State-owned enterprises (SOEs) represent a fundamental pillar of Iraq’s national economy, as they were originally established to perform productive and developmental roles that contribute to the provision of goods and services, employment generation, and economic security. However, many of these enterprises have faced structural, managerial, and financial challenges over the past decades, leading to declining productivity and persistent financial losses, making them increasingly dependent on government support. This situation has negatively affected their contribution to GDP and weakened the competitiveness of local industries. Addressing the condition of loss-making public enterprises should not merely be viewed as an economic burden but rather as a strategic opportunity to rebuild a national industrial base capable of supporting economic diversification and reducing reliance on oil revenues and imports. In this regard, restructuring emerges as a critical economic reform tool aimed at transforming distressed enterprises into productive, efficient, and sustainable institutions. The Reality of Loss-Making Public Enterprises in Iraq Many Iraqi state-owned enterprises suffer from intertwined challenges, including weak management, outdated technology, low productivity, high operating costs, weak marketing capabilities, and limited competitiveness against imported products. Moreover, excessive dependence on state budgets and the lack of effective governance and economic oversight mechanisms have contributed to prolonged inefficiency and recurring losses. The problem is further aggravated by idle or semi-operational production lines, inadequate long-term investment planning, and the inability of certain local products to meet modern market demands in terms of quality, cost efficiency, and technical specifications. Restructuring as a Pathway to Economic Reform Corporate restructuring refers to reorganizing enterprises financially, administratively, and operationally to improve efficiency and long-term sustainability. Importantly, restructuring should not necessarily be equated with privatization or asset disposal; rather, it may involve managerial reform, resource optimization, productivity enhancement, and operational modernization. Restructuring can take several major forms: 1. Financial restructuring, through addressing accumulated losses, reassessing assets, rationalizing expenditures, and improving cost accounting and managerial accounting systems. 2. Administrative restructuring, by adopting governance principles, appointing competent leadership, implementing performance measurement systems, and linking incentives to productivity. 3. Operational and technological restructuring, through modernizing production lines, adopting advanced technologies, digital transformation, and improving product quality in line with international standards. 4. Marketing restructuring, through better understanding domestic market needs, strengthening national brands, and expanding marketing channels and industrial partnerships. Advancing Local Industry in Iraq The restructuring of public enterprises should be integrated with a broader national industrial policy aimed at supporting domestic production and generating greater economic value. Such a strategy requires smart industrial protection policies that enhance competitiveness rather than promote economic isolation. Key requirements for strengthening local industry include: •Encouraging public-private partnerships. •Stimulating domestic and foreign industrial investment. •Expanding industrial financing and credit facilities. •Supporting research, innovation, and technology transfer. •Enhancing technical education and vocational training aligned with industrial needs. Restoring confidence in national products also requires adherence to quality standards, competitive pricing, effective marketing, and gradual import substitution whenever domestic products can compete efficiently. Economic and Social Dimensions of Reform The success of restructuring extends beyond improving enterprise performance. It generates broader economic and social impacts, including employment creation, income growth, reduced imports, trade balance improvement, and economic diversification. Furthermore, a strong industrial sector contributes to economic stability and reduces excessive dependence on oil revenues, enabling Iraq to better withstand global economic fluctuations. Conclusion The restructuring of loss-making state-owned enterprises in Iraq is an economic and developmental necessity rather than a postponable option. Genuine reform cannot be achieved by continuing to subsidize inefficient enterprises; instead, it requires building competitive and productive companies based on governance, technology, and sound management. Advancing local industry demands a comprehensive reform vision involving government institutions, the private sector, academia, and financial institutions to establish a productive and sustainable economy capable of generating employment, promoting development, and strengthening Iraq’s economic sovereignty.