Iraq: Evading the Gathering Storm
Should U.S.-Iranian tensions escalate to a shooting war, Iraq would likely be the first battleground. Washington and Tehran should stop trying to drag Baghdad into their fight. The Iraqi government should redouble its efforts to remain neutral and safeguard the country’s post-ISIS recovery.
What’s new? In June, several rockets landed near U.S. installations in Iraq, and in July-August, explosions shook weapons storage facilities and a convoy of Iraqi paramilitary groups tied to Iran. These incidents helped push U.S.-Iranian tensions to the edge of confrontation, underscoring the danger of the situation in Iraq and the Gulf.
Why does it matter? While the U.S. and Iran have so far avoided clashing directly, they are pushing the Iraqi government to take sides. Iraqi leaders are working hard to maintain the country’s neutrality. But growing external pressures and internal polarisation threaten the government’s survival.
What should be done? The U.S. and Iran should refrain from drawing Iraq into their rivalry, as doing so would undermine the tenuous stability Iraq has achieved in the immediate post-ISIS era. With the aid of international actors, Iraq should persevere in its diplomatic and domestic political efforts to remain neutral.
The rockets that fell close to U.S. assets in Iraq in mid-June and the explosions that struck the assets of Iraqi paramilitary groups with ties to Iran in July and August are ominous signals. They are clear warnings of how badly escalation between the U.S. and Iran could destabilise Iraq and the region as a whole. Even short of hostilities, Washington’s “maximum pressure” campaign against Tehran could wind up placing as much stress – and inflicting as much harm – on its nominal ally Iraq as it does on its enemy Iran. For Iraq, the timing hardly could be worse. It is still recovering from the havoc wreaked by the Islamic State (ISIS) and the costly battle to defeat the jihadists; its institutions and security forces remain brittle; and its government, elected a little over a year ago, hangs on to a slim, precarious parliamentary majority. Washington and Tehran should keep Baghdad out of their confrontation: the costs to both of renewed instability in Iraq would exceed any benefits to either. Attempts to compel the Iraqi government to choose sides would likely fail and lead to chaos instead.
The Iraqi leadership is working hard to insulate the country from regional turmoil. It is stepping up diplomatic engagement with Iran, the U.S. and its immediate neighbours, as well as shoring up domestic consensus behind the objective of remaining neutral. These efforts are important but may be insufficient to protect Iraq from the spiralling U.S.-Iranian rivalry. If relations between the U.S. and Iran continue to deteriorate, let alone if the two countries come to blows, the struggle is likely to deepen political polarisation between Iraqis supporting and opposing Iran. Even under current conditions, internal tensions may precipitate a descent into political disarray.
Both the U.S. and Iran are likely to lose from a feud in Iraq. Contrary to the Trump administration’s expectations, its “maximum pressure” campaign is not countering Iran’s extensive influence in Iraq, which Tehran exercises in myriad ways. As part of its pressure, Washington would like Iraq to cut back its purchases of natural gas and electricity from Iran and forge closer links to U.S.-allied Arab states. But these U.S.-directed efforts are likely to lead Iran to intensify its own pressure on Baghdad, seeking to impede the Iraqi government’s efforts to strengthen its institutions, diversify its energy supply and broaden its foreign relations. Should tensions between Washington and Tehran continue to grow, U.S. personnel in Iraq could become more vulnerable to attack by pro-Iranian militias. A resulting security vacuum could enable an ISIS comeback.
Tehran, too, should have an interest in shielding Iraq from its standoff with Washington. Stability in its neighbour carries both economic and security benefits: it allows Iran to blunt the impact of U.S. sanctions by preserving ties to the Iraqi economy, and it lessens risks of an ISIS resurgence that inevitably would threaten Iran.
Others, too, can help immunise Iraq from harm, beginning with the Iraqi government itself. Steps it could take include making clear to the Trump administration which U.S. expectations it is in a position to satisfy and which it is not; bolstering efforts to bring the Iran-linked paramilitary groups under central government control; and intensifying outreach to regional states – notably Saudi Arabia, the United Arab Emirates (UAE) and Jordan – to counterbalance Iran’s role without exacerbating risks of armed confrontation on Iraqi soil. For its part, Europe, which has an important stake in consolidating the achievements of the anti-ISIS campaign and avoiding more turbulence in the area, should work with Baghdad in seeking to de-escalate U.S.-Iranian tensions and preventing them from dragging Iraq, and the wider region, into a dangerous spiral.
