Introduction
Since the American invasion of 2003, discussions surrounding Iraq’s economic development have frequently centered on the reform of the financial sector. To this end (and following sanctions that “may well lay claim to be the worst humanitarian catastrophe ever imposed in the name of global governance”1), the American-led Coalition Provisional Authority (CPA) issued multiple Washington Consensus-inspired diktats within the 100 binding orders that were meant to transform Iraq’s political economy. These measures were carried into Iraq’s 2005 constitution,2 rendering capital market development, liberalization, and compliance with International Financial Institutions’ (IFI) recommendations into the compass guiding Iraq’s economic trajectory.
In a context where finance has been conceived as a conduit for Iraq’s awaited prosperity,3 the new 170-meters-high Central Bank of Iraq (CBI) tower stands as both a totem and mechanism of an impending national resurgence. Looming atop the skyline, the 90,000-square-meter structure itself, a modern-day ziggurat imagined by Zaha Hadid, offers material testament to Iraq’s current developmental priorities.4 Construction began in 2018—delayed by Iraq’s violent 2010s, the nadir of which was reached with the war against ISIS—and is scheduled to be completed shortly. In official discourses, the tower symbolizes a new day dawning: its glass and rebar project growth, stability, and renewal. For some, the tower also augurs Baghdad’s nascent financialization: The city’s elevation as an investment hub at the center of the projected Iraq Development Road. All of this is in keeping with regional trends—both architectural and economic. The CBI tower will join an archipelago of high-profile buildings designed by the late “Queen of the desert” in the Middle East and North Africa region, buildings that all in their own way testify to Arab states’ growing power, capital, and social designs.5
Beneath the narrative surrounding the CBI tower is a reality marked by competing actors and agendas and structured according to contradictions inherent to Iraq’s political economy. This article probes these underlying dynamics by focusing on the intricate relationships between capital, developmental investments, and Iraq’s “state partisan oligopoly”.6 In unwinding some of what is at play in the CBI’s monetary and investment policies and in contemporary fiscal initiatives, a sightline into Iraq’s nascent financialization is profered.
A political economy of post-ISIS Iraq
Iraq’s political field crystallized following the defeat of ISIS in 2017. This event reopened “a new round of critical state reinforcement in Iraq”,7 mobilising variegated public and private actors to deepen their involvement in national affairs. This had significant effects on the country’s economic prospects and geography of power. Concerning the latter, Baghdad progressively reasserted its position as the dominant fulcrum of Iraq’s political economy, a shift consolidated by its 2017 military campaign against Kurdish forces. Concurrently, numerous armed groups’ executives underwent a process of “notabilization”.8
Notabilization entailed pursuit of strategies to secure revenues entrenched in state rent distribution. Beyond laying claim to oil wealth, those participating in the process worked to position themselves within the state’s investment circuits and to acquire stakes within the country’s consumption-driven economy (real estate, retail, imports, etc.). Real estate speculation, both commercial and residential, emerged as especially important. Visible in the proliferation of large-scale construction projects, particularly public-private partnerships (PPP) and state-backed housing developments, profits derived from the transformation of Baghdad’s built environment brought new and old elites together into a novel class formation.
Indeed, Baghdad’s changing skyline serves as a spatial map, revealing the socio-economic effects of power and capital accumulation strategies in the post-ISIS environment. Amidst macroeconomic fragility, clientelism, and deficits in foreign investments, the city’s built environment shows where influence truly lies. As a corporate interlocutor explained to me in the beginning of 2025: “One shouldn’t look at the public ministry or institution behind a project. What matters is the individual; it tells you everything, and it’s not difficult to understand then what is going on and what is at stake”. Whether directly affiliated with the “state partisan oligopoly” or not, individuals and companies are still making “big money in Iraq”,9 and in so doing, acquiring major holdings of political capital as well.
