In a significant shift in foreign and economic policy, Iraq’s federal government is actively adopting the investment-led diplomacy model pioneered by the Kurdistan Regional Government (KRG), aiming to strengthen international ties and overcome years of diplomatic isolation fueled by corruption, instability, and militia influence.

The strategy, which leverages partnerships with major international corporations to build political capital, marks a dramatic reversal for Baghdad, which had long viewed the KRG’s independent deal-making with suspicion.

The KRG’s formula was showcased in May 2025 during a visit by Prime Minister Masrour Barzani to Washington, D.C. The trip culminated in landmark agreements with U.S.-based energy firms HKN Energy and Western Zagros. The deals, valued at approximately $110 billion, focus on the development of the Miran and Kurdamir gas fields and are seen as a masterclass in using economic engagement to bolster diplomatic standing.

Iraqi security experts have credited the KRG’s proactive outreach, particularly to American companies, with significantly elevating the region’s international profile and creating stable partnerships that transcend political friction.

In a clear change of tack, the federal government has moved from opposing the KRG’s agreements to actively imitating them. This new direction was signaled by two key moves this summer.

On July 15, 2025, Baghdad signed an initial agreement with HKN Energy—the same company partnering with the KRG—to develop the Hamrin oil field. This was followed by a second preliminary deal on August 19 with American energy giant Chevron for exploration and surveying in the Nasiriyah area.

Iraqi economist Nabil Marsoumi confirmed the strategic pivot, noting that Baghdad has begun offering crucial transparency guarantees and stable contract terms to entice American companies back to federal Iraq, a region from which many had withdrawn due to political risk and bureaucratic hurdles.

The move establishes a new competitive dynamic between the federal government in Baghdad and the regional government in Erbil, with both now vying for similar types of international investment to secure diplomatic benefits.

According to political activist Hakar Mizouri, Baghdad has come to recognize the profound diplomatic value of the KRG’s contracts. "The federal government is now competing with Erbil to secure similar contracts," Mizouri told BasNews.

However, analysts caution that the recent agreements are merely preliminary and their progression hinges on a critical factor: Iraqi sovereignty. Mizouri stressed that American companies require firm assurances that Baghdad is free from external influence.

“American companies need assurances that Iraq will no longer take orders from other capitals,” he said, emphasizing that demonstrating greater autonomy is essential for finalizing any deals.