Overview
September 30th was a momentous day for the US-Iraq bilateral relationship: the US withdrew the last of its troops, and the Iraqi government had pledged to bring Iran-backed elements of the Popular Mobilization Forces (PMF) under full state control, at long last, by the same date. While the withdrawal of US forces grabbed the most headlines and closed another chapter in a military presence that began in 2003, the prospective reworking of the PMF (for which the deadline has now been extended to June 2027) could ultimately have the greater impact on Iraq’s domestic security landscape and the regional balance of power. The end of the US’ presence in Iraq will prove popular for Prime Minister Ali al-Zaidi’s government and potentially hand Baghdad stronger leverage in efforts to disarm Iran-backed militias, reducing operational risks in Iraq and Iranian regional influence writ large. On the other hand, the expected difficulty of reworking the PMF promises government instability, which could increase Iranian influence, damage US credibility in Baghdad, scuttle major US and multinational energy investments in Iraq and potentially prompt new Western sanctions, which the US has long avoided.
The Role of the PMF and Domestic Political Considerations
Prime Minister al-Zaidi’s pledge to bring Iran-backed elements of the PMF under state control would be deeply impactful. The PMF, or the Hashd, are a patchwork of mostly autonomous militias organized by the Iraqi state in 2014 to institutionalize pre-existing and predominantly Shia militias already fighting against ISIS. PMF fighters are entitled to the same pay and benefits as regular soldiers of the Iraqi army and received a government operating budget of about $3.4 billion in 2024. The PMF legally answer to the Iraqi prime minister, not the Iraqi Defense or Interior Ministries, but they are practically independent from Iraqi state control – and many of them answer to Iran. Several Shia militias are ideologically aligned with Tehran or are explicitly part of Iran’s regional proxy network (such as major groups like Kataib Hizballah). Further, successive PMF Chiefs of Staff have directly cooperated with the Iranian Revolutionary Guard Corps (IRGC) to implement Iranian directives. These Iran-backed militias have, in just the last year, contributed to major strikes on Saudi Arabia’s Yanbu oil pipeline, strikes on American military assets in Iraq (including one stretch with 27 attacks in a 24-hour period), attacks on Saudi oilfields, an attempted drone attack on a Syrian airbase, and more.
The US, and Iraq’s Sunni Arab neighbors, have long sought greater regulation of the PMF, which they see as a direct threat to their security and an important element of Iran’s regional influence campaigns. But US efforts to incentivize or force Baghdad to control the PMF have been couched within the context of the broader bilateral relationship – which is a complex one. The US has been a necessary partner to Iraq in containing ISIS, and Iraq has long wanted a closer relationship with the US to enable greater economic and diplomatic ties to the West and Sunni Arab capitals. At the same time, popular Iraqi resentment for the US’ post-Iraq War presence in the country runs deep, and cultural ties to Iran make the bilateral relationship a touchy subject in Baghdad.
In recognition of ISIS’ diminishment and dynamics in Baghdad (not to mention US domestic wariness for “forever wars”), the full withdrawal of US troops has been under discussion for years. The election of Prime Minister al-Zaidi, who was explicitly backed by President Trump for appearing less close to Iran than his competitors and predecessors, kicked off the formal process for ending the US presence in Iraq under Operation Inherent Resolve (OIR). The US and Baghdad see the withdrawal as providing additional motivation and leverage for al-Zaidi to more decisively align with the US by disempowering the PMF, many of whom saw pushing back on the US presence as a core part of their mandate.
Prospects for PMF Reform
Bringing the PMF fully under state control is expected to be a serious struggle for al-Zaidi’s government. The plan is to disarm, dismantle and reorganize PMF fighters into existing PMF brigades, and reform the legal structure of the PMF to make its leadership more answerable to the Iraqi state. The plan would distribute Iran-backed elements so that individual brigades are less able to act as independent factions, and allow more policy direction by Baghdad.
Baghdad has begun integrating PMF factions to mixed success. Two weeks after al-Zaidi’s election, Muqtada al-Sadr announced that he would separate his armed faction from his political movement and integrate it into the PMF – a significant signal despite the fact that Sadr, among the most influential political voices in Iraq, is not Iran-aligned (but is anti-American). In the following weeks, the leaders of Iran-backed Asaib Ahl al-Haq and Kataeb al-Imam Ali followed suit.
But progress has been limited. More senior Iran-backed elements, like Kataib Hezbollah and Harakat Hezbollah al-Nujaba, have held off on engaging in negotiations. Other leading factions have explicitly rejected the September 30 deadline to disarm, framing their continued presence as necessary to defend Iraq’s sovereignty (or maintain it, after successfully driving out the American presence). It is hard to imagine how Baghdad will force, or incentivize, prominent militias like these to integrate. Unlike Asaib Ahl al-Haq, which disarmed in exchange for high-level political representation, the most prominent pro-Iran elements see themselves as above politics. Even though the US presence in Iraq has ended, pro-Iranian elements see the fight for Iraqi sovereignty as very much alive in the context of the broader US-Iran conflict (especially given reports of new Israeli outposts in Iraq amid the war). Iran, for its part, sees its PMF factions as a core component of its national defense, and has no intention of supporting their disarmament. Finally, even those militias that have agreed to integrate present a mixed picture – for example, some defectors from Asaib Ahl al-Haq have already formed a new armed group with significant Iranian support. While the formal integration of the group solves the problem of Iraqi state funds supporting pro-Iran elements, it clearly does not reduce Iranian influence or simplify the security environment.
Implications for Regional Stability and Economic Interests
Efforts to curb the PMF carry significant upside and downside risks. If successful, Baghdad could gain much-needed control of its internal security landscape, reduce Iranian political influence, strengthen its diplomatic relationship with Washington, and open the door for greater alignment and economic cooperation with the US and Sunni Arab states. If unsuccessful, security risks throughout Iraq could proliferate, Prime Minister al-Zaidi’s government could be destabilized, the US-Iraq relationship would be damaged (likely resulting in new tariffs or sanctions) and Iranian influence and operations could increase, presenting more regional security risks amid the protracted US-Iran conflict.
On the economic front, significant energy investments and Iraq’s economic relationship to the US and its partners are at stake. US energy companies have major existing investments and projects in Iraq, which boasts the world’s twelfth-largest liquefied natural gas (LNG) reserves and is OPEC’s second- or third-largest oil producer. The Gas Growth Integrated Project, a $10 billion multi-energy project led by an international consortium, expected to be active by 2028, is a prominent example. A US-backed company is currently in the process of constructing a $450 million floating LNG hub at the Khor Al Zubair Port, part of an effort by the US to increase Iraq’s share of the global LNG market to displace Russia and increase Iraq’s economic autonomy from Iran. Over the summer, President Trump and Prime Minister al-Zaidi announced a raft of new agreements with US companies, including the revival of an Iraq-Syria oil pipeline, several projects aimed at increasing Iraqi oil production, power grid development, and solar energy projects. Security disruptions, new US trade measures, or a damaged US-Iraq bilateral relationship could scuttle these deals, leading to losses for multinational companies and disruptions to global and regional energy markets.
Failure to control the PMF could also trigger new sanctions or tariffs on Iraq for its extensive dealings with Iran, on which the US has historically been lenient in recognition of Iraq’s complicated position. When al-Zaidi’s election over a more Iran-friendly candidate was in question, US sources floated the possibility of sanctions on Iraq’s Central Bank, State Oil Marketing Organization and political figures, as well as restrictions on Iraqi oil sales, banks and access to US dollars. These measures could lead to a near-total halt in foreign trade and create serious complications for multinational businesses in Iraq.
