Iraq's US-Iran balancing act faces crunch time

Baghdad wants good relations with Washington, but its ties with Tehran run deep. Under increased pressure, it may have to pick a side once and for all.

An Iraqi man and children hold Iranian flags as people march during celebrations to mark the ceasefire between Israel and Iran in the southern city of Basra on June 24, 2025.
HUSSEIN FALEH / AFP
An Iraqi man and children hold Iranian flags as people march during celebrations to mark the ceasefire between Israel and Iran in the southern city of Basra on June 24, 2025.

Iraq's US-Iran balancing act faces crunch time

During the 12-day war in June between Israel and the United States against Iran, banners appeared in Baghdad proclaiming: “This is the battle of truth against falsehood, and silence is betrayal.” Yet there was a different truth throughout those days: the Iraqi people were fearful that the war would spill over and engulf them. After the ceasefire, Iraqis were relieved, celebrating “the Islamic Republic’s triumph” over Israel.

Yet throughout those 12 days, when Iranian commanders, scientists, military sites, and nuclear facilities were being attacked, Iraqi support for Iran amounted to hashtags and slogans on social media. Despite the fiery warnings from the leaders of Iraqi armed factions, these groups issued tepid and conditional statements, such as: “If the Supreme Leader is targeted, we will intervene.”

More than most, Iraqis know the tragedies of war. Haunted by Saddam Hussein’s ruinous wars (with Iran from 1980-1988 and his reckless invasion of Kuwait in 1990), they also know that there are no real victors, only the enduring scars of economic and social devastation. Yet as Iraqi scholar Salim Souza has argued, political culture today defines victory not by battlefield success, but by the survival of the ruling order.

In Iraq, Shiite political forces and their media portrayed the 12-day Iran-Israel war as a sectarian showdown between Shiites and Israel. They linked the fate of Iraq’s Shiite-led political order to the survival of Iran’s system of governance, led and exemplified by the Supreme Leader, Ali Khamenei. In this narrative, Israel was not merely targeting Iran; it was attacking the broader Shiite political power base across the region.

There is an irony here, because Iranians themselves rejected this sectarian framing. On the contrary, their rhetoric emphasised national identity over religious ideology. In his first public address after the ceasefire, Khamenei spoke not of Islam, but of “a great people, a powerful and vast Iran, with an ancient civilisation and cultural heritage that far surpasses that of America and its ilk”.

REUTERS / Ahmed Saad
Pictures of Iraq's top Shiite cleric, Grand Ayatollah Ali al-Sistani and Iran's Supreme Leader Ayatollah Ali Khamenei are carried at a rally to show solidarity with Iran, amid the Iran-Israel conflict, in Baghdad on June 21, 2025.

At the Ashura commemorations, Iran's Supreme Leader requested a poem titled "O Divine Iran"—rich with Shiite symbolism, yet recited not to elevate sectarian pride, but to affirm Iranian national identity, even during sacred religious occasions.

That identity may need some affirmation. Since Hamas attacked Israel on October 7 2023, Iran's network of proxies has been attacked and weakened, whether in Gaza, Lebanon, or Yemen. Iraq's armed factions are one of Iran's last remaining regional levers, and while they did not enter the Iran-Israel war, they remain armed and intact.

Indeed, there are indications that it was Iran that urged their restraint. Tehran recognised that any Iraqi intervention would invite Israeli retaliation, not just against the militias but against its own entrenched networks and interests in Iraq. Iranian officials also understood the limited military value of the militias.

Far from tipping the balance, their involvement may have led to their obliteration. Preserving them as tools of strategic deterrence against the US in Iraq was deemed far more valuable than sacrificing them in a losing war. As a result, the most lasting impact of the 12-day war may be a recalibration of Iran's strategy in Iraq.

To effectively separate Iran from Iraq, the US would need to formulate a coherent strategy that restructures the country's political landscape

Electoral test

Rather than rely on armed groups, Iran could begin cultivating broader political alliances, perhaps with Sunni and Kurdish actors. The upcoming November elections may therefore prove to be the true test of Tehran's influence in Iraq, with analysts wondering whether this is an unravelling or an evolving.

Iraq is not a US foreign policy priority. The American embassy in Baghdad is currently headed by a chargé d'affaires, following the departure of Ambassador Alina Romanowski in November 2024. In Washington, Iraq is often seen through the lens of America's relationship with Iran and rarely as a sovereign partner in its own right.

The armed factions within Iraq that are loyal to Tehran are not seen as sovereign actors, but rather as extensions of Iranian power. The resulting reticence was evidenced in a recent letter from US President Donald Trump to Iraqi Prime Minister Mohammed Shia' al-Sudani concerning new US tariffs on Iraqi exports. "These tariffs—whether increased or decreased—will depend on the nature of our relationship with your country," Trump said.

The implication is that Iraq is currently seen as neither an ally nor an adversary. Some American policymakers remain deeply sceptical about influential Iraqi political figures, who are seen as beholden to Iran, but Sunni and Kurdish leaders are also considered unreliable, especially given the destabilising effects of their various sectarian militias.

This ambiguity extends to the government of Prime Minister al-Sudani. In a recent interview with the Associated Press, he appeared to contradict himself, simultaneously echoing the militias' rhetoric to justify their armed status (to 'resist' the US in Iraq) while discussing plans for a forthcoming summit to redefine security relations with Washington and expressing hope of strengthening ties.

For Washington, Iraq's November elections may represent the first genuine opportunity since its 2011 military withdrawal to re-establish a presence and counterbalance Iran

Talking a tougher line

Some American policymakers believe that a direct strike on Iran would lead it to turn inward and scale back its influence in Iraq. But such a belief underestimates the complexity with which the two nations are now bound together—wholly unlike Iran's ties to Syria, Lebanon, or Yemen. Informal economies and illicit networks underpin Iran's influence (via its allied militias) in Iraq, so US sanctions are unlikely to have any effect.

To effectively separate Iran from Iraq, the US would need to formulate a coherent strategy that restructures the country's political landscape to end the tolerance for armed groups. To that end, recent US messaging regarding the Iran-backed Popular Mobilisation Forces (PMF) has appeared sharper.

In a call between al-Sudani and US Secretary of State Marco Rubio, the latter expressed strong concerns about a draft law that would grant the PMF more powers. Rubio said this would "entrench Iranian influence and empower terrorist armed groups that undermine Iraq's sovereignty".

For Washington, Iraq's upcoming November elections may represent the first genuine opportunity since the 2011 military withdrawal to re-establish a US presence, counterbalance Iran, and ensure a Baghdad government that wants to, and is able to, curb Tehran's proxies. In a sense, the election may determine Iraq's future geopolitical alignment.

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