Iraq’s prime minister carries the title, but not the power

Ali al-Zaidi was selected as Iraq's prime minister in just 25 minutes by the Shia-dominated Coordination Framework alliance, a consensus forged under intense pressure from Washington. The United States Treasury had frozen Iraq's dollar shipments flowing from New Jersey to the Central Bank of Iraq, effectively blocking the financial lifeline that sustains the Iraqi state. This financial pressure forced the abandonment of former Prime Minister Nouri al-Maliki's bid to return to office, leaving al-Zaidi, a 40-year-old banker with no established political base, as the remaining candidate.

Al-Zaidi's lack of a political foundation within Baghdad's traditional power structures makes him dependent on external support rather than domestic constituencies. His position owes more to Trump's Treasury pressure than to Iraq's electoral processes. Additionally, Iraq's Central Bank barred al-Zaidi's own institution, Al-Janoob Islamic Bank, from US-dollar transactions in 2024 as part of a broader effort to curb illicit dollar flows to Iran. While al-Zaidi was never charged and neither he nor his bank currently faces sanctions, the existence of this regulatory file provides Washington with potential additional leverage.

The actual power in Baghdad now resides with Tom Barrack, who simultaneously holds three titles: ambassador to Turkey, envoy to Syria, and envoy to Iraq. Barrack's influence derives not from traditional diplomacy but from Washington's financial control over Iraq. Iraqi oil revenues, which fund approximately 90 percent of the state budget, are held in an account at the Federal Reserve Bank of New York. In April, Washington blocked a cash shipment of nearly $500 million drawn from these revenues and suspended portions of its security cooperation, demonstrating the direct financial leverage available to the US administration.

Washington's demand that Iraq bring all armed factions under state control remains largely unresolved. Shia cleric Muqtada al-Sadr dissolved his Saraya al-Salam militia in late May, and other militias including Asa'ib Ahl al-Haq and Kataib Imam Ali have announced steps toward disarmament or placing weapons under fuller state control. However, Kataib Hezbollah and Harakat al-Nujaba, the two factions most closely aligned with Tehran, have rejected full disarmament, stating their weapons are not subject to negotiation. The US has responded with military strikes killing dozens of Iranian-backed Popular Mobilization Forces fighters and Treasury sanctions against seven militia commanders by name. Baghdad has set September 30 as the disarmament deadline, coinciding with the planned withdrawal of remaining US forces.