II.From Escalation to Indirect Confrontation
U.S.-Iranian relations have been in a state of crisis for roughly four decades. But the Trump administration’s May 2018 withdrawal from the Iran nuclear deal (the Joint Comprehensive Plan of Action, JPCOA) and its November 2018 reimposition of U.S. economic sanctions on Iran have opened what could be one of the most perilous chapters yet. In mid-2019, following Washington’s decision in May to ratchet up sanctions, a cascading series of incidents have raised the prospect of a shooting war that could engulf the Middle East.
For reasons of geography and history, Iraq finds itself squarely in the path of the gathering storm. In the wake of the 2003 U.S. invasion to topple the regime of Saddam Hussein, and the subsequent battle against ISIS, it is the Middle Eastern country with the largest U.S. embassy and the highest number of U.S. troops (over 5,000). Iran, for its part, has used the post-2003 vacuum to invest heavily in Iraq’s political system, economy and security apparatus. During the four-year struggle to defeat ISIS (2014-2018), the two neighbours became intertwined to an unprecedented degree. Iran’s allied Iraqi Shiite militias formed the core of the Hashd al-Shaabi (Popular Mobilisation), the amalgam of paramilitary forces (also encompassing Shiite and non-Shiite fighters without direct ties to Iran) that answered Grand Ayatollah Ali al-Sistani’s call to fight ISIS. But Iran also cultivated political ties well outside the ranks of its Shiite Islamist allies, exploiting internal Kurdish and Sunni divisions. And cross-border trade between Iraq and Iran flourished.
The defeat of ISIS, and the inauguration of President Donald Trump, have ended what had been a tacit U.S.-Iranian détente in Iraq and ushered in a period of escalating rivalry.
In the aftermath of the May 2018 Iraqi parliamentary elections, this rivalry roiled Baghdad’s already factious politics, with Washington and Tehran each trying to exert influence through its preferred actors. Their tug of war over government formation lasted thirteen months and produced a list of broadly acceptable, but inherently weak office holders lacking strong support even within the political parties to which they belong. The list included Prime Minister Adel Abdul-Mahdi and President Barham Salih, two respected but somewhat isolated politicians who took up their posts in October. The posts of interior, defence and justice ministers remained unfilled for another eight months, in large part as a result of continued Iranian-U.S. sparring. Today, with most senior officials sitting outside the largest parliamentary blocs, the government remains vulnerable to a no-confidence vote among the deputies.
A key factor keeping the Abdul-Mahdi government wobbly is U.S. policy toward Iran. The moment Washington reactivated some of the previously suspended sanctions on Iran in November 2018, it called on the Iraqi government to cease payments to Tehran for natural gas and electricity and to diversify its energy imports, including through contracts with U.S. companies. Baghdad asked Washington for time to pursue alternatives, fearing Iranian retaliation as well as electricity shortages. The Trump administration responded by issuing temporary waivers, the first one for 45 days. It then renewed the waivers for 90 days in December 2018 and March 2019, and for 120 days the following June. The respite has allowed Baghdad to continue importing gas and electricity from Iran, but the U.S. has continued to press Baghdad on other files, such as the energy infrastructure contracts it wants Iraq to sign with U.S. companies. A U.S. official in Baghdad explained:
Our sanctions are on Iran and not on Iraq. We expect the government to develop infrastructure that will allow energy imports from Kuwait, Saudi Arabia and Jordan, just as it has developed [similar infrastructure] with Iran in Diyala [province]. The government knows it has to take these steps, because it fears we won’t renew the waivers.
Another U.S. demand is that the Abdul-Mahdi government rein in the Iran-linked militias among the Hashd. Since the defeat of ISIS, the Hashd have assumed quasi-state dimensions in several areas formerly under the jihadists’ rule and inserted themselves into national politics as well. No unit has disarmed. In 2016, the government formally integrated the Hashd into the security forces, but it has yet to assert effective control over more than a few of them.
