Barham Salih, Iraqi’s deputy prime minister, on Monday opened negotiations over a bilateral trade agreement with the European Union, admitting that much of the government’s $41bn budget for next year would be swallowed up by moves to secure the conflict-ridden country.

Making a pitch for foreign direct investment to boost reconstruction, Mr Salih warned that observers “should not underestimate the difficulties of this transition” from dictatorship to democracy. But he insisted that “many provinces of Iraq are relatively safe and secure and are able to receive investment”.