Iraq's Position Amid Rising Tensions Between Israel and Iran
Iraq's leaders are grappling with a challenging situation, as they find themselves caught in the escalating tensions between Israel and Iran. The United States generally takes a lenient stance towards Israel's actions, which could lead to the assumption that the U.S. either approved or did not object to an attack on Iran if it were to cross Iraq.
To avoid becoming a client state, Iraq is attempting to balance its relations with Russia and China. Increased investment from the United States could enhance Baghdad's autonomy.
Historical Challenges and Current Issues
Iraq is still dealing with the aftermath of Saddam Hussein's rule, the 1980-1988 war with Iraq, decades of sanctions following the 1991 invasion of Kuwait, the liberation by the U.S.-led coalition in 2003, a post-invasion reconstruction that squandered much of the $60 billion spent, and the Islamic State insurgency from 2014-2019.
The U.S.-led sanctions against Saddam Hussein's regime severely disrupted the Iraqi economy, leading to soaring inflation, record unemployment, a significant drop in living standards, infrastructure collapse, and a serious decline in public services. These factors, along with Saddam's crimes against his own people for nearly 25 years, are burdens Iraq must bear as it strives for a peaceful and prosperous future.
There are other issues that Iraq has to contend with. About 2,500 U.S. troops are currently stationed in Iraq, and most Iraqis want them to leave. Iraq also hosts around 300,000 refugees and asylum seekers, primarily Syrian Kurds, and over 1 million Iraqis remain internally displaced due to the Islamic State insurgency.
U.S. Influence and Control Over Iraq's Economy
The U.S. continues to exert influence over Iraq by requiring a sanctions waiver for Iraqi purchases of electricity from Iraq, and it recently banned all foreign transactions in Chinese Yuan. The U.S. also controls the distribution of Iraq's dollar-denominated oil revenues from an account at the Federal Reserve Bank of New York.
Israel's Planned Attack on Iran
Israel is planning to attack Iran in retaliation for Iran's retaliation to Israel's killing of its allies in Hamas and Hezbollah and Iranian military officers. The most direct routes are through Iraq and Saudi Arabia, but Iraq's foreign minister has stated that the expansion of war to Iran via Iraq's airspace is "unacceptable."
If the attackers cross Iraq, the assumption will be that the Americans approved or did not disapprove of the attack on Iran. This could weaken support for the U.S., undermine U.S.-friendly politicians, and strengthen the positions of Moscow and Beijing.
U.S.-Iraq Economic Relationship
Iraq's Prime Minister, Mohammed Shia' Al Sudani, visited the White House in April 2024, focusing on the economic relationship between the U.S. and Iraq. About 60% of Iraq's population is under the age of 25, and high youth unemployment is a drag on the economy and a recruiting opportunity for Iran and the Islamists.
Russia has invested over $19 billion in the Iraq energy sector, with LUKOIL, Gazprom Neft, and Rosneft being the top investors. Iraq is trying to balance its relations with Russia and China to avoid becoming a client state, and American investment could increase Baghdad's autonomy.
The Future of U.S.-Iraq Relationship
The U.S. president and the Iraqi prime minister should consider the future of the U.S.-Iraq relationship, which has been dominated by security concerns. The 2003 invasion weakened the Iraqi state and invited greater Iranian influence, which the U.S. should help Baghdad dilute.
Bottom Line
The U.S. and Iraq need to transition from a security relationship to an economic one. For Iraq to be a full partner, the Americans may have to relinquish their grip on Iraq's oil revenues. If Washington is hesitant to do business, Iraq can explore joining BRICS (Brazil, Russia, India, China, South Africa).
The U.S. can assist Iraq in navigating its way to a prosperous future for its youth, but both countries will need to distance themselves from Jerusalem and Tehran because indulging those two often promotes self-harm instead of cooperation and opportunity.
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