In response to Washington’s “maximum pressure” campaign, and its complementary demands upon Baghdad, Tehran stirred up anti-American sentiment in the Iraqi parliament. On 19 January, lawmakers close to Iran presented a bill (still under review) calling, among other things, for the withdrawal of U.S. troops from Iraq. They demanded as well that the prime minister report on the number of U.S. troops and assets present on Iraqi soil. These deputies belong to the Fatah bloc, which came in second in the 2018 elections, and counts several Hashd commanders among its members.
Testy rhetorical exchanges ensued. In a televised interview, President Donald Trump stated that U.S. soldiers would need to stay in Iraq “to watch Iran”. Two months later, on 7 April, Iran’s supreme leader, Ali Khamenei, called on Iraqi leaders to make sure that the U.S. military leaves “as soon as possible”. Meanwhile, a procession of senior U.S. and Iranian officials came to Iraq to press their respective cases, including Trump himself in an unannounced visit in December 2018 and, four months later, President Hassan Rouhani of Iran. It is highly doubtful that Israel would hit Iraqi targets without at least securing Washington’s acquiescence, given the considerable U.S. presence and stakes there.
Since early May, competition has morphed into indirect confrontation. On 8 May, U.S. Secretary of State Mike Pompeo warned Iraqi officials of U.S. retaliation in case of an attack on U.S. assets, and a week later, the State Department withdrew non-emergency personnel from the embassy in Baghdad claiming impending security threats. In June, a series of rockets landed close to U.S. installations in Baghdad, Basra and Mosul.These attacks remain unclaimed and caused no fatalities, but they briefly raised the spectre of all-out military confrontation. Simultaneous incidents in the Gulf brought tensions to a peak. On 20 June, Iran shot down a U.S. drone over the Strait of Hormuz that, Tehran claimed, had entered Iranian airspace. Trump prepared a retaliatory strike on Iran before calling it off at the last minute.
These incidents and Iranian breaches of the JPCOA in July were followed by four separate explosions at weapons storage facilities and a raid on a convoy belonging to the Hashd in July and August. Media speculation, indirectly confirmed by Israeli government officials, attributed the explosions to Israeli bombing, which Hashd leaders accused the U.S. of enabling. While the U.S. denied involvement in the attacks on the Hashd weapons depots, it did not denounce them. It is highly doubtful that Israel would hit Iraqi targets without at least securing Washington’s acquiescence, given the considerable U.S. presence and stakes there.
Washington has certainly doubled down on its pressure campaign in other ways. The U.S. Treasury Department blacklisted the Iraqi paramilitary group Harakat al-Nujaba because of its links to Iran’s Islamic Revolutionary Guard Corps. It also sanctioned individual Hashd leaders suspected of having ties to Iran or committing acts of violence against Christians and other religious minorities. Iraqi officials said the Trump administration, in private conversations, also threatened to withhold financial, economic and military support from Iraq if the government fails to sign energy-related contracts and rein in Iran-backed paramilitary groups. A U.S. official in Baghdad said, “We have pressure points on the Iraqis. We can withhold U.S. currency from the Central Bank or blacklist groups for their affiliation with Iran’s Revolutionary Guard Corps”. As if in reply, a Hashd commander issued this warning: “Blacklisting Harakat al-Nujaba has only increased their popularity. … Once you list them among your enemies, they become one”.
III.A Fragile Neutrality
Washington’s “maximum pressure” campaign on Iran and Tehran’s response are putting severe strain on the Iraqi government, a partner to both. An Iraqi lawmaker said:
Neither the U.S. nor Iran wants war. Yet the U.S. expects Baghdad to stand against Iran, and Iran expects Baghdad to stand against the U.S. Now parliament could put pressure on the government by threatening to withdraw confidence [if it dislikes government policy on balancing between the two], while Iran could easily influence some of the militias to provoke security incidents [in retaliation for U.S. actions in Iraq]. The government is under extreme pressure both internally and externally.
Amid the countervailing pressures, senior government leaders – the prime minister, president and speaker of parliament – have shown both determination and dexterity in asserting Iraq’s neutrality. They have found support among an Iraqi public equally concerned about a potential escalation. In an interview with Crisis Group, President Barham Salih stated:
Our policy will remain “Iraq first” and away from a U.S.-Iran confrontation. There are countries neighbouring Iraq, including Iran, that have a vested interest in keeping Iraq stable and not part of this conflict. I am working with our neighbours’ foreign ministers and also seeking the support of the UN and EU to develop a framework of regional cooperation based on our shared interest to avoid another conflict.