Fiscal troubles further consolidate Iraq’s emergent elite
Since the oil boom of the 1970s and Saddam Hussein’s consolidation of power in 1979, the political economy of Iraq has been increasingly tethered to the vagaries of energy markets. Macroeconomic conditions and the state’s fiscal health have long since swayed with price movements on the world’s largest commodities exchanges. Moreover, due to a host of dynamics attendant to commodity dependence and war, non-extractive sectors have underdeveloped over time, amplifying the economy’s vulnerability. For a sense of scale, oil in 2023 accounted for 39% of Iraq’s GDP and 91% of government expenditures.10
At first glance, the recent drop in oil prices in April 2025 to less than US$65/bbl—driven by higher OPEC+ output under Saudi leadership and weakening global demand amid US tariff-related uncertainty—would therefore seem to point to trouble.11 With the IMF projecting the Iraqi economy to shrink by 1.5% in 2025, the expectation might be fiscal contraction and elite instability.
But this would overlook the role that debt has come to play in fastening the top ranks and buttressing the popular foundations of Iraq’s contemporary political economy: Debt financing (especially during the Covid shock) has allowed Iraq’s political governors to maintain if not grow public payrolls and other systems of patronage regardless of oil earnings. And attendant to this development, those actors able to extend lines of credit to the state—namely, financial institutions, (under the guidance of the CBI) and individuals with substantial liquid wealth—have acquired growing prominence.
Central banking: between technocracy and power
Sitting 500m west of the Babylon Rotana Hotel and its corporate venues, the Central Bank of Iraq tower overlooks a dried-out Tigris riverbank.12 Under Prime Minister al-Sudani’s investment policies, the site has undergone intensive construction. With the tower at its heart, the neighborhood is set to become a nod of Baghdad’s rising financial networks.13
Since 2003, Iraq’s monetary policy—despite turbulence and political constraints—has been steered by and through the CBI, which has steadily worked to expand its authority and influence over monetary policy and economic governance. The Coalition Provisional Authority established the bank as a legally independent institution under Law No. 56 (2004). As we will see, legal independence never implied operational independence. Regardless, despite facing political turmoil, as a general rule, those in charge of the bank have followed a core mandate that could be reduced to “Solidity, Stability and Sustainability”.14 Materially, this implied the maintenance of currency and price stability through inflation targeting and reserve accumulation. A key part of the CBI’s efforts was the dollar auction window, which was used to control the money supply and dollar liquidity.
With time, the CBI, like many other central banks around the world, expanded its interventions in a number of directions. Cognizant of the country’s vulnerability to energy market volatility, the CBI developed refinancing facilities for state and commercial banks, allowing the latter to sustain lending capacity in the face of liquidity crunches. More recently, the CBI has also stepped up its regulatory reach. The need to do so was made apparent in 2023, when the US Treasury censored fourteen Iraqi banks over non-compliance with Iran-targeted sanctions (Another five Iraqi banks were censored in 2025).15 By dint of the Treasury’s actions, the Iraqi banks in question were prevented from conducting cross-border dollar transactions. With exclusion from dollar-based financial markets posing a systemic threat to the country’s financial system, the CBI took the task of bringing all parties up to speed with compliance seriously. Likewise, it has used its regulatory authorities to demand that domestic banks meet the paid-up capital requirements necessary for their being reconnected to the SWIFT network. In terms of knock-on effects, this second regulatory initiative is certain to precipitate greater financial market concentration: Having set capital requirement thresholds of 400 billion Iraqi dinar, smaller banks will have no choice but to accept merger and acquisition bids.
Beneath the surface, the CBI’s history reveals struggle and contentiousness. This is apparent even in developments related to the construction of its new tower facility. The project to construct a new home for the central bank was launched in February 2012 when Sinan al-Shabibi—former director of the CBI and leading technocratic figure of the post 2003 Iraq—signed a deal with Zaha Hadid and her London based architecture company. The deal was agreed after several months of tensions between Shabibi and former Prime Minister Nouri al Maliki. The tensions stemmed from al Maliki’s desire to go around the constitution in order to entrench government control, that is to say cabinet control, over the CBI. Al-Shabibi actively resisted this, viewing the CBI as a technocratic instrument designed to implement monetary policies inspired by IFI recommendations. In the end, however, the Prime Minister won out. Nine months after the deal was signed with Zaha Hadid, al Maliki replaced al Shabibi and other high-ranked officials of the CBI.
