The re-election of Donald Trump probably signals the commencement of a more assertive U.S. effort versus Iranian influence in Iraq. This is not because Trump himself has any interest in Iraq: he views it as a dusty junkyard with oil but nothing else. However, Republicans across the board want to reduce Iran’s influence and Iraq is the scene of Iran’s greatest success: taking control of a major Arab nation using the blood and treasure of America’s wars in Iraq as Tehran’s springboard to success.  The new U.S. effort to reduce Iranian influence in Iraq will have little to do with the number of U.S. troops on the ground. Instead, a counter-influence campaign against Iran-backed groups will rely upon U.S. financial intelligence, sanctions and political warfare against the militias and their ability to use the Iraqi petro-economy as a source of financing security threat. The Trump administration will see itself as having little to lose in Iraq and everything to gain by pursuing a thrifty coercive effort against Iraq’s government to distance Baghdad from Iranian influence. 

Donald Trump has never had much interest in Iraq as a country. His only visit there did not even include the capital Baghdad or a meeting with the Iraqi government, but instead was limited to visiting U.S. troops located at the Al-Asad base in the country’s remote western desert[1]. That says a lot about his laser focus on U.S. interests in places like Iraq, which he will view as an unstable mess of a country where the U.S. has little to gain. 

When Donald Trump is inaugurated for the second time in January 2025, he is unlikely to give much thought to Iraq or perhaps to ever travel there, but his foreign policy team will have a lot to say and do in the country. Many of the current Republican foreign policy elite dealing with the Middle East deeply care about Iraq. Veterans like Mike Waltz, Trump’s pick for National Security Advisor, spent years of their lives in Iraq as service members. They will never stop trying to reverse the outcome in Iraq – that of Iran vaulting over the backs of more than 4,500 dead Americans to reap all the benefits and end up picking Iraq’s prime ministers[2].

Republicans have watched the situation in Iraq worsen considerably in the years since Trump left office, with Iran-backed militias losing the October 2021 elections and yet still emerging triumphant in the subsequent government formation in 2022[3], emplacing Prime Minister Mohammed Shia al-Sudani, who they describe in derogatory terms as their “general manager”[4]. This has created a burning, pent-up desire to shift the balance in Iraq away from Iran. Even future Vice President J.D. Vance, an Iraq veteran who thinks the invasion was America’s greatest strategic blunder, sees Iran’s domination of Iraq as a failure of U.S. policy that should be reversed.

Yet neither Trump nor Vance are supportive of major new military campaigns in the Middle East. The last time that America had “first among equals” status in Iraq, it was based on a powerful military presence: the 2003-2011 period, with up to 185,000 U.S. troops in the country.  If the U.S. government tries to reduce Iranian influence in Iraq in 2025 and the years afterwards, it will not be through the deployment of troops but rather through an “intelligence surge”. 

The U.S. decision-makers who appear to be lining up to serve in Trump’s new Middle East team are very familiar with intelligence, special operations, asymmetric warfare, and sanctions. They include former Green Berets like Mike Waltz and Rob Greenway, whose unit was formed precisely to undertake unconventional warfare, and numerous U.S. army veterans of the shadow war fought between the U.S. and Iran inside Iraq since 2003, for instance Joel Rayburn, who will probably take a key Middle East portfolio at the State Department. They will reassemble a powerful interagency task force with the specific intention of damaging Iran’s militia partners in Iraq and limiting their ability to feed off Iraq’s $150-billion annual budgets.[5]

The U.S. does not need troops on the ground for these kinds of actions. Iraq is highly vulnerable to an intensified sanctions enforcement policy[6], which could build on a growing raft of evidence in mainstream investigative journalism regarding Iran’s use of Iraqi banks to gain access to the U.S. dollar,[7] and about the abuse of Iraq’s oil sector to make money for Iran-backed militias and to aid Iranian crude oil sanctions evasion[8]. Oil-rich Iraq is the “cash cow” for the entire axis of resistance outside Iran – with Lebanese Hezbollah[9] and Yemen’s Houthis[10] crowding in alongside Iraqi militias to get a share. 

