The United States welcomes Iraq’s desire to be a “bridge” to its neighbors but will not accept “malign” Iranian influence that undermines Iraqi sovereignty, two top State Department officials told Al-Monitor.
In a joint interview Wednesday at the State Department, Assistant Secretary for Conflict and Stabilization Operations Denise Natali and Deputy Assistant for Iraq and Iran Andrew Peek emphasized the primacy of Iraqi sovereignty in US policy and a desire to work with Baghdad to address Iranian-backed militias that operate outside the control of Baghdad. The pair encouraged “balanced” state-to-state relations between Iraq and all of its neighbors after returning from a delegation to Iraq earlier this month that was led by Natali and also attended by Peek.
“There has been a proliferation of undisciplined armed actors that are not under the control of the state,” Natali said. “That, to me, has become one of the biggest impediments to stabilization assistance moving forward, in addition to the lack of security or the lack of services.”
These actors, she said, have evolved from a security threat to a major drag on Iraq’s ability to rebuild in places like Mosul.
“This is moving from a security issue to an economic issue,” she said. “They are now operating like economic cartels, like mafia groups, in different parts of the country.”
That proliferation of militias outside the control of Baghdad is already having a detrimental effect on efforts to rebuild places like Mosul, Iraq’s second-largest city which was ravaged by the war against the Islamic State.
“The principles of our stabilization is we have local, legitimate partners that we hold accountable, and if our local partners can't get some of these undisciplined armed actors [under control], there is a risk that the stabilization may not continue in the way that it is. And that's an important risk that we have to put out there.”
Iraq’s partners “can’t build desalination plants [if they] don't know if they're going to get blown up the next day,” added Peek.
Peek said the United States is not seeking to prevent Iraqi relations with its powerful neighbor to the east per se.
“We know that Iraqis are going to meet with Iranians. We know they’re going to trade with Iranians,” said Peek. ”What we want is for them to do that without being dominated by Iran.”
The nature of Iran’s economic system, however, greatly complicates matters. US sanctions aim to weaken the Islamic Revolutionary Guard Corps and the Central Bank of Iran, which the United States accuses of using their dominant role in the economy to sponsor “malign activities” across the region.
“We need to make sure they get as few dollars as possible,” Peek said. “The goal is zero.”
Below is the full transcript of our conversation, edited for clarity.
Al-Monitor: You both just returned from Iraq, where you attended the American University of Iraq Sulaimani’s Suli Forum and met with top officials. What are your impressions of the new Iraqi government formed in the wake of the May 2018 elections?
Peek: I think there is tremendous potential in the new Iraqi government. You know, there were a lot of first-time things about the election. Obviously, there was a breakdown of [voting by] sectarian bloc. The voters were voting according to policy. They've voting according to ideas. Particularly, it was noticeable in the Shiite blocs. Candidates were vying for policy programs.
I think overall what that reflected was a desire for normalcy. People wanted services. They wanted jobs. They did not necessarily want national security crises to be the issue of the day, and I think that reflected a desire of not just normalcy, but some of the political choices for new leadership, for leadership that had never been had. And, of course, [cleric Muqtada al]-Sadr was the lead Shiite vote-getter, Sadr's party Saroun.
So I think there's a hunger for normalcy. That's the demand signal, and this government is working to get there. Not doing it as quickly as I think Iraqis would like, particularly in the South, but they're trying.
Natali: I would say, to pick up on what [Deputy Assistant Secretary] Peek indicated, this is another sign of Iraq moving away from, if it was ever truly there, the notion that it is comprised of three homogenous blocs. That there is not just a Sunni-Shia-Kurd component of Iraq, and we really need to stop using that language and talk about Iraq in terms of geographies, territories and different cross-sectarian groups of people. There are two cross-sectarian main blocs in the Iraqi government, and that's a better way of understanding contemporary Iraqi politics today.
