Mutual Economic Interdependence or Economic Imbalance: Turkish Private Sector Presence in the Kurdistan Region of Iraq

Abstract

This article concentrates on the deepening of Ankara-Erbil relations, with a specific focus on the presence of the Turkish private sector in the Kurdistan Region of Iraq (KRI) between 2004 and 2014. During that period, the Kurdistan Regional Government (KRG) failed to implement important structural reforms to diversify the economy and ensure economic stability. The absence of a strong local private sector, independent from government-led economic activity, hindered the potential for the region to become completely self-reliant. Due to the liberal economic framework and insufficient government capacity to oversee private sector operations, foreign corporations could operate in the area without deliberately contributing to the long-term socioeconomic development of the KRI. For the viability of South Kurdistan, the KRG must require foreign corporations operating in the KRI to move beyond simple ‘do no harm’ approaches and actively engage in conflict sensitive practices including inclusive business practices, sustainable human resource management, environmental sustainability, human capital development, and social investments.