Diyala Governorate

Diyala occupies the seam between Iraq's Arab and Kurdish zones—a mixed-population governorate northeast of Baghdad where Shia, Sunni, and Kurdish communities intersect. This diversity made Diyala a sectarian battleground during the post-2003 civil conflict and an ISIS target during the 2014-2017 emergency. Reconstruction efforts now reach over 5 million people across Diyala and four other affected governorates.

The governorate's agricultural potential distinguishes it from petroleum-dependent provinces. Orchards and farmland in the Diyala River valley produce fruits and vegetables that supply Baghdad markets. This agricultural base provides economic resilience that pure oil economies lack, though it also creates vulnerability to water scarcity as upstream Turkish and Iranian dams reduce river flows.

A major oil discovery announced in January 2025 identified approximately 2 billion barrels in the East Baghdad field's southern extension into Diyala. This finding may transform the governorate's economic profile, adding petroleum revenues to the agricultural economy. Development timelines will depend on security conditions and investment decisions currently focused on Basra's established fields.

The government's 2024 budget allocated reconstruction funds for Diyala's ISIS-affected areas, with roads, housing, and public services receiving priority. By 2026, expect continued agricultural production, new oil development potentially beginning, and demographic stabilization as displaced populations return to communities where security has improved.