Strait Closure Exposes Weaknesses in Iraq-GCC Trade Integration

The conflict in the Middle East has disrupted trade between Iraq and the GCC countries, specifically affecting grassroots traders who rely on established routes and credit relationships. The closure of the Strait of Hormuz has made it difficult for Iraqi businesses to import construction materials from East Asia via the UAE's Jebel Ali Port, which is a crucial route due to its safe and predictable nature.

However, with the rise of Turkey as an alternative supplier and trade route, traders are now exploring this option. As one trader noted, 'The GCC is not the only actor shaping Iraq's external options. Turkey, already Iraq's largest non-oil trading partner, will fill this space.'

The impact on grassroots trade has been significant, with cost spikes due to rerouted maritime traffic and disruptions to specific industries such as construction materials and plastic fittings. While high-value goods like electronics have seen little disruption, traders of these materials are facing challenges.

Baghdad's approach to GCC economic integration is also being affected by the closure of the Strait, highlighting the importance of maintaining ordinary commercial relationships beneath formal agreements between governments.