Soon.. Exchange companies will recover again and resume their work
The financial market is witnessing Iraq A gradual shift in the economic landscape as we approach return Exchange companies work to the fore.
Finance Committee reveals broad outlines of amending budget law
Today, Tuesday, the Finance Committee discussed during its meeting the draft law amending the first law to the Federal General Budget Law for the fiscal years (2025-2024-2023) No. (13) of 2023.
Atwan Al-Atwani, Chairman of the Committee, stressed the importance of these laws and emphasized discussing them and submitting some of them to the Council Presidency for a second reading, pointing to the formation of a body to estimate and monitor the distribution of revenues, in order to achieve sustainable development.
The Finance Committee discussed the articles related to the draft law amending the first law of the Federal General Budget Law for the fiscal years (2024-2025-2023) No. (13) of 2023, regarding the mechanism for exporting oil in the region and monitoring production costs, where the necessity of maturing the law to meet the requirements was emphasized, with the need to collect detailed data in numbers and tables to achieve the goal of the appropriate amendment.
On the other hand, the Finance Committee discussed the file of the proposed first amendment to the Law of the General Authority for Monitoring the Allocation of Federal Revenues No. (55) of 2017.
In June of last year, the Iraqi Parliament voted on the draft general budget law for the fiscal years (2023, 2024, 2025).
The value of the 2023 budget amounted to 197 trillion and 828 billion Iraqi dinars (about 152.2 billion dollars), with a total deficit of 64.36 trillion dinars (49 billion dollars).
The Iraqi government allowed the possibility of amending the articles or paragraphs of the law, which is what actually happened when the Council of Ministers approved amending Article (12/Second/C) of the Triennial Budget Law and referred it to Parliament for discussion.
Talk about "fair prices" for oil.. Meeting between Al-Sudani, Russian Prime Minister and Saudi Energy Minister
Prime Minister Mohammed Shia al-Sudani held a joint meeting with the Russian Deputy Prime Minister and the Saudi Minister of Energy to discuss the "energy market situation."
According to a statement issued by Al-Sudani's media office, a copy of which was received by Al-Jabal, "Mohammed Shia Al-Sudani held a joint meeting with Russian Deputy Prime Minister Alexander Novak, and Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al Saud."
The meeting witnessed "discussions on the conditions of global energy markets, and matters related to the production of crude oil, its flow to markets, and meeting demand."
He added, "The importance of maintaining stability, balance and fair prices was emphasized, while emphasizing the vital role played by the OPEC Plus group in this regard."
House of Representatives votes to extend legislative term for one month
link I'd like a date ...
Today, Tuesday, the Speaker of the House of Representatives, Mahmoud Al-Mashhadani, opened the 17th session with the attendance of 168 representatives.
More details but still no date
Parliament extends its term and ends reading of three laws
The House of Representatives voted, during its seventeenth session of its second legislative term yesterday, Tuesday, to extend its legislative term for one month, and while it voted to appoint Halo Mustafa Kaka Reda as Minister of Environment, it completed the first reading of the draft law amending the first federal general budget law.
This comes at a time when the parliamentary legal committee confirmed the existence of a package of laws that will be reviewed, carried over from previous parliamentary sessions, some of which need legal reformulation to keep pace with societal developments.
A statement by the media department of the House of Representatives, received by "Al-Sabah", stated that "the session, which was chaired by the Speaker of the House of Representatives, Dr. Mahmoud Al-Mashhadani, and attended by 168 representatives, witnessed at the beginning a vote on extending the legislative term for one month, in addition to removing the paragraph of voting on the draft law to ratify the air transport services agreement between the Government of Iraq and the Government of the Russian Federation from the agenda.
The Council also voted to approve "Hello Mustafa Kaka Reda" assuming the position of Minister of Environment in the current government, and taking the constitutional oath, after approving the addition of the paragraph to the agenda of the session.
