Iraq’s Cheongung-II Export Gains Momentum as Payment Dispute Is Resolved

[Financial News] The Iraqi government has ordered financial support for a contract to acquire the Korean-made Cheongung-II medium-range surface-to-air guided missile system, valued at about 3.7 trillion won. The move comes amid claims of delayed payments locally and ongoing financial consultations between the two countries since the contract was signed. LIG Defense & Aerospace (LIG D&A), a party to the contract, says it received the advance payment without issue and that the project schedule remains unchanged.
According to industry sources on the 12th, Iraq’s Finance Ministry announced that it had ordered funding for a contract to purchase a Korean air defense system at a meeting of the finance and defense ministers the previous day. The ministry said the measure was intended to support the protection of the country’s airspace and plans to develop the military’s defense capabilities. It also said it planned to provide the resources needed to arm and equip the military. The measure is understood to be related to the Cheongung-II contract.
Cheongung-II is a medium-range, medium-altitude interceptor system developed using domestic technology to counter aerial threats such as enemy aircraft and ballistic missiles. Iraq’s Defense Ministry signed a contract with LIG D&A in September 2024 to acquire Cheongung-II for about 3.7 trillion won. Iraq is the system’s third export customer, after the United Arab Emirates (UAE) and Saudi Arabia. However, after the contract was signed, concerns over securing funds within Iraq came under scrutiny. In July, claims emerged in Iraqi political circles that an initial payment of $500 million had been made for the air defense system contract, but subsequent payments were delayed.
In August, Iraq’s finance minister and the South Korean ambassador to Iraq met to discuss financing for the air defense system contract. The Finance Ministry’s order to provide funding is viewed as a follow-up move after those discussions. With the Iraqi government formalizing its pledge to provide the financial support needed to fulfill the contract, some of the uncertainty surrounding local financing is expected to ease.
LIG D&A says it has also received the down payment without issue and is proceeding with the project according to the original schedule. A LIG D&A representative said, “Separate from discussions on local financing arrangements, the down payment was made without issue, and the company’s project is being prepared as planned without disruption.”
[email protected] Jung Won-il Reporter