On September 2, 2024, Masrour Barzani, Prime Minister of the Kurdistan Regional Government of Iraq, welcomed Sheikh Ahmed Suhail Bahwan, Chairman of the Suhail Bahwan Group Holding, and Luay Jassim Al-Kharafi, CEO of the Kharafi Group. The meeting focused on exploring joint cooperation with both government and private sectors in the Kurdistan region in the field of renewable energy. They held bilateral meetings with high-level government and economic entities in the region to discuss ways to enhance Omani-Kuwaiti investments, aligning with the requirements of the U.S. Agency for International Development and the United Nations Development Programme.
Numerous Incentives
There are several motivations driving Kuwait and Oman to invest in Iraqi Kurdistan. The most prominent among these can be highlighted as follows:
Kuwait and Oman are keen on strengthening their relationships with the Kurdistan Region: Kuwait’s move toward Iraqi Kurdistan is part of broader efforts to enhance and diversify its interests in the region. Recent joint meetings underline this strategy. For instance, Nechirvan Barzani, President of the Kurdistan Region, met with Kuwait’s Foreign Minister, Abdullah Ali Al-Yahya, on February 17, 2024, during the Munich Security Conference in Germany to discuss expanding cooperation in various fields. Additionally, Masrour Barzani, Prime Minister of the Kurdistan Regional Government, met with Kuwait’s Ambassador to Iraq, Tarek Abdullah Al-Faraj, on May 23, 2024, to discuss strengthening mutual cooperation.
Similarly, Oman has taken steps to bolster relations with the Kurdistan Region, albeit preferring to act in partnership with other nations. Oman’s focus remains on economic cooperation, despite the possibility of upsetting Baghdad. Kuwait and Oman are capitalizing on the Kurdistan Region’s drive to strengthen ties with Gulf nations. A significant example of this is the decision in February 2024 to allow citizens of 53 countries, including Kuwait and the rest of the Gulf Cooperation Council (GCC) nations, to enter the Kurdistan Region without prior visas, aimed at boosting tourism from the Gulf.
Kuwait and Oman aim to expand their presence inside Iraq: Increased Kuwaiti and Omani engagement with the Kurdistan Region, especially in economic cooperation, opens the door to greater influence in Iraq as a whole. This balanced approach to relations with various Iraqi political forces is timely, as Baghdad has adopted a more open stance toward Gulf countries in recent years. This reduces the sensitivity of balancing relations, as Baghdad seeks to reduce its reliance on Iran and integrate more with regional countries, a strategy that Kurdistan has also pursued with increasing intensity in recent years.
Kuwait and Oman are looking to exploit the region’s mineral resources: Both nations are interested in tapping into Kurdistan’s rich mineral resources. The region is known for its mineral diversity, with deposits of iron, chromium, nickel, platinum, gold, copper, and zinc. Other areas in Kurdistan may also be rich in resources like limestone, crucial for industrial development in the Gulf. These minerals are in high demand globally, and foreign companies specializing in this field may invest in them. Kuwaiti and Omani companies could play a role here, especially as global demand for oil is expected to decrease in the coming years. With the ongoing dispute over oil between Baghdad and Erbil, attention will likely shift to other resources, making mineral wealth a competitive area in the future.
Leveraging Kurdistan’s strategic position in regional transportation projects: Kuwait and Oman are eager to expand their presence in regional transportation projects announced in recent years, despite not having been centrally involved in them thus far. Oman, with its strategic location, could connect India, the Middle East, and Europe through the India-Middle East-Europe Corridor (IMEC). Kuwait, though not part of this corridor, could benefit from the Iraqi Development Road, which is expected to pass through Kurdistan, offering it direct access to Turkey and Europe, thereby boosting trade with those regions.
Kurdistan’s role as a key hub in the Iraqi-Turkish connection via the Development Road will increase its importance, making it more attractive for investment. This, in turn, will boost the revenues of the Omani-Kuwaiti alliance seeking to invest in renewable energy, especially with the anticipated rise in economic activity in the region as a railway connecting Iraq and Turkey passes through it. On May 23, 2024, the Ministry of Transport and Communications of the Kurdistan Regional Government, the Director General of Iraqi Railways, and the Italian company responsible for the project signed a memorandum of understanding for the Iraqi Development Road.
Expansion of Kuwaiti and Omani companies abroad: The Omani-Kuwaiti alliance’s interest in investing in renewable energy in Iraqi Kurdistan reflects the aspirations of Oman’s Bahwan Group and Kuwait’s Kharafi Group to increase their international presence, particularly in regions with limited competition. Both companies operate in various sectors and countries, and this partnership helps to reduce the potential costs of investment in the Kurdistan Region, especially as the region is located in an area of political disputes and security challenges. Nonetheless, the political benefits of investing in the region for relations between the Kurdistan Region and both Kuwait and Oman could be significant, with potential expansion into other sectors, especially mining, tourism, and agriculture.
The Omani-Kuwaiti alliance is keen to seize investment opportunities in Kurdistan, particularly in the renewable energy sector, which is expected to develop further once the Iraqi Parliament passes the Renewable Energy Law in the near future, helping to address the electricity crisis. According to government sources in Iraq, the Kurdistan Region requires around 4,500 megawatts of electricity, of which it currently produces 3,400 megawatts, mostly from gas-powered plants. The Kurdistan Regional Government aims to increase the contribution of renewable energy to electricity production from the current 20% to about 80%.
Political Dimensions
Finally, while Kuwait and Oman seek economic gains from their investments in Kurdistan, the venture also has political dimensions. Both countries aim to increase their presence in the region, with Kuwait striving to balance its relations with Baghdad. Meanwhile, Oman views its involvement as a means to bolster its role in the broader Middle East.