The statement pointed out that "the Council completed the first reading of the draft law regulating the rights of the victims of Ibn al-Khatib Hospital, the victims of al-Naqa Center, and the victims of the al-Hamdaniya incident, submitted by the Committees of Martyrs, Victims, and Political Prisoners, and Health and Environment.
On the other hand, al-Mashhadani noted that the legal contexts related to the Council's exercise of its oversight role by questioning any executive body are ongoing and without defect, stressing that the Council will not take any step that violates the internal regulations of the House of Representatives and the Constitution. During the session, which was chaired by the Vice-President of the Council, Shakhwan Abdullah, the Council completed the first reading of the draft law amending the fifth amendment to the Civil Aviation Law No. (148) of 1974, submitted by the Transport and Communications Committee.
The statement of the Media Department indicated that "the Council completed the first reading of the draft law amending the first amendment to the Federal General Budget Law of the Republic of Iraq for the fiscal years (2023, 2024, 2025) No. (13) of 2023 submitted by the Finance Committee, in order to appoint a specialized international technical advisory body to work on calculating the fair estimated costs of producing and transporting oil produced in the region Kurdistan, for each field separately, and to preserve the national wealth and enhance the actual federal revenues, and enable the Oil Marketing Company (SOMO) to make optimal use of export outlets and diversify them, after which it was decided to adjourn the session. In a related context, a member of the parliamentary legal committee, Ahmed Fawaz Al-Watifi, told Al-Sabah that "after extending the legislative term, there is a package of laws that are supposed to be discussed in parliament and included in the agenda, and there are also many of these laws that need consensus to discuss and pass them."
He added that "the most important of these laws are the general amnesty law, as well as the cancellation of the decisions of the dissolved Revolutionary Command Council, and the Personal Status Law, in addition to several other important laws that are supposed to be completed during this parliamentary session," explaining that "the new presidency of parliament stressed the importance of expediting the discussion and formulation of these laws and proceeding with voting on them."
Al-Watifi continued, "The current parliamentary session played a major role in legislating many important laws carried over from previous sessions, which were the subject of controversy. Some of them were approved and the rest will be included in the agenda, most notably the agricultural land rental law, which was carried over from previous parliamentary sessions and was approved in the current legislative session this year."
US State Department warns: Armed factions in Iraq threaten the country's stability!
Al-Mustaqillah/- At a sensitive time when Iraq is under great pressure at the regional and international levels, the US State Department has issued serious warnings regarding armed factions in Iraq, stressing that the actions of these factions could drag the country into a regional war that could be devastating. This warning came from the State Department spokesman Matthew Miller, who indicated that these factions pose a direct threat to Iraq’s internal security and could lead to undesirable consequences if they continue to escalate.
What do these warnings mean?
Miller’s statements speak of armed factions operating outside the control of the Iraqi government, reflecting US concerns that these factions could spark a regional conflict. The US government has previously warned against Iraq’s involvement in ongoing regional conflicts, stressing that such factions could harm relations between Iraq and neighboring countries and could serve as a tool to indirectly ignite conflicts.
On the other hand, some see the armed factions in Iraq as part of the political and security fabric in some cases, and they contribute to protecting national security. These armed groups may have emerged under exceptional circumstances, such as confronting ISIS, and provide Iraqi territory with additional deterrence against any external threats. Therefore, from a local perspective, these factions may be considered protectors of the homeland, but there seems to be a growing ability of these factions to make independent decisions, which may threaten the political and security unity of Iraq.
Are there any possible solutions?
While the United States continues to stress the need to ensure stability in Iraq, calls for the restructuring of armed factions and ensuring that they are under state supervision are among the most prominent solutions on the table. However, it may be difficult to convince these factions, which represent local and religious forces, to give up their independent power in favor of a central authority that may not be able to protect their interests.
The most important question remains: Can the Iraqi government confront these challenges and control the armed factions that may be a key player in local politics? Or will the United States and the international community behind it put additional pressure on Baghdad to limit the activity of these factions, which may lead to internal tensions between the government and the armed factions?
