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Petrofac’s Sami Iskander was in buoyant mood as the London Stock Exchange-listed contractor released 2021 results days after Abu Dhabi National Oil Company (Adnoc) lifted its suspension from bidding for contracts, which had been imposed a year earlier as the extent of Petrofac’s governance problems emerged.

International oil companies (IOCs) have continued to receive payments from the Kurdistan Regional Government (KRG), despite the Federal Supreme Court’s decision to throw out the region’s oil law.

GSN Risk Grade: D4↓ Recent developments- Kuwaiti compensation: The UN Security Council (UNSC) voted unanimously on 22 February to end compensation payments from Iraq to victims of the 1990 invasion of Kuwait. Iraq has paid $52.4bn to 1.5m claimants since the system was set up in April 1991.

GSN Risk Grade: D4↓ Recent developments- Presidential deal: The KRI’s two main parties – the Kurdistan Democratic Party (KDP) and Patriotic Union of Kurdistan (PUK) – remain deadlocked over who should be chosen as the next federal president.

 The Federal Supreme Court sparked a major political dispute on 15 February, when it ruled that a 2007 law regulating the oil sector in the Kurdistan Region of Iraq (KRI) was unconstitutional.

Iraq and Iran are to connect their rail systems via a 32km link between Shalamcheh in Iran and Basra in Iraq. The timeframe for the work is not clear, but Islamic Republic of Iran Railways and Iraqi Republic Railway are due to form a joint venture to develop the project in the near future, following an agreement signed by the two governments in late December.

The Iraqi political system appears to be at an impasse, as Kurdish parties fail to agree on a joint presidential candidate, stalling the appointment of a new government.

Iraq’s House of Representatives (parliament) has been presented with a choice of 25 candidates to become the next federal president, with incumbent Barham Saleh and former finance minister Hoshyar Zebari the leading contenders.

Iraqi Kurdistan’s GSN Risk Management Report grade of D4 with a negative outlook for economic and financial risk remains unchanged. The Patriotic Union of Kurdistan (PUK) and Kurdistan Democratic Party (KDP) continue to negotiate over a possible joint candidate for the federal presidency, held since October 2018 by PUK nominee Barham Salih. Not date has been set for the fifth Kurdistan Parliament election, but preparations have begun for a poll in 2022.  The Kurdistan Regional Government earned net revenues of $1.7bn in 2021 from crude exports via the Ceyhan terminal in Turkey but some receipts are stuck in Lebanese banks due to currency restrictions. Local economic, security and political conditions have resulted in large outward waves of migration towards Europe.

In GSN's most recent Risk Management Report, Iraq's D4 risk grade with negative momentum for the economic and financial outlook  remains unchanged as politicians in Baghdad continue to argue over the formation of a new government. Political violence and the influence of Iran-backed militias remains a problem. The heavily oil-dependent economy performed better in 2021 thanks to increased global prices.

The Ministry of Trade said in late November that it planned to send a delegation to Geneva to discuss joining the World Trade Organisation (WTO). While all the Gulf Co-operation Council countries and Yemen are members of the global trading group, Iraq and Iran both remain outside the WTO. The most recent Gulf country to join was Saudi Arabia in December 2005.

Numerous Peshmerga fighters were killed and injured in a series of confrontations with Islamic State (IS or Daesh) forces in northern Iraq in late November and early December. At least seven Peshmerga were killed and another seven injured in IS attacks north in Garmyan region, south of Sulemaniyah, in late November.

Baghdad’s political blocs are now fully engaged in negotiations to form the next administration – with some trying to use the courts and violence as leverage – after final results of the recent general election were declared.

The UK Foreign, Commonwealth and Development Office released files on 23 November giving more detail on events surrounding British Airways flight BA149, which was caught in the Iraqi invasion of Kuwait when it landed at Kuwait City of 2 August 1990.

The Ministry of Finance completed the sale of ID1trn ($686m) of Binaa (construction) bonds in its first domestic bond issuance since the  2003 invasion.