July 21, 2026
Author: Akinobu Kinoshita
Executive Summary
1. Iraq Is Transforming from a “Buffer State” into a “Strategic State”
Iraq has traditionally been viewed as a geopolitical “buffer state” situated between Iran and Turkey. Today, however, four major powers—the United States, Iran, Turkey, and the Gulf states—are deepening their engagement with Iraq, each pursuing distinct strategic objectives. Iraq is increasingly transforming into a “strategic state” where the Shia Crescent, security, logistics, investment, energy, and U.S. Middle East strategy converge.
2. Iran Positions Iraq at the Core of the “Shia Crescent”
For Iran, Iraq is a critical strategic hub connecting Iran with Syria, Lebanon, and the Mediterranean as part of its westward regional strategy. Political networks in Baghdad and security networks such as the Popular Mobilization Forces (PMF) constitute important foundations of Iran’s regional influence. At the same time, greater political autonomy for Iraq could help reduce its excessive dependence on Iran.
3. Turkey and the Gulf States View Iraq as an “Economic and Logistics Corridor”
In addition to addressing the PKK issue and securing its northern border, Turkey has a strategic interest in promoting the Development Road project, which would connect the Persian Gulf with Turkey and Europe through Iraq. The Gulf states, meanwhile, increasingly view Iraq as a northern market and have the potential to expand their economic influence through investment in ports, electricity, energy, railways, logistics, industry, tourism, and other sectors.
4. The United States Is Reassessing Iraq as a Link between Its “Strategy toward Iran” and “Middle East Reconstruction”
For the United States, Iraq could become an important strategic hub not only for containing Iranian influence, regional security, counterterrorism, and energy security, but also for reshaping the regional balance of power through the reconstruction of infrastructure, industry, and electricity systems. If multiple agreements with the United States and the proposed large-scale development fund are realized, they could provide an opportunity to accelerate Iraq’s economic reconstruction and diversify its external relations.
5. Iraq’s Future Depends on “Four-Power Balancing Diplomacy” and Its Transformation into an Economic and Logistics Hub
Iraq’s greatest challenge is to determine how to formulate a national strategy between two competing visions: Iran’s political and security corridor, and the economic and logistics corridor linking Turkey, the Gulf states, and Europe. The most realistic path may be for Iraq to adopt a policy of “Four-Power Balancing Diplomacy,” rather than becoming overly dependent on any one of the United States, Iran, Turkey, or the Gulf states, and instead leveraging competition among the four powers for national reconstruction. In this scenario, Iraq could transform itself from a “buffer zone” into a “strategic crossroads” shaping the emerging order in the Middle East.
Keywords
- Four-Power Balancing Diplomacy in Iraq
- Shia Crescent
- Development Road
- New Middle Eastern Logistics Corridor
- Geopolitics of Iraq Reconstruction
Table of Contents
Introduction: Iraq—From a “Buffer State” to a “Strategic State”
- Five Strategic Positions of Iraq
- The United States, Iran, Turkey, and the Gulf States as Four Strategic Powers
- The Shift from Geopolitics to Geoeconomics in Iraq
- The Transformation from a “Buffer State” into a “Strategic Crossroads”
Chapter 1. Iran’s Strategy
— The Shia Crescent and Iraq’s Strategic Importance —
1-1. The Concept of the Shia Crescent
1-2. Iran’s Regional Strategy
1-3. Iraq’s Strategic Importance
1-4. Connections with Syria and Lebanon
1-5. Iran’s Western Corridor and Iraq’s Political Autonomy
Chapter 2. Turkey’s Strategy
— The Northern Corridor, Security, and European Connectivity —
2-1. Iraq’s Importance to Turkey
2-2. The Development Road Project and Turkey
2-3. The PKK Issue and Security in Northern Iraq
2-4. Relations with the Kurdistan Region
2-5. The Potential for a Persian Gulf–Iraq–Turkey–Europe Logistics Corridor
Chapter 3. The Strategy of the Gulf States