The US State Department’s warning opens a wide door to discussion about the future of Iraq. Will the armed factions remain an active element in Iraqi politics, or is there a need to reduce their role in order to ensure the stability of the state and its neutrality in regional conflicts?
The House of Representatives completes the first reading of the budget amendment and adjourns its session
The House of Representatives voted to extend its legislative term for one month.
The House of Representatives completed the first reading of the draft law regulating the rights of the victims of Ibn Al-Khatib Hospital, the victims of Al-Naqa Center, and the victims of the Al-Hamdaniya incident.
The House of Representatives completed the first reading of the draft law amending the fifth amendment to the Civil Aviation Law No. (148) of 1974.
Parliamentary Finance: Delay in budget schedules did not affect government projects
The Finance Committee of the House of Representatives confirmed today, Tuesday, that the delay in the budget schedules did not affect investment and operational projects, while indicating that there is a parliamentary movement to solve the financing problem .
Member of the Parliamentary Finance Committee, Hussein Mounes, told the Iraqi News Agency (INA): "The 2024 budget did not include large sums of money for the governorates, despite the existence of allocations, the funding has not yet been achieved, and this is the main problem we face in the current budget ."
He added, "The Finance Committee is following up on this issue seriously, and two weeks ago hosted some of the figures concerned with this matter."
He stressed that "delaying the schedules will not affect the progress of the operational and investment budget, as the government continues to finance important and necessary allocations ."
He pointed out that "this delay will not affect the general procedures of the state ."
Closed meeting of the Parliamentary Finance Committee to discuss seven files
The Parliamentary Finance Committee held a closed meeting this morning, Tuesday, to discuss the draft of the first amendment to the Federal General Budget Law for the fiscal years (2023 - 2024 - 2025) No. (13) of 2023.
The committee will also discuss the report of the draft law of the Center for Banking Studies to submit it for the second reading. , and the proposal for the first amendment to the General Authority for Monitoring the Allocation of Federal Revenues Law No. (55) of 2017, in addition to the proposals for the first amendment to the National Authority for Nuclear and Radiological Control Law No. (1) of 2024, and the proposal for the twenty-second amendment to the Staff Law No. (25) of 1960 submitted by the Health Committee and other topics.
Huge rise in dollar sales.. What is happening in Iraq?
link the last 2 sections are the most interesting IMO
After the Iraqi currency auction sales exceeded $65 billion by the end of October 2024, economists expressed concerns that the correspondent banking system adopted by Iraq to finance foreign trade would turn into a new method of currency smuggling and money laundering through “inflating the value of invoices.”
“This huge figure is expected to reach $75 billion by the end of the year, the highest in Iraq’s history,” Nabil al-Marsoumi, a professor of oil economics, told Alhurra. This means that the new measures taken to curb currency smuggling and money laundering “did not succeed.”
According to data issued by the Central Bank of Iraq, its sales of foreign currency have witnessed a clear increase during the current year, exceeding 6 billion dollars last October, or about 274 million dollars per day.
These figures raised reservations among Iraqi economic experts, as they are completely different from what Iraqi Prime Minister Mohammed Shia al-Sudani stated in February 2023, when he appeared on the official Al-Iraqiya channel at the beginning of his assumption of office, protesting the size of currency auction sales at the Central Bank of Iraq.
During that interview, which coincided with the start of work on the electronic platform and the SWIFT system, Al-Sudani said, “We always talk about the existence of fake invoices and the exit of money abroad through smuggling, and this is a reality,” expressing his surprise at imports that were worth about $300 million per day.
He expressed his belief that "this explains why the currency was being smuggled abroad, and this has been a chronic problem for years," noting that this money was being taken out "with forged invoices."
Conflicting numbers... and doubts
Knowing the size of Iraq’s imports is a dilemma. According to estimates by the Central Statistical Organization, Iraq imported $24.6 billion worth of commodities and petroleum products in 2023, an increase from $21.9 billion in 2022.