Thereafter, CBI control remained a major and hotly contested political prize to capture. Current CBI director Ali Mohsen al-Alaq has held court for the preponderance of the post-2012 period, his reign interrupted only by a brief interlude from 2020 to 2023 when Mustafa Ghalib Mukheef, considered an ally of Muqtada al-Sadr, took the reins. Al-Alaq’s longevity derives from the support he has retained within the Coordination Framework, but also from his capacity to manage the Americans. In many ways, his personal story is instructive.
After earning his diploma in the University of Baghdad, al-Alaq pursued a career in finance that took him to the Gulf and Canada. After the American invasion of 2003, he quickly carved out roles within the upper reaches of the state apparatus. Initially taking a post at the Ministry of Oil, al-Alaq was appointed chairman of the Joint Anti-Corruption Council in 2006. There, he worked in collaboration with US officials while also working as Secretary General for the Council of Ministers under Maliki’s government. The skills developed in engaging these two constituencies—American officialdom and local power brokers—proved of great use when al-Alaq moved to the central bank. In enforcing financial sanctions, handling fraud monitoring, and delivering price stability, the central banker won a number of allies in Washington. In enabling expansionary fiscal policies via deficit financing and juicing local credit markets (in the latter case, by establishing refinancing facilities and lowering the benchmark interest rate from 7,5% to 5%), al-Alaq kept relevant stakeholders happy at home, too. Likewise, recent moves toward directing credit allocation have served to secure buy-in from the major power brokers of post-ISIS Iraq.
The CBI’s growing “developmental” role
Pretenses toward developmentalism notwithstanding, recent CBI interventions in credit markets have largely been undertaken with an eye on the built environment. Critical here were two lending initiatives—combined capitalized at eight trillion Iraqi dinar in 2015—notionally meant to support non-oil sectors. The first provided subsidized loans through commercial banks to small and medium enterprises (SMEs) “engaged in manufacturing, agriculture, and other high-growth sectors”16. In actuality, though, 83% of the allocated credit wound up concentrating in the residential real estate sector, with just 9% making its way to industry (and but 1% to agriculturalists). The second provided subsidized credit to state-owned commercial banks with an eye on boosting lending to the real (i.e. productive) economy. As breakdown of the CBI’s financial flows as of 2023 reveal, however, a large majority of the liquidity injected wound up again designated for real estate: Of the 12,6 trillion dinars allocated in 2023 through this program, 96% went to the state-owned Real Estate Bank and Iraqi Housing Fund, with 3% accruing to the Industrial Bank and less than 1% to the Agricultural Bank and Al Rasheed Bank17.
