What’s Next as Iraq Moves to End Deadlock?

Abdul Latif Rashid takes his oath of office in front of Iraqi lawmakers in Baghdad, Iraq, October 13, 2022. (Iraqi Parliament Media Office/Handout via Reuters)
Abdul Latif Rashid takes his oath of office in front of Iraqi lawmakers in Baghdad, Iraq, October 13, 2022. (Iraqi Parliament Media Office/Handout via Reuters)
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What’s Next as Iraq Moves to End Deadlock?

Abdul Latif Rashid takes his oath of office in front of Iraqi lawmakers in Baghdad, Iraq, October 13, 2022. (Iraqi Parliament Media Office/Handout via Reuters)
Abdul Latif Rashid takes his oath of office in front of Iraqi lawmakers in Baghdad, Iraq, October 13, 2022. (Iraqi Parliament Media Office/Handout via Reuters)

Iraqi lawmakers have elected a new president who swiftly named a prime minister in the hope of ending a year of political gridlock and deadly violence.

But major challenges lie ahead for the crisis-hit nation.

How will government talks play out?

Iraq's parliament, dominated by the pro-Iran Coordination Framework of Shiite factions, elected on Thursday a new president, 78-year-old Kurdish former minister Abdul Latif Rashid.

The new head of state moved immediately to task Shiite politician Mohammad Shia al-Sudani with forming a government, capping a whole year of deadlock between major parties since Iraq last went to the polls in October 2021.

In multi-ethnic, multi-confessional Iraq, where political alliances and coalitions constantly shift, divisions between feuding factions might resurface and complicate Sudani's efforts in the 30 days afforded to him to form a government capable of commanding a majority in parliament.

In the past, constitutional deadlines have been routinely missed amid protracted political wrangling.

"Once we start discussing who becomes minister, but even more critically who gains more leverage over the senior civil service, government agencies, state coffers -- that's when we will continue to see the fragmentation and stalemate play out," said Renad Mansour of British think-tank Chatham House.

He explained that Iraq is headed for "another power-sharing government", where political parties will "try and divide the country's wealth".

And the stakes are high. A colossal $87 billion in revenues from oil exports are locked up in the central bank's coffers.

The money can help rebuild infrastructure in the war-ravaged country, but it can only be invested after lawmakers approve a state budget presented by the government, once formed.

What will Sadr do?

The future government's hands may be tied by influential Shiite cleric Moqtada Sadr, capable of mobilizing tens of thousands of his supporters with a single tweet.

In June, he had ordered the 73 lawmakers in his bloc to resign, leaving parliament in the hands of the rival Coordination Framework, which now controls 138 out of 329 seats in the legislature.

This pro-Iranian alliance includes the political arm of the former paramilitary Popular Mobilization Forces (PMF), as well as Sadr's longtime rival, former prime minister Nouri al-Maliki.

Political analyst Ali al-Baidar noted the Sadrist movement has kept uncharacteristically "quiet".

It may be that their leader has been "giving the political forces a chance", but it could also be the result of "an agreement offering the movement some" government positions in return for their tacit approval of Sudani's nomination, Baidar said.

Tensions between the two rival Shiite camps boiled over on August 29 when more than 30 Sadr supporters were killed in clashes with Iran-backed factions and the army in Baghdad's Green Zone, which houses government buildings and diplomatic missions.

"It remains a precarious state of affairs," Mansour said.

"Sadr will remain on the margins of the political scene, trying to disrupt and use protests to replace the political capital" he lost in parliament, the researcher added.

Sadr is "hoping to force an early election using controlled instability as he always has, to maintain his power and leverage in negotiations.

"But mistakes in the past few months have... put him in a difficult bargaining position," Mansour continued.

Is there hope for change?

Political analyst Baidar said the "consensus" on Rashid's appointment means a government will be formed relatively easily, but stressed the "colossal tasks" ahead.

Nearly four out of 10 young Iraqis are unemployed and one-third of the oil-rich country's population of 42 million lives in poverty, according to the United Nations.

Prime minister-designate Sudani vowed on Thursday to push through "economic reforms" that would revitalize Iraq's industry, agriculture and private sector.

He also promised to provide young Iraqis "employment opportunities and housing".

