Iran is losing its stranglehold over Iraq

Mint

14-07-2025

He was killed by an Israeli air strike in Lebanon last year. Yet the face of Hassan Nasrallah, formerly the boss of Hizbullah, is still plastered on posters all over Baghdad, Iraq's capital. Alongside them are images of other Shia militia leaders from Iraq, Iran and Lebanon. They have one thing in common: their outfits are backed by Iran.
The posters are testament to Iran's long-standing influence in Iraq. Yet they also mask a growing dissatisfaction among Iraqis about their country's alignment with its bigger neighbour, particularly among the young. Many dreaded being dragged into Iran's war with Israel and America, and were relieved that their government stayed out of it. The response to calls by the militias to march on the American embassy during the war in June, which ended with a ceasefire after just 12 days, was lacklustre. As its influence wanes across the region, Iran cannot rely on Iraq the way it used to.
The relationship between the neighbours, which share a 1,600km-long border, has waxed and waned. Their religious leaders compete for influence among Shia Muslims around the world. In the 1980s they fought a war in which hundreds of thousands of people died.
Yet in the years since America toppled the regime of Saddam Hussein in 2003 Iraq has been a staging ground for Iran to project power across the region. With extensive Western sanctions in place to stymie Iran's nuclear programme, Iraq's economy has been one of the few lifelines for its beleaguered neighbour. For years the regime in Tehran manipulated the Iraqi central bank's daily dollar auctions to secure hard currency to pay for imports, circumventing sanctions. Only America's blacklisting of Iraqi banks in 2023 slowed the practice. Iraq is also a crucial market for Iranian exports. Iran presses Iraqi government departments and ministries to prioritise Iranian goods over those from elsewhere, according to businesspeople in Baghdad. 'If the Americans occupied Iraq militarily,' says one banker from the region, 'then Iran has done so economically.'
Even more important has been Iran's exertion of military influence through militias backed by its Islamic Revolutionary Guards Corps (IRGC). The rise in Iraq of Islamic State (IS), a Sunni extremist group, in 2014 triggered a call to arms from Shia religious authorities in both Iraq and Iran. Iran supported the establishment of a number of Shia armed groups in Iraq. They battled IS and eventually helped to degrade it significantly. But they also provided Iran with a way to control much of Iraq's politics and economy.
The militias' unmarked pickup trucks still roam the streets of the capital. Their members have vast business interests and control important ministries, including those in charge of oil and metals exports. Until recently they exerted significant influence over the supreme court.
Much of that control was exerted by Qassem Suleimani, who as head of the Quds force, the IRGC's elite arm, helped co-ordinate Iran's foreign-influence activities. But Iran's hold over the militias has diminished since an American drone strike killed Suleimani in 2020. Even as some joined Iran's 'axis of resistance', others turned inward, focusing on domestic affairs.
One reason is that Esmail Qaani, Suleimani's successor, lacks his predecessor's deft touch in managing the factions' competing interests, says a veteran Iraqi lawmaker. 'The requests became demands,' he says. Another is that Iran's allies in Iraq have grown rich and now have much to lose from getting dragged into a conflict with America or Israel. Some still believe in Iran's Islamic revolution and the need to fight Israel. But others are increasingly resentful of their country's status as its neighbour's satrap.
Perhaps most important, a younger political class that grew out of anti-government protests in 2020 has become increasingly vocal about its opposition to the militias. The armed groups are 'corrupted and have built economic empires', says Muhi Ansari, who heads the Iraqi House foundation, a new civil-society group. 'The concept of resistance [to Israel] is hollow in Iraq,' he says.
That sentiment was on full display during Iran's brief war against Israel and America last month. Even Iran's closest allies in Iraq were too wary of retaliation by America or Israel to offer much help. As Abu Meethaq al-Amsari, a political analyst close to Badr, one of the biggest Iran-backed factions, explained on national television on June 21st: 'The brothers in the factions are practising a high degree of self-restraint and rationality.'
Israel's decimation of the IRGC's high command during the dozen-day war and America's strike on Iran's nuclear programmes have raised hopes among some Iraqis that Iran's hold over Iraq's politics and economy will diminish. As militias and politicians loyal to Iran find themselves adrift, a space could open up for other, homegrown political forces. 'Whatever they say in public,' says a civil servant, 'we're not sad to see Iran weakened.'