In 2025, the Trump administration will selectively sanction Iraqi banks, airlines, port operators and shippers to send a signal to other commercial players to distance themselves from terrorist financing in Iraq. U.S. sanctions waivers for Iraq’s purchase of Iranian gas and electricity will be tightly conditioned on the rapid diversification of energy supplies away from Iran[11].  Greater scrutiny will be directed at indirect sanctions evasion – for instance, trilateral gas swaps including Iraq, Iran and Turkmenistan[12]. Washington may withhold multi-month extensions of the sanctions waivers under Trump, opting for single-month waivers and lapses in waivers that will send shivers through the Iraqi banking sector and disrupt their access to hard currency. The Popular Mobilization Forces’ ambition to grow the Muhandis General Company economic conglomerate into an Iraqi version of the Iranian Revolutionary Guard’s Khatam ol-Anbia[13] will be actively opposed, as it was under the first Trump administration[14].

The Trump Iraq team will not give away anything that they can instead trade for changes in Iraqi behavior. A more aggressive U.S. State Department country team will be deployed to Embassy Baghdad, including a tactically adept ambassador who is selected precisely for their ability to play hardball with Iraqi interlocutors. One hugely under-used tool in the U.S. arsenal is unparalleled U.S. financial intelligence on where Iraqi politicians and businesspersons have their assets hidden, inside Iraq and outside[15]. Another is communications intelligence that gives a detailed picture of how political leaders are positioning themselves privately, with foreign nations (like Iran) and with other factions. This intelligence dominance was privately used in the first Trump term to occasionally warn Iraqi leaders to observe U.S. red lines, for instance to not form the Muhandis General Company when the militias first sought to do so in 2018.[16] The U.S. can be expected to “show what it knows” more often in the future, a tactic that tends to elicit rapid and favorable “behind closed doors” behavior changes in Iraqi leaders[17].

What kind of reaction will be created by this kind of U.S. activism in Iraq? Iran would not be happy, but nor would Tehran want to openly challenge the U.S. under Trump, especially after Iran was shown to have meddled with his election campaign[18] and even planned to assassinate him[19]. An indirect Iraqi reaction is more likely but the militias have also learned to be cautious about threatening U.S. personnel in Iraq. In 2024, under President Joe Biden, the U.S. undertook painful strikes on mid-level militia leaders in Baghdad in January-February[20], and again in June-July[21], creating noticeable windows of deterrence afterwards. The U.S. has frequently appeared to be on the very edge of striking inside Iran for actions undertaken by Iran-backed militias in Iraq, such as the January 28, 2024 killing of three Americans at the Tower 22 base in Jordan[22]. Militia strikes on American bases in Iraq may occasionally be undertaken, but probably not regularly or heavily enough to alter U.S. calculations. 

If Iran and its militias escalate and kill Americans, the U.S. option of shuttering the embassy in Baghdad remains on the table, as it was in early 2020 if escalation against U.S. interests had continued to surge upwards[23]. It remains unclear how Trump’s instincts on foreign deployments – that they are a waste of time and money, and a risk for no benefit[24]– will affect the future of U.S. sites in Iraq and Syria. They may be closed in 2025-2026, as the U.S.-Iraq Higher Military Commission seems to envisage[25], or they may hang on, as the U.S. bases in Syria did for years after he initially ordered them closed[26]. What is clearer is that Trump will retain the option of shuttering the Baghdad embassy if he wishes, but could also stay in bases like Iraq’s Al-Asad Airbase if he wishes. Neither having an embassy in Iraq, nor adhering to prior deliberations by the U.S.-Iraq Higher Military Commission are sacred to Trump. These are just bargaining chips in a game. Trump probably does not want an Afghanistan-type chaotic withdrawal on his watch. Nor is it clear that Iran or the militias really will want the U.S. fully gone if this frees Washington to act in a fully unconstrained manner. 

What non-kinetic options does Iraq have? Could Iraq take steps to reduce its dependence on the trading of oil in U.S. dollars? The examples of Iran and Russia are instructive: it remains very hard to create non-dollar portions of the global economy that can operate at real scale[27], and Iraq would not want to trade its oil at a significant discount, as Iran does[28]. Greater Iraqi economic integration with China is already underway and likely to continue, Trump or no Trump, but it is largely limited to infrastructure projects where most U.S. companies do not seek to compete due to profitability, corruption and security concerns[29]. Collaboration on Iraqi mega-projects is a potential path in the U.S.-Iraq relationship that expired years ago:  Trump will instead see those opportunities inherent in the U.S.-Israel-Gulf-India axis[30].