These numbers are much lower than the Central Bank’s foreign currency sales in 2023, which amounted to $40.9 billion, and lower than its sales in 2022, which amounted to $48.5 billion.
In contrast, the German company "Statista", which specializes in market and consumer data around the world, revealed the value of Iraq's imports for the year 2023, which reached $95.53 billion. Meanwhile, the Iraq Future Center spoke of imports that reached $67.25 billion.
These financial and import flows were addressed in a study titled “The Role of Currency Auctions in Illicit Financial Flows in Iraq,” which concluded that the currency auction was a key window for illicit financial flows in Iraq. It said that more than $132 billion out of the total sales of $350 billion between 2007 and 2013 were smuggled through it.
In a report published by the Integrity Commission entitled “The Role of the Financial Control System in Preventing the Phenomenon of Foreign Currency Smuggling,” which relied on the sale of currency in the Central Bank of Iraq as a model, it was concluded that there are many major violations and breaches in the instructions and laws issued by the Central Bank, as a result of deliberate negligence that led to serious violations that resulted in the phenomenon of currency smuggling as one of the most important aspects of corruption in Iraq.
scary import
The US administration excluded a large number of Iraqi banks during 2022 and 2023 from dealing with the "foreign exchange window" and imposed sanctions on them due to suspicions of corruption surrounding them. And began dealing with an electronic platform through which banks raise their dollar requests in coordination with international bodies, in order to tighten and organize the operations of the foreign exchange window, ensuring effective control over it.
However, the problem that occurred is that: “The mechanism has not changed much except for the stimulation of balances, meaning that we are back to dealing with the old mechanism before the platform, the difference is that the enhancement process is audited by American banking institutions,” as economist Abdul Rahman Al-Mashhadani told Al-Hurra.
Al-Mashhadani points out that the World Trade Center, which issues an annual report on the volume of trade, “talks about $85 billion, the value of Iraqi imports for the year 2023.”
This is a problem that comes from the fact that Iraq is an “importing country, and we do not have a manufacturing process to reduce the volume of imports. This comes because we do not have a source of funding for the budget other than oil, we only have oil revenues.”
Another fact that Al-Mashhadani points out: “The real import figures only come from outside Iraq when those countries disclose the size of the imports, and we find that they are large and terrifying numbers.”
According to Al-Mashhadani, the questions that should be raised today relate to “the extent of Iraq’s actual need to import materials at these amounts in one year and the accuracy of these numbers. We must investigate whether there is inflation in the invoices. Here we need to pause to scrutinize whether these goods that were announced have entered Iraq or not.”
Al-Mashhadani's statement here is consistent with the Integrity Commission report, which cited several aspects of currency smuggling, the most important of which is the inflating of "invoices for fictitious commodity imports," which it said amounted to only 1% of the materials entering Iraq in a sample of the lists reviewed by the report.
complex issue
Speaking to Alhurra, Professor of Economics and Banking Sciences, Ahmed Hithal, criticised the Central Bank’s postponement for many years of implementing the platform for transferring dollars, which would identify the final beneficiary of foreign transfers to finance foreign trade, “on the pretext that we cannot control the banking system, and that the banking system is backward and does not have sufficient flexibility to implement electronic automation in the issue of transferring dollars.”
Despite the implementation of the electronic platform: “The transfer issue is still very complicated by the Central Bank, and there are still invoices from merchants, and there are still credits from banks stating that these invoices are being fabricated and inflated, so that the highest possible amount of dollars can be sold through the platform and correspondent banks.”
Hedhal justifies his opinion by saying, “It is illogical that the dollar has been sold daily for five days a week during the past few days for more than $250 million.”
Hedhal believes that this number is “very large,” and expresses his belief that these amounts of dollars “do not match the size of actual imports,” noting at the same time that “many foreign transfers and registered goods and services do not enter under their real names.”
