World Bank Approves $930M to Modernize Iraq’s Railways, Spur Trade & Jobs

In a strategic move to modernize Iraq’s transport infrastructure and catalyze economic diversification, the World Bank Board of Executive Directors has approved a landmark US$930 million financing package for the Iraq Railways Extension and Modernization (IREM) Project. This transformative initiative is set to rehabilitate and upgrade a key railway corridor stretching over 1,047 kilometers, from Umm Qasr Port in southern Iraq to the northern city of Mosul, traversing Baghdad and a total of eight governorates.

The IREM project aims to revitalize Iraq’s long-neglected rail sector, stimulate domestic trade, reduce transport costs, ease pressure on the country’s heavily burdened road networks, and help position Iraq as a regional transport and logistics hub in line with the strategic ambitions outlined under the Iraq Development Road (IDR) initiative.

Setting the Tracks for Iraq’s Economic Diversification

The initiative comes amid a broader regional resurgence in rail connectivity across the Middle East, with strategic implications for trade flows between the Gulf, Asia, and Europe. Iraq, with its unique geographic positioning, is poised to become a vital connector between the Gulf and Europe, especially through enhanced infrastructure that integrates seaports, dry ports, and road and rail networks.

Jean-Christophe Carret, World Bank Middle East Country Director, underscored the importance of this project:

“As Iraq shifts from reconstruction to development, enhanced trade and connectivity can stimulate growth, create jobs, and reduce oil dependency. The IREM project is vital for transforming Iraq into a regional transport hub and helping achieve the IDR’s goals.”

Core Infrastructure Upgrades and Modernization Scope

The IREM project will undertake a full rehabilitation of the existing north-south railway line and modernize all supporting components necessary to operate a safe, reliable, and efficient railway service. Key activities include:

• Upgrading 1,047 km of railway track linking Umm Qasr Port, Baghdad, and Mosul.

• Modernization of aging locomotives and rolling stock, including procurement of spare parts.

• Refurbishment of the Baiji maintenance workshop, a crucial logistical node.

• Development of logistics hubs and dry ports to facilitate freight handling and enhance multimodal transport.

• Infrastructure safety enhancements: improved level crossings, new signaling, emergency preparedness systems, and staff training.

By shifting freight transport from road to rail, the project aims to reduce road damage and long-term maintenance costs, promote lower emissions, and enhance overall transport efficiency.

Economic Impact: Jobs, Growth, and Industrial Spillovers

The railway modernization will play a pivotal role in creating jobs and revitalizing local economies:

• 3,000+ full-time construction jobs will be generated over the 7-year implementation period.

• By 2040, the project is projected to support 21,900 annual jobs linked to the rail operations and associated services.

• The revitalized line is expected to move 6.3 million tons of domestic freight, 1.1 million tons of international freight, and carry 2.85 million passengers annually by 2037.

• Goods transported will include bulk commodities (grains, cement, steel) and containerized goods (consumer and industrial products), enabling more efficient trade flows within and beyond Iraq.

Strengthening Iraq’s Rail Sector Institutions and Gender Inclusion

Beyond physical infrastructure, the IREM project will support a robust technical assistance package aimed at enhancing the institutional performance of the Iraqi Republic Railways (IRR), including:

• Development of a Railway Sector Reform Action Plan.

• Opportunities for private sector participation in logistics and operations.

• Specialized training programs for IRR staff.

• Initiatives to increase women's participation in the rail and logistics sectors — traditionally male-dominated fields.

An internationally recruited CAPEX management firm will be hired to support implementation and capacity building for the IRR. This will ensure the project follows best global practices in contract oversight, procurement, project delivery, and financial management.

Community-Centered Development and Oversight

The IREM project prioritizes meaningful citizen engagement, including:

• Community-led planning and monitoring mechanisms, ensuring transparency and responsiveness.

• Regular public reporting on project progress and performance.

• Targeted awareness campaigns to promote railway safety and increase public trust.

The Ministry of Transport will have overarching responsibility for the project, with IRR as the primary implementing agency. Close coordination with local communities and governance structures will be embedded throughout the project lifecycle.

A Path Toward Regional Integration and National Unity

With trains set to traverse nearly half the country, from the Gulf to Iraq’s northern borders, the project will enhance national integration, bridge regional disparities, and reestablish rail as a strategic driver of development and cohesion. Enhanced connectivity will benefit approximately 17 million people, including rural populations underserved by current transport networks.

As Iraq transitions from decades of reconstruction to a forward-looking development phase, the IREM project reflects a bold, strategic investment in its infrastructure, people, and regional future.