Iraq’s Sovereignty Test: A New Government Between Washington and Tehran
On 14 May this year, Iraq’s Prime Minister Ali al-Zaidi was sworn in after parliament approved the majority of his cabinet ministers. The new government entered office amid severe regional turmoil, with the rivalry between the United States (US) and Iran at its peak, further deepening Iraq’s vulnerability by turning its territory into a strategic arena for external power competition. Iraq is among the countries in the region targeted by both the US and Iran in the ongoing US–Iran war. The Trump administration’s shift from its first-term policy of maximum pressure on Iran to a policy of open confrontation in its second term has had serious implications for Iraq’s political stability.
Iraq is among the countries in the region targeted by both the US and Iran in the ongoing US–Iran war.
Iranian-backed militias have used Iraqi territory as a launch pad for attacks aimed at inflicting maximum damage on US forces, Israel, Syria, Saudi Arabia, the UAE, Jordan, Kuwait and regional energy infrastructure. To overcome this challenge, Trump has supported a new government in Baghdad whose objective is to ensure a state monopoly on weapons amid growing US pressure to dismantle Iran-backed militia groups. The US President congratulated Ali al-Zaidi on his nomination as the next prime minister of Iraq and advocated for a new government free from terrorism that could deliver a brighter future for Iraq. US diplomat Tom Barrack, meanwhile, said that the US was ready to work with al-Zaidi, echoing this willingness. US facilities in Iraq have sustained more than 600 attacks by Iran-backed militias since 28 February this year.
In the recent election, Prime Minister Nouri al-Maliki and incumbent Mohammed Shia’ al-Sudani, who were also in the race, have found themselves down in Washington’s priority. However, Trump did not seek either of the two leaders as potential candidates to protect US interests after a war with Iran. While Trump disliked Nouri al-Maliki, whom he believed was pro-Iranian, he saw Sudani as unable to contain Iranian influence in the country. On the other hand, Ali al-Zaidi is backed by the Coordination Framework, a ruling alliance of powerful Shia groups with varying ties to Iran that dominates the Iraqi parliament.
While Mohammed Shia’ al-Sudani has been working closely with the US over the past few years, especially on economic cooperation, the Trump administration withdrew support from former Prime Minister Sudani. The administration viewed him as having failed to address the challenge posed by Iranian-aligned Shia armed factions acting against US interests, chief among them the Popular Mobilization Forces (PMF).
Iranian-backed militias have used Iraqi territory as a launch pad for attacks aimed at inflicting maximum damage on US forces, Israel, Syria, Saudi Arabia, the UAE, Jordan, Kuwait and regional energy infrastructure.
The fact that Iraq, as a sovereign country, can exercise control over its territory and is capable of defending itself and contributing to stability in the region has remained a serious issue for the US for nearly two decades. The eminent scholar Max Weber argued that the state holds a monopoly on legitimate force within a given territory. However, this essential feature of the state may be missing in the case of Iraq’s existing security structure, as it remains contested terrain between non-state factions, external actors such as the US, Iran, Syria, and Israel, various terrorist organisations, and proxy militias.
Challenge to Iraq’s Sovereignty
Iraq’s internal divisions and ineffective law enforcement undermine the authority of the state. The government has to navigate the erosion of state authority, manage militia groups, and address the rivalry between Washington and Tehran. A major issue is that some militias formally linked to the Iraqi state still maintain independent command structures and external ties to Iran. Tehran has embedded itself within Iraq’s political, economic, and security structures by transforming the PMF into a central mechanism for proxy influence.
The government in Iraq has long believed that allowing militias to be part of the economic, political, and security institutions and integrating them into the government structure would help them assimilate into Iraqi society.
The government in Iraq has long believed that allowing militias to be part of the economic, political, and security institutions and integrating them into the government structure would help them assimilate into Iraqi society. Under this accommodation strategy, some militia groups, such as Asa’ib Ahl al-Haq (AAH), focused on their political and economic interests. AAH and Kata’ib Imam Ali—both sanctioned by the US—have publicly indicated support for restraining their militant activities by turning their weapons over to state control after facing increased pressure from the Trump Administration. However, more ideologically driven groups, such as Kata’ib Hizballah (KH), remain committed to the ideology of resistance and use their military power against US forces and the Iraqi state.