— Investment, Economic Diversification, and Iraq as a Northern Market —
3-1. Why the Gulf States Attach Importance to Iraq
3-2. The Geopolitical Significance of Iraq for the Gulf States
3-3. Investment in Iraq and Economic Diversification
3-4. Engagement in Ports, Energy, and Logistics Infrastructure
3-5. Connecting to Turkish and European Markets through Iraq
Chapter 4. U.S. Strategy
— Iraq as a Link between the “Strategy toward Iran” and “Middle East Reconstruction” —
4-1. A New Phase in U.S.–Iraq Relations
4-2. The Significance of the Development Fund Proposal
4-3. The Strategic Importance of Iraq to the United States
4-4. From Security Cooperation to Economic, Energy, and Infrastructure Cooperation
4-5. U.S. Geoeconomic Strategy to Counterbalance Iranian Influence
Chapter 5. Iraq as the Crossroads of Four Strategic Powers
5-1. The Four-Power Strategies of the United States, Iran, Turkey, and the Gulf States
5-2. Competition between the New Middle Eastern Logistics Corridor and the Iranian Corridor
5-3. The Development Road and the New Middle Eastern Logistics Corridor
5-4. From a “Military and Security Corridor” to an “Economic and Logistics Hub”
5-5. The Prospects for Iraq’s Four-Power Balancing Diplomacy
Chapter 6. The Geopolitical Significance of Iraq’s Reconstruction
6-1. Iraq’s Reconstruction and the Emerging Balance of Power in the Middle East
6-2. Electricity Reconstruction and Reducing Dependence on Iran
6-3. The Strategic Importance of Roads, Railways, Ports, and Energy Infrastructure
6-4. Investment Opportunities from the United States, the Gulf States, and Turkey
6-5. Integrating Economic Reconstruction with National Security
Conclusion: Iraq—From a “Buffer Zone” to a “Strategic Hub of the Middle East”
- Iraq at the Intersection of Four Strategic Powers
- Competition between Iran’s Western Corridor and the New Middle Eastern Logistics Corridor
- The Prospects for Iraq’s “Four-Power Balancing Diplomacy”
- National Sovereignty and Strategic Autonomy through Economic Reconstruction
- Can Iraq Become a “Strategic Crossroads” of the New Middle Eastern Order?
Introduction Iraq: From a Buffer State to a Strategic State
For many years, Iraq has been situated between two regional powers, Iran and Türkiye, and has continued to be affected by their geopolitical influence.
However, in considering the Middle Eastern situation in 2026, it is no longer sufficient to view Iraq simply as a country located between Iran and Türkiye.
Today, Iraq simultaneously occupies five strategic positions:
- A western strategic corridor for Iran
- A southern security and logistics corridor for Türkiye
- A northern market and investment destination for the Gulf States
- A key strategic hub for U.S. security policy in the Middle East
- A connecting region for China’s Belt and Road Initiative
Of particular importance is the fact that four major powers—the United States, Iran, Türkiye, and the Gulf States—are each strengthening their engagement with Iraq for different strategic purposes.
Iran seeks to maintain its political and security influence through the “Shia Crescent” corridor.
Türkiye, while addressing the PKK issue, seeks to secure logistics and energy corridors connecting northern Iraq with Türkiye and Europe.
The Gulf States seek to incorporate Iraq into their northern economic sphere and expand their economic influence through investment, ports, energy, and logistics.
The United States, meanwhile, regards Iraq as an important strategic space for containing Iranian influence, while simultaneously reassessing Iraq as a hub for security, energy, and economic reconstruction in the Middle East.
In this sense, Iraq is gradually transforming from a “buffer state caught between great powers” into a strategic state where multiple powers compete for influence.
Chapter 1 Iran’s Strategy
— The Shia Crescent and the Strategic Importance of Iraq —
Map Source
Source: Prepared by the Middle East and Asia Strategic Information Institute (MEASII) based on materials from the Washington Institute for Near East Policy, the Atlantic Council, and the Carnegie Endowment for International Peace.
