Critical Balance: Iraq Under the Pressure of the American-Israeli War on Iran
The U.S.–Israeli war against Iran has once again repositioned Iraq at the center of regional confrontation, though this time within a context far more complex than the traditional framework of rivalry between Washington and Tehran. The war revealed that Iraq is no longer merely an open arena of competing influence; rather, it has become a concentrated model of the crisis of a state ostensibly attempting to preserve its sovereignty amid the presence of political and armed actors, as well as regional networks, that clearly transcend the boundaries of formal state authority.
Baghdad has navigated this crisis through a difficult equation. On the one hand, the Iraqi government has officially declared its rejection of transforming Iraqi territory into a battlefield or a launching ground for proxy wars. On the other hand, armed factions continue to possess tangible capabilities to shape the trajectory of escalation, while regional and international powers increasingly treat Iraq as an integral component of their broader security and strategic calculations. Consequently, the war has exposed not only the fragility of Iraq’s position between the United States and Iran, but also the depth of the internal crisis associated with the multiplicity of political and security decision-making centers within the Iraqi state.
This article examines Iraq’s position in the current regional war as a dual test of sovereignty, state presence, and the government’s capacity to manage crises in a manner consistent with its national interests. Externally, Iraq faces mounting pressures stemming from its geopolitical proximity to Iran, Tehran’s regional influence, and the continued American military presence in the region. Internally, the Iraqi state confronts the challenge of controlling armed factions and preventing them from dragging the country into escalatory trajectories whose costs and consequences remain beyond Baghdad’s control. In this sense, the war represents a revealing moment for a deeper Iraqi dilemma: a state that possesses formal institutions yet continues to struggle to transform these institutions into a unified sovereign authority. This challenge is further intensified by the multiplicity of external alignments-which, in one way or another, reflects a multiplicity of loyalties-at the expense of an official and coherent foreign policy, as well as by the state’s ongoing inability to monopolize the legitimate use of force and confine arms exclusively to its own institutions.
Iraq as an Arena for Reciprocal Responses
Since the outbreak of the war, Iraqi territory has appeared increasingly vulnerable to targeting by multiple actors. Iran launched strikes against areas in northern Iraq, including the Harir base in Erbil, while the United States carried out airstrikes against sites affiliated with armed factions and the Popular Mobilization Forces across several Iraqi cities and provinces. Simultaneously, Iraqi factions were accused of attacking oil facilities operated by foreign companies, as well as vital civilian infrastructure both inside and outside Iraq. Some of these groups openly acknowledged attacks against diplomatic and military installations, most notably the U.S. Embassy. More recently, reports have emerged alleging that Israel established temporary military bases in western Iraq to launch strikes against targets deep inside Iranian territory.1 In this sense, the central problem no longer lies merely in Iraq’s exposure to external attacks, but rather in the state’s inability to prevent its territory from becoming an open platform for the reciprocal escalation signaling among the parties to the conflict.
The war has placed Baghdad before a clear dilemma: an official position advocating dissociation from regional confrontation, contrasted with a fragmented security environment in which armed factions operate according to calculations that exceed the government’s capacity for full control. More fundamentally, this dilemma has once again exposed a structural crisis embedded within the political system itself, one rooted in the fragmentation of political consciousness as a result of the sharp divergence among political forces that, for more than two decades, have invested in mobilizing subnational and sectarian identities at the expense of a unifying national identity. Inevitably, this dynamic has shaped the manner in which the Iraqi state responds to its surrounding environment, including the opportunities and challenges it presents. Rather than consolidating a coherent national interest, political actors have increasingly politicized identities and formulated policies that reflect the calculations and interests of specific political groups that maintain control over the levers of power.
Politically and in security terms, the divergence between the Iraqi government’s rhetoric of neutrality and sovereignty and respect for sovereignty-and the behavior of armed actors operating outside the framework of the state reflects the depth of Iraq’s crisis of authority and the complexity of its internal and regional balances. Such an outcome has become increasingly inevitable within a fragmented environment characterized by the competing centers of power shaping the Iraqi scene. Consequently, the Iraqi government repeatedly finds itself trapped in the challenge of constructing a viable balance between the state’s external interests and the competing considerations of domestic political and armed actors.