The other downside of that is there still is going to be some political entropy, given the fact that consensus is going to be needed, and the new prime minister [Adel Abdul Mahdi] is focusing on consensus. So we may not have the speed in decision-making that we would like. There still are positions unfilled, but it is [a government] that is crossing sectarian lines.
Al-Monitor: The reconstruction of Iraq’s second-largest city has been described in the media as a tale of two cities, with the more ravaged eastern part of Mosul largely abandoned while the western half across the Tigris river is basically back up and running following the defeat of the Islamic State [also known as Daesh or ISIS] in July 2017. Is that an accurate view of the reality on the ground? How do you see progress toward reconstruction in Mosul? Are you comfortable with the pace of progress there? What more needs to be done from the Iraqi government, and how can the US help?
Natali: The United States so far has provided over $2.5 billion in humanitarian stabilization assistance to Iraq. That includes de-mining. There's also $300 million for minorities in the north. There has been an enormous amount of United States government support for humanitarian assistance and stabilization. I use the word "stabilization," not reconstruction.
One of the requisites and one of the issues that we're having in stabilization, however, is that there also needs to be able and accountable local partners on the ground that we can work with. There also has to be burden-sharing and partnerships in the presence of security. Where you don't have those requisites, we're not having successful stabilization.
So I will go back to some of the hindrances to where stabilization has not been able to get through is because we haven't had the presence of security, and we haven't had the presence of capable local partners on the ground. There are about 1.8 million internally displaced people who still have not gone back to their homes, and in those areas, it is because of those elements.
Peek: I don't think there's any difference in our approach or in the UN's approach to West Mosul versus East Mosul. West Mosul was just so devastated by the final battle. I mean, we haven't really, in our experience of fighting wars in the last two decades, seen a city like that, that kind of Stalingrad-esque combat. So it's just starting from a much lower place. I was there about 10 months ago, and I was shocked by how devastated it was.
We're also working to get our partners in the region to be engaged in this, and they have. The United Arab Emirates, I think, have put $50 million into rehabilitating, stabilization in Mosul —and that's tremendously valuable because it lets the people there know that they are not alone.
Al-Monitor: What are we doing to address this lack of security? Is that an issue with the Iraqi forces – are there just too few of them? Is it a training issue?
Natali: Let's start by saying we are appreciative, the United States, of the valiant efforts and the courageous efforts of the Iraqi Security Forces, the Kurdish Peshmerga and the Hashd al-Shabi [also known as Popular Mobilization Forces] in pushing back and defeating Daesh or pushing Daesh back in these areas.
With that said, there has been a proliferation of undisciplined armed actors that are not under the control of the state. That does not mean all Popular Mobilization Forces. They have officially been incorporated into the Iraqi government in 2016. I am talking about those armed actors that are not. I think it is important to differentiate between the disciplined and the undisciplined. That has been a useful way that Iraqis themselves can refer to this problem and then target the problem.
But where there are undisciplined armed actors not under the control of the state, that has become one of the biggest impediments to stabilization assistance moving forward, in addition to the lack of security or the lack of services.
So that security component is added to the need for and the calls for local security forces, local police. They say they are there to guard against or protect against ISIS, and there's been discussions at different levels about having different components of local populations securing, forming a local police or a local guard for their own areas. That has not come about yet, but that is a possible solution to replacing some of these undisciplined groups.
Peek: That really needs to be a priority for the Iraqi government - ensuring that funding [for] local security [forces]. Like in our country, police that talk like them, that pray like them, that they feel are accountable to their communities, because those are security forces who will act with restraint and act responsibly.
Natali: This is a big endeavor because it requires training. It requires a plan. Across the board, people in Iraq have identified this issue of the undisciplined groups becoming one of the biggest obstacles to move forward. And I say that because, again, I emphasize we have to be clear about making that differentiation. We can't clump them all into one group and then think that this is a similar problem across the entire country. It's in certain pockets of the country by certain specific individuals and groups.
Al-Monitor: When you use these carefully chosen words, your Iraqi counterparts know who you're talking about?
Natali: They should.
Al-Monitor: And these are some of the groups we've been sanctioning?