By often fostering luxury-oriented real estate speculation, the CBI’s activist turn has produced material, social, and political effects. At the highest level of abstraction, the CBI’s policies have helped turn Baghdad’s built environment into a device for capital accumulation and transnational coalition-building. This process has been expedited by the profits available in real estate development. The latter is not only be attributed to the CBI, of course. Other high-level state investments and public-private partnerships have pushed in this direction as well.18 So too have domestic and regional politics19, cheap labour costs—fueled by youth unemployment amid demographic pressure—and a weak regulatory environment. The need of Iraq’s elites for a store of wealth—for a place where sizable holdings of surplus capital could be deployed and appreciated—has clearly factored in the spiking profit rates available in property development as well, as have internal migrations and tourism development in Baghdad. But in directing credit in the manner it has, the CBI has nevertheless played an outsized role in supercharging the construction of high-end residential apartment complexes across Baghdad’s sprawl.20
Profit and Power in Baghdad’s Construction Boom
An interlocutor interviewed in early 2025, a Baghdad-based businessman, recounted quite clearly how real estate investment has come to the forefront of Iraq’s political economy: “It’s quite simple, I’ll tell you. The absence of stringent regulations lets us generate profits impossible abroad. That is why many Iraqi elites—those that don’t know how to work outside of Iraq, those reliant on political and local networks of solidarity and influence from which they benefit here, those that don’t know how to do business abroad—have constantly failed to develop ventures overseas. They eventually return here to seek new capital accumulation. Also, they want to to replicate lifestyles experienced abroad. [Do you think about the Gulf model?] The Gulf, certainly. Their aim is to preserve and secure that elite lifestyle here in Baghdad. You know, it’s not something you want to lose when it contrasts so much with the hardships you experienced in the past.” Expectantly, foreign parties, whether companies or financiers, have taken note of the profits that can be had in post-ISIS Iraq. Overseeing the planned makeover of the symbolic Turkish Restaurant of Tahrir’s square, for instance, is Italy’s GKSD Holding. The building redesign, of which GKSD Holding is part, epitomizes well the political economy of contemporary Iraq and finance’s rising role therein, as the project is to transform the building into a modern luxurious private hospital complex. The airport refurbishment also speaks of this trend.21 There, state and private banks have signaled Iraq’s standing as gateway for Chinese, Turkish, Iranian, Western and Arab investors and economic partners. The main lounge, a space of socialisation and a hub for business networking, was funded by the International Development Bank, a major Iraqi commercial bank, whose group ZK Holding is based in the United Arab Emirates (UAE). The social space—reserved for travelers of significant means alone— suggests Iraq may, through its new development turn, wind up embedded within circuits of accumulation dominated by GCC monarchies.
Conclusion: Baghdad’s emerging financialisation
The new Central Bank of Iraq tower stands not just as a symbol of progress and as a hub for finance development in the country, but as the embodiment of Iraq’s enduring underlying political struggles and aspirations. Indeed, the reality is that the CBI functions less as a technocratic institution than as an intermediary of power, one balancing US and IFI expectations against the demands of local power brokers.
Materially, the CBI’s policies have disproportionately amplified speculative investments in urban real estate. This distributional pattern reinforces a state-backed capital allocation model that sustains accumulation for elites at the expense of economic diversification. It speaks, moreover, to a recalibration of Iraqi rentierism. Empowered and emboldened, the CBI is now at the heart of efforts to streamline accumulation, stabilize political power, absorb fiscal socks, and manage dissent.
This publication has been supported by the Rosa-Luxemburg-Stiftung. The positions expressed herein do not necessarily reflect the views of Rosa-Luxemburg-Stiftung.
1Michelle Woodward, ‘The Enduring Lessons of the Iraq Sanctions’, MERIP, 15 June 2020.
2Irene Costantini, ‘Statebuilding and Foreign Direct Investment: The Case of Post-2003 Iraq’, International Peacekeeping, 20.3 (2013), pp. 263–79 (p. 266.); Yousef K. Baker, ‘Global Capitalism and Iraq: The Making of a Neoliberal State’, International Review of Modern Sociology, 40.2 (2014), pp. 121–48.
3“There was widespread hope that the Central Bank and Iraq’s financial institutions would spearhead a transformation, one rooted in modern banking laws, institutional independence, and integration with global standards. […]. [Since ] Prime Minister Mohammed Shia al-Sudani came to power in late 2022, a new reform narrative has emerged, prioritizing financial and economic overhaul. In this context, the Central Bank was tasked with playing an instrumental role in restoring macroeconomic balance and institutional credibility.” in “Reforming Iraq’s Financial System: The role of the Central Bank”, Middle East Research Institute (MERI), Erbil, 2025.