In the case of the Iraqi government’s position-among many other examples-which attempted to pursue a policy of dissociation following the events of October 7 amid Israel’s efforts to regionalize the conflict, several Iraqi armed factions instead chose to become actively involved by targeting American military bases in Iraq and Syria.2 These attacks continued until the United States launched strikes against 85 targets after the factions attacked an American base located along the Syrian–Jordanian border using a drone strike that killed three U.S. soldiers in January 2024. Similarly, Israel, during a United Nations Security Council session in December of the same year, openly invoked its right to “self-defense” against attacks carried out by Iraqi factions.
The conflict, however, has entered a more dangerous phase. Armed factions-commonly referred to as the “Islamic Resistance factions”-have opted for a broader and more direct level of engagement through attacks targeting diplomatic facilities, critical civilian infrastructure, and economic installations both inside and outside Iraq. In response, the United States has repeatedly carried out strikes against headquarters affiliated with the Popular Mobilization Forces across different regions of the country, particularly in strategically significant areas such as Jurf al-Sakhar and the city of al-Qaim. Some of these strikes have even targeted locations situated within residential neighborhoods in Baghdad. Consequently, Iraq finds itself trapped in a recurring cycle defined by the inability to regulate the security environment or insulate the country from the expanding war arena, leaving it exposed to continuous attacks from multiple directions.
Although the Iraqi actors most deeply involved in the conflict are those affiliated with the so-called “Islamic Resistance,” American strikes have targeted numerous brigades within the Popular Mobilization Forces, including some that were ostensibly uninvolved in the conflict-despite the ambiguity surrounding the extent of their noninvolvement. In certain cases, Iraqi army facilities themselves have also been targeted. This reality reflects the structural configuration of Iraq’s military and security apparatus and the broader dilemma of functional duality and layered identity between the Popular Mobilization Forces as an official state institution and the resistance factions as transnational actors operating beyond the effective authority of the state within the framework of the Iranian-led Axis of Resistance.
This dynamic is deeply embedded in the structural nature of Iraq’s security architecture. While the Islamic Resistance factions are formally incorporated into the Popular Mobilization Forces-which themselves were integrated into the Iraqi armed forces in 2016-and while their members receive salaries from the state treasury, several figures associated with these factions simultaneously occupy senior leadership positions within the PMF structure. Yet these same factions often operate independently of the directives of the Iraqi commander-in-chief, and some openly declare their ideological allegiance to the Supreme Leader in Iran.
Perhaps the most consequential-and potentially most dangerous-aspect of this reality lies in the fact that these factions have preserved highly complex networks and external relationships that function with near autonomy from the Iraqi state. Combined with the extensive political, economic, social, and security influence they have accumulated over time, the factions operating under the umbrella of the Popular Mobilization Forces increasingly appear not merely as armed groups, but as actors central to the protection and continuity of the post-2003 political order itself. In many respects, they have also become instruments for safeguarding the dominance of Shiite Islamist political forces. Under such conditions, any attempt to curtail their activities becomes an exceptionally difficult and highly risky undertaking.3
The Strategic Importance of Iraq to the Parties of the War
Iraq increasingly appears no longer as merely an arena of influence contested between Iran and the United States, but rather as a central battlefield through which their confrontation manifests itself across political, security, and economic dimensions. The nature of this conflict has also evolved beyond conventional forms or the confines of diplomatic channels. Instead, it is increasingly managed through indirect mechanisms in which the roles of the state intersect with those of non-state actors, while Iraqi territory serves as a platform for exchanging strategic messages and exerting pressure. This entanglement has produced a fragile equilibrium in which no actor possesses the capacity to achieve decisive victory, while Iraq continues to bear the costs of an ongoing confrontation. Rather than functioning as an autonomous actor, Iraq frequently finds itself constrained by these balances and unable to disengage from either side.
