Is Iraq the missing piece in India’s corridor strategy?

At the G20 Summit in New Delhi, Prime Minister Narendra Modi, President Joe Biden, and other world leaders unveiled the India-Middle East Economic Corridor (IMEEC), a trade highway to bring Indian goods by sea to the United Arab Emirates, overland to the Mediterranean, and then onward to Europe.

The project makes economic and diplomatic sense, but not everyone was happy with the proposed route. Iran’s Islamic Revolutionary Guard Corps often views the world as a zero-sum game. They dominate industry in Iran and stood to benefit from the proposed International North-South Transport Corridor, that would begin in India and ship goods by sea to Iran where they would transit north via truck or rail to Azerbaijan and then across Russia to Europe.

While the West tends to view the Houthi challenge to Red Sea shipping solely through the lens of Iranian animus toward Israel, leaders in Tehran favor strategies that achieve multiple aims simultaneously. By working to block shipping through the Suez Canal or transiting Israel, Iranian authorities believe they can make the trans-Iran route more attractive.

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American officials take a Manichaean approach to diplomacy. Just as Ambassador Eric Garcetti chided PM Modi’s visit to Russian President Vladimir Putin because Washington wants New Delhi to fully commit to an alliance with it, so too do they oppose the North-South corridor because they fear that any transit of Iran will benefit Islamic Revolutionary Guard Corps-run ports and logistical companies. Frankly, this concern is real as the Revolutionary Guard’s economic conglomerate, Khatam al-Anbiya, controls about 40 per cent of Iran’s economy including all major industries and channels its profits into insurrections and terror groups across the region.

India’s unwillingness to bet its diplomatic, military, or trade security on a single partner makes strategic sense. What is missing in India’s approach, however, is a third way that increases India’s trade security. After all, the trans-Iran North-South corridor need not be the only alternative to IMEEC. In many ways, Iraq could be a natural partner for India to augment its trade security beyond IMEEC and Iran.

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Iraq is no stranger to India. Almost three crore Indians supported the British Army in Iraq during World War I, most in non-combatant roles, but others in more direct military roles. For years, Indian laborers and expatriates helped the Iraqi railways run. The numbers of Indian officers in Iraq declined from two thousands to just a few dozen after the British mandate ended, but relations rebounded upon India’s independence.

In 1952, India and Iraq signed a “Treaty of Perpetual Peace and Friendship” and, despite Iraq’s neutrality in the 1965 war and its more overt support for Pakistan six years later, India and Iraq developed cordial military ties, leading to the Indian Air Force training Iraqi MiG-21 pilots, and the Indian Navy supporting a Naval Academy in Basra. Prior to the 1991 Gulf War, the Indian presence in Iraq soared to more than 80,000. It plummeted under sanctions but, after the United States invaded Iraq in 2003, began to rebound. US contractors recruited thousands more to provide various services to military bases.

In May 2010, the number of Indian workers increased greatly in the Iraqi Kurdistan region after New Delhi lifted its travel advisory. Today, Indians are spread across the country. More than 5,000 Indians work at the Karbala Refinery Project, and another 25,000 have worked from Basra in the south to Baghdad in the centre, to the Iraqi Kurdish capital Erbil in the north. Ministry of External Affairs statistics today count only 18,000, but that is more than four times the number of Indians in Iran and more than ten times the number in Turkey, both far larger countries.

India-Iraq trade has more than doubled since 2020 to more than Rs 250,000 crore ($30 billion), largely on the back of Iraqi oil exports but also due to other opportunities. Indian companies, for example, have taken the lead on the Basra sewage system, and on compressors to enable the Beiji refinery to operate. Following its success with Beiji, Bharat Heavy Electricals Ltd. has moved to help Sulaymani, the second-largest city in Iraqi Kurdistan, upgrade its own power generation.

Nor is business the only draw for Indians. While Shi’ite Muslims may be a tiny minority in India, they still represent the second or third largest population of Shi’ites in the world after Iran. Thousands of Indian Shiites go to pilgrimage each year to Najaf, Karbala, Kufa, and the Kadhimiya shrine in Baghdad.

Today, Iraq is again stable. A decade ago, the United Nations ceased tallying monthly statistics about terror casualties because they had fallen so low. The daily rate of traffic fatalities in New Delhi is greater than the monthly rate of terror deaths throughout the entirety of Iraq. The United Nations Assistance Mission for Iraq will cease operation and close shop in December 2025.

It is against this backdrop that India should move in force to solidify and augment its position in Iraq. While Iraqi democracy can be rough-and-tumble, a culture of debate and tolerance now predominates. More than 70 percent of Iraqis were born or came of age after the 2003 war. They have no real memory of Saddam Hussein’s dictatorship; Iraq’s political culture has changed permanently. Iran, however, faces instability as rivals gear up for a scramble for power after the 85-year-old supreme leader dies. It is conceivable that, a year from now, Iran could be embroiled in its own Syria-style civil war.

Despite corruption among Iraqi politicians, business in Iraq is also easier. The lack of commercial law and an independent judiciary makes investment in Iran difficult, as efforts to invest in the Iranian port of Chabahar show. Investment in Iraq need not be exclusive but simply put Iraq is a better bet.

To solidify a third trade route and secure India’s economic and diplomatic interests, Baghdad and New Delhi should cooperate now. Indian universities might open further slots for Iraqi students, while Iraq’s top universities like the University of Baghdad, Kufa University, and the American University of Iraq-Sulaymani might solicit Indian students.

Indian business should also seek a greater slice of the financial pie. When Indian laborers work on American or other Western contracts, they receive a small fraction of the contract’s funds; contractor and large subcontractors siphon off most of the funding. If Indian firms sought to compete more directly, they could cut out layers of contracting bureaucracy and provide the same services for less cost to the Iraqis and at greater profit for themselves.

India is today the world’s largest country and amongst its most vibrant democracies. It is a power with which to reckon in the Indian Ocean basin and the Middle East. If its influence is to grow symbiotically, it should take inspiration from its past and recognise the potential that investment in Iraq and a corollary trade route through the country could provide.

Michael Rubin is director of policy analysis at the Middle East Forum and a senior fellow at the American Enterprise Institute. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.