{"id":110670,"date":"2026-05-12T19:16:08","date_gmt":"2026-05-12T19:16:08","guid":{"rendered":"https:\/\/www.europesays.com\/iran\/110670\/"},"modified":"2026-05-12T19:16:08","modified_gmt":"2026-05-12T19:16:08","slug":"iraqs-new-prime-minister-faces-immediate-test-over-iran-and-the-u-s","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/iran\/110670\/","title":{"rendered":"Iraq\u2019s New Prime Minister Faces Immediate Test Over Iran and the U.S."},"content":{"rendered":"

Iraq may soon have a new prime minister as the Coordination Framework, Iraq\u2019s largest parliamentary bloc and a coalition of Shia Arab political forces, \u00a0nominated<\/a> businessman Ali al-Zaidi for the post, hoping to break a deadlock between caretaker prime minister Mohammed Shia Al-Sudani and former prime minister Nouri Al-Maliki, who was previously nominated for the post. U.S. president Donald Trump spoke to Zaidi<\/a> and pronounced himself satisfied: \u201cWith our help, he won, and we want him to do very well.\u201d<\/p>\n

Trump may have felt some affinity for Zaidi, a billionaire businessman who is new to politics, but he may also have run out of options after refusing to support Sudani and publicly rejecting Maliki, despite a Wall Street Journal report that a Zaidi-linked bank<\/a> did business with Iran-linked militias.<\/p>\n

If Zaidi can form a government in 30 days and formally take the reins, what are the top issues he must address with the U.S.?<\/p>\n

Iran-linked militias.<\/p>\n

The \u201cfounding charter\u201d of Iraq\u2019s militias is arguably\u00a0Coalition Provisional Authority Order Number 2: Dissolution of Entities<\/a>, which, in May 2003, dissolved, but did not disarm, Iraq\u2019s military and security services. Many of the 400,000 newly unemployed troops joined the anti-American resistance and later joined al-Qaeda if they were Sunni Muslims, or the Mahdi Army if they were Shia Muslims. The militias played a part in defeating Islamic State of Iraq and the Levant that controlled significant territory in Iraq and Syria from 2013 to 2019.<\/p>\n

In May 2025, two U.S.\u00a0legislators asked<\/a>\u00a0Secretary of State Marco Rubio to expand sanctions on Iranian-backed militias and designate the PMF, the Al-Muhandis General Company, and the\u00a0Badr Organization<\/a>\u00a0(a Shia Islamist political party and paramilitary group) as\u00a0Foreign Terrorist Organizations<\/a> (FTO); none of these entities have been designated an FTO, though they have all been sanctioned.<\/p>\n

In August 2025, U.S. pressure (and internal divisions in Iraq) caused Baghdad to\u00a0withdraw legislation<\/a>\u00a0that would formally integrate the PMF into Iraq’s armed forces under unified military command. Washington\u2019s concern was that the legislation would legitimize groups it considers terrorists while creating a parallel force separate from the regular Iraqi military that\u00a0has ties<\/a>\u00a0to the U.S. military.<\/p>\n

Washington has made curbing militia influence<\/a> a key condition for stronger cooperation.<\/p>\n

Iraq\u2019s economic relations with Iran.<\/p>\n

Iraq\u2019s economy remains heavily dependent on oil and vulnerable to external shocks, corruption, and illicit finance. The U.S. has expressed concerns about illicit financial flows and sanctions vulnerabilities tied to Iranian influence<\/a>.<\/p>\n

Iran is one of Iraq\u2019s top trading partners<\/a>, but the relationship is\u00a0 asymmetric: Iraq imports far more from Iran than it exports to Iran. Bilateral trade (mostly Iraqi imports of Iranian goods and natural gas) has hovered around $12\u201315 billion per year in recent years, and late 2025, the Iran-Iraq Joint Chamber of Commerce set a three-year goal to increase bilateral trade<\/a> to US$20 billion.<\/p>\n

Iraq imports natural gas<\/a> almost exclusively from Iran (via pipelines to power plants near Baghdad and Basra), as local production and infrastructure have lagged behind demand for electricity generation. Volumes fluctuate significantly due to payment disputes, U.S. sanctions pressure, Iran\u2019s domestic shortages (especially in winter), and recent regional conflicts.<\/p>\n

Natural gas imports have been highly volatile in 2025\u20132026. In late 2025, imports were fully suspended<\/a> due to payment\/U.S. sanctions issues and Iran\u2019s domestic needs), causing major power shortfalls of 4,000\u20134,500 megawatts (MW), about 40% of Iraq\u2019s needs. Imports resumed<\/a> in February 2026, briefly increased<\/a> in mid-March 2026 then halted after Israel\u2019s attack on Iran\u2019s South Pars gas field (a loss of about 3,100 MW). Imports then resumed<\/a> as of late April 2026.<\/p>\n