I want to make another point about the Iran malign activities or the activities of these undisciplined actors. This is now moving from a security issue to an economic issue. They are now operating like economic cartels, like mafia groups in different parts of the country. This has gone from groups coming in to maintain control of checkpoints to controlling revenues at checkpoints, bribing. It's gone into a whole different arena right now, and this type of activity, again, is going beyond the security element.
I am concerned, very concerned, that those people working to continue with stabilization in the north can only go so long and be impeded for so long. I don't know how long that will continue if these undisciplined armed actors are not controlled. This is not going to go on forever. We can't want this more than the Iraqis. So, at the end of the day, it's the responsibility of the Iraqi government. The principles of our stabilization is we have local, legitimate partners that we hold accountable, and if our local partners can't get some of these undisciplined armed actors [under control], there is a risk that the stabilization may not continue in the way that it is. And that's an important risk that we have to put out there.
Peek: [You can’t] build desalination plants [if] you don't know if they're going to get blown up the next day.
Natali: Or they're going to have to pay so much bribes to undisciplined armed actors at checkpoints that they can't get their relief products through. So this is something that's serious, and we hope that it can be addressed so that we can continue, which we want to do, to engage and support stabilization efforts in Iraq to enhance Iraqi sovereignty.
Al-Monitor: The actors on the ground often get lumped together under terms like “Shiite militias.” What’s wrong with that approach?
Natali: It's a term that Iraqis don't like. I understand that it's used, and we know what you're saying. But it's not as an effective speaking point. If you want to get to the goal that we want to get, using that term was not going to help us get there as effectively as other terms can.
Peek: There's Shiite militias that respond to Baghdad and those that respond to Tehran.
Natali: There's also Sunni-Arab militias that respond to Iran, and there's also Sunni-Arab militias that respond to Baghdad. Over 60 percent of Iraq are comprised of Shia. If we're going to start getting into grouping people, we have to be more nuanced because we're not going to make our point.
Al-Monitor: Moving on to Iraq’s relations with Iran, let’s talk about Tuesday’s decision to renew the waiver allowing Baghdad to import electricity from Tehran for another 90 days. Blackouts have sparked protests in Basra. What is the US doing to help Iraq wean itself off of Iranian imports, without destabilizing the country?
Peek: Iraqis need electricity, point one. I think they've run at a dearth of about 4,500 megawatts for air conditioning to be able to run full-time. We have no — repeat no — desire to make the lives of Iraqis harder. They are hard enough, particularly in places like Basra, particularly in the summer. That is why we engage with our partners — the Saudis, Kuwaitis — like last summer when the Kuwaitis delivered diesel fuel and generators to make sure that those citizens in times of blackout or water crises had the services they need and also engaged private industry to come to Iraq. Like in December, under the aegis of the chamber of commerce, to make sure that our companies are talking about the opportunities to help Iraqis.
Point two: Iraq should not be reliant on Iran for its electricity and natural gas. Iraq is one of the most energy-rich countries in the world. They are losing money by importing these items from Iran. In fact, they should be exporting. So that is something very much to keep in mind.
Point three: The Central Bank of Iran is deeply involved in financing all manner of Iran's malign activities, including terrorism, including proxies. We need to make sure they get as few dollars as possible. The goal is zero, but as few as possible to make sure that they cannot then give those abroad, such that it is in our national security interest as well as the Iraqis’, by the way, not for Iran to have that hard currency to be able to sponsor malign activities around the region.
Al-Monitor: Iraq, as you know, has said it wants a normal relationship with Iran, which presumably includes trade, buying good and services, both ways. Is that acceptable for the United States?
Natali: The United States policy toward Iraq hasn't changed. We support a unified, federal, democratic Iraq that is a sovereign Iraqi state. The United States understands that Iraq will trade and have relationships with its neighbors, but malign Iranian influence in the country that undermines the sovereignty of the Iraqi state, that undermines the sovereignty is problematic, and there is the issue here.
