• Baghdad

  • Monday, January 29, 2024 at 10:36:07 AM
    Last Update : Monday, February 12, 2024 at 4:03 PM

Iraq Concerned that Red Sea Tensions May Cause Trade Decline and Price Hikes

(AWP) - Merchants and economists say that trade in Iraq will be negatively affected by a decline in global trade volumes due to tensions in the Red Sea and the Bab al-Mandab Strait.

Some major shipping companies have announced the suspension of their Red Sea activities, redirecting their routes through the Cape of Good Hope, increasing journey times and costs.

Iraqi economic experts and traders say that the increase in maritime shipping costs has raised the prices of commodities in Iraq, which relies on importing a variety of foodstuffs and clothing.

Mohamed Hanoun, the official spokesman for the Iraqi trade ministry, said, “Any political or security developments that affect the world will also affect Iraq. As for the Ministry of Trade, we have been working for a while to provide a strategic stock related to the ration card system distributed by the government to citizens. We have achieved a good stock in all warehouses in Baghdad and other governorates.”

He added, “We seek to minimize the damage inflicted on Iraqi traders as a result of the increased transportation costs across seas and the Red Sea in particular.”

Aly al-Zamly, a merchant, said that any negative impact affects the market and all imported goods; whether they are clothes, construction materials, foodstuffs or pharmaceuticals.

He explained, “Importers will be affected, especially the ships transiting the Red Sea, because they will be subject to taxes and insurance, which will push up prices of commodities and, consequently, overall prices.”

However, other Iraqis believe that although Red Sea tensions have had negative implications related to higher costs, one positive effect is that oil prices, which Iraq depends on as a key export, have risen.

Some also point out that Iraq has alternative maritime outlets that can reduce its reliance on the Red Sea for trade.

Emad al-Qaysi, another Iraqi merchant, suggested that the biggest impact is on the African countries adjacent to the Red Sea, Yemen, Egypt and Sudan.
“As for [Iraq], we have other outlets; the Strait of Hormuz, Jebel Ali and the Arabian Gulf,” he said.

The Houthis claim to be attacking ships in the Red Sea owned or operated by Israel or those carrying goods to or from Israel, in solidarity with the besieged Gaza Strip.

The United States and Britain launched strikes on Houthi sites several times this month to weaken the group’s ability to threaten navigation in the Red Sea and undermine global trade.