August 21, 2020
By Katherine Lawlor with Brandon Wallace
Key Takeaway: Iraq’s new prime minister is taking assertive but risky actions against corrupt political and militia interests in the Iraqi state. His bold policies create new opportunities for the United States to help Iraq make essential reforms amidst increasingly dire political and economic conditions. However, the United States must accept the limitations that the Iraqi system will impose upon Prime Minister Mustafa al-Kadhimi’s freedom of action. Kadhimi’s early efforts to reform Iraq’s security, economy, and government have achieved mixed but worthwhile results. Without improved security and stalwart international support, Kadhimi’s government is likely to be whittled away by harassment and targeted violence. With US and international support, Kadhimi may be able to generate enough momentum to stabilize Iraq and improve the US-Iraqi relationship beyond his time in office.
Iraqi National Intelligence Service Chief Mustafa al-Kadhimi ascended to the office of prime minister in May 2020 in the midst of converging crises as a consensus candidate with vocal support from both Iran and the United States. Kadhimi’s ascension followed the forced resignation of the previous prime minister, months of mass protests and political deadlock, a devastating collapse in oil prices and government revenues, the emergence of the coronavirus in Iraq, and the failure of two previous prime minister-designates.
The Iranian regime allowed the formation of an Iraqi government under Kadhimi in order to prevent Iraq’s collapse. Iran’s preferred candidates failed to gain sufficient support in Iraq’s parliament. Iran also faced a devastating outbreak of COVID-19, its own domestic economic woes, and a destabilized Lebanon. Iran seeks a weak but stable Shi’a-led Iraq to provide a captive market for the regime to evade sanctions and access international currency. Iran therefore accepted Kadhimi as the best short-term compromise to avoid Iraqi state collapse. The Iranian regime likely ordered its proxies to pause attacks on US and Coalition forces to smooth that necessary government formation period. Iran restarted its anti-US campaign almost immediately after Kadhimi’s premiership was assured and the threat of immediate state collapse was averted.
Kadhimi’s assertive policies threaten Iran’s interests in Iraq. Kadhimi is attempting to reclaim state sovereignty from unregulated militia groups, diversify Iraq’s economy away from an overreliance on oil revenues and Iranian energy imports, and reshape the federal government at all levels while reasserting his own authority. His attempts to alter Iraq’s security, economic, and political landscapes threaten Iran’s vision for Iraq as a client state and nearby release valve for economic sanctions. Kadhimi is constraining militia access to lucrative assets, reaching out to Iran’s regional competitors for economic partnerships, and reshuffling or ending valuable government sinecures for Iran’s proxies. Iran’s proxies have already begun to retaliate against Kadhimi’s government for these efforts.
1: Kadhimi’s Security Progress
Kadhimi is building toward his ultimate objectives of reclaiming Iraqi sovereignty and confining arms to the control of the state by limiting proxy attacks on US facilities and by attempting to hold militias accountable for criminal or non-state-sanctioned activity. Kadhimi has undertaken three separate but overlapping security lines of effort to secure these objectives with limited success.
- Kadhimi is attempting to prevent rocket attacks on US and Coalition facilities in Iraq. Kadhimi ordered Iraq’s elite Counterterrorism Service (CTS) to conduct a raid on a Baghdad facility belonging to key Iranian proxy militia Kata’ib Hezbollah (KH). The June 26 raid marked the first time that Iraqi intelligence demonstrably preempted a rocket attack on a US facility. The raid led to the seizure of dozens of rockets and the temporary arrest of 14 KH militants. These arrests mark the first time since 2014 that an Iraqi prime minister has attempted to hold KH accountable for its frequent terrorist acts against Americans and Iraqis alike. However, Kadhimi proved unable to enforce his edicts; the KH militants were quickly released from custody after hundreds of heavily armed militia members stormed Baghdad’s fortified Green Zone. Kadhimi’s attempt to enforce the rule of law in his capital demonstrated to the United States that, given the right support and security, Kadhimi would begin to hold Iran’s proxies in Iraq accountable for their criminal and terrorist activities. However, he is constrained by the institutionalized power of Iran’s political and militia proxy networks in Iraq.