Iraq can be a bridge to all of these countries in the region — the Gulf, the Levant, Iran as a neighbor. But there are negative, very negative malign influences, and this is the point that I think that the United States is targeting.
Peek: I think that was excellently said.
Natali: Thank you, Andrew. If we can enhance the sovereignty of the Iraqi state, then we can get at Iraq's relations with sub-state actors and any entity coming in and undermining that sovereignty.
Al-Monitor: More broadly, taking a step back, do you consider the Iranian president's visit to Iraq, in particular his meeting with Grand Ayatollah Ali al-Sistani [the Shiite spiritual leader in Najaf] as a positive or a negative step?
Peek: I'm far more concerned about the IRGC [Islamic Revolutionary Guard Corps] officers running all over Iraq than I am about [Rouhani’s] meeting with the prime minister.
Natali: Right. This goes back to our understanding that Iraq is going to have relationships with its neighbors. But it's those activities that undermine the sovereignty of the Iraqi state through the sub-state malign actors [that concern us].
Peek: A perfect example of this is the fact that [IRGC Quds Force Commander Qassem] Soleimani can travel to Iraq without getting his passport stamped, without going through customs like every US official, like every other official in every other country. That is not a normal thing, and that is a result of Iran's malign behavior, its intimidation, and subterfuge.
Al-Monitor: You've told the government in Baghdad that they need to shut that down. What's been the reception?
Peek: Iraqis are even more aware than we are of Iran's malign behavior, and they want a sovereign republic.
Al-Monitor: You're talking about reining in Iranian malign activity, while allowing Iraq to have normal relations with its neighbors. But how does that work in the context of an Iranian economy dominated by state actors, including the IRGC. You mentioned aiming to get transfers to the central Bank of Iran [CBI] down to zero.
Peek: That was perhaps a glib exaggeration. Our position is not a trade embargo. Certain categories are sanctionable. CBI itself isn't sanctioned.
The only caveat to this is that there are not just the sectoral sanctions, but the IRGC is in so many of Iran's industries that people need to be very careful, the Iraqis included, about who they do business with. If they are doing business with an IRGC business, they are liable for sanctions. So while we want a normal relationship, this is something that in terms of legally that they just have to keep in mind.
Natali: The United States has not said, "Iraq, you are prevented from having visitors at high levels to go to — you are not allowed to go to Iran." However, it goes back to the kind of activity that is going on at the level of these sub-state malign actors. So it's very clear: When we've sanctioned these groups for doing these types of activities, these terrorist activities, then those are the types of activities, the relationships that we condemn.
Al-Monitor: Iraq has been trying to turn into this policy focused on good neighborly ties, economic integration with the region. We saw that with the new trade deal with Jordan, with visits from Saudi officials and others from the region, with this week’s announcement that border crossings with Syria are being reopened. What is the US response to this trend in Iraqi policy. Is that something you wholeheartedly approve of, or are there any concerns there?
Peek: Every day, there are a lot of indicators coming out of Iraq. I would suspect there was a discussion in Iran about [the fact that Baghdad] just invited a large delegation of US officials headed by an Assistant Secretary to the Suli Forum. I don't want to get too caught up on one indicator or the other. I think the whole picture is more important.
As Denise said, we want Iraq to have a normal relationship with its neighbors as a sovereign state. So they will conduct political meetings. They will conduct military meetings. I don't think there's a trend one way or other. [Iraq] has a number of issues going on at the same time, but we continue to build its capacity for normalcy
Natali: And normalcy also means having important balance relationships with the [Arab] Gulf states, with Jordan. The Iraqis have said, "We are neutral. We want to be the neutral force in the region." Iraqis have told me it could be very important and very helpful for them in addressing some of their own domestic issues, trade, economics. So that's a positive thing, and I would say that US efforts in trying to enhance those relationships have been well received.
Al-Monitor: We all know about US concerns with regards to Iran. Are there any other countries or groups that you feel are not playing as constructive a role in Iraq as they could be?