According to Baidar, a "growing" global interest in Iraqi politics -- specifically from Washington, Paris and London -- could "force politicians to perform better".

"While Iraq is by no means a poor country, private and partisan interests conspire to divert resources away from critical investment in national development," UN envoy Jeanine Hennis-Plasschaert told the Security Council last week.

"Iraq's political and governance system ignores the needs of the Iraqi people," she charged.

"Pervasive corruption is a major root cause of Iraqi dysfunctionality. And frankly, no leader can claim to be shielded from it."

A pessimistic Mansour said "public life will remain as it is".

"People will still not have their basic rights, water, healthcare, electricity."



What Happens When Russian Gas to Europe Via Ukraine Stops?

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
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What Happens When Russian Gas to Europe Via Ukraine Stops?

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo

Austria's energy company OMV was informed by Gazprom that the Russian gas producer would halt deliveries of natural gas via Ukraine to OMV from 0500 GMT on Nov. 16 following OMV winning an arbitration case. Supplies of Russian gas to Europe via Ukraine may completely stop from Jan. 1 2025 after the current five-year deal expires as Kyiv has refused to negotiate the new terms of the transit with Moscow during the war.
Here is what happens if Russian gas transit via Ukraine is completely turned off and who will be affected most, according to Reuters.
HOW BIG ARE THE VOLUMES?
Russian gas supplies to Europe via Ukraine are relatively small. Russia shipped about 15 billion cubic meters (bcm) of gas via Ukraine in 2023 - only 8% of peak Russian gas flows to Europe via various routes in 2018-2019.
Russia spent half a century building its European gas market share, which at its peak stood at 35%.
Moscow lost its share to rivals such as Norway, the United States and Qatar since the invasion of Ukraine in 2022, prompting the EU to cut its dependence on Russian gas.
EU gas prices rallied in 2022 to record highs after the loss of Russian supplies. The rally won't be repeated given modest volumes and a small number of customers for the remaining volumes, according to EU officials and traders.
UKRAINIAN ROUTE
The Soviet-era Urengoy-Pomary-Uzhgorod pipeline brings gas from Siberia via the town of Sudzha - now under control of Ukrainian military forces - in Russia's Kursk region. It then flows through Ukraine to Slovakia.
In Slovakia, the gas pipeline splits into branches going to the Czech Republic and Austria.
Austria still receives most of its gas via Ukraine, while Russia accounts for around two-thirds of Hungary's gas imports.
Slovakia takes around 3 bcm from energy giant Gazprom per year, also about two-thirds of its needs.
Czech Republic almost completely cut gas imports from the east last year, but has started taking gas from Russia in 2024.
Most other Russian gas routes to Europe are shut including Yamal-Europe via Belarus and Nord Stream under the Baltic.
The only other operational Russian gas pipeline route to Europe is the Blue Stream and TurkStream to Türkiye under the Black Sea. Türkiye sends some Russian gas volumes onward to Europe including to Hungary.
WHY DOES THE UKRAINIAN ROUTE STILL WORK?
While remaining Russian gas transit volumes are small, the issue remains a dilemma for the EU. Many EU members such as France and Germany have said they would not buy Russian gas anymore but the stance of Slovakia, Hungary and Austria, which have closer ties to Moscow, challenges the EU common approach.
The countries, who still receive Russian gas, argue it is the most economic fuel and also blame neighboring EU countries for imposing high transit fees for alternative supplies.
Ukraine still earns $0.8-$1 billion in transit fees from Russian gas transit. Russia earns over $3 billion on sales via Ukraine based on an average gas price of $200 per 1,000 cubic meters, according to Reuters calculations.
Russia's gas pipeline export monopoly Gazprom plunged to a net loss of $7 billion in 2023, its first annual loss since 1999, because of the loss EU's gas markets.
Russia has said it would be ready to extend the transit deal but Kyiv has repeatedly said it won't do it.
Another option is for Gazprom to supply some of the gas via another route, for example via TurkStream, Bulgaria, Serbia or Hungary. However, capacity via these routes is limited.
The EU and Ukraine have also asked Azerbaijan to facilitate discussions with Russia regarding the gas transit deal, an Azeri presidential advisor told Reuters, who declined to give further details.