Iraq’s ‘Development Road’ project and Iran’s strategic dilemma: What are the possible scenarios?

In recent years, Iraq has been undergoing a remarkable geopolitical and economic transformation to redefine its place within regional and international trade networks.

After decades of near-total dependence on oil exports, Baghdad is now moving towards building a diversified economy based on infrastructure, transportation, and logistics. Within this context, the Development Road Project has emerged as an ambitious strategic initiative designed to make Iraq a logistical hub connecting the Gulf to Europe.

This project is not merely an economic plan; it represents a broad geopolitical shift that places Iran before a strategic dilemma: should it engage with the new corridor to strengthen its economic presence, or should it fear a reduction in its influence as a traditional route between the East and West?

From this standpoint, this study seeks to analyze Iran’s position by examining official positions and media statements, and then exploring the possible future scenarios.

The Development Road Project: Economic vision or a geopolitical gamble?

The Development Road corridor is a major strategic project that aims to connect the Grand Faw Port in southernmost Iraq to the Turkish border, and subsequently to Europe, through an integrated network of highways and railways spanning approximately 1,200 kilometers. The project is estimated to cost around $17 billion and expected to be implemented in three phases until 2050, transforming Iraq into a key logistical and commercial hub linking Asia and Europe.

The Iraqi government officially launched the project in May 2023 during the Baghdad Conference for Regional Cooperation and Partnership, describing it as one of the most significant development projects in the country’s modern history. The project aims to reduce transport times for goods and passengers by linking the Port of Faw to the Ovakoy crossing on the Turkish border, and from there to Turkey’s transport network, reaching as far as the Port of Mersin on the Mediterranean Sea.

For decades, Iran has relied on its geographic position to dominate the region’s main transport routes, most notably the North–South Corridor, which begins in India and passes through Iran’s southern ports, extending toward Russia and Eastern Europe. However, Iraq’s Development Road could undercut part of this Iranian advantage.

By September 2025, around 60 percent of the designs and strategic plans were completed in preparation for the start of implementation. Meanwhile, Iraqi technical committees, working in cooperation with Turkey, the UAE, and Qatar, continue to monitor the project’s stages and coordinate efforts to ensure progress according to the established timelines.

The Development Road represents a multidimensional geostrategic corridor, offering Iraq a way to overcome its geographic isolation and strengthen its position within the global trade system. However, the success of the project depends on addressing structural and administrative challenges, ensuring effective governance, enhancing transparency and foreign investment, and strengthening coordination between the state, the private sector, and regional and international partners.

At the regional level, the project reinforces Iraq’s role within the geopolitical landscape of the region, enabling it to control vital transit routes and deepen economic integration with neighboring countries. On the international stage, it repositions Iraq within global trade and energy networks and enhances its engagement with major powers such as the United States, the European Union, China, and Russia, thus opening the door to large-scale investments and the transfer of advanced technologies.[1]

Iran’s official position on the Development Road project

Although many regional countries have expressed interest in joining this vital corridor over the past two years, Tehran has adopted a balanced diplomatic stance aimed at avoiding direct confrontation with Baghdad while emphasizing its own vision for the future of regional economic corridors.

Iraqi Prime Minister’s Advisor for Transportation Affairs, Nasser al-Asadi, announced that Oman and Armenia had submitted formal requests to join the project, highlighting the growing international interest in it. He also affirmed that the Iraqi government’s vision is to engage neighboring countries as genuine partners in the Development Road Project, particularly Turkey, Qatar, and the United Arab Emirates, all of which have expressed their commitment to supporting it and to building a shared economic vision for developing the region’s economy.

In contrast, Iranian official institutions have been careful to adopt a pragmatic approach based on the principle of “integration, not competition” among regional corridors. Officials at Iran’s Ministry of Roads and Urban Development have repeatedly stressed that transit projects in the region should not be presented as competing alternatives but as complementary initiatives that serve common interests.

In this context, Iranian Deputy Minister of Transportation Shahriar Afandizadeh stated during the 2023 conference of regional transportation ministers in Baghdad that the Development Road Project represents an opportunity for all countries in the region. He pointed to the vast potential of the North–South and East–West railway corridors, which could benefit Iran, the UAE, Iraq, Saudi Arabia, Turkey, and Oman, affirming the project’s pivotal role in transporting goods. Afandizadeh added that the joint Iran–Iraq railway link between Shalamcheh and Basra would soon enter its implementation phase, describing it as a crucial connection that allows both countries to integrate into new transport projects, especially towards Europe.