During periods of war, Iran relies on an extensive and highly complex network of influence within Iraq that spans political, security, economic, and societal dimensions. Beyond these forms of influence, Tehran has long sought to project itself as the political protector of Shiite communities worldwide, particularly in Iraq, despite the doctrinal distinctions between the Iraqi and Iranian Shiite religious schools. Iraq’s large Shiite demographic composition, combined with its profound religious and historical significance, grants it a central position within the Shiite world and the broader Islamic sphere. This discourse became especially pronounced after the events of October 7, a period marked by the relative decline of the Axis of Resistance’s regional influence.
In contrast, the United States maintains its presence through its broader international and regional standing, as well as through the instruments of influence at its disposal, including security and economic support. Washington also retains highly influential pressure mechanisms tied to Iraqi oil revenues deposited in the U.S. Federal Reserve, alongside additional political and diplomatic leverage that reinforces its ability to shape Iraqi decision-making.
On the ground, and within the broader logic of wartime strategy, the parties involved increasingly appear to regard Iraq’s involvement in the conflict as unavoidable. This perception is driven by a combination of geopolitical considerations and factors related to proxy networks, spheres of influence, and intersecting interests. For Iran, Iraq represents the final stronghold of its broader strategic project, functioning as a vital corridor that sustains relations with regional allies and proxy actors while providing critical support under conditions of international isolation and economic sanctions. At the same time, Iraqi territory hosts American military bases as well as armed Iranian Kurdish opposition factions, whose activities American and Israeli officials-particularly during the early stages of the war-signaled a willingness to support and potentially utilize. These dynamics are further reinforced by Iran’s long-term political, economic, and at times social investment in Iraq, which has deepened the structural interdependence between the two countries.
Accordingly, from an Iranian strategic perspective, Iraq occupies a pivotal role within the context of the ongoing war. Its direct geographical connectivity with Iran makes it a critical arena for logistical transportation and operational management. At the same time, Iraq’s political and security environment has enabled the emergence of armed factions capable of carrying out proxy roles without necessarily imposing direct operational costs on Tehran. Moreover, Iraq represents a point of intersection between American and Iranian interests, granting it amplified strategic value as a theater for signaling and the exchange of strategic messages.4
However, amid the intensifying American targeting of strategic sites associated with leadership and logistical infrastructures-particularly those possessing high political and security significance-it appears that Iran has gradually shifted from a strategy centered on expanding the scope of conflict and dispersing its instruments of confrontation toward a more cautious approach focused on minimizing operational costs while preserving a minimum degree of effectiveness. This shift reflects an increasingly vulnerable security environment characterized by deeper penetration and a higher susceptibility to precise targeting.5
Conversely, the United States-which continues to exercise substantial political and economic influence-appears fully aware of the strategic significance of the Iraq–Iran border, which extends for more than 1,500 kilometers. From Washington’s perspective, containing or regionally neutralizing Iran requires dismantling the foundations of Iranian influence within Iraq. In practice, this influence extends far beyond the realms of politics and armed power; it has penetrated state institutions and facilitated the construction of broad and highly complex economic networks through which Tehran and its allied actors have cultivated durable social constituencies. Some of these networks are rooted in ideological affiliation, while others are sustained through systems of political patronage and clientelism.
Beyond the aforementioned dimensions, the United States appears not merely focused on degrading the material capabilities of armed factions, but also on reshaping their strategic behavior. Washington’s objective extends beyond limiting these groups’ operational capacities toward compelling them to reassess their calculations and transition from offensive actors into more cautious and defensive ones. Simultaneously, this approach carries a broader political dimension centered on pressuring the Iraqi state to redefine its security role and to engineer a new relationship between state institutions and these armed factions. In practical terms, this implies an attempt to redefine Iraq’s function within the broader regional conflict equation-from a pressure arena through which leverage can be exerted against Washington into a more controlled environment in which adversarial actors possess reduced room for maneuver.6
In essence, the parties involved in the war increasingly perceive Iraq as far more than a mere geographical neighbor of Iran. For Tehran, Iraq constitutes a strategic depth and a vital logistical and political artery sustaining its network of regional allies and partners. For the United States, Iraq represents more than simply a territory requiring stabilization; it is a strategic space that must be regulated in order to diminish Iran’s ability to employ it as a platform of influence. The convergence of these competing strategic perceptions has significantly constrained the Iraqi state’s capacity to pursue policies capable of safeguarding its sovereignty and independence. Under the combined pressures of regional confrontation and a fragmented domestic environment, Iraq has increasingly been transformed into an entrenched arena of confrontation rather than an autonomous regional actor.