- Kadhimi is undertaking a campaign to retake Iraq’s border crossings from corrupt militia groups. Kadhimi has deployed Iraqi Security Forces to at least five border crossings since July 10. These crossings provide a lucrative opportunity for smuggling and graft for Iran’s proxy militias. Iraq’s Joint Operations Command announced on August 18 that all border crossings were now protected by the army and under the control of the Border Ports Authority. The JOC claimed that the newly controlled crossings had generated approximately 420 million USD in government revenues in the last thirty days. In a press conference, Kadhimi claimed that he was retaking the crossings from corrupt gangs and “ghosts.” However, this campaign has been imperfect; the Mandali and Mundhiriya crossings were retaken by the 5th Iraqi Army Division, one of the most heavily Iranian-infiltrated Army units. Iraq’s porous border with Iran remains impossible to fully control. Nevertheless, even a temporary reassertion of government control at revenue-generating crossings will hinder the blatant profiteering of Iran’s proxy militia network and other corrupt interests in Iraq.
- Kadhimi is attempting to protect Iraq’s popular protest movement from excessive violence by Iraqi security forces and militia groups and to hold these forces accountable for past violence. In Kadhimi’s first week in office, he ordered the Basra police to raid the headquarters of the small Iranian proxy group Thar Allah in Basra after members of that group shot multiple protesters and killed one. Members of the group were quickly released and are unlikely to be prosecuted. Kadhimi has also taken aim at the Iraqi Law Enforcement Forces (LEF), a security force formed by Iran’s proxies in former Prime Minister Adel Abdul Mehdi’s administration to crush anti-government protests.  The Iraqi LEF is likely modelled after the domestic protest suppression function of Iran’s LEF. Members of Iraq’s LEF are likely drawn from Iran’s proxies in the Ministry of Interior and are responsible for the abuse and killing of multiple protesters. Kadhimi arrested and publicly named LEF officers complicit in those abuses and removed the LEF commander, providing a degree of accountability that is unusual for Iraq. The political connections of powerful security commanders may stop Kadhimi from holding them personally accountable, but Kadhimi may be able to impact the future of institutions like the LEF by challenging their normalization of state violence against protesters and links to Iran.
2: Kadhimi’s Economic Progress
Kadhmi is attempting to diversify Iraq’s economy away from an overreliance on government pay checks, oil revenues, and Iranian energy imports by expanding regional partnerships and international investments in non-traditional ways. Kadhimi attempted to reduce Iraq’s bloated public sector spending but was thwarted domestically. He has since turned to international partners to bolster Iraq’s private sector, government revenues, and energy capacity. Kadhimi has pursued foreign energy partnerships and investments from Iran, Saudi Arabia, Turkey, and the Gulf Cooperation Council (GCC), rebalancing Iraq’s energy sector to be less reliant on Iranian imports. He has also moved to rebalance Iraq’s economic partnerships away from Iranian domination, with a particular focus on outreach to Iran’s regional competitor, Saudi Arabia. By diluting and rebalancing foreign engagements in Iraq away from any one actor, Kadhimi likely hopes to regain some degree of Iraqi autonomy and economic independence. However, the austerity measures and public sector cuts that would be necessary to solve Iraq’s domestic economic woes are politically fraught. The Iraqi government is the country’s largest employer; with no pre-existing political base, Kadhimi cannot afford to offend any substantial portion of Iraq’s government workforce.
3: Kadhimi’s Governmental Reforms
Kadhimi is undertaking a reformist campaign to reshape the federal government at all levels within the constraints of an uncooperative Parliament, an ineffective cabinet, and a non-existent political base. Iraq’s parliament approved the Kadhimi government with a corrupt and ineffective cabinet chosen by political blocs. Kadhimi’s cabinet does include a few key allies, namely experienced Finance Minister Ali Allawi and US-trained Minister of Interior General Othman al-Ghanimi. Kadhimi has also fostered potential alliances in Parliament, leading to the formation of the pro-Kadhimi Iraqis Alliance bloc. However, without the support of a Parliamentary plurality or of his cabinet, Kadhimi has relied on his executive authority to reshuffle key posts, including military operations commands and the Office of the Prime Minister, often replacing Iranian proxies and corrupt or ineffective appointees. Kadhimi is also pursuing broader federal professionalization with federal government purges and the elimination or reshuffling of some six thousand government sinecures.
