Azerbaijan and Iraq are less than 400 miles distant but through much of recent history, they might have been on the other side of the world. With Azerbaijan incorporated into the Soviet Union, Iraq focused its attention on the Arab world, as generations of Soviet and Azerbaijani leaders oriented Azerbaijan’s trade toward Moscow. When Azerbaijan regained its independence in 1991, that began to change, though only slowly. Azerbaijan expanded its ties toward Turkey, Iran, and Israel but its relations with the Arab world remained a secondary consideration.
Iraq recognized Azerbaijan’s independence on January 2, 1992, and shortly after established diplomatic ties. These largely lacked substance. While Iraq opened an embassy in Baku almost immediately, it would be nearly a quarter-century before Azerbaijan would reciprocate, though the two did host each other’s foreign ministers; Iraqi Foreign Minister Hoshyar Zebari visited Baku in 2011, and Azerbaijani Foreign Minister Elmar Mammadyarov reciprocated three years later.
Diplomatic support for each other’s sovereignty colored early ties: Iraq supported Azerbaijan’s position on Nagorno-Karabakh, and Azerbaijan generally opposed Kurdish separatism in Iraq. Frankly, these focused mostly on winning backing at the United Nations and other international organizations, especially regarding votes on the Azerbaijan-Armenia dispute. In 2024, Azerbaijan’s National Security Ministry formed a collaborative intelligence cell with Iraq’s Popular Mobilization Units to coordinate cybersecurity efforts, disrupt terror financing networks, and track movements of militants along the Iraq-Syria border.
Decades of sanctions, mismanagement, and war, coupled with a rapid expansion of both population and economy, have left Iraq struggling to generate adequate electricity to power its grid.
Since the beginning of the year, however, bilateral Azerbaijan-Iraq ties have become more multifaceted. Earlier this year, Iraq’s Foreign Service Institute and Azerbaijan’s ADA University signed a memorandum of understanding to formalize cooperative diplomatic training. And just this month, Azerbaijan announced plans to establish a consulate in Erbil. Its goal is more than pro forma recognition of the Iraqi Kurdistan Region; Azerbaijan aspires to expand its business reach. The consulate will help manage cooperation between the Azerbaijani state oil company SOCAR and Iraqi Kurdistan’s various oil companies as they develop and exploit regional fields. SOCAR also hopes to bid on contracts to rehabilitate refineries in Baiji and Kirkuk that were damaged in the war against the Islamic State and subsequent looting. While Baghdad has sway over the former, the Kurdistan Regional Government influences Kirkuk’s politics and decision-making.
U.S. policy also brings Iraq and Azerbaijan together. Decades of sanctions, mismanagement, and war, coupled with a rapid expansion of both population and economy, have left Iraq struggling to generate adequate electricity to power its grid. This left Iraq dependent on Iranian gas. While Washington sought to sever Iraq’s dependence on Iran, Iraqi authorities rightly pointed out that they had no alternatives since they did not produce enough gas to power generators. They proposed—and previous U.S. administrations accepted—that Iraq would continue its purchases from Iran but pay into an escrow account so that the money would not fall into the Islamic Revolutionary Guard Corps’ hands. Iranian authorities could debit the escrow account to cover payments to Iraq for pilgrimage fees or other expenses. Meanwhile, Iraqi authorities worked with U.S. companies on capture-flare technology so that Iraq could derive economic benefit from its gas, rather than simply burn it off when extracting oil.
President Donald Trump upended this arrangement. He questioned why, after so many years, the Iraqi government still needed Iranian gas and if it is sincere in its capture-flare efforts, and he ended the sanctions waivers that Iraq had used to remain immune to U.S. retaliation when it purchased Iranian energy. This has forced Baghdad to look for new natural gas suppliers. Iraq first considered importing liquified natural gas from Qatar and Algeria, but sending Azerbaijan’s gas via pipeline across Turkey to Iraq was geographically and financially more convenient. Such a linkage also will support expansion of the Southern Gas Corridor that would send gas to Europe via the Trans-Anatolian Pipeline and the Trans-Adriatic Pipeline. Turkey, meanwhile, may reverse flow through the Baku-Tbilisi-Erzurum pipeline to connect to Iraq’s grid, furthering the economic feasibility of the project. By 2030, Azerbaijan’s gas exports could provide 15 percent of Iraq’s electricity demand.
The goal now is to match Iraq’s subsidized energy pricing with Azerbaijani export prices, and to flesh out transit agreements across Turkey’s Botas pipeline network.
The May 2025 Baghdad Energy Dialogue has reflected the seriousness of Iraq in the new projects. The Dialogue has established working groups to address contract terms, transit arrangements, and pricing procedures. The goal now is to match Iraq’s subsidized energy pricing with Azerbaijani export prices, and to flesh out transit agreements across Turkey’s Botas pipeline network. Azerbaijan generally seeks longer commitments, while Iraq, whose government changes more rapidly, favors three- to five-year arrangements. If the two governments can reach agreement, Iraq could receive gas shipments of between five and seven billion cubic meters by 2027. Electricity trade still may lag, especially given Iraqi Kurdistan’s inadequate transmission infrastructure.
The new Azerbaijani consulate also may negotiate with Iran to help meet demand: Azerbaijan already swaps gas with Iran, Russia, and Turkmenistan to fulfill European contracts that exceed current production. In addition, it will further growing trade in everything from Iraqi dates and pharmaceuticals to Azerbaijani equipment exports. Azerbaijan’s AZPROMO has pledged $320 million for solar energy projects in Iraq through 2028. Iraq, meanwhile, has shifted from ignoring the Caucasus to lending diplomatic support for peace efforts. Iraq has both Turkmen and Armenian minorities and has offered to host peace negotiations between Armenia and Azerbaijan in Najaf later this year.
Azerbaijan and Iraq may never become each other’s primary trade partners, but the rapid growth of their relations shows how, more than two decades after Iraqi President Saddam Hussein’s ouster and more than three decades since the fall of the Soviet Union, the ossified divisions that marked the regions are breaking down. Iraq is finding new partners outside the Middle East, and Azerbaijan is taking advantage of new markets and opportunities beyond Turkey and the former Soviet states. Whether Azerbaijani-Iraqi ties can weather changes in Iraqi governance, however, remains uncertain, though the same forces that lead Baghdad to seek new alternatives play in Baku’s favor.
