Prime Minister Sudani in Washington

Normality vs abnormality for Iraq

Iraq generally—and Prime Minister Muhammad Shia Sudani in particular—desires a “normal” relationship with the United States.  While the contours of what is “normal” are perhaps not fully envisioned, Iraq knows what an abnormal relationship looks like, and they know they are living it. 

So there are two categories of issues that Prime Minister Sudani will be talking about while in Washington.  The things he wants to talk about (moving towards normalization), and the things Washington will bring up that he therefore has to talk about (most of which are distinctly abnormal).

(Media Office of the Iraqi Prime Minister)

Front and center in the second category will be Iran and Iran’s sub-state allies in Iraq.  This issue has two major branches—Iraq’s economic relationship with its Eastern neighbor and the status of the Iranian-influenced Hashd, or Popular Mobilization Forces (PMF).

Also in the abnormal category, the issue of the US-led coalition presence in Iraq. These forces under the Combined and Joint Task Force Operation Intrinsic Resolve (CJTF-OIR), are located in Baghdad, at Al Assad airbase in Anbar province, and in Irbil, at both the consulate and airport (full disclosure: their commander is a long-time friend).

Finally, the US interest in the details of Iraq oil policy, and particularly the status of the contracts signed by oil firms (many of them US firms) with the Kurdistan Regional Government and how those contracts might be regularized with Baghdad.

Meanwhile, Sudani will want to talk about normalization—normalization of the Iraqi banking system, normalization of artistic, educational and cultural exchanges, and normalization through integration into the region.  He will also have thoughts about how a more normal relationship can be constructed between the US Department of Defense and the Iraqi Ministry of Defense (though the Minister of Defense is not part of the delegation and is not expected in Washington for some months). All of the issues are part of the long-standing Strategic Framework Agreement signed in 2008 by the United States and Iraq.

First, Iraq and Iran.  This topic will be particularly sensitive and topical in the wake of Saturday night’s attack on Israel.  But Sudani’s clear nationalist credentials should make the conversation more comfortable than with any of his predecessors, though Iraq’s close relationship with its neighbor will always make Washington uneasy. 

Iraq exists in this strange space where the West is simultaneously chiding them (fairly) for not developing their non-petroleum economy but is also denying them—via secondary sanctions—the ability to conduct normal economic activity with their neighbors to both the East (Iran) and West (Syria).  This in a region where the normal economic flows run East and West.  Iraq’s proposal of a “Development Road” from Basra to Turkey and then onward to Europe (bypassing the Suez Canal and the Bab-el-Mandeb Straits) is a clever attempt to work around this fundamental geographic reality, but bypasses can only take you so far.  This is a tension that US policymakers tend not to want to acknowledge. 

Iraq will continue to have to live in this strange space where economic activity with their neighbor is unavoidable (imagine the US trying to live without trading with Canada and/or Mexico) but has to be very carefully monitored for dollar-denominated activity.  But the United States must eventually acknowledge that either a) Iraq must be given some reasonable exemptions for its trade with Iran or b) the United States must accept Iraq’s continued economic lethargy as its trade with its neighbors is choked.  Alternatively, the United States could accept a third possibility, in which Iraq moves further away from dollar-denominated transactions in order to both assuage US concerns about use of the dollar while also engaging its neighbor, but this hardly seems to be in the US national interest.

The second Iraqi file with major Iranian concerns remains Iraq’s Hashd or PMF.  These groups—largely but by no means exclusively Shia—emerged in the wake of the failure of Iraq’s Army and Interior forces to defend against ISIS in 2014.  In their own conception—and the conception of a significant part of the Iraqi public—the Hashd are the guarantor against ISIS once against gaining significant inroads inside Iraq.  Therefore, once should not expect these forces to disappear any time soon.

