ERBIL, Kurdistan Region - The United Kingdom and Iraq are set to significantly expand their trade relationship following the signing of a “historic” trade package worth £12.3 billion (approximately $16.6 billion) in January, which is expected to substantially boost their current trade volume of £1.1 billion (around $1.5 billion), a senior trade official at the British Embassy in Baghdad told Rudaw.
Lara Hampshire, the UK Director of Trade in Iraq at the British Embassy, recounted in a Wednesday interview that the landmark trade package was announced during Iraqi Prime Minister Mohammed Shia’ al-Sudani’s visit to London earlier this year.
“This package covers a wide range of sectors, including telecommunications, large infrastructure projects, defense and security, and more,” Hampshire said, also highlighting British companies’ “long and successful” history in Iraq’s oil sector.
She further emphasized key areas where Iraq could benefit from UK expertise, particularly sustainable infrastructure development focused on power generation and transmission.
"We all see in the summer, there's, you know, it's a challenge," Hampshire said, referring to Iraq's power shortages, adding that other promising sectors include “healthcare, high-quality medications, and defense and security capabilities.”
The senior British Embassy trade official also highlighted the UK’s important ties with the Kurdistan Region, highlighting the “trade priorities paper” signed with the Kurdistan Regional Government (KRG) in September 2024, which identifies key sectors for cooperation such as health, agriculture, green technology, and civil defense.
One notable success story in the Kurdistan Region, according to Hampshire, is in education. The establishment of institutions like the British International University in Erbil demonstrates the “quality of the British offer” and a “real appetite for British education standards,” in the Region.
Below is the full transcript of the interview with Lara Hampshire.
Rudaw: How would you assess the current trade ties between the United Kingdom and Iraq?
Lara Hampshire: Thank you very much for that question. So, currently, as trade stands between the UK and Iraq, we're at 1.1 billion pounds [around $1.5 billion]. But I should say that there are plenty of opportunities for this to grow further, and I'm really excited for the ambition, aspirations that we have for this to go even higher.
How would you assess the current volume and trends in trade between the UK and Iraq?
So, currently the volume, as I mentioned, is 1.1 billion [around $1.5 billion], but earlier this year, we had a flagship announcement, which was historic between Iraq and the UK. Iraq's Prime Minister, His Excellency [Mohammed Shia’] al-Sudani visited London in January and between the two governments, there was a trade package worth 12.3 billion pounds [around $16.6 billion] worth of exports announced across a whole range of sectors, and I think that really highlights that there are so many opportunities for us to boost that number in the years ahead, and there's real excitement and momentum from UK companies who are looking at these sorts of announcements and seeing that actually there are opportunities to do more here in Iraq, and of course, our embassy has a role to play in supporting those companies as they navigate how to do business here, how they work out the landscape, whether that be regulatory, which can sometimes be quite complex, or even just how to engage with the ministries here.
So, as I said, I think it's very exciting, I think there's a lot more that can be done, and we strongly believe in the UK offer, what UK companies have both in terms of their quality, but also their long-term ambition in overseas markets.
What are the main sectors currently driving UK-Iraq trade, and where do you see the greatest opportunities for growth in the near future?
So, of the 12.3 billion pound [around $16.6 billion] package that I mentioned, this covered a really wide range of sectors, which included things like telecommunications, large infrastructure projects, defense and security sector, and the list goes on. So, there's a really wide scope for these projects and I think there's exciting growth potential across all of these, but particularly we see in sustainable infrastructure development. For example, Iraq's power generation, we all see in the summer, there's, you know, it's a challenge and so we think the UK has something to offer when it comes to power generation and transmission network and enhancing that, but also in enhancing access to high-quality defense and security capabilities, access to healthcare solutions, and high-quality medications.
I think these are all sectors where there's a real chance for our relationship to go from strength to strength and where UK companies have a unique selling point and real expertise and innovative solutions that they can bring. So, these are areas that we're really excited about
Among the sectors you mentioned, which do you consider the most promising for further investment and development?
