Policy paper

UK–Iraq development partnership summary, July 2023

Published 17 July 2023

Introduction

The Strategy for International Development (IDS) places development at the heart of the UK’s foreign policy. It sets out a new approach to development, anchored in patient, long-term partnerships tailored to the needs of the countries we work with, built on mutual accountability and transparency. This approach goes beyond aid and brings the combined power of the UK’s global economic, scientific, security and diplomatic strengths to our development partnerships. Our 4 priorities are to: deliver honest, reliable investment; provide women and girls with the freedom they need to succeed; step up our life-saving humanitarian work; and take forward our work on climate change, nature and global health. The Integrated Review Refresh (IR23) reiterates that sustainable development is central to UK foreign policy and sets out how the UK will go further and faster on development to reduce poverty and reinvigorate progress towards the SDGs. This Country Development Partnership Summary details how the IDS and IR23 will be put into practice with Iraq.

Country context

Iraq is shaped by decades of conflict, regional interference, and poor governance. Whilst Daesh was territorially defeated in 2017, many issues that led to its rise remain unresolved. Poverty is on the rise; 2.4 million Iraqis remain in acute humanitarian need and 1.2 million remain internally displaced. Human rights indexes continue to decline, including specifically for women and girls (166th from 170 countries globally – Women, Peace and Security Index). Despite its upper middle-income status, Iraq lags its regional neighbours, Lebanon, Jordan and the Occupied Palestinian Territories (OPTs), in development indicators, including on health, education and GNI per capita (UNDP Human Development Index 2021). Iraqi migrants are in the top 3 arrivals from small boat crossings to the UK for 2022. Iraq’s economic situation is now the biggest risk to its long-term stability. Iraq’s economy heavily relies on oil exports which, according to the International Monetary Fund (IMF), in 2022 constituted 55% of Iraq’s GDP, 95% of government revenue and 94% of total exports. Iraq’s economy was bolstered last year by high oil prices, but growth is now expected to slow from 4.2% in 2023 to 2.2% in 2027. Iraq’s economy faces additional structural issues: a bloated and ineffective public sector, poor basic services and endemic corruption have hindered government reconstruction efforts and investment in human capital and pose a future stability risk.

At the same time Iraq’s underdeveloped private sector stifles growth and opportunities for young Iraqis (Iraq is ranked 172nd out of 190 countries in the World Bank Doing Business Index). Rapid population growth of c1.255 million per annum increases the labour market by approximately 300,000 every year; with limited hope for young Iraqis of finding suitable jobs. Iraq will struggle to provide jobs and services as global demand for hydrocarbons falls.

In parallel, the worsening effects of climate change and environmental degradation are beginning to be felt. Climbing annual temperatures, worsening sandstorms, rising desertification and increasing salination are increasing the strain on Iraq’s already fragile basic services, and hastening the decline of Iraq’s agricultural sector and rural communities. Water is increasingly becoming a major challenge for Iraq, both in terms of the quantity flowing from upstream neighbours and highly inefficient domestic usage. Young, poor and marginalised Iraqis will increasingly experience the worst effects of climate change risking further unrest, political instability and displacement of people.

Our development portfolio targets key drivers of instability, including economic fragility, climate vulnerability, population growth and displacement. Our Conflict, Stability and Security Fund (CSSF) ODA portfolio also tackles key drivers of instability and aims to support a more accountable, capable and inclusive Iraqi state that is better able to meet the needs of its people. Whilst modest compared to other donors, the portfolio is designed to:

• use small investments to deliver policy change through trialling new approaches
• thought leadership and technical support to the Government of Iraq (GoI)
• leverage greater financial and political commitments from the GoI and wider international community

In 2021, the UK and Iraq signed a Strategic Partnership which covered cooperation in economy, education, culture, science, law enforcement, human rights and military and security. The second UK-Iraq Strategic Dialogue held in July 2023 reaffirmed our ambition to work together for our shared national, regional and global interests. Our work is underpinned by other plans as well for Iraq including Iraq Vision 2030, Iraq’s International Humanitarian Response Plan, GoI’s National Family Planning Strategy, Iraq’s Women, Peace, and Security (WPS) National Action Plan (NAP) (2021), Iraq’s COP27 Nationally Determined Contributions (NDCs) and Iraq National Climate Conference recommendations. Iraq is currently drafting its COP28 Road Map which will shape our engagement on climate change going forward.

