Iran looms large over Iraqi PM’s reform agenda

BAGHDAD — When Iraqi Prime Minister Mohammad Shia al-Sudani speaks about battling corruption, implementing long overdue economic reforms or getting an elusive oil law done with the Kurdistan Region, you get the sense that he means it.

Sudani, 52, is a former human rights minister and mayor of Maysan province. When he was 10 years old, Saddam Hussein’s regime killed his father and other family members for being affiliated with the opposition Shiite Dawa Party. Sudani never went into exile under Saddam and participated in the 1991 anti-regime protests following the Gulf war.

In office less than six weeks, Sudani’s charge as premier is formidable, even daunting. He knows that Iraqis desperately want and need accountable government. The political system is widely viewed as rigged and corrupt. Betting against reform in Iraq has been a good move. For example, despite words to the contrary, many expect that the investigation into the theft of $2.5 billion from Iraq’s Rafidain Bank, the so-called "heist of the century," will avoid incriminating anyone in power and probably be used as a cudgel against those out of favor.

Sudani’s best intentions and his ambitious program may ultimately be complicated or even thwarted by what happens with Iraq's neighbor to the east. The specter of Iran hangs over Iraq’s future. The Islamic Republic is under siege, as Iran’s leaders reportedly describe their predicament. The protests in Iran, sparked by the death in custody of Kurdish Iranian woman Mahsa Amini for a hijab violation, don’t seem to be dying down despite Iran seemingly offering to loosen such legislation and disband the notorious morality police.

Iran blames its enemies — especially the United States, Israel and Saudi Arabia — for the unrest, putting Iraq in the crossfire. Iran launched artillery and rocket attacks into Iraqi Kurdistan for months, claiming the region is being used as a base for Kurdish and other armed groups that have joined the protests, and has threatened ground operations. Amberin Zaman writes that unresolved disputes among Iraqi Kurdish political parties gives Iran leverage over the Kurdistan Region as Turkey sets up more military bases inside its northern borders as part of its war effort against Kurdistan Workers Party militants. 

In a meeting in Tehran last month, Iranian Supreme Leader Ayatollah Ali Khamenei told Sudani to get control of the border and stand up to the two countries’ "common enemies." Sudani agreed to take additional steps to secure the border, though Iraqi officials privately doubt there is much to Iran’s allegations. Sudani also insisted that Iran stop its attacks on Iraqi territory and it has, at least for now. 

Iraq is inevitable collateral damage when Iran feels threatened and US-Iran relations deteriorate. The Biden administration barely mentions the Iran nuclear deal anymore. The priority in Washington and Brussels is backing the protesters, involving even more sanctions on Iran.

This puts Baghdad in a bind. When Tehran feels the pressure from the United States, it calls in its chits in Iraq. For example, US sanctions don’t allow direct cash transfers to Iran. Iraq depends on Iranian gas for electricity, for which payment is made in a barter arrangement through Iraq’s trade bank. Iran holds the gas transfers over Iraq’s head. 

The power brokers behind Iraq’s government, known as the Coalition Framework, include Shiite parties and militias with close Iranian connections. This does not make the coalition or the government a proxy of Iran. But it is a reminder that Iran has many levers of influence and a well-established lack of respect for Iraqi sovereignty, especially when it feels threatened. 

Sudani has given priority to Iraq’s integration with Arab states, including the Gulf, and is keen to build on Iraq’s recent success as a hub for regional diplomacy. This is priority for the Biden administration as well. Sudani’s predecessor, Mustafa al-Kadhimi, deepened Iraq’s integration with Egypt and Jordan and opened a new chapter in Iraq’s relations with the UAE and Saudi Arabia. Building on close personal ties with Arab and regional leaders, Kadhimi hosted Iran-Saudi and other back channel talks and convened a summit on Iraq of Arab and regional leaders as well as French President Emmanuel Macron.

Sudani has offered to reconvene the Iran-Saudi meetings but Iran is enraged by Saudi support via its media outlets, including Iran International, for the protesters. The next regional summit on Iraq will be held in Amman on Dec. 20.

The stakes are high. Iraq needs Gulf investment and especially Iraq-GCC coordination on the energy grid. The Gulf wants a stable Iraq that is not beholden to Iran. But the mood has darkened with Iran’s brutal crackdown and the deterioration in US-Iran and Iran-Saudi relations. The instability and uncertainty in Iran and what it might mean for Iraq and the region has tilted the Gulf toward a wait-and-see mode. 

Inside Iraq, the Iraqi populist cleric Muqtada al-Sadr is another wildcard, ready to pounce if Sudani stumbles. The Coalition Framework only came to power after Sadr, whose party won the most seats in the October 2021 special elections, bafflingly withdrew his members from the Iraqi parliament in June 2022. Left hanging by Sadr, the Sunni Progress Party led by parliament speaker Mohammed al-Halbousi and the Kurdistan Democratic Party led by Masoud Barzani closed ranks with the Framework. 

Even Iraqis who are in the know or claim to be are at a loss to divine Sadr’s past or future moves. The buzz in Baghdad is that Sadr is in reassessment mode; even hardcore loyalists feel he blew it by withdrawing his parliamentarians. There are murmurs of dissent in his inner circle. 

No one’s counting him out, either. Sadr commands the streets and his followers, legions of disenfranchised young Shiites, rally to his lineage as heir of a revered clerical family, his steadfast opposition to what most see as a corrupt ruling system and his rejection of both Iranian and US influence in Iraq, especially the American military presence. 

Sudani is undaunted despite the headwinds and is pressing ahead with his expansive agenda. He has a big idea for a deeper partnership with Turkey to supply gas and energy to Europe and is upbeat regarding prospects for an oil law between Baghdad and Erbil. He says that it is in Baghdad’s interest that Iraqi Kurdish parties settle their dispute and reach agreement with Baghdad. The next two weeks are critical, as negotiators are in the home stretch on an Iraqi budget. With the Framework commanding a majority in parliament, there is a chance that reforms could be passed as laws. 

For Sudani to succeed on any of these fronts, Iraq can’t be party to regional conflicts. That’s one of the prime minister’s messages to Washington, Tehran and the Gulf. It all depends on whether Tehran is listening from under siege and will give Sudani and Iraq the space it needs.