The US-Iraq Relations
Iraq remains too strategic for the US to walk away, when compared to the US withdrawal from neighbouring Syria. Much of the Trump administration’s focus and resources in Iraq have gone towards countering Iranian penetration among Iraqi militias and their control over Iraqi territory and its oil resources. The US-Iraq 2008 Strategic Framework Agreement states that the US established a foundation for long-term cooperation that effectively tethered Iraq’s political, diplomatic and financial systems to those of the US. The structural veins of that agreement now stand choked, even as the US’s main priority seems to be to prevent Iraq’s territory from becoming a launchpad for Iran to target the US military and its allies in the Middle East. The US has already targeted a host of entities and individuals in Iraq, including Ali Maarij al-Bahadly, Iraq’s Deputy Minister of Oil, whom it accuses of abusing his government position to “divert Iraqi oil in support of the Iranian regime”. A splintered state system in Iraq augmented the challenge for the Trump administration, especially in the context of the ongoing war with Iran, where both are vying for their respective control – Washington for Iraq’s oil money and Tehran over its armed factions. The current US-Iran war has intensified the power and influence of both countries in Iraq. The US has withheld Iraqi oil money to pressure it to alienate itself from Iran-aligned groups.
Complications for Iraq in the US–Iran War
The Iraqi economy is fundamentally dependent on oil exports through the Strait of Hormuz and is hurtling towards an economic crisis. Iraqi oil export revenues have fallen more than those of any other Gulf state. By one measure, Iraq may be losing over US$ 200 million per day due to the closure of the Strait of Hormuz, as oil exports account for 90 percent of the country’s revenue.
In June 2025, during the ‘12-day war,’ the Tehran-backed militias in Iraq stayed on the sidelines, as Tehran wanted to limit its retaliation. However, in the 2026 US-Iran war, Iranian-backed groups have participated, as these groups are staring at an existential threat to Iran and themselves. As other Tehran-backed proxy groups, such as Hezbollah, Houthis, and Hamas, come under attack, the militias in Iraq do not want Washington’s focus to shift decisively to them. Even as some of Iraq’s militias have refrained from launching attacks, the most extreme militias, such as KH, Harakat al-Nujaba, and Kataib Sayyis al-Shuhada, have joined the war to inflict maximum losses on the US and its allies in the Middle East.
Some Iran-backed militias continue to pledge to attack US energy infrastructure in Iraq, even as Gulf countries come under attack. The militias also target government institutions aligned with the US. On 21 March this year, Iraqi militias attacked military sites, including National Intelligence Service facilities, airports, and civilian infrastructure. Increasingly, the embeddedness of Iran-backed militia groups within the Iraqi government in Baghdad has blurred the lines between state and non-state actors, augmenting challenges for the US.
The US military drawdown in Iraq was first announced in 2024 and continues today. The US retains military presence in the Kurdistan region of Iraq, but US troops are expected to transition to a new role. The Trump 2.0 administration’s shift from nation-building to a transactional approach is likely to intensify the pressure on the incoming al-Zaidi government. Among its preeminent steps have been the call for the full disarmament of Iran-backed militia groups such as Kata’ib Hezbollah, the Badr Brigades, Asa’ib al-Haq, and others in the country.
On the positive side, the new government in Baghdad seems keen to work with the US, while simultaneously managing the reality of Iran’s influence and the presence of Iran-backed militia groups operating in Iraq. Adding to the new government’s challenge is the pressure to repair Iraq’s relations with Gulf countries, which have protested attacks by Iran-backed militias on their territory during the war.
On the negative side, although Iraq is under new leadership, the structural constraints on state authority remain largely unchanged. A mix of internal and external factors continues to limit the government’s ability to consolidate state authority, curb Iranian influence, increase oil production, and manage disputes among Kurdish leaders. Among these, the Iraqi government’s control over militia groups remains limited and is the biggest outlier, which is hindering its efforts to resolve its wider security crises. Persistent militia activities in government functioning, weak law enforcement, and unresolved fragmentation continue to undermine internal stability and state sovereignty in Iraq, even as it seeks to manage a belligerent Washington.
Vivek Mishra is Deputy Director – Strategic Studies Programme at the Observer Research Foundation.
Surya Prakash Noutiyal was a Research Intern at the Observer Research Foundation.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.