Iraq's Grand Strategy to Unmask KRG's Customs Revenues and Tightens Grip Over Cross-Border Trade
The Iraqi government is quietly constructing two large facilities where major customs checkpoints, which are nearly ready to operate, will be established—one for the KDP areas and the other for the PUK areas, enabling Iraq to estimate customs revenues from the Kurdistan Region.
From July forward, the flow of trucks at the Ibrahim Khalil border point with Turkey and Haji Omeran with Iran in the KDP zone will be redirected to a major customs checkpoint, set to be built between Nineveh and Duhok. This checkpoint, spanning 14 acres on the banks of the Mosul Dam, will feature ultrasound inspection for trucks. The other is located in the Mahmudiya area near Khanaqin. All goods imported from the Bashmakh and Parwizkhan border crossings with Iran in the PUK zone and bound for Iraq must pass through this facility, where they will also undergo re-inspection and be documented according to the unified Iraqi customs system. The plan dictates that any goods destined for Iraqi cities through Kurdistan border crossings must enter Iraq solely via these two facilities.
Iraq aims to achieve several objectives by establishing these two facilities:
1. Out of the 17 official and unofficial ports in the Kurdistan Region, only four border points, which are official, will be permitted to transport goods from the region to Iraqi cities, dealing a significant blow to trade movement in the Kurdistan region, especially the smuggled goods that have been flooding the Iraqi market and impacting local businesses. After the establishment of these two checkpoints, no goods from Iran and Turkey will enter southern and central Iraq without passing through them. Consequently, the Iraqi government will gain insight into the revenue and customs manifests of the KRG gates, as no cargo will pass through these checkpoints without the manifests from the four official gates of the Kurdistan Region.
2. Through the re-examination of all goods entering Iraq from the four border points, approximately seventy percent of the actual revenue generated at these border points will be revealed, with a particular focus on uncovering the revenue from the Ibrahim Khalil crossing with Turkey.
3. In terms of traffic flow, Kurdish drivers operating at these border points will face significant challenges. For instance, a driver who previously carried cargo from Haji Omeran to any Iraqi city would have delivered their shipment via Erbil to Kirkuk and then proceeded to their intended destination. However, now they will have to go from Erbil to western Duhok, then to Nineveh before heading back to the Kirkuk road en route to central and southern Iraq.
4. Regarding trade, the Iraqi government's plan diminishes the region's importance, which may gradually transform the Kurdistan Region from a commercial hub to an isolated area with only domestic trade remaining, as it would make more sense to import through alternative routes that may be less costly and involve less hassle.