Iranian officials have also emphasized that Tehran is simultaneously working to develop the International North–South Transport Corridor (INSTC), which links India to Russia and Europe, noting that this route could complement rather than compete with Iraq’s project. In this regard, Iran’s ambassador to Iraq, Mohammad Kazem Al Sadeq, stated in September 2024 that Tehran appreciates the Iraqi government’s invitation to participate in the project and welcomes any initiative that contributes to strengthening economic growth and trade exchange among the countries of the region.

Similarly, Secretary of Iran’s Supreme National Security Council (SNSC), Ali Larijani, stressed during his official visit to Baghdad Tehran’s desire to expand bilateral cooperation in various fields, particularly in the railway link connecting passenger and freight movement with the Development Road and other major regional corridors. Saeed Khatibzadeh, Iran’s Deputy Foreign Minister, also stated that relations between Iran and Iraq are strong and solid at all levels, affirming Iran’s support for the project as one capable of achieving broad benefits for all countries in the region.

But this conditional support does not conceal Iran’s unease over the project’s geostrategic implications.

Major transit corridors are not merely economic routes but instruments of political and geopolitical influence. Ali Hosseini, head of the Transport and Logistics Committee at Iran’s Chamber of Commerce, believes that Iraq’s Grand Faw Port could eventually become a main competitor to Iran, potentially affecting Iranian transit routes toward Turkey and Europe. He adds that the project grants Turkey direct access to the Gulf through Iraq, bypassing Iranian territory, thus diminishing Iran’s role as a regional transit corridor and posing a challenge to the Chabahar Port as an alternative regional hub, particularly amid Iran’s economic sanctions and infrastructural weaknesses.

Accordingly, Tehran has genuine concerns that Iraq’s rise as an alternative corridor could weaken its position in regional transit trade. In this context, Secretary-General of the Iran–Iraq Joint Chamber of Commerce, Hamid Hosseini, criticized the Iraqi government’s approach on X, noting that while it had allocated funds for the Faw–Turkey railway project, it showed little interest in cooperating on the shorter Shalamcheh–Basra rail line.

Several Iranian experts, including Ali Hosseini, former head of the transport committee at the Iranian Chamber of Commerce, argue that Iraq has set itself a new strategic goal: turning the Faw Port into the central hub of a corridor extending toward Turkey, parallel to Iran’s North–South Corridor (INSTC). This, they believe, reflects a strategic shift in Baghdad’s priorities and a relative decline in Tehran’s regional role.

Ultimately, Iran’s stance toward the Development Road Project can be described as watchful, along with a desire for conditional participation aligned with its strategic interests and regional balance considerations.

At the regional level, the project reinforces Iraq’s role within the geopolitical landscape of the region, enabling it to control vital transit routes and deepen economic integration with neighboring countries. On the international stage, it repositions Iraq within global trade and energy networks and enhances its engagement with major powers such as the United States, the European Union, China, and Russia, thus opening the door to large-scale investments and the transfer of advanced technologies.

The Iranian media’s position on the Development Road project

Iranian media outlets have taken varied positions on Iraq’s Development Road Project, broadly divided into two main camps: a pro-government current aligned with the official stance, and a critical current representing relatively independent or opposition voices.

On one hand, newspapers and websites close to the government view the project as an opportunity for regional cooperation rather than a threat to Iran. They consider it complementary to Iran’s existing transit routes and emphasize the importance of Tehran’s participation to safeguard its economic and geopolitical interests.

This argument suggests that Iraqi–Iranian relations differ fundamentally from Iraq’s relations with other Arab states due to the historical, sectarian, and economic ties binding the two countries. From this perspective, Iran can benefit from Iraq’s geopolitical advantages to expand its influence, turning the connection between the Grand Faw Port and Europe into a long-term strategic goal that serves its regional vision.

