The changes from one political system to another in both Syria and Lebanon have political impacts not only on those two countries but also on the entire Middle East. To the investors and spectators of Middle East currencies, the shifts that have occurred in these countries also pose certain crucial queries regarding implications for the Iraqi Dinar (IQD). This interaction of Iraq with the political/financial geography of the ME is inseparable from the latter’s economic base; thus, the rise of new regimes in Syria and Lebanon may dramatically change existing financial landscapes.
As new regimes are established in Syria and Lebanon, the value of the Iraqi Dinar is set to be affected. In this article, the author will reveal how. Out of the lights, it is important for us to pursue findings related to the political changes, the regional changes, and the economic factors that might have an impact on the value of the Dinar. These relations are important irrespective of whether one is an investor, an analyst, or a layman interested in Middle Eastern geopolitics for making the best guess about the future of the Iraqi Dinar.
It is with this understanding of the political changes happening in Syria and Lebanon that we should start the research of investing in Iraqi Dinar. Both countries have experienced a lot of instabilities in the recent past, and the changes of guard and regime change in the countries are setting a new balance in the region.
Syria has been in a bloody civil war since 2011, causing massive political overflow, displacement of millions of people, and emergence of different groups. Nevertheless, the last years so much as have demonstrated that the Syrian government led by President Bashar al-Assad has regained a significant influence all over the state. However, the question remains: which opposition? While the opposition is struggling with internal problems and losing international support, Assad’s regime seems to be solid for the next period, supported by such countries as Russia and Iran.
Moreover, along with Assad’s military and political domination, there has been a process of searching for a rapprochement with other players in the Middle East, including Arab countries. This is the moment of Syria’s future as the regime seeks to restore the shattered post-war economy under the framework of regional cooperation, potential foreign investments, and the gradual reintegration into Arab League activities.
Lebanon, for its part, has had its drawbacks as follows Lebanon. The country that took its political system based on sectarian lines has experienced political stagnation over the last years due to the economic crisis, corruption, and the Beirut port explosion in 2020. The current political crisis in Lebanon has brought changes to the stability in that country whereby the state has failed to function to provide even basic amenities or maintain order.
In 2022 a new president—Michel Aoun—was elected in Lebanon, although it has been months since there was no official president in the country. But it stays in a politically stagnant position and is currently experiencing severe economic challenges – the Lebanese pound has dropped, for example, to 1/1,500 to the US dollar. That is why the relations of the occurrence remain vague, and the further position of Lebanon, both politically and economically, could be sharply influenced by the financial collapse of the government.
Syria and Lebanon are neighboring countries of Iraq situated in the heart of the Middle East. It will then be important to appreciate cultural, historical, and economic relations between such nations. But the changing of the guard in both Syria and Lebanon may precipitate unfavourable changes in the reverse direction that could upset the precarious political and economic equilibrium in Iraq. This situation thus requires the evaluation of how these changes might impact various subsectors of political governance in Iraq, the country’s economy, as well as the stability of its currency.
The political changes that have taken place in Syria and Lebanon may cause the formation of new regional groups in the interest of Iraq. For instance, if the Syrian government wants to remain in control and attempt to recover diplomatic relations with its Arab neighbors, more than likely Iraq will help in the process of creating bilateral trade and diplomacy. Syria and Iraq are neighboring countries, and both countries have collaborated on different subjects in security, commerce as well as inside energy fields. Suppose the Syrian government and Syria manage to work hard and make the country tourable again. In that case, it brings again the economic tie between both countries and more business, therefore adding strength to a more stable Iraq and maybe to the Dinar.
Likewise, the financial crisis experienced by Lebanon could also be seen as an opportunity for Iraq. When the Lebanese political and economic outlook remains inconclusive, Iraq can likely create and become a center of regional integration of economic and political links with Lebanon’s leader might assist Iraq in establishing its place in the region and enhance Perf investor certainty about the market in Iraq.
On the same argument, political system stability in the Iraqi nation’s neighbor’s like Syria and Lebanon may also be an issue. For example, Syria is still staging one of the most brutal fights, and many groups, such as ISIS, continue to oppose the regime’s control in the aggression level in Syria may lead to affecting Iraq and making it unstable. In the process, it will bring more challenges to the already struggling country in maintaining its internal political stability. This could demoralize investors both locally and abroad, and thus, there will be a weakened Iraqi Dinar.
The situation in Lebanon worsens steadily: the political crisis and the devaluation of the national currency can lead to destabilization of the region. If the crises in Lebanon expand or the civil problems in the state grow, it could impact Iraq. In this case, the capital might start to flee the region in the event that the financial situation in Lebanon deteriorates further; the scenario puts further pressure on Iraq. Moreover, many problems of Lebanon can in a way, deepen the situation in Iraq and complicate economic relations in the Middle Eastern countries.
