Two years ago, Iraq didn't register on the global AI readiness index. The country that gave humanity algebra and the first written laws was invisible in the technology that would define the twenty-first century. Today, Iraq ranks 77th globally and 9th among Arab nations. The jump isn't a statistical anomaly. It reflects a deliberate national effort to build AI capability from nearly nothing, in a country still recovering from decades of conflict, sanctions, and instability. The story of Iraq's AI awakening is unlike anything happening in the wealthy Gulf states. It's harder, messier, and in some ways more remarkable.
In 2024, the Iraqi government drafted the National Strategy for Artificial Intelligence, known as INSAI, designed to integrate AI across healthcare, agriculture, tourism, and education. In February 2025, Prime Minister Mohammed Shia al-Sudani inaugurated the Digital Transformation and Automation Center at the Ministry of Higher Education. The University of Baghdad is opening two new faculties: the College of Artificial Intelligence and the College of Excellence, both scheduled to begin operations in the 2025-2026 academic year. These aren't press releases designed to attract foreign investment. They're foundations being laid in a country where the basics of digital infrastructure remain works in progress.
The Starting Point
Understanding Iraq's AI journey requires acknowledging where it begins. In the 2024 Government AI Readiness Index, Iraq scored 40.91 points, well below the Middle East and North Africa average of 48.50. The UAE, for comparison, scored 75.66. Iraq's telecommunications infrastructure remains uneven. Electricity supply is unreliable in many areas. The brain drain that accelerated during years of conflict has depleted technical talent. These aren't excuses. They're the context in which any technological advancement must occur.
Yet Iraq possesses advantages that rankings don't capture. A population of 43 million, with over 65 percent under the age of 35, represents a demographic that grew up with smartphones and social media despite everything else. Internet penetration has reached 75 percent. Smartphone penetration exceeds 82 percent. The appetite for digital services exists. The infrastructure to fully serve it is what's being built.
At Fusion AI, we track Iraq as an emerging market with dynamics fundamentally different from the Gulf states we typically serve. The opportunity isn't deploying cutting-edge AI for clients with unlimited budgets. It's understanding how AI adoption happens in constrained environments where every investment must justify itself against competing urgent needs.
Building the Educational Foundation
Iraq's approach to AI development prioritizes education in ways that reflect both ambition and realism. The College of Artificial Intelligence at the University of Baghdad will offer programs in engineering applications, biomedical applications, and big data. The College of Excellence will cover applied information systems, data science, e-business management, and related fields. These aren't theoretical programs designed for prestige. They're attempts to produce graduates who can actually build things.
The University of Baghdad isn't alone. The University of Warith al-Anbiyaa in Karbala has launched an artificial intelligence department. The Middle Technical University in Baghdad offers courses in cybersecurity and AI. The American University of Baghdad secured international funding to establish an Innovation Lab. Al-Iraqia University has incorporated AI into its media faculty through a department of AI journalism. Across the country, institutions are adding AI programs at a pace that suggests coordinated national priority rather than isolated initiatives.
The government has also approved training 100 digital leaders in a first phase, with international expert assistance, as part of an initiative to attract skilled professionals from the Iraqi diaspora. Prime Minister al-Sudani's administration clearly recognizes that building AI capability requires human capital that domestic institutions alone cannot yet produce at scale.
Kurdistan's Regulatory Ambition
In the Kurdistan Region, the Academy of Artificial Intelligence and Graphic Design is working on something potentially more significant than any single training program: a draft law for AI regulation. If enacted, Kurdistan would become the first jurisdiction in the Middle East with dedicated AI legislation. The draft aims to regulate and increase AI use across sectors while preserving intellectual property rights.
This matters beyond Kurdistan's borders. AI governance frameworks are being debated globally, with the EU's AI Act serving as one model and various national approaches emerging elsewhere. A Middle Eastern jurisdiction establishing its own regulatory framework, adapted to regional legal traditions and economic conditions, could influence how AI governance develops across the Arab world. Kurdistan's relatively stable governance and established relationships with international technology companies make it a plausible testing ground.
Where AI Meets Iraqi Needs
Iraq's INSAI strategy identifies specific sectors where AI can address genuine national challenges. Healthcare diagnostics and treatment optimization matter in a country where medical infrastructure was devastated by conflict and sanctions. Precision agriculture matters where water scarcity threatens food security. Intelligent water management, specifically building smart regulators on the Tigris and Euphrates, addresses pollution, salinity intrusion, and scarcity that affect millions.
These applications differ from the AI use cases dominating discussion in wealthy economies. Iraq isn't optimizing customer experience for e-commerce platforms or building autonomous vehicles for suburban commuters. It's trying to ensure clean water reaches communities and hospitals can diagnose diseases accurately. The AI applications that succeed in Iraq will be those that solve fundamental problems with constrained resources, not those that require massive infrastructure investments.
From Fusion AI's perspective, this creates interesting opportunities for organizations developing AI solutions for emerging markets globally. Iraq's constraints, limited infrastructure, cost sensitivity, urgent basic needs, characterize much of the world's population. Solutions that work in Iraq can potentially scale across markets that together represent billions of people.
The Market Opportunity
Data Bridge Market Research projects Iraq's AI market will reach $1.58 billion by 2029, growing at 12.7 percent annually. Regional AI spending across the Middle East is expected to hit $7 billion by the end of 2026. These figures are modest compared to Gulf state investments measured in hundreds of billions, but they represent real markets where companies can build sustainable businesses.
The growth will likely concentrate in specific sectors. Financial services, telecommunications, and oil and gas have the capital and immediate use cases to drive early adoption. Government services, healthcare, and education will follow as public sector digital transformation accelerates. Agriculture and water management represent longer-term opportunities that depend on infrastructure development.
What Success Requires
Iraq's AI ambitions face obstacles that money alone cannot solve. Electricity reliability affects everything from data center operations to basic connectivity. Security concerns, while dramatically improved from a decade ago, still influence where investments flow and which areas can support technology deployment. The regulatory environment remains less developed than neighboring countries, creating uncertainty for both domestic entrepreneurs and foreign investors.
Success requires patient capital, realistic timelines, and solutions designed for Iraqi conditions rather than imported wholesale from different contexts. It requires continued government commitment through inevitable political transitions. It requires diaspora engagement that brings expertise home rather than extracting remaining talent. And it requires international partners willing to invest in a market with significant risk but also significant potential.
Iraq's journey from invisible on AI rankings to 77th globally happened in two years. The next two years will determine whether that trajectory continues or stalls. The foundations being laid, in universities, in government strategy, in regulatory frameworks, suggest the ambition is real. Whether execution matches ambition will depend on countless decisions by Iraqi leaders, entrepreneurs, educators, and their international partners. The story is just beginning.