1-1. The Concept of the Shia Crescent
For many years, Iran has regarded the maintenance of a strategic network connecting Iran, Iraq, Syria, and Lebanon as an important national security objective.
This concept is generally referred to as the “Shia Crescent,” or the “Crescent Corridor.”
Iraq is geographically located at the center of this strategic network and serves as a key land corridor connecting Iran with Syria and Lebanon.
Consequently, Iraq’s political and diplomatic orientation has a direct impact on Iran’s regional security policy.
For Iran, Iraq serves multiple strategic functions:
- A frontline of western security
- A gateway to Syria
- A strategic link to Lebanon
- A base for supporting pro-Iranian forces
- A strategic space for countering U.S. policy in the Middle East
1-2. Iran’s Regional Strategy
Iran’s objectives in emphasizing the Shia Crescent can be broadly summarized in five areas:
- Securing strategic access toward the Mediterranean
- Maintaining support for allied and friendly forces
- Securing overland logistical routes
- Building deterrence against Israel
- Countering the U.S. military presence in the Middle East
For Iran, Iraq lies at the center of this strategy.
In particular, political networks centered in Baghdad and security networks involving the Popular Mobilization Forces (PMF) constitute important elements supporting Iran’s regional strategy.
1-3. The Strategic Importance of Iraq
Iraq occupies a central position within the Shia Crescent.
Baghdad is the political center, while Najaf and Karbala hold major religious significance.
For Iran, Iraq is positioned as:
- The core of the Shia Crescent
- A logistical and supply route
- A base of operations for pro-Iranian forces
- A strategic link to Syria
- A security space situated between Iran and the United States
Therefore, the strengthening of Iraq’s political autonomy does not necessarily serve Iran’s interests.
At the same time, if Iraq becomes excessively dependent on Iran, its relations with the United States, Türkiye, and the Gulf States could deteriorate.
This represents the greatest dilemma facing Iraqi foreign policy.
1-4. Connections with Syria and Lebanon
For Iran, Syria serves as a strategic transit space linking Iraq to the Mediterranean.
Lebanon, meanwhile, has become an important base for deterrence against Israel through Hezbollah.
Accordingly, the strategic connection:
Iran → Iraq → Syria → Lebanon
is essential to understanding Iran’s regional strategy.
However, this structure competes with the strategies of the United States, Israel, Türkiye, and the Gulf States.
Thus, Iraq is simultaneously part of Iran’s “western corridor” and a country that has the potential to constrain Iran’s broader regional strategy.
Chapter 2 Türkiye’s Strategy
— The Northern Corridor, Security, and European Connectivity —
2-1. Iraq from Türkiye’s Perspective
Türkiye’s policy toward Iraq is not simply an economic policy.
At its core are multiple strategic factors, including:
- The PKK issue
- Security in northern Iraq
- Relations with the Kurdistan Region
- Energy transportation
- Logistics corridors to Europe
- Access to Middle Eastern markets
For Türkiye, stability in northern Iraq is directly linked to the security of its southern border.
At the same time, if Iraq can be used to connect the Persian Gulf with Türkiye and, ultimately, Europe, Türkiye can further strengthen its position as a logistics hub linking the Middle East and Europe.
Map Source
Source: Prepared by the Middle East and Asia Strategic Information Institute (MEASII) based on materials from the Washington Institute for Near East Policy, the Atlantic Council, and the Carnegie Endowment for International Peace.
2-2. The Development Road and Türkiye
The Development Road is a large-scale logistics corridor designed to connect the Grand Faw Port in southern Iraq with:
Basra → Baghdad → Mosul → Türkiye → Europe
If this initiative is realized, Türkiye would become one of the principal beneficiaries of a new logistics route:
Persian Gulf → Iraq → Türkiye → Europe
Therefore, for Türkiye, the Development Road is not merely an infrastructure project. It forms part of a broader “north-south and east-west logistics strategy” designed to connect the Middle East and Europe through Iraq.
Map Source
Source: Prepared by the Middle East and Asia Strategic Information Institute (MEASII) based on materials from the Washington Institute for Near East Policy, the Atlantic Council, and the Carnegie Endowment for International Peace.
