Israel has lifted a ban on trade with Iraq, despite the fact that the two countries do not have official relations and are technically at war.
Israel's Finance Minister, Moshe Kahlon, yesterday signed an official directive allowing trade with Iraq, Israeli newspaper Maariv reported. The directive moves away from Israel's "Trade with Enemy Ordinance" law, which was originally signed during the British Mandate period and defines enemy states with which trade is forbidden. The Israeli government adopted this law upon the creation of the state in 1948 and has since adhered to its restrictions.
Kahlon's directive does not, however, change the status of other Middle Eastern countries named in the Mandate-era law, among which are Israel's regional nemeses Iran, Lebanon and Syria. Yemen is also included on this list.
Maariv added that, despite the existence of the above law, Israeli products have historically been sold to Iraq through proxy states such as Jordan and Cyprus. These products have included medicine, agricultural products and dates, many of which are grown on illegal Israeli settlements in the occupied West Bank.
Though Kahlon did not give a reason for allowing trade with Iraq, a number of potential explanations exist.
For its part, Maariv suggested that "it can be assumed that the main reason for the decision […] stems from the unofficial economic and security ties with the autonomous region of Kurdistan". Israel has, in recent years, developed relations with Iraqi Kurdistan, allegedly supporting the latter's aspirations for independence and statehood.
In May 2018, for example, Israeli Knesset Members (MKs) held a debate to examine ways in which Israel could help the Kurds establish an independent state in Syria, Iraq and Turkey. In 2016, Israel's Ambassador to the US Ron Dermer said that Israel supported Kurdish independence, saying "we feel very close ties with them".
Likewise Kurds have been known to express support for Israel. In September 2016, hundreds of Kurds attended a memorial service in Duhok, north of Mosul in northern Iraq, to pay their respects to former Israeli President Shimon Peres. However, in 2017 the head of the foreign relations department in the Kurdish Regional Government, Falah Mustafa, denied reports that the Kurds had sought assistance from Israel for their independence aspirations.
It is also possible that, by allowing trade with Iraq, Israel is trying to pave the way for warmer relations with the Middle Eastern country as part of its normalisation drive.
This initiative has seen Israel reach out to a number of Gulf states, with Israeli establishment figures attending public meetings with Omani, Emirati and Bahraini officials. Israel is also known to have sold military-grade spyware to Arab states, notably the controversial Pegasus spyware which has been used to spy on Saudi dissidents, the Emir of Qatar and linked to the murder of Saudi journalist Jamal Khashoggi.
Though Iraq has generally been absent from discussions of Israel's normalisation, some overtures have been made; in January, for example, it emerged that prominent Iraqi delegations had undertaken secret visits to Israel on three separate occasions. The 15-person-strong delegations reportedly met with Israeli academics and visited the Yad Vashem Holocaust memorial in Jerusalem, a site often visited by foreign dignitaries on official visits to Israel. Though the visit took place in an unofficial capacity, the meetings allegedly aimed "to build the infrastructure for future ties" between Iraq and Israel.
Whether yesterday's lifting of the trade ban will pave the way for more open relations, or indeed arms sales like those to Saudi Arabia and the United Arab Emirates (UAE), remains to be seen.
Iraq and Israel are technically at war as a result of Iraq's involvement in both the 1967 War and 1973 War, both of which ended without formal peace deals. Iraq has also followed the Arab League's boycott of Israel, meaning the two countries do not hold formal diplomatic relations.