Turkey Shifts Iraq Strategy Amid Waning U.S. and Iranian Influence

(Getty Images; Oleksii Liskonih)

Iraq and Turkey's flags together on a textile cloth fabric

Turkey is shifting its Iraq policy from a security-focused approach to one centered on economic integration and infrastructure development. This move aims to expand Ankara's regional influence amid Iran's declining power and the gradual withdrawal of the U.S. presence, setting the stage for growing competition with Gulf states in the long term. Iraqi oil ministry officials stated on July 21 that Turkey submitted a new pipeline agreement to Iraq that would broaden the 1973 Iraq-Turkey Crude Oil Pipeline Agreement beyond just the Iraq-Turkey Pipeline to include cooperation on natural gas, petrochemicals and electricity. The submission comes after a July 21 decree by Turkish President Recep Tayyip Erdogan announcing the 1973 agreement would be "terminated" on July 27, 2026, after it expires. Even prior to Iraq's announcement, however, Turkish officials signaled that their intent is not to abandon the pipeline entirely, pointing out that Turkey had invested heavily in the maintenance of the pipeline.

The pipeline allows Iraq to export oil from northern regions, including the Kirkuk supergiant field, but it has been offline since March 2023. The closure followed a ruling by the International Chamber of Commerce, which ordered Turkey to pay $1.5 billion in damages for allowing the semi-autonomous Kurdistan Region to export oil without Baghdad's approval for nearly a decade.
Erdogan's decree coincides with a July 17 agreement between the Kurdistan Regional Government and the federal government of Iraq to resume oil exports through the pipeline. However, that agreement faces several hurdles to implementation, particularly regarding written agreements that Iraq has reached with oil producers operating in the Kurdistan Region.

Turkey is shifting from a security-driven approach in Iraq and Syria to a broader strategy focused on economic integration and regional influence, capitalizing on the PKK's disarmament, the weakening of Iran and the withdrawal of U.S. forces. For years, Turkey's priority in Iraq (as well as in neighboring Syria) focused on neutralizing the Kurdistan Workers' Party (PKK) and other regional Kurdish independence movements. As a part of this strategy, Turkey expanded its military presence in Iraqi Kurdistan, targeting PKK bases in the Qandil Mountains along the border region between Iraq, Iran and Turkey that the PKK used as a sanctuary and headquarters of operations. The Islamic State's rise from 2014-17 in Iraq and Syria, as well as the Syrian Civil War, also crystallized Turkey's focus on securing its volatile border and establishing buffer zones in both countries. However, over the past two years, Turkey has shifted its regional strategy in Iraq and Syria by pursuing peace with the PKK, which announced in May its decision to disband and end its 40-year insurgency against Turkey, officially beginning the disarmament process on July 11. Moreover, the decline of the Islamic State, the fall of the Bashar Assad-led Syrian regime in 2024, Iran's weakened state since the outbreak of the Hamas-Israel war in 2023, as well as the impending withdrawal of the U.S.-led coalition forces in Iraq are enabling Turkey to be far more ambitious in re-cementing itself in Iraq, Syria and Lebanon. As a part of this shift in strategy, Turkey has sought to increase economic ties with Iraq, particularly as Baghdad seeks to reduce its economic reliance on Iran due to U.S. sanctions.

Turkey also seeks to gain more direct control over its side of the Iraq-Turkey Pipeline through a new agreement rather than extending the existing contract. The 1973 agreement effectively treats the Iraq-Turkey Pipeline as an integrated project, giving Iraq authority over the pipeline's usage inside Turkey. Article 3 of the 1973 agreement says that the project should be "exclusively" used for transporting Iraqi crude oil, but if the pipeline is underutilized for an extended period, Turkey and Iraq should discuss the possibility of using the pipeline to transport oil produced in eastern Turkey. Turkey likely aims to expand its direct control over the pipeline within its borders, particularly as Turkish Petroleum Corp. has made several oil discoveries in southeastern Turkey over the past five years, which are currently being transported by truck to global markets instead of through the pipeline. Any expansion of production, however, would likely outstrip the ability to transport oil in the region without the use of the pipeline.

The Iraq Development Road underscores Turkey's strategic pivot in Iraq from security concerns to economic cooperation as Ankara positions itself as a key transit hub between the Gulf and Europe. Erdogan's April 2024 visit to Baghdad, the first by a Turkish leader since 2011, underscores Turkey's strategic shift in its approach to Iraq. The visit focused heavily on the $17 billion Iraq Development Road project, an ambitious project that aims to connect Iraq's Al Faw port on the Persian Gulf to Turkey via a system of roads and railways. Expanded pipeline infrastructure and electricity connections are key parts of this project, and Turkish officials are already saying that the new pipeline agreement between the two countries will be expanded to include key aspects of the Development Road project. Turkey and Iraq are positioning the project as more realistic than other competing onshore infrastructure projects connecting the Indian Ocean to Europe via land. The U.S.-backed India-Middle East-Europe Economic Corridor, which aims to connect ports in the Gulf Cooperation Council to ports in Israel via Saudi Arabia and Jordan, is one such project. While the project has access to Gulf money, Saudi Arabia increasingly views Israel as an aggressive regional actor contributing to regional instability, making it less likely to significantly invest in a project that would inevitably require a Saudi-Israel normalization pact. The other primary project, the International North-South Transport Corridor, aims to expand onshore infrastructure to send goods from the Persian Gulf to Europe via Iran. Azerbaijan and Russia face similar constraints given the plethora of Western sanctions on Russia and Iran.

