Saudi Arabia and Iraq have inaugurated a power grid interconnection project that will provide an initial capacity of 1,000 MW. The project will connect the northern city of Afar in Saudi Arabia to Yusufiya in western Baghdad and is expected to support the Iraqi electrical grid and enhance energy security. The Gulf Cooperation Council Interconnection Authority aims to begin exporting electricity to southern Iraq by the end of 2024. The agreement was signed on the sidelines of the Jeddah Summit for Security and Development in July 2022, while the framework agreement was sealed between the Iraqi Ministry of Electricity and GCCIA in 2019 for the establishment of the project.
The interconnection project marks the first to be implemented outside the electrical grid system of the GCC countries. It intends to meet some of the demand for electric power in southern Iraq. The anticipated capacity to be imported through this initiative is estimated at approximately 500 MW, which will cater to the electricity requirements of the Basra governorate, according to the statement from GCCIA.
The agreement underscores part of what Nasser Saidi, Lebanon’s former economy and trade minister and founder of Nasser Saidi & Associates, calls “the regionalized globalization by the GCC. Integrated electricity grids, such as between Saudi and Iraq, result in greater power efficiency, improved management of electricity grids and network economies, lowering costs for all the countries involved,” he told Arab News.
Moreover, as Saidi stressed, the greater integration of these countries with the GCC enables partners to participate in global value chains through the region, generating higher value exports (rather than low-value commodity exports such as phosphates) and diversify their economies.
Infrastructure integration fosters economic development. It creates jobs in countries such as Iraq, Jordan, Egypt, Lebanon and Syria that have traditionally been reliant on exporting labor, helping them combat the present brain drain. The greater integration of these countries with the GCC enables partners to participate in global value chains through the region, generating higher value exports (rather than low-value commodity exports such as phosphates) and diversify their economies.
The project allows the creation of a GCC-augmented electricity market and electricity trading across borders. KSA, the UAE and other GCC countries are heavily investing in renewable energy. Eventually, the GCC can export solar-based electricity green energy to not only neighboring countries (Iraq, Jordan, Egypt and Yemen) but also to India and across North Africa into Europe. Already, a GCC-India undersea electricity connector is planned. A new energy infrastructure map is emerging.
The agreement holds great significance for Iraq as it marks a major turning point. Instead of a country monopolizing Iraq, including the electricity sector, which has caused significant hardship for Iraqi citizens, this agreement will contribute to the long-term improvement of the electricity network in southern Iraq. This project aims to support the increasing demand for electricity in Basra Governorate through cooperation with the Cooperation Council for the Arab States of the Gulf. Furthermore, it lays the foundation for future exchange and trade of electrical energy between the countries of the Cooperation Council and Iraq within a regional and Arab market for electricity.
Since its establishment in 2009, when the Kingdom embraced it, the project has consistently demonstrated its impact year after year, generating numerous economic advantages for the GCC countries. Notably, it has substantially reduced both the capital and operational expenses associated with the Gulf electricity network.
The integration of basic infrastructure — water, electricity, transport and logistics (ports and airports) — is a major building block of greater economic integration between the GCC and its regional partners, enabling the deepening of regional trade and investment links. Infrastructure integration fosters economic development. It creates jobs in countries such as Iraq, Jordan, Egypt, Lebanon and Syria that have traditionally been reliant on exporting labor, helping them combat the present brain drain.
The GCC countries are now pursuing an active international trade and investment strategy leading to ‘regionalized globalization’, at a time when the rest of the global economy is fragmenting and there is attempted US, EU and allies decoupling from China. Strategically, regionalized globalization can lead to greater geopolitical stability.