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Iraq undermined by Iranian and factional interests

Friday, February 3, 2023

Significance

The US Treasury believes the dollars have gone to Iran, highlighting the extent of Tehran's involvement in Iraqi political, economic and security affairs. Sudani himself is beholden to pro-Iranian political factions and armed militias, and this constrains his ability to address multiple challenges from balancing diverse political and ethnic interests to pursuing economic reforms.

Impacts

  • Addressing the decline of the currency will require Baghdad to meet US demands to halt dollar flows to Iran, at risk of antagonising Tehran.
  • Efforts to tackling corruption to bolster public revenues will stall.
  • Sudani may make moderate progress on reintegration into the Arab world, but this will not be enough to solve Iraq’s multiple problems.

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