Which means: “There is a significant inflation of imports by certain groups, and these are linked to the importing countries and the intermediary countries that feed these remittances.”
Money laundering is "over"
The Prime Minister's financial advisor, Mazhar Mohammed Saleh, rules out the possibility of smuggling or money laundering through the foreign currency auction "because it is almost over, and there are now financial reinforcements to American correspondent banks that have the ability to comply and monitor money laundering operations."
What is happening today, according to what Saleh told Alhurra, is that “Iraqi banks that are not sanctioned can open accounts with foreign correspondent banks that are able to monitor and know the final beneficiary of the transferred funds. Therefore, the compliance rules have changed and become stronger.”
However, Saleh agrees with what the economic experts have said: “Iraq does not need these huge sums that are followed by another story related to the size of the large imports, and the variety and multiplicity of goods that are imported without imposing controls on them. Especially the luxury or trivial goods that we see in the markets and on which foreign currency is spent.”
Therefore: “We must set priorities in the import process, and prevent the entry of goods that have no economic value.”
As for the difference between the volume of imports that are announced and those that are not commensurate with the materials that are imported, he says: “There are goods that are exempt from taxes for investors, and there is a different customs policy in the region than in the rest of Iraq. There are also goods that are delayed in arrival, or arrive in the form of flows that require a longer period of time.”
the solution?
For all the reasons mentioned, Iraq, according to the Prime Minister's financial advisor, "needs a major balancing act, especially with regard to revitalizing the industrial sector, and studying the imported goods and commodities." We must also "move to an automated system for recording incoming goods, so that we can see which goods are actually arriving and which have been supplied to trade with hard currency and dinars purchased from them."
In addition to "subjecting the border crossings and treating them as one region. All of this needs time, and Iraq has started taking steps today to achieve this." He concludes his speech by saying: "In my estimation, there are two gaps, the first related to the process of organizing the type of goods entering Iraq. The second related to reducing customs violations so that we can obtain correct estimates of the volume of imports."
In turn, Hathal believes that there is great importance in “knowing the primary beneficiary of the transfer through the platform, through cooperation between the relevant authorities, namely the Ministry of Commerce and Planning, the Central Bank, Customs, and the Ministry of Finance, through the Skoda system.”
He points out that economists "have often called for the implementation of this system, which is in place globally, to determine the real imports and the amounts that must be paid." He noted that "it is not logical that we have about 60% of trade that is not organized, meaning we have unorganized traders who do not have legal status and who put pressure on the internal exchange rate and cause it to rise, and they are the beneficiaries of the external transfer without having legal status."
Resolving the conflicting import figures and increasing the volume of the Central Bank’s dollar sales to finance foreign trade, as Al-Mashhadani sees it, requires “swift and deterrent government measures, as those who carry out these operations are corrupt whales of merchants who finance parties that influence the decision.”
There are also "influential political parties involved, and hotbeds of corruption that require political will and strong decision-making to combat, noting that the law exists, but it is not strong enough to strike the biggest whales of corruption."
Al-Sudani confirms that Iraq will avoid the consequences of regional conflicts and follow a policy of regional balance
During a dinner banquet held for the attendees, Al-Sudani reviewed what was achieved by the government program during two years of work, most notably the integration of the positive investment environment that encouraged major international companies to work in Iraq and contribute to the broad development and economic movement witnessed by the country.
Al-Sudani stressed that the Iraqi diplomatic missions are responsible for conveying the true image of stability in Iraq, and informing the world of the great strides achieved by our people, pointing to the success of the population census process that took place simultaneously in all parts of Iraq, and the image of stability and cooperation that the citizens showed and proved during the process.
He touched on Iraq's firm and principled positions towards developments in the region, the government's success in sparing our country the consequences of conflicts, the policy of balance it follows at the regional and international levels, and the success in ending the file of the presence of the international coalition to fight ISIS, as well as ending the political mission of the United Nations.