Natali: Yes. Any group that is not under the authority of the Iraqi government and that is undermining the sovereignty of the state. So another one is the presence of PKK [Kurdistan Workers’ Party] elements in the north of Iraq. That has been said by the Kurdistan regional government, by other groups, because it's bringing in external issues inside the Iraqi borders [editor’s note: The PKK is a US-designated terrorist group originally from Turkey].
This is another one of those issues of, what are you going to do with these external actors that are carrying out some of their political issues inside the Iraqi state and preventing people from going back to their homes? You've got that issue coming in with the efforts to return the IDPs [internally displaced people].
Peek: You saw the [State Department’s] designation of Harakat al-Nujaba [as a terrorist group] on March 5th. When groups show no willingness to, in that case, respond to Baghdad versus Tehran, if they're fully in Tehran's pocket and if they are unwilling in other cases to become part of the political system, the US will take action on that.
Al-Monitor: Let’s talk about the military component to US policy. Has the backlash from certain members of parliament against President Donald Trump’s comments about leaving troops in Iraq to “watch” Iran died down? Some had threatened to pass legislation to kick out US soldiers.
Peek: I think responsible Iraqi actors know the international coalition is critical to the future of Iraq. It represents security and stability. Political grandstanding of one kind or another does not. That may result in the removal of that entire coalition. It is too big a risk for Iraq to take as it moves towards normalcy.
Natali: And removal does not mean just one part of the country. It would mean the entire country. So that is not in the interest of any Iraqi, including the Kurds in the north. I think people are aware of the stakes. As Andrew indicated, there are great stakes if that were to happen.
Al-Monitor: Kurdistan Regional Government (KRG) Prime Minister Nechirvan Barzani told Al-Monitor earlier this month that relations between Baghdad and Erbil are “far better” than they’ve been for a long time. You both were in the Kurdistan region for the Suli Forum and met top officials there. How do you see Erbil-Baghdad relations following the backlash against the Kurdish referendum in September 2017?
Peek: I think we are in so much of a better place than we were back in October, November, December 2017, and this has been a steady progression of things. You have the referendum and the fighting in October, and then Baghdad, after months of intense US engagement, Baghdad agrees to pay some of the civil service salaries, a huge development, brave move by [former] Prime Minister [Haider al-] Abadi. He didn't have to do that. So that goes a long way toward alleviating some of the economic crunch.
Shortly thereafter, the airport restrictions get lifted, first for international flights, first on Erbil and then Sulaimaniyah, a tremendous step. Again, Abadi did not have to do that.
And then you come to November when the government agrees to restart oil exports from Kirkuk up through KRG to [the port of] Ceyhan [in Turkey], tremendously positive step. That provided benefits to both Iraqis and the KRG, Arabs and Kurds, and was followed almost immediately by the visit of former president of KRG, Masoud Barzani, to Baghdad [for the first time] since the referendum. And so these kind of four increments were just an increasing cascade of positive deepening relations. So I think we're in a very, very good position on that.
Natali: I agree with Andrew. Just to add, you have also leadership on both ends in the Iraqi government in Baghdad and the leadership in the Kurdistan regional government, two personalities that are … consensus-based individuals, so it's easier to really go down and make those visits that are necessary. One other point, you've got important Kurdish leadership in Baghdad with not only the president of the country [Barham Salih], but also the minister of finance [Fuad Mohammed Hussein], and they have been able to move forward in a very pragmatic way. The referendum frankly set the Kurds back in some ways, but they are being very pragmatic in knowing that their future and their relationship in a federal Iraqi state is working positively with Baghdad.
The budget was very good for the Kurds. The civil service salaries are continuing to be paid, which is a very big and important boon for the Kurdistan region, given what happened after those years of not getting consistent salaries.
There is one issue still, though, that needs to be resolved in full. My understanding is 250,000 barrels of Kurdish oil has to be sent, and it is sent to SOMO [the State Organization for Marketing of Oil in Baghdad]. So we will see how that is able to work out as they move forward.