Despite Turkey's push, the Iraq Development Road project faces significant financial and logistical obstacles that will complicate its realization. The Development Road project faces substantial financial constraints, given that Iraq is not in a financial position to invest in the project on its own. Further, the economics of the rail and transportation route may never be advantageous against maritime shipping, even if the Red Sea remains a risky route for commercial vessels. However, while the physical transportation aspect of the project is likely overly ambitious, the energy sector components may be more realistic. In December, Iraq's Council of Ministers approved a $4.6 billion contract to develop the Basra-Haditha pipeline, which will have the capacity to transport 2.2 million barrels per day of oil from Basra to Haditha in Anbar province. From there, Iraq will have several options to transport oil westward for export, including proposed pipelines to Jordan and Syria. Still, Turkish officials hope the pipeline will be connected to the Iraq-Turkey Pipeline in northern Iraq as a part of the Development Road project, enabling oil to be transported from Basra to Ceyhan. This is perhaps the least risky of Iraq's options from Haditha, though it will require rehabilitating Iraq's side of the pipeline, which the Islamic State heavily damaged for a decade as it spread throughout northern Iraq. Moreover, Turkey and Iraq have been working to expand electricity trade, especially after the expiration of a U.S. sanctions waiver in March 2025 that had allowed Iraq to import power from Iran; enhancing energy infrastructure through the Development Road project would also help Iraq address chronic electricity shortages that have fueled public unrest in recent years. In addition to the financial risks, security risks remain a significant constraint. As deeper economic ties between Turkey and Iraq will likely come at the expense of Iran's political influence in Iraq, pro-Iranian militias may eventually start threatening to target any construction of the road and rail network if it materializes. Moreover, while the PKK has begun disarmament, holdovers that reject the PKK agreement could target trade between Turkey and Iraq as a tactic to pressure Turkey if the route emerges as a commonly used one.

Even if the Development Road project only modestly achieves its objectives, deepened energy ties and economic interdependence between Iraq and Turkey will help anchor Turkey's growing influence in Iraq and Syria at the expense of Iran as well as Gulf Cooperation Council countries. Deeper economic ties between Iraq and Turkey, particularly for electricity, are a direct challenge to Iran's political influence in Baghdad, which Tehran has built up over the last decade. This will increase Baghdad's ability to resist Tehran's demands and strengthen the hand of Iraqi political factions calling for Iran's influence to decline. Given its weakened state due to its conflict with Israel, Iran is likely in no position to significantly challenge Turkey's growing influence other than relying on intimidation by pro-Iranian militias. Still, even pro-Iran politicians in Iraq likely recognize Iraq's need to diversify its own energy supplies and transportation networks, particularly as the United States expands sanctions enforcement inside Iraq. Turkey's large construction sector is also well-positioned to further take advantage of reconstruction opportunities in Iraq as Baghdad pushes through with post-Islamic State reconstruction efforts in decimated cities like Mosul. Turkey's growing economic and political ties with Baghdad are also likely to come amid Ankara playing a key role in shaping the future government of Syria and establishing close ties with it. Turkey's construction sector is also well-positioned to take advantage of any foreign funds focused on reconstruction after the Syrian Civil War. Taken together, Turkey's expanding presence in Syria and Iraq is likely to rekindle long-dormant rivalries with the Gulf Cooperation Council over time, potentially reigniting competition among regional Sunni powers that has historically shaped the Middle East but remained subdued over the past five years. Turkey's growing influence in the region will be more of a direct threat to the Gulf since, unlike Iran, Turkey can rely on its status as a Sunni government to export ideology and influence in a way Iran, a Shiite regime, could never due to the broader geographic scope of Sunni Islam compared to Shiite Islam, which is more heavily concentrated around Iraq, Syria, Lebanon and Iran.

Turkey's growing ties to Baghdad also significantly hurt Iraq's Kurdistan Regional Government, which during the mid-2010s exploited the rift between Baghdad and Ankara to increase economic connectivity with Turkey and reduce economic reliance on Baghdad. However, with Turkey now backing Baghdad more firmly, it is by extension supporting the Iraqi government's centralization push against the Kurdistan region.