Likewise, Iraqi leaders are working hard to forge a consensus on their country’s neutrality across the domestic political spectrum. On the president’s initiative, the heads of the main political groups, including Fatah, convened and agreed that a conflict between the U.S. and Iran would negatively affect Iraq. They stated in a confidential document that they would refuse to turn Iraq into “an arena for competing players to settle scores”.
Responding to critics, Prime Minister Abdul-Mahdi said the U.S. troop presence is legal because the government had requested it to support the fight against ISIS. In the same spirit, he said Baghdad would not allow Washington to send additional troops without granting its permission in response to a formal request. On 18 June, following the rocket incidents, he issued a statement prohibiting foreign troops deployed for advisory or training purposes from using Iraqi soil to launch attacks against Iraq’s neighbours and forbidding any party to acquire weapons or carry out security operations without the government’s consent. He addressed the question of the Hashd’s status by issuing a decree reaffirming the government’s authority over paramilitary groups and denouncing any activities conducted outside his command. Finally, following the airstrikes on Hashd armories, he issued a statement banning unauthorised flights in the country’s airspace and called for an investigation into the Baghdad explosions. Should the U.S.-Iran standoff intensify or, worse, turn violent, it would have an immediate impact on Iraq’s domestic politics and shake the delicate equilibrium its leaders are striving to maintain.
Baghdad also is seeking a way out of its energy quandary. While it continues to pay Iran for gas and electricity imports, it is in the process of signing contracts with Jordan and Saudi Arabia, as well as with European and U.S. energy companies. Still, as Fuad Hussein, Iraq’s finance minister, made clear, the government cannot afford to stop doing business with Iran:
Cutting gas imports from Iran will harm the government’s stability. The problem is political more than technical. We could import gas and electricity from other countries in the medium term, but if Iraq undermines its relationship with Iran, parliament is likely to withdraw its confidence in the government.
The government has started discussing the establishment of a “special-purpose vehicle” (loosely modelled on the European equivalent) that would allow it to pay for energy imports from Iran in Iraqi dinars instead of U.S. dollars, to be deposited in an Iraq-based bank account from which Iran could then draw exclusively to buy humanitarian goods in Iraq – thereby refraining from violating U.S. sanctions.
The president, prime minister and speaker of parliament have stepped up their diplomatic engagement as well. They have reached out to Iraq’s neighbours – Saudi Arabia, the UAE, Turkey, Iran, Jordan, Egypt and Kuwait – in an attempt to diversify ties and proposed a regional conference to build consensus on the perils of a U.S.-Iran confrontation. Moreover, while not offering to mediate between the U.S. and Iran, fearing that doing so would only increase pressures on the government, they have served as an informal channel to pass messages between the two.
These efforts notwithstanding, the Iraqi leadership’s commitment to neutrality may not suffice to insulate the country from external perils.Should the U.S.-Iran standoff intensify or, worse, turn violent, it would have an immediate impact on Iraq’s domestic politics and shake the delicate equilibrium its leaders are striving to maintain.
Iraq faces several risks from the current crisis. Most ominously, an escalation to direct U.S.-Iranian confrontation could encourage paramilitary groups with ties to Iran to begin targeting U.S. assets on Iraqi soil. The most likely triggers for such action are continued (Israeli or other) strikes against Iranian assets in Iraq, a U.S. attack on Iranian assets and a U.S. decision not to renew Iraq’s gas and electricity import waivers. Separately, strong domestic discontent could emerge over other issues, for example, inadequate public services, that could push legislators to threaten a no-confidence vote in the Abdul-Mahdi government. Any of these eventualities could force the government to throw in its lot with the Fatah bloc, which, in turn, would pressure it to take Iran’s side in the U.S.-Iranian confrontation. The government’s only alternative to alliance with Fatah would be dissolution.
There is little doubt that political parties and paramilitary groups with longstanding ties to Tehran will choose Iran’s side if a conflict breaks out, especially if they believe that the U.S. provoked it. Faleh al-Khazali, a Fatah lawmaker, said:
For now, parties are united in opposing a confrontation between the Americans and Iran. But if the Americans launch an attack, there will be a response, and ordinary Iraqis will be the first to mobilise against the Americans.