Some Iranian analyses suggest that the Grand Faw Port could, in fact, provide important gains for Iran in commercial transit and facilitate the export and import of goods. Completing the railway line from Chabahar to Zahedan could link it with the Shalamcheh–Basra line, creating an east-west rail network connecting East Asia to Iraq and from there to Europe. In this manner, Iraq’s project could complement Iran’s North–South Corridor, which connects the ports of Chabahar and Bandar Abbas in the south to the cities of Astara in the northwest and Ashgabat in the northeast. Tehran also hopes to connect Iraq’s railway system to enable the export of Iranian oil from the Port of Basra toward Turkey, within the framework of trilateral cooperation between Iran, Iraq, and Turkey.

However, a large segment of the Iranian media views Iraq’s project as a direct competitor to Iran’s interests. The establishment of the Grand Faw Port and its transformation into a major international corridor would make Iraq a central trade hub between the Gulf and Europe, potentially weakening Iran’s geopolitical position while boosting Turkey’s role as an alternative axis in regional transport networks. This perspective argues that through the Development Road Project, Iraq seeks to redirect trade routes away from Iranian territory and ports, undermining Tehran’s transit projects, particularly the North–South Corridor. Furthermore, the project’s potential role in transporting energy to Europe could reduce Europe’s future reliance on Iran as an energy supplier.

In this context, Iranian transport expert Ali Ziaei warned in an interview with Shargh newspaper that the Development Road Project “is not purely an Iraqi initiative” but one that has been “placed in Iraq’s hands by the United States and Turkey.” He added that its implementation would turn Iraq into an alternative north-south hub at Iran’s expense, effectively sidelining the Iranian corridor.

Shargh newspaper also noted that Iraq revealed this alternative corridor during a regional summit, explaining that the $17 billion project—which has been studied with the involvement of Italian and French companies—aims to shorten the route of goods from South Asia to Europe via the Gulf and Turkey. The newspaper added that Iraq has failed for two decades to complete the modest 30 km railway line connecting it to Iran via the Basra–Shalamcheh route, at a cost of no more than $250 million, reflecting Baghdad’s lukewarm interest in transit cooperation with Tehran.

Similarly, the Eghtesaad 24 website reported that although Iraq agreed to link its railway network with Iran, it clarified that the line would be used only for passenger transport, not for freight, thereby limiting the economic value of the connection between the two countries.

Meanwhile, the Iranian Diplomacy news site wrote that Iraq’s top priority today is the Development Road Project, not any alternative or parallel initiative. Within this framework, Iraq seeks to connect its borders with Saudi Arabia and the UAE, having already opened two new crossings with Saudi Arabia and begun constructing national roads to link them to the project. It has also invited European companies from Italy, France, and Germany to invest. The site added that Turkey is among the strongest supporters of the project, viewing it as a means to consolidate its economic and political influence in the region.

At a fundamental level, Iran has not explicitly rejected the project. Instead, it has adopted a cautious, diplomatically reserved approach that reflects a dual understanding of the project’s nature.

The ongoing dispute between Iran and Iraq over the Shalamcheh–Basra railway line thus embodies their divergent strategic visions: Iraq prioritizes the Development Road as a national and regional priority, while Iran views the Shalamcheh–Basra connection as a vital route for its regional interests.

Some Iranian analysts also fear the security implications of the project, noting that increased maritime activity following the opening of the Grand Faw Port could create opportunities for hostile foreign intelligence operations, including those of the United States and Israel, and make it more difficult for Iran’s Revolutionary Guard to monitor the area. Environmental concerns have also been raised regarding dredging operations and the accumulation of commercial vessels, which could affect the marine ecosystem and the livelihoods of local fishermen in southern Iraq and Iran.

Iran’s strategic dilemma and future scenarios

The paradox of Iraq’s Development Road Project represents a unique case of strategic confusion for Iran, as Tehran finds itself caught between two opposing choices: should it engage in the project to benefit from its economic returns, or oppose it in order to preserve its geopolitical standing as a key corridor between Asia and Europe?

At a fundamental level, Iran has not explicitly rejected the project. Instead, it has adopted a cautious, diplomatically reserved approach that reflects a dual understanding of the project’s nature.[2] Tehran recognizes that Iraq’s road threatens its economic influence in Baghdad and strengthens Turkey’s role. But it also sees potential to integrate into a new regional network that might offer a much-needed outlet amid Western sanctions. This contradiction encapsulates what can be described as Iran’s “strategic confusion,” as Tehran struggles to determine whether the project represents an opportunity for adaptation or a threat that must be countered.

