transport, childcare, flexible work, formal registration and social protection.
• Change young people's incentives from waiting for public-sector appointments to acquiring marketable skills, working and producing.

5. Extensive Territory, Strategic Location and the Domestic Market

Fact: In 2025, the World Bank approved US$930 million to rehabilitate and modernize 1,047 kilometres of railway between Umm Qasr and Mosul via Baghdad. The line is expected to serve eight governorates and approximately 17 million people. By 2037, it is expected to carry around 6.3 million tonnes of domestic freight, 1.1 million tonnes of foreign trade and 2.85 million passengers, and to support 21,900 annual jobs by 2040. A further US$900 million in financing for road corridors was approved in 2026, reflecting the fact that road transport accounts for more than 90% of transport activity in Iraq.¹³¹⁴

Analysis: Linear infrastructure alone is insufficient. To turn location into wealth, corridors must be surrounded by dry ports, industrial zones, customs clearance services, multimodal transport, storage, packaging, maintenance, insurance and trade finance. Iraq can then retain a larger share of value added, instead of receiving only limited transit fees.

Domestic market: A population exceeding 46 million provides a demand base capable of supporting major food, pharmaceutical and construction-material industries, digital services, transport and retail. A large market may nevertheless increase imports if domestic production remains weak. The chapter must therefore connect the market with productive capability: protecting competition, improving standards, providing reliable energy, financing businesses and linking public procurement to competitive domestic products.

6. Iraq's Baseline and the Choice of Working Figures

Source: National and international sources identified in the footnotes; data cutoff 11 July 2026.

Explaining Conflicting Figures

Population: Use the final census rather than modelled estimates. Unemployment: The difference between 16.5% and 13.5% reflects different measurement years and sources; it must not be described as a fully confirmed decline before the latest survey and methodology are published. Poverty: Use 17.5% in the targets dashboard as a provisional figure reported during preparation of the third Poverty Reduction Strategy, 2026–2030, and update it when the original document is published.²⁸

7. Defining the Problem and Its Structural Causes

The Causal Chain

Source: Analysis by the Iraq Vision 2045 team based on the baseline.

The extractive transparency experience offers institutional evidence: for years Iraq faced inconsistent reporting, weak data systems and limited coordination. It then completed validation in 2025, with 27 corrective actions still outstanding before the 2027 cycle. If the oil sector itself requires this degree of reform, building cross-sector delivery capability becomes a prerequisite for the Vision.³⁰

8. Disparities within Iraq

Fact: Iraq does not start from a single position. Unemployment reached approximately 32.8% in Nineveh and 27.3% in Al-Muthanna in 2021, compared with 5.5% in Babylon and a national average of 16.5%. Labour force participation in Anbar was only 31.7%. Urban unemployment stood at 17.6%, compared with 13.3% in rural areas, while the proportion of young people not in education, employment or training was approximately 41% in rural areas and around 35% in urban areas.³¹

Analysis: The national average may conceal three different crises: conflict-affected governorates that need to restore assets and trust; historically poor governorates that need basic infrastructure and economic integration; and large cities that need formal jobs, transport, housing and services commensurate with urban expansion. Gaps affecting women and young people also differ geographically. A national package with identical details is therefore unsuitable for every governorate.

Spatial Design Rule

• Establish a baseline for each governorate covering employment, learning, poverty, water, energy and connectivity, rather than relying on the national average.
• Allocate financing according to service and outcome gaps, with a national minimum and safeguards against politically driven allocation unsupported by data.
• Establish outcome contracts between the federal government and governorates, linking resources to auditable indicators.
• Give additional priority to women, young people, rural areas and displacement-affected communities when designing skills, transport and protection programmes.

9. Selected International Comparisons

Source: Sources identified in the footnotes; analysis by the Iraq Vision 2045 team.

Reference Scenario to 2045

Source: Policy assessment; not a probabilistic forecast.

10. Vision 2045 and the Theory of Change

The Causal Logic

The theory starts from the premise that assets do not generate impact by themselves. They first require enablers: consistent data, fiscal and legal rules, a delivery body and capable institutions. These enablers are then applied to four interconnected transformations: developing people and employing them; diversifying the economy and public finances; securing water and energy; and converting location into corridors of production and services. Outcomes appear in higher productivity, formal employment, exports and non-oil revenue. The ultimate impact is a state less vulnerable to oil and climate shocks, fairer, and better able to protect its interests.

Governing Implementation Principles

• Prioritize institutional capability and projects that enable other programmes.
• Measure public investment by its outcomes and economic function, not solely by allocations or expenditure rates.
• Give each national target one body responsible for its definition and publication, even when many bodies contribute to its achievement.
• Create no permanent fiscal commitment without a sustainable funding source and a test of its resilience to lower oil revenue.
• Review indicators annually, the strategic path every five years, and the framework exceptionally after major shocks.

