I haven’t been to Baghdad in years, but the city seemed very different to me. The blast walls, sandbags, and military convoys that once defined the city had given way to a more familiar, if chaotic, cacophony of civilian life, small business activity, and struggling government capacity — a combination reminiscent of other Arab capitals, at least outside of the Gulf. Traffic jams, bustling markets, and packed sandwich shops before Ramadan painted a picture of resilience, of ordinary life resuming in a city that has endured decades of war and hardship.
I was in Baghdad in late February for a conference on Iraq’s regional role, where we had the opportunity to meet with top leadership and policymakers. Iraq has come a long way since the fall of Saddam Hussein and the battle against ISIS. The state has reasserted itself, the political power-sharing system has proven durable, and the economy is inching forward. Yet deep challenges remain — sectarian divisions persist, corruption is rampant, and the Popular Mobilization Forces (PMFs), an umbrella of largely Iran-backed militia groups formed to combat ISIS, now pose a dilemma for Iraq’s national sovereignty.
Economic aspirations vs. harsh realities
Iraq’s government is touting ambitious economic projects, including the Development Road, a massive overland trade corridor linking the Gulf to Turkey and Europe beyond. In cooperation with the United Arab Emirates, Qatar, and Turkey, Iraq hopes to position itself as a critical hub for international commerce. But the project is still in the planning stages and will take many years to build. Meanwhile, overdependence on oil revenues, severe electricity shortages, high unemployment, and environmental degradation weigh heavily on progress. Prime Minister Mohammed al-Sudani has made strides, but Iraq’s political system — riddled with competing interests — slows meaningful reform. Elections in October will likely reshape the political landscape once again.
Iraq: Regional mediator or battleground?
The prime minister has championed Iraq as a diplomatic bridge in a volatile region. Baghdad has hosted multiple rounds of Saudi-Iranian talks and repeatedly offered to mediate between the US and Iran. In May, Baghdad will host the Arab League Summit, further cementing its role as a regional convener. So far, Iraq has built working relations with Turkey, Iran, and its Arab neighbors while carefully balancing between US and Iranian interests. But tensions are rising.
In particular, the recent power shift in Syria following the collapse of the regime of Bashar al-Assad in December is sending ripples through the country. While there was little love lost in Iraq for Assad’s regime, it was at least predictable and aligned with Iran. The new Syrian leadership under interim President Ahmad al-Sharaa — who once fought alongside al-Qaeda in Iraq — raises alarms in Baghdad. Iraq is also worried that instability next door in Syria could give ISIS a chance to resurge and once again project power into Iraq. Baghdad is cautiously engaging with Damascus, dispatching intelligence officials to the Syrian capital and inviting its foreign minister to Baghdad. But whether Syria’s new president will attend the Arab League Summit in May remains uncertain.
In the Kurdish Regional Government’s capital of Erbil, concern was particularly high for the fate of Syria’s Kurds — between the rising power of Turkey after its allies Hayat Tahrir al-Sham (HTS) took over Damascus and the reelection of Donald Trump, who touts his good relations with the Turkish president and is likely to seek a withdrawal of US forces from northeastern Syria. The former president of the KRG, Masoud Barzani, met with the leader of the Kurdish-led Syrian Democratic Forces (SDF), Mazloum Abdi, in Erbil in January to help find a soft landing for the embattled Syrian Kurdish forces. The framework agreement between the SDF and the new authorities in Damascus, announced a few days ago, lays out a promising pathway for Syrian Kurdish and SDF integration into emerging state institutions in Syria and is welcome news in Erbil.
For its part, Iraq has to manage the risks of a long and unpredictable transition in Syria not only by engaging politically and diplomatically, but also by strengthening its monitoring and controls along the 600-kilometer shared border between the two countries.
Managing the US relationship
The resumption of the US “maximum pressure” campaign against Iran is another headache for Baghdad. The Trump administration is taking a hard stance, deciding not to renew Iraq’s waiver to import Iranian electricity. While Iranian power only accounts for 4% of Iraq’s consumption, any dip in supply during the brutally hot summer months could lead to widespread blackouts and ignite public unrest. More concerning is Iraq’s reliance on Iranian natural gas, which fuels nearly a third of its power plants. While Baghdad is ramping up domestic production and seeking alternatives, solutions are years away, leaving the country vulnerable as the sweltering summer approaches and elections are due in October.
On another note, Baghdad is rethinking the push for American forces to leave the country by this fall. The risk of instability and ISIS resurgence emanating from the new Syria is causing even Iran-leaning factions to reconsider the September 2025 deadline, established as part of an agreement reached last year between Baghdad and Washington.
The US is also pressuring Iraq to rein in the Iran-aligned PMFs, whose influence extends far beyond security matters. Some Iraqi politicians support bringing them under tighter state control, fearing a Hezbollah-like scenario where Iraq becomes entangled in Israeli-Iranian conflicts; but the PMFs have many political allies in government and parliament as well. In January, Prime Minister Sudani visited Tehran to discuss developments in Syria and gauge Iran’s stance on both the PMFs and the US military presence. While Iran’s President Masoud Pezeshkian appeared receptive, Supreme Leader Ayatollah Ali Khamenei took a hardline position, declaring the presence of US forces “illegal and contrary to the interests of the people and the government,” and that the PMFs represent “a crucial component of power in Iraq, and more efforts should be made to preserve and strengthen them.”
Iraq’s fragile balancing act
In my brief visit to the Iraqi capital, it was heartening to see Iraqis of all stripes enjoying the return of normal life to their storied city. But it was also clear that Iraq is in a very difficult position. It seeks stability and economic revival but faces mounting regional and international pressures. From an unpredictable Syria to the intensifying US-Iran confrontation, Iraq must carefully navigate its alliances to avoid being pulled into another cycle of conflict. With an energy crisis looming this summer and elections on the horizon in the fall, the months ahead will be challenging. The US has an interest in remaining closely engaged with leaders in both Baghdad and Erbil to help support the tentative stability and progress that is being made in the country, while managing the risks for Iraq from a volatile regional environment and an escalating US-Iranian confrontation.
Paul Salem is MEI’s Vice President for International Engagement.
Photo by AHMAD AL-RUBAYE/AFP via Getty Images
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