The package that was announced during our Prime Ministers’ meeting earlier this year was primarily driven by a conversation with the Iraqi government, where they identified key priorities for them, whether that be, as I mentioned, in infrastructure or telecommunications or energy. So, it's a two-way conversation where we are saying we have UK expertise in these areas, and the Iraqi government is saying to us, these are priority projects for us, and it works very well in, you know, if I can use the analogy of matchmaking, we're meeting needs with UK innovation, UK solutions, and it is not limited to one particular sector. So, I think, you know, those opportunities are there.
The support that the UK government offers, which I think really helps in a market like Iraq, is through UK Export Finance. That's our leading export credit agency. So, that provides guarantees and loans and insurance underwriting these projects, which gives companies confidence when they're entering a new market. So, I think these investments with the backing of UK Export Finance have real potential.
Do you believe the oil sector holds the greatest potential for growth in terms of future involvement by UK companies?
Yes, I think absolutely, and I think, you know, ultimately, investment when it works well is about meeting the needs and demands of a population, and I think where Iraq is at the moment in its economy and what the government is trying to achieve and deliver on is things like big infrastructure projects, whether that be in water treatment or whether that be in updating the electrical grid. You know, these are things that really matter to people, and these are areas where we think the UK can bring private companies to bring solutions and goods and services to meet these needs. So, I think that, you know, as you mentioned, the investment opportunity is very much there.
British companies, such as oil giant BP, have been involved in major energy projects in Iraq, including in oil-rich areas like Kirkuk. How does the UK support inclusive engagement in these projects across all regions of Iraq?
That's a great question. So, the UK government is always looking for ways to help expand UK export and business opportunities overseas, and in Iraq - that's both in federal Iraq and the [Kurdistan Region of Iraq] KRI - and as I mentioned, we have a role to highlight the quality of the UK offer across diverse sectors.
And so, our focus is on engaging businesses and understanding where there are complexities and challenges that we can help them navigate in terms of ease of doing business, whether that be regulatory, whether that be kind of bureaucratic processes, which, quite frankly, can sometimes be a little bit confusing, particularly for small and medium-sized UK companies who don't have a lot of resources to try and unpick some of these challenges in the new market. The UK government is here to support them and help them navigate that.
But it goes two ways as well. So, where we understand that there are barriers to entering a market, we engage closely with the government of Iraq and its ministries - relevant ministries - to try and see if there are ways that we can work together to bring down those regulatory barriers or bring down those processes that make it more difficult for international companies to enter the market and to flourish here. Ultimately, it's in both economies' interests for it to be easy to do business. So, whatever we can do as a government to support that process, whether it be on the business side or on lobbying the government, there's a key role to play there.
One other thing I would just touch on, which I have mentioned, is UK Export Finance, which is the UK's export credit agency. That provides a lot of reassurances for companies who want to enter the market here to know that their investments and the capital that they're spending is protected. So, that's another facility that provides support for UK companies wanting to work here, and that's something that's not just available here in Iraq. It's available all over the world and it's a great offering for companies.
Given the UK's expertise in finance and banking, how does the UK plan to support its financial institutions in establishing operations and investment channels in Iraq?
It's a good question, and I would say this is still a fairly nascent sector, so there is still a lot of work for us to do to understand the financial and banking sector here in Iraq to understand where some of those collaborations might lie, and also to generate interest from UK banks, UK institutions.
As I say, I think that process is still quite early. So, we're engaging. Recently, the ambassador met with leaders in the financial services sector to hear what the challenges and opportunities are and where we might be able to encourage future opportunities. So, I think we're still in early processes. I think a lot of it is about ensuring that the regulatory standards here in those sectors are enough to attract Western corporations and companies, particularly in the banking sector, where there's very high compliance standards, particularly in the UK, and being able to ensure that there's consistency across the board.