Target Ladder

11. Quantitative Targets for 2030–2045: Economy and Employment

These targets are proposed for the realistic reform path; they are not officially adopted government figures. They are derived from the baseline, institutional capability that can be built, the implementation period and causal links with the proposed packages. The path is reviewed every five years, and values are updated when more recent Iraqi baselines are published.

Source: Baselines from the World Bank and the Labour Force Survey; targets proposed by the Vision team.³⁶³⁷

Derivation Method and Warning Thresholds

• Diversification: A gradual reduction that does not assume falling oil production, but faster growth in non-oil revenue and exports.
• Unemployment: Requires job-creating non-oil growth and reform of public-employment incentives, not merely stand-alone training programmes.
• Women's participation: Linked to transport, childcare, flexible work, protection and expansion of the formal sector.
• Amber warning: A shortfall exceeding 10% of the interim trajectory for two consecutive years. Red warning: A shortfall exceeding 20%, or an indicator falling below its baseline.

Target Ladder

12. Quantitative Targets for 2030–2045: People and Poverty

Source: Baselines from the Human Capital Review and the announcement of the third Poverty Reduction Strategy; proposed targets.³⁸³⁹

Testing the Numerical Path

Raising the Human Capital Index from 0.41 to 0.70 over roughly twenty years implies an average annual improvement of approximately 2.7% in the composite index. This is ambitious but defensible if education, health and nutrition reforms are implemented in sequence. Raising learning-adjusted years of schooling from 4 to 8 requires roughly one additional year of actual learning every five years, not simply more years of enrolment.

Reducing the share of young people not in education, employment or training from 36.7% to 12% means narrowing the gap by approximately 1.2 percentage points annually on average. This requires preventing dropout, improving learning, demand-linked training, creating private-sector jobs and enabling women to participate. Reducing poverty to 5% is less certain because growth, inflation, water, displacement and targeting quality all affect it. It therefore remains a conditional target, subject to review when the complete official baseline is published.

Confidence Limits

Source: Analytical assessment by the Vision team.

13. Policy and Programme Package and Financing Architecture

Source: Prepared by the Iraq Vision 2045 team.

Financing Architecture

Detailed programme cost estimates must not be presented before feasibility studies and design. The chapter therefore uses ordinal categories: low, below US$250 million; medium, US$250–900 million; high, US$0.9–3 billion; and transformational, above US$3 billion. These categories are based on reference project sizes in transport, water and gas, and do not constitute final budget appropriations.^40414243

Source: Policy framework; each project is subject to feasibility and fiscal impact studies.

14. Implementation and Financing Matrix

Source: Costs are ordinal categories, not appropriations; they will be detailed in sectoral chapters and feasibility studies.

Implementation Sequence

• First 100 days: Establish the delivery unit, indicators register and assumptions register; review existing programmes; and identify critical water and energy projects.
• 2027–2030: Restore the foundations—fiscal rules, data, youth employment, human development services and critical projects.
• 2031–2035: Build institutions and capabilities—expand training, the formal sector, logistics zones and blended finance.
• 2036–2040: Expand and diversify—increase non-oil exports, freight, productivity and service reliability.
• 2041–2045: Consolidate and lead—sustain institutions and financing and update targets beyond 2045.

The World Bank's active Iraq portfolio, which totalled US$2.24 billion across ten projects in October 2025, demonstrates an initial capacity to attract external financing. The decisive factors, however, are implementation readiness, prioritization and the ability to absorb financing—not simply the amount announced.⁴⁴

15. Risks, Mitigation Plans and Monitoring Dashboard

Source: Analysis by the Iraq Vision 2045 team; water and economic risks are supported by the sources.⁴⁵⁴⁶⁴⁷

National Indicators Dashboard

Source: Linked to the central indicators platform, budget and implementation reports.

16. Data Gaps Register

Source: Mandatory update register; gaps must not be filled with undisclosed estimates.

17. Core References

• Iraqi Ministry of Planning / General Population and Housing Census 2024; final results as reported by the Associated Press on 24 February 2025.

• World Bank, Iraq Human Capital Review: A Roadmap to Human Capital Recovery in Iraq, 2024.

• World Bank, Iraq Country Climate and Development Report, 2022.

• World Bank, Iraq country page, economic update and project portfolio, 2025–2026 data.

• World Bank, Iraq Railways Extension and Modernization Project, 25 June 2025.

• World Bank, Iraq Transport Economic Corridors Project, 5 June 2026.

• World Bank, Iraq Makes Strides in Extractives Transparency with EITI Validation Milestone, 14 May 2025.

• OPEC, Iraq country profile: facts, area and resources, accessed 11 July 2026.

• Reuters, reports on Iraq's 2024 budget, the 2025 water crisis, the 2026 marshland recovery and the 2025 gas project.

• Reuters, reports on progress with Saudi Vision 2030 and financing for Jordan's water project, 2025.