Since the end of Iraq’s sectarian war (2005-2007), Iran and its allied groups have been careful not to provoke open hostilities with the U.S. on Iraqi soil, aware that attacks on U.S. personnel could lead to all-out war and that whoever starts the fighting would bear responsibility in Iraqi public opinion. But this restraint is unlikely to survive continued escalation – whether in the form of renewed attacks on Iraqi paramilitary groups’ weapons depots or a U.S. strike on either Iranian or Iraqi soil. At that point, one should expect to see Tehran mobilise Iraqi paramilitary groups in retaliation.
On 21 August, Abu Mahdi al-Muhandis, deputy head of the Hashd, issued a statement holding the U.S. responsible for the strikes on weapons storehouses, alleging that Washington had “introduced Israeli drones into Iraq”. He warned of a Hashd response should another attack occur. On 25 August, the Hashd also accused Israel of targeting one of their convoys via U.S.-controlled airspace on Iraq’s border with Syria. The next day, the Pentagon, perhaps fearing retaliation, issued a statement denying U.S. involvement in the August attacks, saying “statements to the contrary are false, misleading and inflammatory”.
The Abdul-Mahdi government would be unable to stop the Hashd from striking back as it saw fit. The prime minister’s control over the Hashd remains weak. Despite his efforts to reaffirm his command, several groups continue to operate in parallel to those factions that have formally integrated into the security forces. These units are even outside the purview of the overarching Popular Mobilisation Commission. A Hashd commander said:
Iran does not want a war, but if there is going to be one, it will resort to all its allies in Iraq: not just fighters under the Popular Mobilisation Commission but also those operating outside of it.
The prime minister’s 1 July 2019 decree on the integration of Hashd groups offers the government additional legal means of demanding accountability for activities carried out outside its purview and distinguishing between Hashd factions willing to operate under the Iraqi security forces’ umbrella and prime minister’s command and those that are not. Yet the government’s ability to bring to heel this network of military figures with strong ties to the Fatah bloc remains limited. Lack of cooperation among Iraq’s disparate intelligence agencies complicates any effort to investigate security incidents. Trying to prosecute culprits for these attacks could also endanger the government’s parliamentary majority. Further strikes against Hashd installations would also put the militias in a position to act as defenders of Iraqi sovereignty against foreign attacks.
A more likely and no less dangerous scenario is that an Iran confronted with debilitating economic pressures – which would grow stronger should the U.S. decide not to renew sanctions waivers for Iraq – could at some point retaliate by targeting U.S. interests. Iran may calculate that it would be better to risk a confrontation with the U.S. than to risk an internal crisis due to economic collapse. And if Iran were to hit back at the U.S., it would likely do so in Iraq, where it can count on the paramilitary groups and political allies in parliament to challenge the U.S. military presence.
Even a legislatively forced U.S. withdrawal would have serious consequences as it could jeopardise the fight against ISIS, whose threat may have lessened but has not been eliminated; its remaining fighters are holed up in rugged terrain in central and western Iraq. Continued cooperation between the Iraqi military and U.S.-led Coalition forces is essential to ensure that jihadist cells in rural areas cannot launch operations reaching major towns.
Even absent a direct U.S.-Iran confrontation, Iran or its domestic allies could leverage popular discontent to corner the government. Street protests against the government’s failings in service delivery peaked in 2018 during the searing summer heat. A new round of protests this year could induce parliamentary blocs that still support the government to abandon it, increasing the prime minister’s reliance on the Fatah bloc and emboldening the elements closer to Iran to press the government to either confront the U.S. or face a no-confidence vote.
V.Reducing the Risk of Confrontation
The cost of renewed conflict in Iraq would be enormous, not least in light of the significant investments both Iran and the U.S. have made in the country since 2003. To avoid this outcome, Washington will need to address the growing contradictions between its various policy objectives: countering Iran at virtually any cost; securing its post-2003 gains in Iraq through a continued military presence; and preventing an ISIS resurgence. Any escalation by Washington – more belligerent anti-Iranian rhetoric or intensified pressure on the Iraqi government to comply with sanctions on Iran, let alone U.S. (or Israeli) military action against Iran or its Iraqi allies – could prompt Tehran to activate its allies and target U.S. assets and personnel.