Kadhimi is following through on his promise to plan early elections and promote a new elections law in line with protesters’ demands; these efforts directly threaten entrenched powers and political blocs. Kadhimi called for early elections to take place on June 6, 2021, a full year before constitutionally mandated elections are scheduled. Proposed alterations to the electoral system include the formation of electoral districts and a change in elections for Members of Parliament (MPs) from party lists to first-past-the-post elections. MPs who oppose Kadhimi condemned his unilateral attempt to call early elections, claiming that only Parliament has the constitutional authority to dissolve itself. Forcing Kadhimi out of power would be a win for Iran’s allies in Parliament, but only if they can guarantee another electoral victory for their blocs. It remains unclear whether Kadhimi will put his name forward for a second, full term as prime minister. 
Iraq’s political elites will likely reject Kadhimi’s authority to hold early elections while either stonewalling for as long as possible or rushing to hold early elections quickly under the old electoral system, enabling them to more easily manipulate the election and defend their entrenched interests. Both Iraq’s popular protest movement and political elites made their support for Kadhimi contingent on early elections. However, elections held under a new system would threaten the power base of political elites and potentially make political space for protesters to participate in the governance process, a direct threat to elite interests. Iraq’s parliament may be able to stop early elections from being held altogether; MPs must pass a new elections law, draw electoral districts, approve new rules for the Supreme Federal Court, and vote to disband Parliament before the elections can be held. The entropy natural to the Iraqi system can easily be exacerbated by unwilling politicians.
4: Iranian Proxy Retaliation
Kadhimi’s efforts to reclaim the Iraqi state from foreign influence and corruption run counter to Iran’s project in Iraq and risk violent conflict between Iran’s proxies and Iraqi nationalists. Kadhimi’s efforts to reclaim control of the Iraqi Security Forces by replacing incompetent or brutal Iran-linked commanders like former Dhi Qar Crisis Cell Commander General Jamil al-Shammari. LEF Commander General Saad Khalaf, and Basra Police Chief Rashid Falih directly contradict Iran’s attempts to infiltrate the Iraqi Security Forces and build out an Iraqi security structure that is responsive to Iran. Interference with the proxy-dominated Popular Mobilization Forces has proven to be a red line for Iran’s Iraqi proxies. In addition to the June 26 Kata’ib Hezbollah raid on the Green Zone, which directly threatened Kadhimi’s home, likely KH militants assassinated prominent Iraqi security analyst and Kadhimi advisor Husham al-Hashimi on July 6. Separately, Iran’s proxies escalated a campaign of IED attacks against Iraqi contractor convoys working for the US-led Coalition in July and August. Continued threats and assassinations targeting contractors, journalists, activists, and analysts are an implicit threat to the personal safety of Kadhimi and anyone who associates with his government or with the US-led Coalition.
Kadhimi’s efforts to diversify Iraq’s economy away from overreliance on Iranian imports threatens a key market for Iran to evade US sanctions and acquire hard currency. Iran currently makes substantial profits from Iraq’s imports of Iranian energy and other goods. US sanctions waivers to Iraq allow Iraq to import needed electricity from Iran and, in doing so, provide Iran with an outlet to evade the US maximum pressure campaign. If Kadhimi succeeds in moving Iraq off of its current course toward becoming an Iranian client state, Iran will become increasingly reliant on funding and support from its militia groups. Iran used to provide funding to those groups to conduct their attacks, but the flow has since slowed to a trickle. Proxy groups have accepted limited foreign funding and have consequently likely increased their domestic profiteering ventures to help the regime weather the economic disaster caused by the coronavirus pandemic, the collapse in global oil prices, and the US maximum pressure campaign. Kadhimi’s campaign to retake Iraq’s borders and limit government salaries also poses a threat to the usual profits of Iraqi militia groups.
Kadhimi’s efforts to professionalize the Iraqi government threaten Iran’s attempt to create a client state controlled by proxies. Iran has spent nearly two decades placing its proxies into key government positions. Iranian proxies controlled the Office of the Prime Minister, the Ministry of Interior, the Popular Mobilization Forces, the National Security Council, and the second-largest parliamentary bloc before Kadhimi took office. Many of these positions have since been filled by non-proxies, and a number of previously impenetrable institutions like the Ministry of Interior have been opened up to greater competition under Kadhimi. These changes threaten decades of Iranian progress and the efficacy of Iran’s corrupt and well-established patronage network.