Previous development achievements include: support to large-scale technical assistance to GoI on financial sector, social safety nets, business regulations, and other reforms. The UK contributed over £400 million in humanitarian and stabilisation assistance to those in areas affected by the Daesh conflict. This helped support over 200,000 people with food assistance, over 4.2 million people with healthcare and 690,000 people with safe drinking water, toilet, and shower facilities. The UK has provided approximately £32 million through UNDP’s Funding Facility for Stabilisation (FFS) to rehabilitate infrastructure damaged by Daesh including homes, health centres, schools, and core infrastructure (water, electricity and sewage systems) in 5 governorates. We supported the government’s national family planning strategy and are now providing technical support to the Ministry of Health to develop the national family planning costed action plan to deliver this strategy. Over 16,000 young people have been reached with life-skills education integrated with family planning and reproductive health rights and gender-based violence prevention (including messages around the negative consequences of child marriage). We have helped introduce a national enrolment strategy, quality assurance and performance management system across all 30,000 Iraqi state schools. We supported engagement on climate change with Iraq, which led to their accession to the Paris Agreement at COP26, and have continued to engage throughout COP27 and up to COP28. We established support to 19 Iraqi/Kurdish women’s rights organisations to help women play a fuller role in society. With UK support, a Yazidi Survivors Law was passed, a Directorate established, and funding agreed.

The UK was at the forefront of the response to the Daesh conflict in Iraq (2014 to 2017), playing a leading role in the Global Coalition’s fight against Daesh, and providing humanitarian and stabilisation assistance.

Why and how: the UK’s development offer

The UK wants to see a more stable, peaceful and prosperous Iraq. A country which can reach its potential and improve the lives of its people. The UK will support this through partnership with Iraq to counter threats and foster stability and development, while promoting UK interests and values. The UK’s development offer is a core component of the UK-Iraq partnership.

Almost 7 years on from the conflict, our development approach has transitioned to supporting the GoI in delivering the necessary reform and policy change to tackle the range of challenges facing the country and unlock Iraq’s full potential.

Unlike other donors, the UK has significant technical expertise in country. Together with our programmes, this has ensured that the GoI sees the UK as the lead international partner on economic reform and climate and makes us highly influential in the other areas. Working in partnership with the GoI, international community, finance institutions and national and local partners, this approach is aligned with our Middle East and North Africa (MENA) policy under the IDS which aims to unleash the potential of people in middle-income countries and support societies by building resilient, self-reliant economies through lasting economic and social reform. This is delivered in Iraq through the 4 IDS priority areas:

Better economic management and investment

Working with the G7, World Bank and IMF, the UK’s objective is a more inclusive and diversified economy in Iraq. We support a strengthened independent and accountable Iraqi state by improving economic management and governance - for example reducing the barriers limiting the private sector (eg difficulties accessing finance, a challenging regulatory environment), which helps create private sector jobs, especially for youth and women, and attract investment. The UK’s development approach works collaboratively with the UK’s Department for Business and Trade (DBT) and supports trade and investment into Iraq by helping to improve Iraq’s business environment and the ease of doing business in Iraq.

Increased climate resilience

The UK is supporting GoI leadership on climate change and helping improve capacity for gender-responsive climate mitigation, adaption and an energy transition. The UK is exploring greater Gulf development cooperation in Iraq, to support long term climate resilient economic growth, ensuring better national and international collaboration, coordination, and financial support.

Improved rights and freedoms

The UK is promoting an environment where all Iraq’s people can thrive. That means protecting minorities, securing other basic rights such as freedom of expression, enhancing political participation and empowering women and girls. The UK is supporting women and girls through funding grassroots women’s rights organisations, supporting inclusive and quality education, focussed on disadvantaged communities and improving access to family planning and sexual and reproductive health services.

Humanitarian assistance and durable solutions

Building on the UK’s humanitarian support, and working closely with the GoI, international community and the UN, the UK is supporting the return and reintegration of 1.2 million displaced Iraqis, supporting IDPs and returnees from across Iraq and Northeast Syria to help reduce Iraqi vulnerability to underlying drivers of instability and conflict.

The UK’s work in Iraq is helping drive progress on the Sustainable Development Goals (SDGs) and supports Iraq Vision 2030. The UK’s economic reform and investment initiatives supports the SDGs on decent work and economic growth (8). CSSF, development programming and our diplomatic work contribute to the SDGs on peace, justice and strong institutions (16) and climate action (13). The British Council in Iraq lead the UK’s contribution to quality education (SDG 4). We promote gender equality (SDG 5) throughout our work.

Who we work with

The UK works closely with the GoI (including Prime Minister’s Office, Ministries of Finance, Planning, Health, Environment, Water Resources, Oil, Electricity, Migration and Displacement and Education), UN field missions (UNAMI and UNITAD) and agencies (eg UNDP, UNFPA, IOM, UNHCR), Iraqi civil society (including local women’s rights organisations), International non-governmental organisations (Cordaid International and IRC) and private sector partners. The World Bank, IMF and the G7 are key partners, including as part of the Iraq Economic Contact Group, set up by the UK, to support Iraq on its economic reform priorities.

We continue to work closely and coherently with our partners and combine our modest yet strategic ODA funding with UK development expertise (eg on climate, economy, and conflict) and our diplomatic, security, and commercial work. Together this enables us to influence and leverage greater financial and political commitments from the GoI, International Finance Institutions and the wider international community. The GoI priorities closely align with the UK’s. For example, the Iraqis are increasingly linking climate action to economic reform. Our development expertise and political partnership is highly valued by the GoI and other partners.