For European players in Iraq, the Trump administration will undoubtedly be a difficult partner. Washington will seek burden-sharing in new ways: for instance, in European and UK sanctions against U.S.-designated terrorist groups like Kataib Hezbollah, and in anti-corruption and human rights rulings against Iraq’s worst offenders among the Iran Threat Network, many of whom visit Europe and have property in the UK and on the contingent[31]. While the Obama and Biden White Houses tended to view Europeans as a good way to pass U.S. messages to Iran-backed militias in Iraq[32], the Trump team may not view this mechanism as worthwhile. Washington can easily communicate its demands indirectly via Prime Minister Mohammed Shia al-Sudani’s Iraqi government, which was supported by different actors such as Asaib Ahl al-Haq, Badr and Kataib Hezbollah. A new ambassador in Baghdad will be empowered to speak quite candidly regarding U.S. expectations from Iraq. 

If anyone in Iraq is especially happy about Trump’s return, it is the Iraqi Kurds, and most specifically the Barzani family who run the Kurdistan Democratic Party (KDP), who recently won the plurality of seats in the Kurdistan Region’s October 2024 parliamentary elections[33]. The tight connection between the Barzanis and the Republican Party in Congress has surprised even Sudani’s Washington-watchers[34]. Going forward, Trump’s team will not risk relations with state partners like Turkey to serve a Kurdistan independence agenda, but the U.S. will probably weigh-in on Kurdistan’s side when it comes to issues of Kurdish oil exports, Baghdad-Kurdistan revenue sharing, and an ongoing U.S. military presence in Kurdistan. Recent U.S. Congressional letters – some signed by new National Security Advisor Mike Waltz – attest to the depth of ongoing Republican commitment to the Kurdistan Region[35].

The Biden administration’s conception of a “360⁰ relationship” with Iraq[36]that downplayed Iranian influence was probably always unsustainable. Looking forward, Iraq will be viewed first and foremost by the U.S. through the lens of Iranian influence, and Iraqi leaders and institutions will be judged according to their apparent leaning towards or away from Tehran. No Iraqi prime minister – especially not the militia-supported Mohammed Shia al-Sudani – will receive carte blanche support from Washington. 

Instead, each Iraqi premier will be viewed with appropriate skepticism and in a transactional manner. Only by meaningfully drawing Iraq away from Iran can Baghdad be drawn closer to Washington and receive differentiated treatment from other arms of the axis of resistance like Hezbollah-controlled Lebanon, Houthi-held Yemen, and parts of Syria. Will there still be shades of grey? Of course: this is Iraq, still trapped between Iran and the United States. But no one should doubt that Trump’s win is the outcome many proponents of engagement with Iraq’s militias feared the most: an almost zero-sum game in which Iraq must choose between deeply embedded Iran-backed militias and a vengeful U.S. security establishment that sees Iraq as largely lost to Iran.

Notes

[1] Steve Holland, In a first, Trump makes surprise visit to U.S. troops in Iraq, Reuters, December 26, 2018.

[2] Joel Wing, Coordination Framework Picks Its Candidate For Iraq PM But Doesn’t Resolve Anything, Musings on Iraq, July 22, 2022.

[3] For a detailed political history of this period, see Michael Knights, Iraq’s New Regime Change: How Tehran-Backed Terrorist Organizations and Militias Captured the Iraqi State, West Point CTC Sentinel, December 2023, Volume 16, Issue 11.

[4] Hamdi Malik, “‘Sudani Is a General Manager’: How Militias View Iraq’s New Prime Minister,” Militia Spotlight, Washington Institute for Near East Policy, December 1, 2022.

[5] Ahmed Rasheed and Timour Azhari, “Iraq approves record $153 billion budget including big public hiring,” Reuters, June 11, 2023.

[6] Qassim Abdul-Zahra and Abby Sewell, Targeting Iran, US tightens Iraq’s dollar flow, causing pain, AFP, February 2, 2023.


[7] David S. Cloud, Iraqi Banks Used U.S.-Created System to Funnel Funds to Iran, Wall Street Journal, September 8, 2024.

[8] Iraqi Fuel Oil Export Surge Raises Smuggling Concerns, Middle East Economic Survey, November 1, 2024.

[9] For a look at Lebanese Hezbollah economic exploitation of Iraq, see Knights, Iraq’s New Regime Change, West Point CTC Sentinel, December 2023, Volume 16, Issue 11.