Iraq plans to reduce or eliminate gas imports from Iran by capturing<\/a> more of its own flared associated gas, worth US$4\u20135 billion\/year currently. Iraq\u2019s Ministry of Oil states that over 80%<\/a> of associated gas is already being captured, with a target of zero routine flaring by 2028 in major southern fields such as Rumaila, West Qurna?1, and Zubair. This aligns with the national goal to eliminate<\/a> routine flaring across the country by 2028.<\/p>\n

Washington will likely support any Iraqi plan to reduce energy dependence on Iran in support of its overriding goal to cripple Iran\u2019s economy and force regime change.\u00a0<\/p>\n

US investment in Iraq.<\/p>\n

Chinese companies<\/a> (primarily state-owned China National Petroleum Corporation\/PetroChina, and others like China National Offshore Oil Corporation, Sinopec, and smaller independents such as United Energy Group) manage or are heavily involved in roughly two-thirds (around 67%, or 3 million barrels per day) of Iraq\u2019s current oil production.<\/p>\n

After Russian oil companies, especially Lukoil, withdrew from Iraq<\/a> in 2025 due to U.S. sanctions, U.S. and other Western companies were invited to take over their projects, with American firms emerging as the primary replacements.<\/p>\n

The U.S. mostly imports crude oil and petroleum products from Iraq, but Iraq imports<\/a> a varied array of U.S. goods, such as agricultural commodities, machinery and industrial equipment, health equipment, consumer goods, commercial aircraft, and defense articles.\u00a0<\/p>\n

Iraq is a major and consistent buyer of U.S. rice<\/a>, ranking among the top 10 U.S. rice export markets and the second-largest market for long-grain milled rice. U.S. rice is the only U.S.-origin item in Iraq\u2019s government-run food basket program that was managed by one of Mr. al-Zaidi\u2019s businesses.\u00a0<\/p>\n

Trump may be interested in U.S. participation in Iraq\u2019s Development Road<\/a> project, a US$17-24 billion effort to transform Iraq into a major transit hub connecting the Persian Gulf to Europe via Turkey, with railways, highways, and the Grand Faw Port as its core infrastructure, and that aims to help diversify Iraq\u2019s economy away from hydrocarbons.<\/p>\n

Other important issues are:<\/p>\n

U.S. strategic cooperation & military ties. Iraq and the U.S. have longstanding military ties (dating back to the 2008 Strategic Framework Agreement<\/a>), but these have become more sensitive amid regional tensions, and the U.S.\/Israel attack on Iran. Baghdad will seek to avoid taking a side or being a launch pad for future American and Israeli attacks or surveillance of Iran. Washington, on the other hand, clings to its notion of droit\u00a0de\u00a0seigneur, the legacy of over 4,400 dead American troops and US$ trillion spent in a war of choice to eliminate Saddam Hussein\u2019s non-existent weapons of mass destruction.<\/p>\n

Foreign troops are supposed to leave Iraq by September 2026<\/a>, but U.S. Secretary of War Pete Hegseth announced U.S. troops will be \u201changing around\u201d<\/a> the region after the end of the U.S.-Israel war on Iran. Will Washington press Baghdad for an indefinite delay to the troop redeployment? If so, that will put Zaidi in a dangerous position early in his term when he should be concentrating on consolidating his authority and explaining his program to the Iraqi people.<\/p>\n

Sovereignty and perceptions of external influence. Iraqi leaders have always been sensitive to any perception of U.S. interference<\/a> in Iraq\u2019s internal affairs, especially in prime ministerial selection. Just as the Americans obsess about Iranian influence in Baghdad, Iraq\u2019s leaders are anxious to avoid the fates of Germany and Japan \u2013 pro-U.S. satellite states with little influence on U.S. military operations launched from their territory.<\/p>\n

Zaidi will have to engage Washington while being careful about national sovereignty concerns. Aside from American feelings of entitlement is the \u201cTrump factor,\u201d where a random tweet at 3:00 AM can upset sensitive negotiations or appear to compromise local leaders. The Wall Street Journal report of a secret Israeli military base<\/a> in Western Iraq \u2013 that the Americans knew about \u2013 will limit Zaidi\u2019s cooperation with Trump\u2019s policies and cast doubt on future Iraqi military cooperation with the U.S.<\/p>\n

Government formation and inclusive politics. Washington has signaled it wants the next Iraqi government to exclude<\/a> hardline militia leaders and Iranian proxies from senior roles – a condition that could complicate Zaidi\u2019s cabinet negotiations \u2013 but Zaidi\u2019s discomfort will be secondary to Washington\u2019s prioritization of limiting real or perceived Iranian influence. And that inclusive government will have to reflect Iraq\u2019s diverse politics, e.g., Shiite, Sunni, and Kurdish blocs, while satisfying enough U.S. demands that it can get on with the business of governing. \u00a0<\/p>\n

By James Durso for Oilprice.com<\/p>\n

More Top Reads From Oilprice.com<\/p>\n

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