Iraq and the Difficult Economic Test
The war reveals that Iraq’s fragility is not confined to the security and political spheres alone, but extends deeply into the structure of its economic model itself. A state that relies overwhelmingly on oil as its principal source of revenue becomes exceptionally vulnerable to any disruption affecting maritime corridors or energy infrastructure. Within this context, the Strait of Hormuz is transformed from an external maritime passage into a direct component of Iraq’s internal stability equation. Any disruption to the strait rapidly affects state revenues, particularly for a government carrying extensive obligations related to salary distribution, public services, and the preservation of a minimum level of social stability.
Perhaps one of the most dangerous developments witnessed in Iraq since the outbreak of the war has been the targeting of two fuel tankers at the port of al-Faw, in addition to attacks on the Majnoon oil field, one of Iraq’s largest and most strategically important oil fields. These developments contributed to a decline in Iraqi oil production estimated at nearly 70 percent, placing Iraq among the states most severely affected by the conflict. Approximately 90 percent of Iraqi oil exports pass through its maritime outlet overlooking the Strait of Hormuz, creating an acute threat to state revenues in an economy whose public budget remains overwhelmingly dependent on oil rents due to its deeply rentier structure.
At the same time, the closure of the Strait of Hormuz exposed the extent of Baghdad’s strategic complacency in developing alternative export routes despite the existence of several promising but stalled projects. Some of these obstacles appear political in nature, such as export routes extending from Kirkuk and the Kurdistan Region toward Turkey, while others remain less clearly understood, including the Basra–Aqaba pipeline project. Meanwhile, the Iraqi government resorted to reviving the Kirkuk–Banias pipeline through Syria, despite the fact that it had remained inactive for decades. Nevertheless, Iraq’s response plans still appear disproportionate to the reality of a state whose primary revenue lifeline depends almost entirely on oil rents and petroleum exports.
These developments unfold against the backdrop of an already strained economic environment characterized by an inflated public sector, domestic debt exceeding 100 billion dollars, and a fiscal deficit surpassing 45 billion dollars. All of this occurs while Iraq remains structurally dependent on oil, raising serious questions regarding the sustainability of public financing and the state’s capacity to continue supporting those dependent on government income, including public employees, pensioners, social welfare recipients, and the broader system of essential public services.
Ali al-Zaidi’s New Government and the Question of State Restoration
It can be argued that the war is testing not only the new government’s ability to manage a passing regional crisis, but also its capacity to restore the centrality of decision-making within a state where power remains divided between formal institutions and armed factions. Consequently, the success of the government will not be measured solely by its ability to articulate a balanced political position, but rather by its ability to translate that position into enforceable security and economic policies capable of being implemented on the ground.
The nomination of Ali al-Zaidi by the Coordination Framework came as a surprise. Al-Zaidi had maintained little public political visibility and was primarily known as a wealthy businessman with significant influence within economic-and perhaps political-circles, largely operating behind the scenes. Yet his nomination was quickly met with regional and international acceptance, particularly from the United States. Washington may view the formation of his government as an opportunity to initiate steps aimed at pressuring armed factions in Iraq while engaging with a figure perceived as distinct from the country’s traditional and deeply entrenched political elites.
Despite the Coordination Framework’s efforts to preserve its internal cohesion and unified political posture, its selection of al-Zaidi appears, in many respects, to have represented an attempt to break a prolonged political deadlock that had persisted for months. The crisis escalated to the point where the President of the United States reportedly imposed a “veto” against a figure with the depth of influence possessed by Nouri al-Maliki. Against this backdrop, the decision to advance a relatively unknown figure may reveal the extent of conflicting interests and competing visions within the Coordination Framework itself, as well as the scale of the pressures confronting it amid persistent American efforts to reduce Iranian influence and dismantle the network of armed factions whose strategic importance increased following the intense pressure on Hezbollah in Lebanon and the collapse of the Syrian regime. The factions within the Coordination Framework appear fully aware that Washington’s welcoming posture toward al-Zaidi does not necessarily constitute unconditional support, but rather may reflect the granting of a limited political “grace period” within which he is expected to address American demands inside Iraq.