The economic factors that are in question by virtue of new regimes in Syria and Lebanon could easily be compared to the political change processes. The Iraqi Dinar depends a lot on the rest of the Middle Eastern region, and any improvements or deterioration in the economic conditions of Syria and Lebanon will ripple right through to the Iraqi markets. That is why let us discuss some of the major economic repercussions.
As the reconstruction impact starts to emerge in Syria and Lebanon, Iraq can reap from the trade front. If Syria reconstructs over the coming years after years of conflict, Iraq will be able to effectively cover its neighbor’s demands and services, thus boosting the Iraqi economy. Like the case with Lebanon, the slow financial recovery could lead to the revival of economic relations between the two countries.
It might be beneficial for the Iraqi Dinar if Iraq is able to capitalize on and latch onto these opportunities to strengthen its economy. This means that the transaction would increase the country’s reserve, and economic growth of Iraq may lead to an increase in the demand for the Dinar and, hence, the stabilization of the exchange rate.
Problems with finances in Syria and Lebanon can endanger the Iraqi economy and its currency. Both countries are contaminated with analogous economic problems like inflation, debt, and the inability to access international financial markets. These problems could limit the extent to which Iraq is able to seize forthcoming opportunities. A potential risk for regional development may result from deterioration in economic situations in both the Syrian and Lebanese contexts that limit their abilities to perform their obligations and cope with crises.
Possible negative aspects include the decline of the Lebanese pound and the extension of Syria’s continuous financial crises, which might hinder a stable economic climate in Iraq as well. If Iraq does not manage to overcome these challenges successfully, the situation may lead to higher volatility of the Dinar’s exchange and slower investors’ challenges of devaluation.
Foreign investment is essential for Iraq to balance the Dinar. As in the case of Syria and Lebanon, the political and economic environment is still unstable, which may prevent investors from investing in the whole region. However, if Iraq succeeds at trying to brand itself as a safer investment than the nations around it, it could see more money coming in, thus increasing the value of the Dinar and making Iraq a stable nation.
The new relatively integrated regional product and services markets that could come with regional cooperation with Syria and Lebanon or regional economic integration, either in a customs union or common market system, may open up new possibilities for FDI. Investor interest in investing in safe economies in the Middle East could also be an opportunity for Iraq since other regional economies are recovering from the slump. This would mean more interest in the IQD and more confidence in the country’s economic dispensation.
The impact of the new regimes in Syria and Lebanon on the Iraqi Dinar will be as follows. On the one hand, the analysis reveals important prospects for deepening regional integration. On the other hand, there is a range of opportunities that can be regarded as threats that should not be disregarded.
The Allocations of political stability in relation to economic cooperation and regional security will specifically determine the future of the Iraqi Dinar.
The peaceful stabilization of the countries in the Levant area, namely Syria and, later on, Lebanon, could be a factor in bringing great economic fortunes for Iraq. Enhanced commerce, improved closer cooperation within the region, and more international activity led to growth. Thus, the Iraqi economy could become stronger, and the value of the Dinar would stabilize. These decode that if Iraq manages to build better relations with these countries and learn to work through their problems, it will be at a vantage point of being a regional power and a hub for investment.
Mitigation of risks is essential for achieving stability within the style of the Iraqi economy, especially taking into consideration instability in the region with identified threats emanating from Syria and Lebanon and the economic vulnerabilities within Iraq. These affect the value of the Iraqi Dinar directly, and therefore, the management of political, economic, and security risks must be in proportion to each other. Thus, these risks are interrelated, and thus, the strategies should be interrelated as well: it means that many of them should be focused on the elimination of the immediate threats and long-term economic development promotion.
In these challenges, Iraq can target special areas, which include diversification, institutionalization, and improvement of governance. Iraq can reduce the vulnerability of the world oil market that affects its economy by diversifying the sectors for generating income. Improving institutions will improve the policy of the country through the constructive implementation of policies reducing corruption as well as attracting confident investors. Even though these measures involve much work and time, they open the way in order for Iraq to be able to mitigate its risks and develop a stable environment for its economy and its currency.
The new regime in Syria and, to some extent, in Lebanon may be seen as posing both threats and opportunities for Iraq. As Iraq is dealing with an internal political and economic environment, the changes in the neighboring countries will affect the value of the Iraqi Dinar. It is, however, a fact that the future of the Dinar directly depends on how this country will manage to use regional opportunities coupled with the overall risks of regional instabilities.
Therefore, anyone interested in following developments concerning Iraqi Dinar investment should follow regional political and economic news. The relationship between Syria, Lebanon, and Iraq will be very important in determining the future direction of the Iraqi Dinar.
End
DINARIT is a worldwide Licensed financial Numismatic service offering currency exchange for Iraqi Dinar and other currency with lowest rates