The war in Iran has dominated news throughout 2026, but with no end to the conflict in sight, life and business as usual has been moving ahead in other parts of the region.
One such example is neighbouring Iraq, which was a longstanding centre of conflict-related news throughout the 2000s. Despite its proximity to the centre of the war in Iran, this country is slowly emerging as a potential new manufacturing centre, receiving attention even from major brands such as PepsiCo.
On the surface, the draw of this market is clear, due to its geographical advantages, large young population, and high access to locally produced food ingredients — according to the United Nations Food and Agriculture Organisation (FAO), these include many staple crops as well as dates, fruits, tomatoes, potatoes and animal protein.
“As one of the region’s historic farming heartlands, we want to support Iraq’s agricultural potential and industrial capacity to become a hub for food exports,” PepsiCo CEO of Foods, Middle East, North Africa and Pakistan Ahmed Elsheikh said during the recent US-Iraq High Level Business Summit.
“This MOU provides a basis for exploring opportunities to grow Iraq’s food manufacturing sector and strengthen the country’s farming sector [as] strong food manufacturing begins with strong agriculture. By working across the value chain, we hope to create opportunities that benefit farmers and local industry while supporting products proudly made in Iraq.”
This is not the firm’s only project in Iraq this year, as it also signed an MoU with the Baghdad Soft Drinks Co. (BSDC) that aims to boost local production capacity to go beyond 250 million cases annually.
According to PepsiCo, this MOU builds on a partnership that has been in place since 1984, for over four decades.
“This MOU reflects PepsiCo’s confidence in Iraq’s industrial future, and supports employment and local manufacturing,” said the firm.
Iraq’s beverage manufacturing
A big part of the MOU is the aim to support modernisation for the local manufacturing sector, an important area that needs rapid improvement if the country really hopes to upgrade its role in the region.
“The main goal is threefold: advanced manufacturing, skilled employment, and continued investment in Iraq’s local industry,” PepsiCo declared after the MOU was signed.
This was further bolstered by PepsiCo SVP and CEO, Middle East and Africa Beverage FOBO (franchise-owned bottling operations) Mohamed Shelbaya, who confirmed the company views Iraq as a major beverage manufacturing player in the region.
“[The MOU] with BSDC outlines a shared ambition to explore potential opportunities related to manufacturing capacity expansion, strengthening Iraq’s role as a leading beverage production hub in the Middle East, and further developing the people and capabilities that drive our business forward,” he said via social media.
“I’ve always believed that the strongest partnerships are built over time. Our relationship with BSDC spans more than four decades, and this next step reflects the trust we’ve built together and our shared belief in Iraq’s long-term potential.”
What is standing in the way?
Investment and assistance from international names such as PepsiCo are crucial to deciding whether Iraq will be able to take off as the region’s next modern manufacturing hub.
According to the World Bank report Breaking Out of Fragility, Iraq faces many challenges as remnants of its war-torn history some two decades ago, but the major, obvious ones that pose the greatest hurdles to its manufacturing growth include infrastructure and logistic deficits.
Some of the most problematic would include cold storage facilities, electrical supply stability, as well as transportation logistics and timings.
“Although Iraq’s geography gives it the potential to be a regional transit hub, its performance at logistics and border management is weaker than any of its neighbours’, turning it instead into a regional bottleneck,” the report said.
“[That said], Iraq has latent export potential for a variety of goods that, if tapped, could diversify the country’s economy, raise living standards, and boost economic resilience. Under the right conditions, including a return of domestic security, improved trade policy could also bring about better prices and quality for Iraqi consumers.”