This paradox stems from a set of interrelated factors. Geopolitically, the Development Road connects the Gulf states to Europe via Iraq and Turkey, bypassing Iranian territory and thereby diminishing Iran’s role as a major transit hub in the Middle East. Economically, the project threatens Tehran’s revenues from transit fees and ports such as Chabahar, Bandar Abbas, and Imam Khomeini, while granting Iraq and Turkey a new competitive role.

In security terms, Iran fears the expansion of Turkish and Western presence in northern and southern Iraq, along with the possible reshaping of regional power balances that may accompany it.

Politically, Tehran faces an internal divide between a pragmatic faction that views cooperation with Baghdad as a national interest, and a conservative faction that regards the project as part of a Western–Turkish “encirclement strategy” against Iran.

For decades, Iran has relied on its geographic position to dominate the region’s main transport routes, most notably the North–South Corridor (INSTC), which begins in India and passes through Iran’s southern ports, extending toward Russia and Eastern Europe. However, Iraq’s Development Road could undercut part of this Iranian advantage.

As a result, Iran faces a potential threat to both its transit revenues and its geopolitical influence in the region, while Turkey stands to gain strategically from the project, becoming the principal link between Iraq and Europe, strengthening Ankara’s influence in the Middle East, and enhancing its bargaining position vis-à-vis Iran and the Arab states.[3]

In light of these intertwined political, economic, and security factors, Iran’s position toward the Development Road Project is unlikely to be singular or straightforward. Rather, it will emerge from a complex interplay between national interests and geopolitical concerns. Tehran recognizes that ignoring the project could lead to the marginalization of its regional role, while participating in it without careful calculation could place it within the sphere of Turkish and Western influence. Conditional partnership, seeking alternatives, and indirect confrontation

Three main scenarios can be drawn to represent Iran’s possible choices between adaptation and resistance in the face of this strategic transformation.

Th first scenario is based on what Tehran calls a “calculated partnership,” meaning a partial and carefully measured engagement in the Development Road Project. Through it, Iran seeks to link its railway lines, such as Shalamcheh–Basra and Khosravi–Khanaqin, to the Iraqi corridor, ensuring a limited economic presence that spares it regional isolation. This option requires a degree of diplomatic flexibility and understanding with Baghdad and Ankara, and possibly Russian or Chinese support to reduce Western dominance over the project. This scenario aligns most closely with Iran’s current policy approach, as it allows Tehran to “be present without confrontation.”

In the second scenario, Tehran would accelerate the development of the North–South Corridor project and expand its east–west railway lines within its own territory, linking them with Indian and Russian ports. The goal is to fortify Iran’s economy and consolidate its position as an indispensable alternative route, even after Iraq’s Development Road is completed. However, Western sanctions and the lack of foreign investment remain major obstacles to implementing this option swiftly, limiting its short-term effectiveness.

As for the third scenario, Iran might resort to using its political and media tools inside Iraq to slow the project’s implementation or influence its geographic trajectory. It may also seek to strengthen its presence in southern Iraqi ports to maintain its logistical influence in the face of growing Turkish and Gulf power. Yet this option carries the risk of political escalation and the potential for Iran’s increased regional isolation.

Iran faces a potential threat to both its transit revenues and its geopolitical influence in the region, while Turkey stands to gain strategically from the project, becoming the principal link between Iraq and Europe, strengthening Ankara’s influence in the Middle East, and enhancing its bargaining position vis-à-vis Iran and the Arab states.

Ultimately, Iran’s pragmatic solution may lie in the old adage: “If you can’t beat’em, join’em,” or “If you cannot stop the road, be part of it.” By aligning its interests with Baghdad’s and presenting itself as a technical and logistical partner, Iran could transform the threat into an adaptive opportunity that reinforces its presence rather than diminishing it.

With all that said, Iraq’s project reveals Iran’s geopolitical dilemma in the 21st century: how to preserve its regional influence amid new alliances being reshaped without it?

The answer does not lie in rejection or reaction, but in adopting a multi-track balancing strategy that combines cooperation and competition, and in cultivating the intelligent adaptability needed to navigate the shifting economic and political geography of the Middle East.

This report was published in collaboration with Rosa Luxemburg Stiftung.