Al-Sudani listened to the interventions of a number of heads of Iraqi diplomatic missions, and urged the attendees to make every effort to care for the affairs of Iraqi citizens abroad, communicate with them, and provide services to them.
The Trump Administration and Iraq: What Comes Next?
The re-election of Donald Trump probably signals the commencement of a more assertive U.S. effort versus Iranian influence in Iraq. This is not because Trump himself has any interest in Iraq: he views it as a dusty junkyard with oil but nothing else. However, Republicans across the board want to reduce Iran’s influence and Iraq is the scene of Iran’s greatest success: taking control of a major Arab nation using the blood and treasure of America’s wars in Iraq as Tehran’s springboard to success. The new U.S. effort to reduce Iranian influence in Iraq will have little to do with the number of U.S. troops on the ground. Instead, a counter-influence campaign against Iran-backed groups will rely upon U.S. financial intelligence, sanctions and political warfare against the militias and their ability to use the Iraqi petro-economy as a source of financing security threat. The Trump administration will see itself as having little to lose in Iraq and everything to gain by pursuing a thrifty coercive effort against Iraq’s government to distance Baghdad from Iranian influence.
Donald Trump has never had much interest in Iraq as a country. His only visit there did not even include the capital Baghdad or a meeting with the Iraqi government, but instead was limited to visiting U.S. troops located at the Al-Asad base in the country’s remote western desert.1 That says a lot about his laser focus on U.S. interests in places like Iraq, which he will view as an unstable mess of a country where the U.S. has little to gain.
When Donald Trump is inaugurated for the second time in January 2025, he is unlikely to give much thought to Iraq or perhaps to ever travel there, but his foreign policy team will have a lot to say and do in the country. Many of the current Republican foreign policy elite dealing with the Middle East deeply care about Iraq. Veterans like Mike Waltz, Trump’s pick for National Security Advisor,2 spent years of their lives in Iraq as service members. They will never stop trying to reverse the outcome in Iraq – that of Iran vaulting over the backs of more than 4,500 dead Americans to reap all the benefits and end up picking Iraq’s prime ministers.3
Republicans have watched the situation in Iraq worsen considerably in the years since Trump left office, with Iran-backed militias losing the October 2021 elections and yet still emerging triumphant in the subsequent government formation in 2022,4 emplacing Prime Minister Mohammed Shia al-Sudani, who they describe in derogatory terms as their “general manager”.5 This has created a burning, pent-up desire to shift the balance in Iraq away from Iran. Even future Vice President J.D. Vance, an Iraq veteran who thinks the invasion was America’s greatest strategic blunder, sees Iran’s domination of Iraq as a failure of U.S. policy that should be reversed.6
Yet neither Trump nor Vance are supportive of major new military campaigns in the Middle East. The last time that America had “first among equals” status in Iraq, it was based on a powerful military presence: the 2003-2011 period, with up to 185,000 U.S. troops in the country. If the U.S. government tries to reduce Iranian influence in Iraq in 2025 and the years afterwards, it will not be through the deployment of troops but rather through an “intelligence surge”.
The U.S. decision-makers who appear to be lining up to serve in Trump’s new Middle East team are very familiar with intelligence, special operations, asymmetric warfare, and sanctions. They include former Green Berets like Mike Waltz and Rob Greenway, whose unit was formed precisely to undertake unconventional warfare, and numerous U.S. army veterans of the shadow war fought between the U.S. and Iran inside Iraq since 2003, for instance Joel Rayburn, who will probably take a key Middle East portfolio at the State Department. They will reassemble a powerful interagency task force with the specific intention of damaging Iran’s militia partners in Iraq and limiting their ability to feed off Iraq’s $150-billion annual budgets.7
The U.S. does not need troops on the ground for these kinds of actions. Iraq is highly vulnerable to an intensified sanctions enforcement policy,8 which could build on a growing raft of evidence in mainstream investigative journalism regarding Iran’s use of Iraqi banks to gain access to the U.S. dollar,9 and about the abuse of Iraq’s oil sector to make money for Iran-backed militias and to aid Iranian crude oil sanctions evasion.10 Oil-rich Iraq is the “cash cow” for the entire axis of resistance outside Iran – with Lebanese Hezbollah11 and Yemen’s Houthis12 crowding in alongside Iraqi militias to get a share.
