American financial power will remain when American troops leave. Iraq\u2019s oil revenues are integrated into the international dollar system, and Iraqi banks depend on access to dollar transactions and correspondent banking.<\/p>\n
Washington demonstrated this leverage in 2026 by\u00a0restricting physical-dollar shipments<\/a>\u00a0to Iraq amid concerns about Iran-backed militias and illicit financial activity. The restrictions were eased after Baghdad took steps involving financial controls, banking reform, and militia disarmament. Will Washington stop dollar shipments if the militias defy the 30 September mandate?<\/p>\n This gives Washington a powerful post-withdrawal instrument. It can restrict access to the international financial system, sanction banks and individuals, and pressure Iraqi institutions to prevent money laundering, sanctions evasion, and militia financing.<\/p>\n But there is a distinction between protecting the integrity of the U.S. Dollar system and using the dollar to dictate Iraqi political decisions. The former is legitimate and sustainable, but the latter could encourage Baghdad to seek alternatives to the dollar.<\/p>\n A smarter policy is conditional access: Iraqi oil revenues remain Iraqi revenues, but Iraqi banks seeking access to international finance must meet international standards for transparency, anti-money-laundering enforcement, and sanctions compliance.<\/p>\n The most complicated issue will be Iraq\u2019s Iran-aligned militias, \u201cthe resistance\u201d in the eyes of many Iraqis.<\/p>\n Washington should support the principle that all armed formations must answer to the civilian government and the military chain of command, but it should be cautious about demanding that Baghdad disarm every militia immediately.<\/p>\n One thing Iraqis appear to agree on is that the militias will not start\u00a0surrendering weapons<\/a>\u00a0to Baghdad until\u00a0after\u00a030 September. Hopefully, the American embassy is keeping the White House apprised of this, so we do not wake up on 1 October to a storm of angry tweets.<\/p>\n Many militias are not simply armed gangs. They have political parties, parliamentary representation, businesses, social networks, and some are officially part of Iraq\u2019s security structure. Trying to eliminate them simultaneously could start a civil war, triggering political fragmentation, economic deterioration, and Iranian intervention.<\/p>\n Consequently, 30 September should be a political milestone rather than a deadline for collecting every militia weapon, though it is odd to hear Americans complaining about private ownership of firearms. Washington should insist that progress toward state control be genuine and irreversible while allowing Baghdad to determine the pace and mechanics.<\/p>\n The objective should be transformation instead of immediate demobilization. Iraqis remember the violent consequences of America\u2019s heedless decision in 2003 to suddenly\u00a0disband Iraq\u2019s army<\/a>. Many of the cashiered soldiers joined the resistance against the U.S. -led coalition, and their officers helped organize the Islamic State. Militia personnel who accept Baghdad\u2019s authority can join the military or police, while independent chains of command, unauthorized military operations, and heavy weapons gradually disappear, though the economic enterprises may become assets of allied political parties.<\/p>\n Disarmament needs specific conditions. From Northern Ireland to Bosnia, successful militia transitions required three items:\u00a0 a strong state, political and economic incentives, and voluntary disarmament. Iraq lacks these conditions, making externally imposed disarmament a potential trigger for civil conflict.<\/p>\n Several militias recently\u00a0proposed<\/a>\u00a0putting the heavy weapons into storage, but under their control, and refraining from military activity for two years; Baghdad rejected the offer and negotiations are ongoing. Also proposed was the demobilization of the Kurdish militia, the\u00a0Peshmerga, but Washington will probably oppose that as the armed Kurds are a useful \u201cthumb on the scale\u201d in Iraq and regionally, and\u00a0Iraq\u2019s constitution<\/a>\u00a0allows the Kurdish Regional Government to establish and organize its own internal security forces. (However, in Fiscal Year 2027, the Pentagon has proposed\u00a0slashing funding<\/a>\u00a0for Kurdish security forces.)<\/p>\n Washington should also avoid demanding that Iraq choose between the United States and Iran. Iraq\u2019s geography, history, religious ties, and economic relationships make a substantial relationship with Iran inevitable. The U.S. administration\u2019s\u00a0\u201cOperation Economic Outcast\u201d<\/a>\u00a0is aimed at Iran but will probably hit Iraq, which cannot afford more economic disruption as it is still recovering from three wars and decades of economic sanctions. And like Russians in the 1990s, many Iraqis may associate the Americans\u2019 gift of \u201cdemocracy\u201d with disorder and privation.