The Trump administration likewise will need to narrow the gap between what it demands of Baghdad and what Baghdad can effectively deliver. The U.S. administration’s anti-Iranian fixation and the pressure it exerts to get Iraq to comply with its sanctions are having a host of unintended effects. They are harming U.S.-Iraqi relations; emboldening Iranian allies in Baghdad; and complicating Baghdad’s attempts to achieve what Washington claims it wants: warmer relations between Iraq and its Arab neighbours. A more effective U.S. policy would tone down the anti-Iranian rhetoric; continue to issue sanctions waivers for reasons both economic (given Iraq’s dependence on Iran) and political (given the sensitivities of Iran and its Iraqi allies); and focus on a longer-term strategy of helping Baghdad balance Iran’s influence by backing its efforts to strengthen political and economic ties with U.S. partners, such as Jordan, Saudi Arabia, the UAE, Kuwait and Qatar. A stable Iraq will be in a better position to help Tehran absorb the impact of U.S. sanctions.
Iran, too, ought to see merit in avoiding actions that destabilise its neighbour. A stable Iraq will be in a better position to help Tehran absorb the impact of U.S. sanctions; as its oil sales diminish, Iran increasingly will rely on non-oil trade, with Iraq in particular. It is unclear how far the Trump administration will go in pressing Iraq to cut those economic ties, but Iran has every reason not to force the issue. Directly or indirectly targeting the U.S. in Iraq almost certainly would lead the administration to double down on its current approach and give those in Washington intent on increasing pressure on Baghdad a justification for doing so. Accordingly, Iran should clearly communicate to its Iraqi allies that they ought to refrain from provocative behaviour.
Iran also should have an interest in the success of the counter-ISIS campaign, including through the ongoing U.S./Coalition role, given the threat the organisation presented to Iran and to Shiites in Iraq. In the absence of a credible replacement for the technical capabilities the U.S. and its international partners bring to the fight, a move to expel American forces could end up harming both Iraq’s and Iran’s security.
As for Iraq’s leaders, they should continue to consolidate their country’s neutrality in the U.S.-Iranian standoff. The government faces difficult months, born of the potential combination of street protests, parliamentary disputes and regional confrontation. It should tell parliament and the public that Iraq cannot bear the political or economic costs of being embroiled in U.S.-Iranian battles.
The Iraqi government also should clearly spell out to the Trump administration and the U.S. Congress – perhaps via a high-level delegation visit to Washington – the measures it cannot take vis-à-vis Iran without risking domestic political or military backlash; the conditions under which it can remain neutral; and possibly a roadmap of steps it could take over the next six months in response to U.S. demands. These steps could include strengthening economic and political ties to Arab neighbours and signing energy as well as trade deals with non-Iranian companies. Taking these measures would signal Iraq’s determination both to ensure its independence and to fortify its economy with diversification. Iraq’s message should be that it cannot remain neutral in the U.S.-Iran showdown unless Washington dials down its escalatory approach and refrains from compelling Iraq to take sides through its sanctions policy.
The Iraqi government also would be well advised to enlist the support of other members of the anti-ISIS coalition, highlighting the risks of an unstable Iraq. The EU’s July 2019 statement in support of Baghdad strengthening relations with its neighbours through an Iraq-proposed regional conference is a positive development in this direction at a critical time, as it could reduce the impact of U.S.-Iran tensions on Iraq. For outside actors, de-escalating the U.S.-Iran confrontation is a tall order. But supporting an Iraqi government committed to neutrality in that rivalry is an intermediate step that could mitigate risks of all-out war and chaos in the region while preserving Iraq’s recovery.
Thus far, the Iraqi government has proven successful in distancing itself from the looming confrontation between its two powerful backers, the U.S. and Iran. But its efforts may fall short if Washington and Tehran remain on their current collision course.
Both the U.S. and Iran should wish to avoid dragging Iraq into their fight. Doing so would jeopardise U.S. assets in the country. It would harm Iran’s trade at the same time that U.S. sanctions begin to bite harder. And neither the U.S. nor Iran wants to give ISIS a new lease on life.
For both the U.S. and Iran, and for the other countries that contributed to defeating ISIS, the Iraqi leadership’s commitment to the country’s neutrality is an opportunity to seize, especially considering how devastating a new cycle of instability would be for a country struggling to emerge from the last one.
Baghdad/Brussels, 29 August 2019