Ultimately, the desired end states of Prime Minister Kadhimi and the Iranian regime are mutually exclusive. The Iranian regime desires a stable but weak Iraq that can provide profits but can never again threaten Iran the way it did under Saddam Hussein during the Iran-Iraq War. Kadhimi desires a stable, strong, democratic, and sovereign Iraq with balanced foreign relations and no foreign interference. The Iranian regime and its political and militia proxies will do what they can to oppose Kadhimi’s vision using political stonewalling, kinetic attacks, assassinations, and intimidation tactics.
Kadhimi understands the importance of institutional reform; as the head of Iraq’s National Intelligence Service, he transformed the organization from an Iran-dominated shell to a professional intelligence apparatus that will likely outlast him in just four years. Kadhimi has even less time remaining to him as prime minister; his term will be up within two years regardless of whether or not early elections can be held. Kadhimi’s premiership and reformist mentality are valuable assets to the United States and are worthy of US support.
Still, the United States must not become complacent. No individual, no matter how well-intentioned, can change a country’s institutions alone. Kadhimi’s predecessor, the technocratic Adel Abdul Mehdi, also seemed to be a promising ally at the beginning of his tenure. Mehdi’s administration was quickly overtaken by domestic and Iranian pressures; his inability to control even his own security forces eventually led to his demise. Kadhimi has so far attempted to stand up to the pressures that brought down Mehdi with mixed success. He must be cautious and avoid alienating Iran even while rolling back its domination of the Iraqi space.
The United States must back Kadhimi in ways that help him to preserve his independence, domestic maneuverability, and foreign relations while making important and long-lasting changes in Iraq’s most corrupt and heavily infiltrated institutions. The United States can achieve this support even without a large troop presence in Iraq by providing continued training and professionalization of Iraq’s own security forces, improved security advice and intelligence sharing with Kadhimi’s government, and investments in Iraq’s stunted private sector.
Kadhimi will not unilaterally roll back Iranian domination or end rampant corruption in Iraq. However, his incremental approach is already showing some imperfect yet worthwhile results; state security forces have killed far fewer protesters during Kadhimi’s tenure, proxy militias and rogue security forces can no longer operate with complete impunity, millions in border revenues have been restored to the Iraqi state, and UN-endorsed electoral reforms are being seriously considered in Parliament for the first time in a decade. Kadhimi’s two steps forward, one step back approach is slowly but steadily making progress toward a more prosperous, stable, and sovereign Iraq.
Without improved security and stalwart international support, Kadhimi’s government is likely to be whittled away by harassment and targeted violence. With US support, Kadhimi may be able to generate enough momentum to stabilize Iraq and improve the US-Iraqi relationship beyond his premiership.
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“[Translation] Rapid Response Receives the Crossing of Mundhiriya with Iran.” Al-Noor News, July 10, 2020. http://alnoornews.net/archives/263257/%d8%a7%d9%84%d8%b1%d8%af-%d8%a7%d9%84%d8%b3%d8%b1%d9%8a%d8%b9-%d8%aa%d8%aa%d8%b3%d9%84%d9%85-%d9%85%d9%86%d9%81%d8%b0-%d8%a7%d9%84%d9%85%d9%86%d8%b0%d8%b1%d9%8a%d8%a9-%d9%85%d8%b9-%d8%a5%d9%8a%d8%b1/?utm_source=rss&utm_medium=rss&utm_campaign=%25d8%25a7%25d9%2584%25d8%25b1%25d8%25af-%25d8%25a7%25d9%2584%25d8%25b3%25d8%25b1%25d9%258a%25d8%25b9-%25d8%25aa%25d8%25aa%25d8%25b3%25d9%2584%25d9%2585-%25d9%2585%25d9%2586%25d9%2581%25d8%25b0-%25d8%25a7%25d9%2584%25d9%2585%25d9%2586%25d8%25b0%25d8%25b1%25d9%258a%25d8%25a9-%25d9%2585%25d8%25b9-%25d8%25a5%25d9%258a%25d8%25b1.
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 “[Translation] The Army Declares Control of All Border Crossings: 500 Billion Dinars in 30-Day Revenue.” al Mada, August 17, 2020. https://almadapaper.net/view.php?cat=229363.