Chapter 3 The Strategy of the Gulf States
— Investment, Economic Diversification, and Iraq as a Northern Market —
3-1. Why the Gulf States Attach Importance to Iraq
For many years, Iraq was viewed by the Gulf States as a source of security instability.
Today, however, Iraq is gradually shifting from being perceived as a “potential threat” to being regarded as an “investment destination.”
Saudi Arabia, the United Arab Emirates (UAE), Qatar, and other Gulf countries have the potential to strengthen their economic relations with Iraq in areas including:
- Ports
- Energy
- Electricity
- Railways
- Logistics
- Industrial zones
- Real estate
- Tourism
3-2. The Geopolitical Significance for the Gulf States
The engagement of the Gulf States with Iraq has three major implications.
First, it can relatively offset Iranian influence through economic engagement.
Second, it can connect Iraq to the Gulf economic sphere.
Third, it can provide access to Türkiye and European markets through Iraq.
In this sense, Iraq has the potential to become a “gateway to the north” for the Gulf States.
Chapter 4 The United States’ Strategy
— Positioning Iraq at the Intersection of the Strategy toward Iran and Middle Eastern Reconstruction —
4-1. A New Phase in U.S.-Iraq Relations
U.S.-Iraq relations may be shifting from a relationship centered primarily on military and security cooperation toward a comprehensive framework encompassing:
Security + Economy + Energy + Infrastructure + Investment
The Iraqi Government Announces a New Strategic Partnership
“More than 18 new agreements to be signed between Baghdad and Washington, with the establishment of a $150 billion development fund.”
According to sources familiar with the matter, Iraq is expected to sign more than 18 agreements with the United States covering a wide range of sectors. Several additional agreements are reportedly ready and are expected to be signed in the near future.
During Prime Minister Ali Zaydi’s visit to Washington, the two countries are expected to sign more than 18 joint agreements covering politics, the economy, industry, energy, oil, education, healthcare, investment, and defense. These agreements are expected to further strengthen the strategic partnership between Iraq and the United States.
The same sources also stated that Iraq is considering establishing a development fund in a U.S. bank outside the direct control of the U.S. Federal Reserve System (FRS).
According to preliminary information, the fund could be financed by the export of 500,000 barrels of oil per day to the United States, with the fund reportedly reaching a value of $1 trillion. The funds would be used to finance investment and infrastructure projects, particularly electricity-related projects.
In addition, last month, government spokesperson Haider al-Aboudi announced that the Cabinet had decided to establish a $150 billion development fund with international guarantees, aimed at achieving economic stability through investment.
If the reported 18 or more agreements are indeed concluded, their significance would extend far beyond bilateral economic cooperation.
Given that they cover a broad range of fields—including politics, the economy, industry, energy, oil, education, healthcare, investment, and defense—the agreements may indicate that the United States is reassessing Iraq as an important strategic partner in the Middle East.
4-2. The Significance of the Development Fund Initiative
If the proposed $150 billion internationally guaranteed development fund is established, it would have enormous significance for the Iraqi economy.
In particular, investment in:
- Electricity
- Infrastructure
- Energy
- Industry
- Logistics
- Urban reconstruction
could enable Iraq to move away from an economy heavily dependent on oil exports and toward a more diversified economic structure.
However, the geopolitical significance is even greater.
U.S. support for Iraq’s reconstruction should not necessarily be interpreted as an attempt to completely separate Iraq from Iran’s sphere of influence.
Rather, it can be understood as an effort to prevent excessive Iraqi dependence on Iran and to enable Iraq to pursue a balanced foreign policy among multiple competing powers.
4-3. The Importance of Iraq to the United States
For the United States, Iraq has multiple strategic significances:
- Strategic leverage against Iran
- A hub for Middle Eastern security
- Energy security
- Counterterrorism
- Cooperation with the Gulf States
- Strategic connectivity with Türkiye
- Responding to the expansion of China’s influence
Therefore, Iraq’s economic reconstruction should not be viewed simply as an aid policy.