In 2025, the Trump administration will selectively sanction Iraqi banks, airlines, port operators and shippers to send a signal to other commercial players to distance themselves from terrorist financing in Iraq. U.S. sanctions waivers for Iraq’s purchase of Iranian gas and electricity will be tightly conditioned on the rapid diversification of energy supplies away from Iran.13 Greater scrutiny will be directed at indirect sanctions evasion – for instance, trilateral gas swaps including Iraq, Iran and Turkmenistan.14 Washington may withhold multi-month extensions of the sanctions waivers under Trump, opting for single-month waivers and lapses in waivers that will send shivers through the Iraqi banking sector and disrupt their access to hard currency. The Popular Mobilization Forces’ ambition to grow the Muhandis General Company economic conglomerate into an Iraqi version of the Iranian Revolutionary Guard’s Khatam ol-Anbia15 will be actively opposed, as it was under the first Trump administration.16
The Trump Iraq team will not give away anything that they can instead trade for changes in Iraqi behavior. A more aggressive U.S. State Department country team will be deployed to Embassy Baghdad, including a tactically adept ambassador who is selected precisely for their ability to play hardball with Iraqi interlocutors. One hugely under-used tool in the U.S. arsenal is unparalleled U.S. financial intelligence on where Iraqi politicians and businesspersons have their assets hidden, inside Iraq and outside.17 Another is communications intelligence that gives a detailed picture of how political leaders are positioning themselves privately, with foreign nations (like Iran) and with other factions.18 This intelligence dominance was privately used in the first Trump term to occasionally warn Iraqi leaders to observe U.S. red lines, for instance to not form the Muhandis General Company when the militias first sought to do so in 2018.19 The U.S. can be expected to “show what it knows” more often in the future, a tactic that tends to elicit rapid and favorable “behind closed doors” behavior changes in Iraqi leaders.20
What kind of reaction will be created by this kind of U.S. activism in Iraq? Iran would not be happy, but nor would Tehran want to openly challenge the U.S. under Trump, especially after Iran was shown to have meddled with his election campaign21 and even planned to assassinate him.22 An indirect Iraqi reaction is more likely but the militias have also learned to be cautious about threatening U.S. personnel in Iraq. In 2024, under President Joe Biden, the U.S. undertook painful strikes on mid-level militia leaders in Baghdad in January-February,23 and again in June-July,24 creating noticeable windows of deterrence afterwards. The U.S. has frequently appeared to be on the very edge of striking inside Iran for actions undertaken by Iran-backed militias in Iraq, such as the January 28, 2024 killing of three Americans at the Tower 22 base in Jordan.25 Militia strikes on American bases in Iraq may occasionally be undertaken, but probably not regularly or heavily enough to alter U.S. calculations.
If Iran and its militias escalate and kill Americans, the U.S. option of shuttering the embassy in Baghdad remains on the table, as it was in early 2020 if escalation against U.S. interests had continued to surge upwards.26 It remains unclear how Trump’s instincts on foreign deployments – that they are a waste of time and money, and a risk for no benefit27– will affect the future of U.S. sites in Iraq and Syria. They may be closed in 2025-2026, as the U.S.-Iraq Higher Military Commission seems to envisage,28 or they may hang on, as the U.S. bases in Syria did for years after he initially ordered them closed.29 What is clearer is that Trump will retain the option of shuttering the Baghdad embassy if he wishes, but could also stay in bases like Iraq’s Al-Asad Airbase if he wishes. Neither having an embassy in Iraq, nor adhering to prior deliberations by the U.S.-Iraq Higher Military Commission are sacred to Trump. These are just bargaining chips in a game. Trump probably does not want an Afghanistan-type chaotic withdrawal on his watch. Nor is it clear that Iran or the militias really will want the U.S. fully gone if this frees Washington to act in a fully unconstrained manner.