 “[Translation] Welcome to control border entry points with Iran and the Iraqi Interior: We will cut the way for the corrupt.” Al-Quds Al-Araby., July 12, 2020. https://www.alquds.co.uk/ترحيب-بضبط-منافذ-حدودية-مع-إيران-وال/
 “[Translation] The Headquarters of the ‘Thar Allah’ Party in Basra Was Closed.” al Sumaria, May 11, 2020. https://www.alsumaria.tv/news/%D8%A3%D9%85%D9%86/344840/%D8%BA%D9%84%D9%82-%D9%85%D9%82%D8%B1-%D8%AD%D8%B2%D8%A8-%D8%AB%D8%A3%D8%B1-%D8%A7%D9%84%D9%84%D9%87-%D9%81%D9%8A-%D8%A7%D9%84%D8%A8%D8%B5%D8%B1%D8%A9.
Office of the Prime Minister. Twitter, May 11, 2020. https://twitter.com/IraqiPMO/status/1259828719390253056?s=20.
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 “[Translation] Iraq Deports the Commander of Law Enforcement Forces from His Post after a Video of an Assault on a Child.” BBC News Arabic, August 2, 2020. https://www.bbc.com/arabic/middleeast-53628972.
Fadhel al-Nashmi. “Video of Teen Tortured by Security Forces Shocks Iraq.” Asharq al-Awsat, August 3, 2020. https://english.aawsat.com/home/article/2426396/video-teen-tortured-security-forces-shocks-iraq.
 Kirk Sowell. "Inside Iraqi Politics." Utica Risk Services, no. 211 (2020): 22-23
 “Statement on U.S./Iraq/GCC Cooperation.” Department of State, July 16. 2020. https://www.state.gov/statement-on-u-s-iraq-gcc-cooperation/
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“Saudi Arabia and Iraq agree investments in energy and sports.” Reuters, July 20, 2020. https://www.nasdaq.com/articles/saudi-arabia-and-iraq-agree-investments-in-energy-and-sports-2020-07-20
“Iraq is considering importing electricity from Turkey, according to ministry spokesman Ahmed al-Abadi.” Sot al-Iraq. August 6, 2020.
 Abdulhadi Habtor. “Saudi-Iraq Coordination Council Meets in Riyadh ahead of Kadhimi Visit.” Asharq Al-Awsat, July 20, 2020, https://english(.)aawsat.com/home/article/2400016/saudi-iraq-coordination-council-meets-riyadh-ahead-kadhimi-visit
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 “[Translation] A Reform Plan to Replace 6 Thousand High Government Positions within 3 Months.” al Mada, July 27, 2020. https://almadapaper.net/view.php?cat=227932.
 Calvin Pugh, Nicole Millar, and Brian Carter with Katherine Lawlor and Brandon Wallace. “Iraq Situation Report: July 29 - Aug. 5.” Institute for the Study of War, August 7, 2020. http://www.iswresearch.org/2020/08/iraq-situation-report-july-29-aug-5.html.
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 Khaled Yacoub Oweis. “Iraqi Commander Wanted for Killing Protesters Is Accustomed to Unchecked Violence.” The National, December 4, 2019. https://www.thenational.ae/world/iraqi-commander-wanted-for-killing-protesters-is-accustomed-to-unchecked-violence-1.946356.
"Defense transferred al-Shammari to the command ... and the social media is on fire." Sotal-Iraq, July 9, 2020. http://www.sotaliraq(.)com/2020/07/09/%d8%a7%d9%84%d8%af%d9%81%d8%a7%d8%b9-%d8%aa%d9%86%d9%82%d9%84-%d8%a7%d9%84%d8%b4%d9%85%d8%b1%d9%8a-%d8%a5%d9%84%d9%89-%d8%a7%d9%84%d8%a5%d9%85%d8%b1%d8%a9-%d9%88%d8%a7%d9%84%d8%b3%d9%88%d8%b4%d9%8a/
"Dismissing Basra Police Chief Rashid Falih from his post and assigning Abbas Naji to replace him." Rudaw, August 17, 2020. https://www.rudaw(.)net/arabic/middleeast/iraq/1708202012
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 Eric Schmitt. “Top General in Middle East Says U.S. Troop Levels Will Drop in Iraq and Syria.” The New York Times, August 12, 2020. https://www.nytimes.com/2020/08/12/world/middleeast/american-troops-iraq-syria.html.