4Saleh Mahood Salman, CBI’s director general of administration, says that the tower is “an “architectural statement about the bank’s role in the Iraqi economy.” ‘Iraq’s $772m Central Bank HQ Project on Track’, Trade Arabia, 12 May 2019 and the governor of the CBI, Ali Mushen Al-Allaq assert that the “banking sector reform [is their] top priority” Chloe Domat, ‘Pursuing Reform: Q&A With Iraq’s Central Bank Governor Ali Muhsen Al-Allaq’, Global Finance Magazine, 10 October 2024.
5These buildings, like the Beeah group headquarters in Sharjah or the Grand Théâtre of Rabat, weave a map of burgeoning offers that her office started receiving from various “Arab power brokers” on the eave of the Arab spring. Joseph Giovannini, ‘Architect Zaha Hadid’s Dreams Rise in the Desert’, Vanity Fair, 19 November 2021.
6Robin Beaumont, ‘Irak, l’État captif’, Questions internationales, 103104.2 (2020), pp. 104–09.
7Renad Mansour, Iraq After the Fall of ISIS: The Struggle for the State – Kalam (Chatham House, 4 July 2017), p. 33.
8Robin Beaumont, ‘L’Irak, ou la Résistance « désaxée »’, Orient XXI, 6 January 2025.
9Pete W. Moore, ‘Making Big Money on Iraq’, Middle East Report, no. 252 (2009), pp. 22–29.
10See “Table 1. Iraq: Selected Economic and Financial Indicators, 2020–29” in Iraq: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Iraq, IMF Country Report (International Monetary Fund), p. 24.
11World Bank Group, “Reemerging Pressures – Iraq’s Recovery at Risk”, Iraq Economic Monitor, 2023, p. 12.
12‘Twilight of the Tigris: Iraq’s Mighty River Drying up’, Arab News, 20 September 2022.
13One can note that the main contractor handling its construction is the Azebaijan-based company DAAX Construction. The company began as a 50-50 joint venture with the UAE’s DIA Holding FZCO and has worked on large PPP projects in Azerbaijan, Turkey and Kurdistan Region of Iraq. DAAX is also a member of the Iraq Britain Business Council, a key institution that brings together firms shaping the expanding Iraqi private business landscape and networks.
14“Rising from the sloping banks of the Tigris River in Baghdad, the design for the headquarters of the Central Bank of Iraq (CBI) conveys the core values at the heart of the institution: Solidity, Stability and Sustainability.”. “Central Bank of Iraq” – Architecture – Zaha Hadid Architects, 2012.
15David S. Cloud, ‘WSJ News Exclusive | U.S. Bans 14 Iraqi Banks in Crackdown on Iran Dollar Trade’, Wall Street Journal, 19 July 2023; Maha El Dahan, Ahmed Rasheed, ‘Exclusive: Five Iraqi Banks to Be Banned from US Dollar Transactions’, Reuters, 16 February 2025.
16Central Bank of Iraq, The National Strategy for Bank Lending in Iraq, 2023, pp. 23-24.
17Central Bank of Iraq, Annual Economic Report, 2023, pp 52-53.
18Projects being built by Modon Real Estate Development—a subsidiary of Dubai’s Al Handal International Group (HIG)–testifies well to this development. Today, Modon’s activities span from the Gulf and Turkey to Japan. In Baghdad, it has enjoyed the spoils of PPP projects like the $6,5 billion Medinat al Mustaqbal (City of the Future), where Bloom Holding a company of the Abu Dhabi based investment company National Holding is also staked.
19Beaumont, ‘L’Irak, ou la Résistance « désaxée »’.
20“In his interview, Mr. Hardan praised the pioneering role of government agencies and institutions in supporting and encouraging investments in overcoming difficulties, most notably The Central Bank of Iraq, National Investment Commission and Baghdad Investment Commission.” “Modon” awarded best real estate developer in Iraq”, Al Handal, 2022.
21‘IFC Signs PPP Agreement to Modernize Baghdad Airport, Ushering in New Era of Public-Private Cooperation’, International Finance Corporation, 2023.