<\/p>\n An Iraqi politician can be pro-Iran. Iraq can trade with Iran. Iraq can buy Iranian electricity. None of those things threaten American interests and are more about Washington\u2019s grievances with Tehran than Iraqi sovereignty.<\/p>\n The red line should instead be whether Iranian influence operates through Iraqi politics or through an Iranian-backed parallel military structure inside Iraq. A mature Washington will tolerate some Iranian influence while opposing Iranian control over Iraqi armed forces, borders, or illicit financial networks.<\/p>\n American financial leverage can also be used to strengthen rather than undermine Iraqi sovereignty.<\/p>\n Instead of telling Baghdad, \u201cDisarm by 30 September or face punishment,\u201d Washington could establish a positive relationship between Iraqi institutional performance and American cooperation.<\/p>\n Greater control over armed groups, stronger banking regulation, and protection against sanctions evasion could produce greater American investment, defense cooperation, and access to financial markets. Conversely, militia attacks, money laundering, and systematic sanctions evasion could trigger targeted sanctions and financial restrictions.<\/p>\n The real transition is from control to influence.<\/p>\n The temptation for Washington to hang on to control will be considerable, especially after\u00a0US$3 trillion<\/a>\u00a0and over\u00a04,400 dead troops<\/a>. After decades of military involvement, American policymakers may find it difficult to accept that Iraq will dare make decisions Washington dislikes. But the wise understand external pressure rarely works in Iraqi politics where influence comes through incentives, alignment of interests, and respect for internal balances, not coercion.<\/p>\n Iraq 2026 is not Iraq 2011. The Iraqi elite today increasingly see a strategic partnership with the U.S. as essential, while politics is shifting from identity-based to issue-based competition, making sectarian polarization less attractive and the U.S. more appealing through investment, technology, and prosperity.<\/p>\n The United States possesses enormous leverage: dollars, sanctions, weapons, intelligence, investment, and diplomatic power. It will be tempting to use those tools to continue exercising something approaching control, but if the Americans learned anything from their three-decade misadventure in Mesopotamia, they know controlling Iraq is easier said than done. If it\u2019s any consolation, though,\u00a0King Faisal I of Iraq<\/a>\u00a0(1921-1933) lamented, \u201cIn this regard and with sadness, I have to say that it is my belief there is no Iraqi people inside Iraq\u2026There are no common grounds between them.\u201d.<\/p>\n \u00a0Before the invasion in 2003, President George Bush\u00a0declared<\/a>, \u201cFreed from the weight of oppression, Iraq\u2019s people will be able to share in the progress and prosperity of our time.\u201d It is time to follow through on those fine words and make a strong relationship with America attractive rather than try to make Iraqi sovereignty conditional on obeisance to Washington.<\/p>\n The winning formula is: Success = U.S. withdrawal + Iraqi sovereignty + strong bilateral defense cooperation + foreign direct investment + discreet financial leverage + Iraqi-led militia reform.<\/p>\n Washington should not try to eradicate Iranian influence in Iraq. It should seek something better: an Iraq strong enough to maintain relations with both Washington and Tehran, but sovereign enough that security decisions are made in Baghdad. That will be difficult for some in Washington still captive of the \u201cmeddler\u2019s trap<\/a>,\u201d and who feel entitled to dictate Iraq\u2019s future. Ironically, accepting less overt control may be the best way for Washington to preserve long-term American influence. However, the open-ended U.S.\/Israeli war on Iran may be the interventionists\u2019 last opportunity to make Iraq a weapon against the Islamic Republic, as many in Washington will always prioritize the Iran target over productive relations with Iraq.<\/p>\n Iraq is a strategic opportunity for America. Despite growing anti-American sentiment in the region, Iraq is moving closer to the U.S. orbit and making progress on corruption and rule of law for the first time. This opportunity may not come again; Iraq historically can move quickly if the leaders \u2013 in Baghdad and Washington \u2013 are up to the task.<\/p>\n About James Durso <\/p>\n \n James Durso (@james_durso) is a regular commentator on foreign policy and national security matters. Mr. Durso served in the U.S. Navy for 20 years and has worked in Kuwait, Saudi Arabia, Iraq, and Central Asia. <\/p>\n![](\"https:\/\/www.europesays.com\/iran\/wp-content\/uploads\/2026\/07\/a-62-150x150.jpg\"\/)
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