Rather, it can be understood as a geoeconomic strategy aimed at reconstructing the balance of power in the Middle East.
Chapter 5 Iraq at the Crossroads of Four Strategic Agendas
5-1 Understanding Contemporary Iraq Requires Examining Four Strategies Simultaneously
In order to understand Iraq today, it is necessary to examine four major strategic agendas at the same time.
| Power | Main Strategy toward Iraq | Objective |
|---|---|---|
| 🇮🇷 Iran | Shiite Corridor | Western security and regional influence |
| 🇹🇷 Türkiye | Development Road and Northern Corridor | Connectivity with Europe and security |
| 🇸🇦 Gulf States | Investment and logistics | Economic diversification and counterbalancing Iran |
| 🇺🇸 United States | Security and reconstruction assistance | Strategic balance and containment of Iranian influence |
Within this four-pole structure, Iraq is not merely an object of competition among external powers. Rather, Iraq itself may have the opportunity to maximize its economic and diplomatic interests for national reconstruction by encouraging these four powers to compete with one another.
In this sense, Iraq’s foreign policy may move away from a simple binary choice between being “pro-American” and “pro-Iranian.” Instead, Iraq may increasingly pursue a policy of balanced diplomacy among the United States, Iran, Türkiye, and the Gulf States.
Such a strategy would allow Iraq to leverage its geopolitical position and transform competition among external powers into an opportunity for economic development, infrastructure investment, and the strengthening of national sovereignty.
5-2 Competition between the New Middle Eastern Logistics Corridor and the Iranian Corridor
The Middle East is currently witnessing the parallel development of two fundamentally different corridor concepts.
The Iranian Corridor
Iran → Iraq → Syria → Lebanon → Mediterranean Sea
Objectives:
- Political and military influence
- Logistical supply routes
- Support for allied forces
- Deterrence against Israel
Source: Prepared by the Middle East and Asia Strategic Information Institute based on materials from the Washington Institute for Near East Policy, the Atlantic Council, and the Carnegie Endowment for International Peace.
5-3 The Development Road and the New Middle Eastern Logistics Corridor
Persian Gulf → Iraq → Türkiye → Europe
Objectives:
- Trade
- Logistics
- Investment
- Industrial development
- Economic growth
- Connectivity with Europe
Map Source
Source: Prepared by the Middle East and Asia Strategic Information Institute (MEASII) based on materials from the Washington Institute for Near East Policy, the Atlantic Council, and the Carnegie Endowment for International Peace.
Figure source: Prepared by the Middle East and Asia Strategic Information Institute based on materials from the Iraqi Prime Minister’s Office, the World Bank, the Middle East Institute, and the Atlantic Council.
These two corridors are not necessarily mutually exclusive. However, they represent fundamentally different visions for Iraq’s future.
The former is a corridor centered primarily on security, military strategy, and political influence, while the latter is focused on economics, logistics, investment, and regional connectivity.
Therefore, the greatest challenge facing Iraq in the years ahead is whether it can transform itself from a “corridor state centered on military and security interests” into an “economic and logistics hub state”.
The outcome of this transformation will have significant implications not only for Iraq’s national reconstruction but also for the broader strategic balance of the Middle East. Iraq’s ability to balance the competing interests of Iran, Türkiye, the Gulf States, and the United States may determine whether it can establish itself as a sovereign regional hub connecting the Persian Gulf, the Middle East, and Europe.
Chapter 6 Competition between the New Middle Eastern Logistics Corridor and the Iranian Corridor
Two distinct corridor concepts are currently developing in parallel in the Middle East.
The Iranian Corridor
Iran → Iraq → Syria → Lebanon → Mediterranean
Objectives:
- Political and military influence
- Logistical routes
- Support for allied forces
- Deterrence against Israel
Source: Prepared by the Middle East and Asia Strategic Information Institute (MEASII) based on materials from the Washington Institute for Near East Policy, the Atlantic Council, and the Carnegie Endowment for International Peace.
