Prof. Dr. Haider Ali Al-Dulaimi College of Administrative Sciences The Strait of Hormuz is one of the most important maritime routes in the global economy, given its vital role in the movement of oil and gas exports from the Gulf region to international markets. Therefore, any tension or disruption to maritime traffic through the Strait does not represent merely a limited-scale geopolitical crisis; rather, it can develop into an economic shock whose effects extend to energy prices, transportation, trade, inflation, and living standards in countries around the world. These repercussions are particularly significant for Iraq, whose economy is closely linked to the oil sector, whether in terms of financing the state budget, generating foreign currency, or supporting economic activity. Accordingly, the Strait of Hormuz crisis is directly interconnected with the First Sustainable Development Goal (SDG 1), which seeks to end poverty in all its forms everywhere. The Strait of Hormuz: An Energy Corridor and a Potential Source of Economic Shocks The risk associated with disruption to the Strait of Hormuz stems from the fact that the surrounding region constitutes a major hub for global energy supplies. When maritime traffic is placed at risk, uncertainty in the markets increases, potentially driving oil prices upward amid concerns over reduced supplies or higher transportation and insurance costs. At first glance, higher oil prices may appear positive for Iraq as an oil-exporting country. However, the economic picture is more complex. Higher oil prices may increase oil revenues, but at the same time, they may raise global energy, transportation, and trade costs, indirectly affecting the prices of goods and services, some of which Iraq relies on imports to provide. Thus, the Iraqi economy may face a dual impact: potentially higher oil revenues on the one hand, and inflationary pressures and rising living costs on the other. How Does the Strait of Hormuz Crisis Reach Iraqi Citizens? The effects of geopolitical crises do not always reach citizens directly; rather, they pass through a series of economic channels. Higher oil and energy prices can lead to increased transportation, shipping, and insurance costs, which may subsequently be reflected in the prices of food, consumer goods, and raw materials. Production costs for businesses may also rise, potentially affecting the prices of products and services. For low-income households, rising prices of essential goods represent a greater burden, as a larger share of their income is typically allocated to food, housing, transportation, and other essential services. Therefore, any increase in the cost of living is not merely an inflationary issue; it can become a factor that increases the economic vulnerability of low-income groups and threatens the progress achieved in poverty reduction. The Iraqi Paradox: An Oil-Rich State and a Society Exposed to Shocks The Strait of Hormuz crisis reveals an important paradox in the Iraqi economy. Iraq possesses a strategic natural resource whose revenues may increase when oil prices rise, yet at the same time, it faces the risk of higher costs for goods, energy, and services as a result of disruptions in global markets. This means that increased oil revenues do not automatically lead to a reduction in poverty. Poverty reduction requires transforming financial resources into sustainable economic opportunities through investment in education, healthcare, infrastructure, housing, social protection, job creation, and the revitalization of productive sectors. If increased revenues instead lead primarily to an expansion of consumer spending without building a new productive base, the economy will remain vulnerable to oil cycles and external shocks. Inflation: The Silent Threat to Poverty One of the most important channels through which a Strait of Hormuz crisis can affect poverty levels is rising inflation. Even when household income does not decline in nominal terms, higher prices for goods and services reduce the purchasing power of real income. A household that was previously able to purchase a particular basket of goods and services with its monthly income may be forced to reduce its consumption when prices rise. This becomes more serious when price increases affect essential goods that households cannot easily do without, such as food, energy, and transportation. Therefore, protecting the most vulnerable groups from the effects of external shocks requires economic policies that focus not only on the size of public revenues, but also on purchasing power, living standards, and the distribution of inflationary effects across different segments of society. Oil Revenues: From Financial Resource to an Instrument for Poverty Reduction If disruptions in energy markets lead to higher oil prices and increased Iraqi revenues, the real challenge for economic policy lies in determining how these resources should be utilized. The opportunity lies in directing part of the additional revenues toward projects with long-term social and economic impacts, such as developing infrastructure, supporting education and vocational training, expanding social protection networks, improving healthcare services, and supporting small and medium-sized enterprises. Part of these resources could also be used to stimulate non-oil sectors, creating new employment opportunities and reducing households’ dependence on government employment. In this way, oil revenues can be transformed from a temporary response to price shocks into a tool for building an economy better equipped to reduce poverty. Economic Diversification: The Most Sustainable Path The Strait of Hormuz crisis once again confirms that combating poverty in Iraq cannot be separated from the issue of economic diversification. The greater a country’s dependence on a single resource, the more vulnerable its public revenues become to external shocks. Conversely, the more diversified an economy is, the more capable it becomes of generating multiple sources of income and employment. Accordingly, developing agriculture, industry, tourism, services, transportation, the digital economy, and renewable energy can provide a more sustainable economic foundation and help create employment opportunities beyond the government and oil sectors. SDG 1 cannot be achieved merely by providing assistance to people living in poverty. It requires building an economy capable of generating fair and sustainable economic opportunities that enable individuals to improve their incomes and living standards. Social Protection in the Face of Crises Countries exposed to external shocks need social protection systems capable of responding rapidly when prices rise or purchasing power declines. In Iraq, such a response could include developing social targeting programmes, improving the efficiency of the social protection network, monitoring the prices of essential goods, supporting groups most affected by inflation, and providing employment and income opportunities. However, social protection alone is not sufficient. It represents a temporary line of defense, while the more sustainable solution remains the development of a productive and diversified economy that reduces the dependence of both households and the state on a single source of income. From the Strait of Hormuz Crisis to an Economic Lesson for Iraq The Strait of Hormuz crisis offers an important lesson for the Iraqi economy: economic security is achieved not merely through possessing oil, but through the ability to protect society from fluctuations in global oil markets. Natural resources can provide the state with substantial revenues, but resource management determines whether these revenues are transformed into sustainable development or remain vulnerable to price fluctuations and geopolitical crises. Therefore, any increase in oil revenues resulting from higher prices should be viewed as an opportunity to rebuild the economy, rather than simply as an opportunity to increase spending. The Strait of Hormuz crisis highlights the close interconnection between geopolitics, energy, poverty, and development. Any disruption to one of the world's most important energy corridors can lead to higher oil, shipping, insurance, and commodity prices, producing varying effects on national economies and the living standards of their populations. For Iraq, such a crisis may create an opportunity to increase oil revenues, but it may simultaneously place pressure on living costs and purchasing power, particularly for low-income households. Therefore, achieving the First Sustainable Development Goal requires Iraq to invest its oil resources in building a more diversified economy, creating sustainable employment opportunities, strengthening social protection, safeguarding purchasing power, and developing productive sectors. The real challenge is not merely how Iraq can benefit from higher oil prices when a crisis occurs in the Strait of Hormuz, but how it can transform these temporary revenues into lasting development that reduces poverty and strengthens the resilience of Iraqi society in the face of future crises