[10] Adnan Jabarni, A New Axis: Strategic Coordination between the Houthis and Iraqi Factions, Sanaa Center For Strategic Studies, July 15, 2024. See also “Hamas, Houthis Open Offices in Iraq,” Foundation for the Defense of Democracies, September 17, 2024.

[11] Samya Kullab and Qassim Abdul-Zahra, In sign of frustration, US shortens sanctions waiver to Iraq, Associated Press, September 24, 2020.

[12] Turkmenistan and Iran sign deal to supply gas to Iraq, Associated Press, July 3, 2024.

[13] Michael Knights, Hamdi Malik, and Crispin Smith, “The Muhandis Company: Iraq’s Khatam al-Anbiya,” Militia Spotlight, Washington Institute for Near East Policy, March 21, 2023. See also Sinan Mahmoud, “Iraq’s militias set to benefit as government creates company for state-backed groups,” National, November 29, 2022.

[14] Knights, Iraq’s New Regime Change, West Point CTC Sentinel, December 2023, Volume 16, Issue 11.

[15] Author (Knights) interviews, multiple Iraqi contacts, 2020-2023; exact dates, names, and places withheld at request of the interviewees.

[16] Knights, Iraq’s New Regime Change, West Point CTC Sentinel, December 2023, Volume 16, Issue 11.

[17] Author (Knights) interviews, multiple Iraqi contacts, 2020-2023; exact dates, names, and places withheld at request of the interviewees.

[18] Erick Tucker, The FBI says Iran tried to send hacked files to Democrats. It’s another sign of foreign meddling, Associated Press, September 19, 2024.

[19] Rebecca Shabad and Michael Kosnar, Justice Department files charges in murder-for-hire scheme targeting Trump, NBC News, November 8, 2024.

[20] C. Todd Lopez, Self-Defense Strike in Iraq Kills Terrorist Leader, DOD News, January 4, 2024.

[21] Ahmed Rasheed and Timour Azhari, Kataib Hezbollah commander killed in Baghdad in US strike, Reuters, February 9, 2024.

[22] John Gambrell, What is Tower 22, the military base that was attacked in Jordan where 3 US troops were killed?, Associated Press, January 29, 2024.

[23] Nahal Toosi, Lara Seligman and Natasha Bertrand, U.S. weighs closing embassy in Iraq as threats raise spectre of Benghazi, Politico, September 28, 2020.

[24] Steve Holland, Trump to West Point grads: ‘We are ending the era of endless wars’, Associated Press, June 13, 2020.

[25] Joint Statement Announcing the Timeline for the End of the Military Mission of the Global Coalition to Defeat ISIS in Iraq, US DOD Office of the Spokesperson, September 27, 2024.

[26] Karen DeYoung and Karoun Demirjian, Contradicting Trump, Bolton says no withdrawal from Syria until ISIS destroyed, Kurds’ safety guaranteed, Washington Post, January 6, 2019.

[27] Jared Cohen, Don’t Bet Against the Dollar, Foreign Policy, June 10, 2024.

[28] Chen Aizhu and Siyi Liu, China’s cheap Iranian oil supply at risk from tighter Trump sanctions, Reuters, November 6, 2024.

[29] Yerevan Saeed and Sardar Aziz, China’s Rise in Iraq’s Energy Sector: From Newcomer to Dominant Player, Arab Gulf States Institute in Washington (AGSIW), October 23, 2024.

[30] Alberto Rizzi, The infinite connection: How to make the India-Middle East-Europe economic corridor happen, European Council on Foreign Relations, April 23, 2024.

[31] Author (Knights) interviews, multiple Iraqi contacts, 2020-2023; exact dates, names, and places withheld at request of the interviewees.

[32] Michael Knights, Embracing Asaib Ahl al-Haq: Pragmatism or Naiveté?, Hudson Institute, October 9, 2024.

[33] KDP wins Iraqi Kurdish parliamentary election, commission says, Reuters, October 30, 2024.

[34] Author (Knights) interviews, multiple Iraqi contacts, 2020-2023; exact dates, names, and places withheld at request of the interviewees.

[35] Natalie Grover, U.S. lawmakers urge Biden to support ‘economically strangled’ Kurdistan, Reuters, September 19, 2023.

[36]Jim Garamone, U.S., Iraq Examine New Strategic Relationship, DOD News, August 8, 2023.