The Development Road / New Middle Eastern Logistics Corridor
Persian Gulf → Iraq → Türkiye → Europe
Objectives:
- Trade
- Logistics
- Investment
- Industry
- Economic growth
- Connectivity with Europe
Map Source: Prepared by the Middle East and Asia Strategic Information Institute (MEASII) based on materials from the Office of the Prime Minister of Iraq, the World Bank, the Middle East Institute, and the Atlantic Council.
These two corridors are not necessarily mutually exclusive.
However, they represent fundamentally different visions for Iraq’s future.
The former is primarily a corridor centered on security, military affairs, and political influence, while the latter is primarily a corridor centered on the economy, logistics, and investment.
Therefore, one of Iraq’s greatest challenges going forward will be whether it can transform itself from a “military and security corridor state” into an “economic and logistics hub.”
Chapter 7 The Geopolitical Significance of Iraq’s Reconstruction
The reconstruction of Iraq is not merely a matter of domestic economic recovery.
It is the point where:
- Iran’s western strategy
- Türkiye’s southern strategy
- The Gulf States’ northern economic strategy
- The United States’ Middle East strategy
intersect.
Consequently, the development of Iraq’s infrastructure—including electricity, roads, railways, ports, energy, and telecommunications—has significant geopolitical implications.
The issue of electricity is particularly important.
If Iraq can stabilize its electricity supply, it can reduce its dependence on electricity and gas imports from Iran.
At the same time, this would create greater opportunities for investment from the United States, the Gulf States, Türkiye, and other international partners.
In other words, the reconstruction of Iraq’s electricity sector is not only an economic policy but also a security policy aimed at reducing excessive dependence on Iran.
Conclusion Iraq: From a Buffer Zone to a Strategic Pivot of the Middle Eastern Order
Until now, Iraq has been caught in its geopolitical environment as a “buffer state” situated between the regional powers of Iran and Türkiye.
However, the environment surrounding Iraq is changing in 2026.
- Iran needs Iraq as the core of the Shia Crescent.
- Türkiye needs Iraq as a logistics corridor connecting Europe and the Persian Gulf.
- The Gulf States need Iraq as a northern market and investment destination.
- The United States needs Iraq to maintain the strategic balance of power in the Middle East.
As these four strategies intersect, Iraq has the potential to transform itself from a “state caught between competing powers” into a state capable of leveraging competition among those powers to advance its own national interests.
If the more than 18 agreements with the United States and the proposed development fund represent the beginning of this process, Iraq’s reconstruction is about far more than economic recovery.
It is taking place against the backdrop of competition between two major geopolitical visions:
Iran’s Shia Crescent
versus
A new Middle Eastern logistics corridor connecting Türkiye, the Gulf States, and Europe.
At the same time, by supporting Iraq’s reconstruction, the United States may seek not to directly eliminate Iranian influence, but rather to create an environment in which Iraq can expand its relations with Türkiye, the Gulf States, the United States, and ultimately Europe and Asia, thereby relatively reducing its excessive dependence on Iran.
The future strategic orientation of Iraq will therefore be shaped by three possible directions:
- Will Iraq become “Iran’s western corridor”?
- Will it become a “logistics hub connecting Türkiye, the Gulf States, and Europe”?
- Or will it become a “balancing point among the United States, Iran, Türkiye, and the Gulf States”?
Iraq’s national strategy will be determined by the interaction among these three possibilities.
The most likely scenario is that Iraq will not fully align itself with any single camp. Instead, it may adopt a policy of “four-power strategic balancing,” using competition among the major powers to advance its economic reconstruction and national development.
In such a case, Iraq will no longer be merely a “buffer zone” in the Middle East.
Iraq itself will become a strategic crossroads that helps shape the emerging new order in the Middle East.
・Author： Akinobu Kinoshita
An independent analyst specializing in political affairs, security, and information strategy across the Middle East and Asia. Drawing on over 30 years of field networks and hands-on experience at the government level, he founded the Middle East Asia Information Strategy Institute in 2025. Author of ISIS to Tatakau (Aiikusha, 2016).
