Iraq is being pulled dangerously deeper into the widening conflict between the United States and Iran, a geopolitical struggle that is now reshaping the country\u2019s political future, destabilizing its economy, and threatening to undo years of fragile recovery. What was once a careful balancing act by Baghdad\u2014maintaining ties with both Washington and Tehran\u2014has rapidly unraveled under the pressure of war, according to analysis from The Soufan Center.<\/p>\n
The escalation stems in part from Operation Epic Fury, a broader U.S. campaign that has expanded into economic and political pressure on Iraq. Washington is now actively pushing Iraqi leaders to distance themselves from Iran, leveraging tools such as restrictions on financial flows, military cooperation, and even the formation of Iraq\u2019s next government. At the same time, Iran has mobilized its network of allied militias within Iraq to retaliate against U.S. interests across the region, effectively turning Iraqi territory into a central battlefield in the broader conflict.<\/p>\n
Iran-aligned militias, operating under the umbrella of the \u201cIslamic Resistance in Iraq,\u201d have launched hundreds of attacks since the war began. These strikes have targeted not only U.S. military installations and diplomatic facilities inside Iraq but also critical infrastructure across the Gulf, including in Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Jordan. Kuwait in particular has faced repeated attacks, including strikes on its international airport, reflecting longstanding tensions rooted in regional history.<\/p>\n
Inside Iraq, the violence has been equally intense. U.S. and Israeli retaliatory airstrikes have hit militia positions across multiple provinces, killing nearly 100 fighters and, in some cases, members of Iraq\u2019s own security forces who were co-located with militia units. These developments have drawn sharp reactions from Gulf states, which have issued rare joint condemnations and warned Baghdad of potential economic and diplomatic consequences if it fails to curb attacks originating from its territory.<\/p>\n
The fallout has been severe for Iraq\u2019s internal stability. The government\u2019s inability to restrain powerful militia factions has weakened its authority and undermined long-standing efforts to consolidate control over armed groups. Yet paradoxically, the war has strengthened the domestic standing of these militias among segments of the population, particularly within the Shia majority, where they are increasingly viewed as defenders against foreign aggression.<\/p>\n
Compounding the crisis is a devastating economic shock triggered not by Washington, but by Tehran. Iran\u2019s effective closure of the Strait of Hormuz\u2014a vital artery for global oil shipments\u2014has slashed Iraq\u2019s oil exports by roughly 70 percent. Given that oil revenues account for the vast majority of Iraq\u2019s government income, the consequences are dire. The country now faces the prospect of being unable to pay public sector salaries or finance essential imports.<\/p>\n
The International Monetary Fund has projected that Iraq\u2019s economy will contract by nearly 7 percent in 2026, signaling a deep recession. Unlike wealthier Gulf states, Iraq lacks viable alternative export routes. A pipeline through T\u00fcrkiye offers limited relief, but it has been frequently disrupted by political disputes involving Baghdad, Ankara, and Kurdish authorities in northern Iraq.<\/p>\n
As the economic and security crises intensify, Iraq\u2019s political system is also under strain. Following the 2024 parliamentary elections, Iraqi leaders have struggled to form a new government. The Coordination Framework, a coalition of predominantly Shia parties with strong ties to Iran, holds a parliamentary majority but has faced intense pressure from the United States over its choice of prime minister.<\/p>\n
Washington has made clear its opposition to figures it views as too closely aligned with Tehran. In a dramatic intervention, U.S. President Donald Trump publicly threatened to sever cooperation with Iraq if former Prime Minister Nuri al-Maliki were returned to power. Facing the risk of losing critical U.S. support, Iraqi political factions ultimately withdrew Maliki\u2019s candidacy.<\/p>\n
After weeks of negotiations, Iraqi leaders settled on a compromise candidate: Ali al-Zaidi, a 43-year-old businessman with no prior government experience. His nomination reflects an attempt to strike a delicate balance between U.S. and Iranian interests. While Zaidi has not been explicitly rejected by either side, skepticism remains high in Washington regarding his ability\u2014or willingness\u2014to confront Iran-backed militias.<\/p>\n
Zaidi\u2019s background further complicates the picture. His business dealings include leadership roles in financial institutions previously sanctioned by the U.S. for ties to Iranian entities. At the same time, he has signaled an intention to position Iraq as a \u201cbalanced country\u201d in regional and international affairs, a message aimed at reassuring both sides.<\/p>\n
However, the challenges awaiting any new Iraqi government are immense. The United States has already suspended certain forms of military cooperation, including counterterrorism operations and training programs, pending clarity on Iraq\u2019s political direction. Financial pressure is also mounting. The U.S. Treasury has restricted the flow of physical dollar shipments to Iraq, blocking hundreds of millions of dollars in oil revenue transfers and raising alarm in Baghdad about the country\u2019s financial stability.<\/p>\n
These dollar shipments are a critical lifeline for Iraq\u2019s economy, helping to stabilize the national currency and facilitate international trade. Iraqi officials have warned that prolonged restrictions could have catastrophic consequences, potentially leading to a collapse of the government itself. The message from Washington is clear: economic relief may depend on Baghdad taking decisive action against Iran-aligned militias.<\/p>\n
Yet such action is far easier demanded than delivered. The militias are deeply embedded within Iraq\u2019s political and social fabric, with significant representation in parliament and strong grassroots support. Previous efforts to disarm or integrate them into state structures have largely failed, and the current wartime environment has only strengthened their position.<\/p>\n
As Iraq stands at this precarious crossroads, its leaders face an unenviable task. They must navigate an increasingly hostile regional environment, manage a collapsing economy, and attempt to assert control over powerful armed groups\u2014all while balancing the competing demands of two global powers locked in conflict.<\/p>\n
The stakes could hardly be higher. What began as a regional confrontation between the United States and Iran has now placed Iraq at the center of a geopolitical storm, one that threatens to redefine its future and destabilize an already fragile Middle East.<\/p>\n","protected":false},"excerpt":{"rendered":"Iraq is being pulled dangerously deeper into the widening conflict between the United States and Iran, a 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