Nor is it reasonable to expect any integration of this force.  Following the precedent set by Iraq’s Counter Terrorism Service (CTS), under US guidance, the PMF reports not through a ministry, but directly to the Prime Minister via its commander.  While the bulk of the PMF have a primary loyalty to Iraq, there is a significant minority that believes their interests are best represented by the Iranian government.  These forces—in brigades composed primarily of Kataib Hezbollah and the Nujaba Movement—see themselves as part of the Islamic “resistance” first, and elements of the Iraqi government secondarily.  For the bulk of the Hashd, the calculation is just the opposite, with protection of the Iraqi state trumping any outside interests.  But it is the exception, particularly with their attacks (almost 200!) against US forces in the wake of the October 7 Israel-Hamas War, that captures attention.

It is notable that under Sudani’s government, one of the major “resistance” factions, Asaib al Haq, appears to have given up armed resistance and declared itself a political and cultural movement.  The capture of former insurgent groups by the Iraqi state is an important milestone, and one that should be noted.  Should the Iraqi state be able to continue to grow in capability, capacity and strength, it is easy to see other factions being so assimilated.  But the growth in state capacity must come first.

Conversations with the United States on this file will be particularly difficult in the wake of both the killings of US soldiers in Jordan at “Tower 22,” and the Iranian attacks on Israel.  But a “truce” between the resistance factions and the US presence in Iraq appears to have held since shortly after the Tower 22 killings, which makes conversations at least possible.  That said, this issue will continue to be contentious during PM Sudani’s visit, and likely one he will hear about in every meeting.

The presence of the United States military—via the Combined and Joint Task Force—continues to be a point of friction.  The tension loops back to the desire for normality.  While many normal countries have US troop presences—Japan, UK, Italy, Germany—no normal country has a named operation, like “Operation Inherent Resolve,” within its borders.  The presence of the CJTF is seen, plausibly, as a real obstacle to normality. 

From the Iraqi side, the CTJF is an instrument that has served its purpose.  From Iraq’s perspective, “only small ISIS groups remain,” at least inside Iraq’s borders (the camp at Al Hol in Syria is another thing altogether).  Therefore, while it may well be possible to see a future in which there is a bilateral arrangement for US trainers and advisors inside Iraq, the CJTF likely has a very short life left.  But even a resistance figure like Qais Khazali appears to have left the door open for a US presence confined to diplomatic facilities and airports.  It will be interesting to watch what negotiations—whether culminated under President Biden’s current term or dragging into 2025—might bring.

Finally, Sudani can expect pressure from the US firms who have invested significant funds to produce oil in the Kurdistan region. These firms now find themselves without a significant means of exporting their product, due to the closure of the Iraq-Türkiye pipeline in the aftermath of Baghdad’s victory in an arbitration dispute with Türkiye over Kurdish use of the pipeline outside Baghdad’s supervision.  While the dispute and status are complicated and esoteric, the bottom line is that approximate 450 thousand barrels per day (450K bbd) of oil is no longer being exported via Türkiye.  While some of the oil is being moved by truck or consumed locally, the closure of the pipeline to Kurdish oil (again, much of it serviced by US firms) leaves much of this oil off the market.

Prime Minister Sudani has different equities, however.  From his perspective, this oil in the KRG is a stranded asset, even before disputed contractual arrangements are considered.  Iraq is already producing over its OPEC quota, despite taking measures to reduce production in its rich southern oil fields.  Therefore, for Iraq to start exporting oil through the northern pipeline would further bust these quotas.  Enabling these exports would leave Sudani with two unpleasant choices—either to reduce production in the south (which is generally a superior oil blend and cheaper to extract) or to simply ignore the OPEC quotas at a moment in which he needs good relationships with the Gulf States.  Further, while not frequently mentioned at the moment, Sudani cannot help but be concerned about the involvement of Russian oil giant Rosneft in the Kurdish pipeline and how his relations with the United States might be impacted by a surge of revenues from Iraqi oil to the Russia oil major.

Again, PM Sudani is looking for a “normal” relationship.  Despite all the tensions in the region, Sudani’s agenda for his meetings in the United States is finance, business and investment.  From his perspective, Iran, the US CJTF, and KRG oil exports are all distractions and hangovers from the occupation era and/or the ISIS conflict.  It will be a test of Sudani’s statesmanship to see if—or at least how far—he can shift the conversation from these persistent issues, in a time of regional tension, to the normalized and diversified relationship with the United States he clearly desires.