So, that's something that we work both with the private institutions, but also institutions like the [Central Bank of Iraq] CBI, for example, and ministries to see where those changes can be made to ultimately facilitate greater collaboration in that sector.
How would you assess the current state of business and investment relations between the UK and the Kurdistan Region?
I think it's important. Our relationship with the KRI, when it comes to trade, is very important and because of that, we have spent a lot of time trying to see where the main sectors of overlap are.
So, very excitingly, late last year, we signed a trade priorities paper with the [Kurdistan Regional Government] KRG, which set out the key industries where we see that there are potential projects. And the purpose of this paper was really to focus our attention and draw us to a few sectors. So, the four strategic sectors that were identified are in health, agriculture, green tech, and civil defense, and the purpose of creating a list is so that we can come up with very strategic projects that are high ambition, and where we begin to see successes in these sectors, more and more businesses will want to come to the KRI.
So, we would really love to see the KRG bring a number of high-quality, high-value, high-ambition projects to the table for us to scope out where we can bring UK companies and provide solutions in those sectors. I think the relationship is strong. There is scope for it to be stronger, and as we do with companies interested in working in federal Iraq, we provide plenty of support to those operating and wanting to enter KRI as well as a market.
Are there specific sectors in the Kurdistan Region that are particularly attractive for UK investment? Could you highlight any success stories that exemplify this potential?
Yes, I mean, beside the four sectors that I mentioned that are agreed upon in the trade priorities paper, one sector where we've had particular UK success and the UK companies have contributed a lot is in the education space, where they've really showcased the quality of their offer. And, you know, there's a real appetite for British education standards. So, a big success in this, for example, is the British International University, which is backed by the University of London, providing education for many of KRI's young population and future leaders and the future generation. And we think this is really exciting. It's gone very well, and I think because of the success in this sector, more and more UK educational institutions will see that it's possible and will have an interest. So, this is just one other sector, I think, where there's potential for further collaboration, and that is already going very well.
How does the UK government assess and support the role of BP in Iraq's energy sector, particularly regarding its involvement in renewable energy initiatives?
So, as you've mentioned, BP, they are a company who are hugely successful here in Iraq and have been here for a very long time. But what I would say is the UK's policy as of March 2021 is that we are not involved with any fossil fuel commercial discussions. So, we have a policy that dictates that we can't be involved in these sorts of negotiations. So, when it comes to BP's work here in fossil fuels, that's not something that we're involved in. We aren't involved in discussions or negotiations, and that's not something that we've provided support on. And as a UK government, we don't dictate to UK companies how they operate or what kind of business ventures they undertake. So, we've not been involved in that process. We do understand that there have been some concerns from KRG in this process, but as I said, we haven't played a role in the talks, and we've encouraged parties to ensure that they're talking to all relevant stakeholders.
What advice would you offer to investors from the UK and the Kurdistan Region? How suitable is the investment environment in the Kurdistan Region for UK companies?
So, look, I think there's been a lot of change in Iraq - both in KRI and also in federal Iraq - over the last few years, particularly when it comes to things like security, which foreign companies looking to invest in a market will take seriously, will consider. Clearly, the security situation now is very different to what it was many years ago. So, the concerns that companies used to have, the nature of those concerns are changing, and I think as an embassy, we can provide reassurance of what the situation on the ground is. We can provide kind of information on the opportunities that are available. We can facilitate some of those conversations between interested companies and the KRG or the government in federal Iraq, and I think that facilitation, enabling those conversations to understand what the needs are and what the scopes of projects might be and what goods and services UK companies can provide, that's what we do here, and that has yielded success. So, what I would say to investors who are interested in this market is do come, build relationships. Relationships are absolutely crucial. Come and see what is available, come and meet the ministries, come and understand what the needs are and begin a conversation and I think that is where we see the most success, where companies have invested time in building those relationships to then enter the market as smoothly as possible.