As Iraqi Prime Minister, Ali al-Zaidi faces a complex set of challenges, foremost among them the ongoing regional war and the questions it has raised concerning armed factions linked to external actors. Simultaneously, Iraq confronts mounting economic risks tied to declining oil revenues, an inflated public sector dependent on state spending, and deeply entrenched corruption within state institutions. In addition, Iraq faces growing pressure in the sphere of foreign relations as neighboring countries increasingly come under attack from operations launched from Iraqi territory. This occurs alongside mounting international and American pressure linked to sanctions imposed on individuals and banking entities accused of facilitating Iran’s access to hard currency.
The fundamental dilemma confronting any Iraqi prime minister lies in the management of foreign policy. Moving toward accommodating or implementing American pressures and demands risks provoking confrontation from opposing regional actors and from domestic allies aligned with them inside Iraq. Conversely, disregarding American considerations exposes Iraq to broader international and regional pressures. This dilemma was illustrated, for example, when armed factions in Iraq launched drones targeting Saudi Arabia and the United Arab Emirates only days after Tom Barrack, the U.S. special envoy to Iraq, congratulated al-Zaidi. This incident followed earlier remarks by Donald Trump describing al-Zaidi’s appointment as the beginning of a new chapter in relations between Washington and Baghdad.
Conclusion
The current regional war places Iraq before a complex test that extends far beyond the boundaries of direct military escalation. The crisis is not merely connected to the reciprocal strikes unfolding across the region, but rather to the Iraqi state’s ability to protect its political and security decision-making within an intensely interconnected regional environment. In this environment, international and regional powers, alongside armed factions, operate according to overlapping calculations that at times exceed Baghdad’s capacity for full control over the trajectory of events.
The war has demonstrated that Iraq continues to experience a persistent overlap between the authority of formal state institutions and the influence of armed actors linked to broader regional calculations. The Iraqi government repeatedly declares its rejection of transforming the country into a battlefield and consistently emphasizes its commitment to de-escalation and dissociation from regional confrontation. Yet developments on the ground reveal the difficulty of translating this position into effective control over the security sphere. Several armed factions do not interpret the conflict solely through the lens of Iraqi national interests, but rather through their connection to the broader confrontation involving Iran, the United States, and Israel. As a result, the government’s capacity to impose a unified security framework remains limited in many instances.
Within this context, Iraq’s dilemma appears deeper than the mere existence of multiple armed actors. Iraq possesses formal institutions, an army, security agencies, and broad diplomatic relations, yet it continues to struggle to confine decisions of war and peace exclusively within state institutions. Consequently, the war exposes one dimension of the structural crisis that has accompanied the Iraqi political system since 2003, whereby the state was formed within highly complex domestic and regional balances that left the security sphere vulnerable to overlapping roles among the state, armed factions, and external powers.
Economically, the war has once again exposed the scale of Iraq’s vulnerability to any broad regional disruption, whether through threats to maritime corridors or fluctuations in oil and energy markets. Despite its considerable resources, Iraq remains fundamentally dependent on a rentier economic model that reacts rapidly to any prolonged escalation. With every threat to the Strait of Hormuz or disruption in energy flows, concerns re-emerge regarding the state’s ability to sustain salaries, public services, and economic activity. The current crisis has therefore reinforced the reality that Iraqi economic stability remains deeply tied to the stability of the broader region itself, placing Baghdad before challenges that extend beyond the traditional security dimension.
Ultimately, Iraq’s problem does not stem solely from its geopolitical location, but from its ability-or inability-to manage that location and transform it into a source of stability and genuine sovereignty. A state that does not monopolize control over its own security decisions will consistently find itself more exposed to absorbing the repercussions of regional crises than capable of shaping their trajectories or reducing their costs. Without addressing this structural imbalance, Iraq will remain vulnerable, with every new crisis, to renewed cycles of political, security, and economic attrition, even if it officially seeks to adopt a policy of neutrality and distance itself from regional conflicts.
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