What non-kinetic options does Iraq have? Could Iraq take steps to reduce its dependence on the trading of oil in U.S. dollars? The examples of Iran and Russia are instructive: it remains very hard to create non-dollar portions of the global economy that can operate at real scale,30 and Iraq would not want to trade its oil at a significant discount, as Iran does.31 Greater Iraqi economic integration with China is already underway and likely to continue, Trump or no Trump, but it is largely limited to infrastructure projects where most U.S. companies do not seek to compete due to profitability, corruption and security concerns.32 Collaboration on Iraqi mega-projects is a potential path in the U.S.-Iraq relationship that expired years ago: Trump will instead see those opportunities inherent in the U.S.-Israel-Gulf-India axis.33
For European players in Iraq, the Trump administration will undoubtedly be a difficult partner. Washington will seek burden-sharing in new ways: for instance, in European and UK sanctions against U.S.-designated terrorist groups like Kataib Hezbollah, and in anti-corruption and human rights rulings against Iraq’s worst offenders among the Iran Threat Network, many of whom visit Europe and have property in the UK and on the contingent.34 While the Obama and Biden White Houses tended to view Europeans as a good way to pass U.S. messages to Iran-backed militias in Iraq,35 the Trump team may not view this mechanism as worthwhile. Washington can easily communicate its demands indirectly via Prime Minister Mohammed Shia al-Sudani’s Iraqi government, which was supported by different actors such as Asaib Ahl al-Haq, Badr and Kataib Hezbollah. A new ambassador in Baghdad will be empowered to speak quite candidly regarding U.S. expectations from Iraq.
If anyone in Iraq is especially happy about Trump’s return, it is the Iraqi Kurds, and most specifically the Barzani family who run the Kurdistan Democratic Party (KDP), who recently won the plurality of seats in the Kurdistan Region’s October 2024 parliamentary elections.36 The tight connection between the Barzanis and the Republican Party in Congress has surprised even Sudani’s Washington-watchers.37 Going forward, Trump’s team will not risk relations with state partners like Turkey to serve a Kurdistan independence agenda, but the U.S. will probably weigh-in on Kurdistan’s side when it comes to issues of Kurdish oil exports, Baghdad-Kurdistan revenue sharing, and an ongoing U.S. military presence in Kurdistan. Recent U.S. Congressional letters – some signed by new National Security Advisor Mike Waltz – attest to the depth of ongoing Republican commitment to the Kurdistan Region.38
The Biden administration’s conception of a “360⁰ relationship” with Iraq39 that downplayed Iranian influence was probably always unsustainable. Looking forward, Iraq will be viewed first and foremost by the U.S. through the lens of Iranian influence, and Iraqi leaders and institutions will be judged according to their apparent leaning towards or away from Tehran. No Iraqi prime minister – especially not the militia-supported Mohammed Shia al-Sudani – will receive carte blanche support from Washington.
Instead, each Iraqi premier will be viewed with appropriate skepticism and in a transactional manner. Only by meaningfully drawing Iraq away from Iran can Baghdad be drawn closer to Washington and receive differentiated treatment from other arms of the axis of resistance like Hezbollah-controlled Lebanon, Houthi-held Yemen, and parts of Syria. Will there still be shades of grey? Of course: this is Iraq, still trapped between Iran and the United States. But no one should doubt that Trump’s win is the outcome many proponents of engagement with Iraq’s militias feared the most: an almost zero-sum game in which Iraq must choose between deeply embedded Iran-backed militias and a vengeful U.S. security establishment that sees Iraq as largely lost to Iran.
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