Iraq has the world's fourth-largest oil reserves. Despite security improvement in the recent years, the political situation in Iraq remains highly unstable and the economic policymaking is constrained by the weakness of central government control. The government’s primary aims are to continue expanding the oil sector and to improve the implementation of projects to upgrade basic services, such as electricity, water and housing.
Iraq’s manufacturing activity has been closely connected to the oil industry. The major industries in that category have been petroleum refining and the manufacture of chemicals and fertilizers. Since 2003, security problems have blocked efforts to establish new enterprises. The construction industry is an exception; it has benefited from the need to rebuild after Iraq’s several wars.
Exports are expected to largely track changes in oil production. Production in recent years was disrupted by security concerns, international trade embargos and export infrastructure straining under the capacity of higher oil output. Iraq relies heavily on imports for consumer goods and capital inputs. The main export partners include U.S, India, Italy, South Korea, Taiwan, China, and the Netherlands.
Given its oil potential Iraq seeks a larger role in Organization of the Petroleum Exporting Countries (OPEC) and to strengthen its ties with its Arab neighbours. It is a member of the League of Arab States and the Great Arab Free Trade Agreement. In 20013, Iraq ratified a Trade and Investment Framework Agreement (TIFA) and Partnership and Cooperation Agreement with the European Union in 2012.