Key programs in 2023 to 2024

Iraq Catalytic Economic Diversification Programme (ICED)

This programme promotes economic reform and reduces barriers to investment, thereby improving job opportunities for the rapidly growing population; it provides economic space for increased investment in basic services.

Building Peace and Stability in Iraq (BPSI)

This programme supports the effective return and reintegration of Internally Displaced People (IDPs) into local communities, including Iraqis returning from North-east Syria, with a focus on female headed households.

Demographic Transition in Iraq Programme (DTIP)

This programme supports women and girls’ empowerment by helping to deliver family planning services and promoting choice for women and girls around their reproductive and health rights.

Catalytic Climate Action in Iraq

This programme supports Iraq’s Nationally Determined Contribution (NDC) implementation, trans-boundary water negotiations and energy transition.

CSSF Technical Assistance Fund for Iraq (TAFFI)

This programme provides small-scale, catalytic technical assistance to support GoI service delivery and build resilience, that help address underlying drivers of instability.

CSSF Women’s Voices First (WFV)

This programme supports local women’s rights organisations to deliver on self-identified community priorities through service provision, policy and advocacy in Iraq.

CSSF Encouraging Political Pluralism Through Youth Mobilisation and Issue-Based Advocacy

This programme helps to foster broader participation in Iraqi political life by a wider section of society.

FCDO centrally-led programmes

FCDO centrally led programmes reinforce country objectives and include: IFC’s Global SME finance facility to support funding for small and medium size enterprises, Climate and Environment ‘PHENOMENAL’ Programme (MENA regional), the UK Cultural Protection Fund (delivered through British Council) and Preventing Sexual Violence in Conflict Initiative (global programme) which supports Yazidi’s Survivors Law project in Iraq.

Agility and flexibility

Our modest ODA portfolio is supported by UK technical expertise. It is agile and coherent enabling us to flex and adapt as local context and FCDO and His Majesty’s government priorities evolve.

Monitoring

Programmes are monitored regularly in year and through annual and project completion reviews. Third Party Monitoring, incorporated into some programmes, strengthens assurance and supports learning and evidence.

British Council

The British Council leads the Capacity Building Programme in Primary and Secondary Education working to improve access, inclusion and quality of school education in Iraq. It provides particular support for girls’ education and greater inclusion for children with disabilities in all 30,000 state schools across Iraq. The Education Cannot Wait (ECW) initiative with Save the Children supports around 200,000 marginalised and out-of-school children, particularly girls from displaced communities who live in the Kurdistan Region of Iraq (KRI). British Council also provides further developmental assistance through its portfolio of grant-funded programmes on English teaching within the education system, on arts and culture partnerships which support cultural heritage and the creative economy and on non-formal education with a focus on youth leadership for civic engagement.

Financial information

Initial allocations have been set internally to deliver the priorities set out in the International Development Strategy (May 2022) and the Integrated Review Refresh 2023, based on the FCDO’s Spending Review 2021 settlement.

The department’s spending plans for the period 2022 to 2023 to 2024 to 2025 have been revisited to ensure HM Government continues to spend around 0.5% of Gross National Income (GNI) on ODA. This was in the context of the significant and unexpected costs incurred to support the people of Ukraine and Afghanistan escape oppression and conflict and find refuge in the UK, and others seeking asylum. The government provided additional resources of £1 billion in 2022 to 2023 and £1.5 billion in 2023 to 2024 to help meet these unanticipated costs. The Government remains committed to returning ODA spending to 0.7% of GNI when the fiscal situation allows, in line with the approach confirmed by the House of Commons in July 2021.

The country development partnership summaries include the breakdown of programme budgets allocated to individual countries for 2023 to 2024 and 2024 to 2025. These allocations are indicative and subject to revision as, by its nature, the department’s work is dynamic. Programme allocations are continually reviewed to respond to changing global needs, including humanitarian crises, fluctuations in GNI and other ODA allocation decisions.

It should be noted that these figures do not reflect the full range of UK ODA spending in these individual countries as they do not include spend delivered via core contributions to multilateral organisations, or regional programmes delivered by the FCDO’s central departments. Other UK Government departments also spend a large amount of ODA overseas. Details of ODA spent by other UK government departments can be found in their annual report and accounts and the Statistics for International Development.

Figure 1. Bilateral ODA 2023 to 2024: women and girls, 35%; climate, 31%; British International Investment, 19%; humanitarian, 15%; other, 0%.

Of bilateral ODA programmes in Iraq in 2022 to 2023, 50% was marked as being principally or significantly focused on promoting gender equality and 25% was marked as being principally or significantly focused on disability inclusion.

FCDO Official Development Assistance allocation

Allocated ODA budget for financial year 2023 to 2024	Indicative ODA budget for financial year 2024 to 2025
Bilateral ODA £6.5 million	Bilateral ODA allocations are indicative for 2024 to 2025. The Iraq ODA allocation will be reviewed later in the year.

Supporting information sources

• British Embassy Baghdad
• Iraq DevTracker
• D-portal.org