Deep Dive: Iraq’s prime minister embarks on first visit to DC, 16 APRIL

Deep Dive: Iraq’s prime minister embarks on first visit to DC

Iraqi Prime Minister Muhammad Shia’ Al-Sudani embarks on a trip to Dhi Qar governate on Jan. 8, 2024. (Source: IraqiPMO/Twitter/X)

Iraqi Prime Minister Muhammad Shia’ Al-Sudani is set to meet US President Joe Biden for the first time on Apr. 15. The purpose of Sudani’s upcoming trip to Washington is to discuss “common priorities and reinforce the strong bilateral partnership,” according to the White House. The visit signals a mutual readiness to forge a new era of cooperation. Indeed, even though costly and increasingly problematic, the Iraqi prime minister’s openness to negotiate new terms for the US presence gives him an upper hand in drawing conditions agreeable to all sides.

Baghdad is hoping for more constructive strategic engagement with the US that does not undermine its relations with Iran. The Kurdistan Regional Government, on the other hand, is anxious about a more modest American commitment that might leave it vulnerable to a political environment that is more favorable for Iran and its allies. As such, while there are no signs of an articulated common strategic framework going forward, a delicate balance also needs to be struck between the interests of Baghdad and Erbil.

Kurdish oil exports

Ahead of Sudani’s arrival, diplomatic maneuvering to guarantee Kurdish energy security has intensified. Kurdistan Region Prime Minister Masrour Barzani’s visit to Washingtonin early March involved pressure on the White House to convince Sudani to resume oil exports through northern Iraq.

In a Sept. 2023 meeting with Sudani, US Secretary of State Antony Blinken underscored Washington’s support for the re-opening of the pipeline to Turkey previously used for oil exports from Iraqi Kurdistan. Ankara shut down oil flows in Mar. 2023 following an International Chamber of Commerce (ICC) arbitration ruling against it. In parallel, Baghdad and Erbil are reportedly mired in negotiations on matters such as the federal government’s payment of fees to third parties. While the closure of the pipeline has had a significant effect on Iraqi Kurdistan’s finances, only a minor portion of Baghdad’s oil exports have been affected.

The Biden-Sudani meeting thus comes amid mounting anticipation about the efficacy of US efforts to secure Baghdad’s consent to reopening the pipeline. From the perspective of the White House, the pipeline is an energy asset that can increase global oil supply and stabilize a Kurdistan region that it seeks to support as a reliable partner.

Withdrawal of US-led Coalition

The confrontation between Iraqi ‘resistance’ factions and US forces since Oct. 2023 has put the Sudani government in a delicate position. After the Biden administration’s initiation of an escalatory retaliation campaign last November in the face of repeated attacks, public discourse in Iraq began to shift and calls for a US withdrawal resurfaced. Despite Sudani making accommodative statements in support of a withdrawal, he has been vague and refrained from outlining a concrete decision or a timeline.

There is also the lack of a quorum in the Iraqi parliament ahead of a vote to demand the US-led Coalition’s exit from Iraq; the absence of Kurdish, Sunni, and over 100 Shiite Coordination Framework parliamentarians indicated the convergence between Baghdad and Erbil. While the federal and Kurdish regional governments seem in agreement over the demand for an immediate Coalition exit, they are in opposition over the ultimate fate of the US presence.

Speaking on condition of anonymity, a senior advisor to the Iraqi government told Amwaj.media that Sudani’s visit to Washington will “mostly” revolve around “the economy and improving the bilateral relation[ship].” The source also explained that “there are no military or security officials among the delegation.” Yet given the possibility of the renewed targeting of US forces in Iraq, it is likely that security will be on the prime minister’s agenda.

In public announcements, Sudani has suggested that the threat of the Islamic State group (IS) has become manageable. In this vein, a detailed assessment of the ability of Iraqi security forces to counter terrorism is expected in parallel with the Iraqi-US political engagement. The Kurdish ruling parties—the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP)—however, are warier of an extremist resurgence and believe any Coalition withdrawal in the medium to long term will likely favor IS.

Yet, the primary US concern remains aligned with both Baghdad and Erbil in terms of ensuring that an exit will not produce a security vacuum and favor an IS resurgence, similar to the 2011 withdrawal scenario. Having said that, the US is likely to uncouple its presence in federal Iraq from the Kurdistan region, finding an arrangement that keeps both sides sufficiently agreeable while maintaining its interests in the region. In this context, the same Iraqi government advisor disclosed to Amwaj.media that the US-Iraq Higher Military Commission will in July 2024 kick-start another round of talks on the Coalition presence.

Banking sanctions

The US has long applied economic pressure on Baghdad over its relationship with Tehran. Measures have involved restrictions on Iraq’s access to its dollar reserves, and efforts to stamp out alleged money laundering said to benefit Iran and Syria. With more than 100B USD in oil export proceeds held in the US, Iraq heavily relies on Washington’s goodwill to ensure that its foreign exchange reserves—and state finances more broadly—do not face US censure.

Against this backdrop, Sudani’s efforts to engage more closely with Washington are intended to persuade US officials to ease sanctions policies targeting Iraq, which have second-order impacts on the Iraqi economy and population. In return, Sudani has adopted accommodative financial reforms to combat alleged money laundering and to restrict illicit flows of US dollars. Speaking to Amwaj.media, the same senior government advisor confirmed that Baghdad is attempting to “find a mutual understanding with the US Treasury to mitigate pressures on Iraqi businesses such as banks or other companies put under sanctions.”

For example, as part of his cooperation with US authorities, Sudani in Jan. 2023 ordered an elite counter-terrorism force primarily tasked with combating IS to crack down on private currency traders allegedly delivering dollars to Iran. The move came only months after the US barred more than 20 Iraqi banks from conducting US dollar transactions.

Recent restrictions, however, have triggered a backlash from Sudani’s political allies, business elites, and the public, which have been hit hard by inflation due to dollar shortages. While the Kurdistan region has been under financial pressure from Baghdad, US restrictions on the Iraqi banking sector have put a strain on ordinary Kurds as well. Therefore, despite the clashes between the KDP and the ruling Shiite Coordination Framework, Erbil has an interest in seeing Sudani lessen US restrictions.

Containing armed groups

In an effort to engage with Turkey and to improve ties with the US, Iraq’s prime minister has sought to curb the influence of armed groups—albeit with limited success. For instance, the Coordination Framework—which backs Sudani—has responded to the campaign against US interests by ‘resistance’ factions by alleging that they operate outside the government and urged security forces to stop them.

On the other hand, Iraq on Mar. 14 banned the Kurdistan Workers’ Party (PKK), a step that Ankara has welcomed. The move is part of the larger power struggle between Baghdad and Erbil, particularly over control of the strategic Sinjar district in northwestern Iraq. Mostly inhabitedby the minority Yazidi community, the area is contested by the Iraqi army, Iraq’s Popular Mobilization Units (PMU), the KDP and the PKK.

Importantly, the ban on the PKK may signal that the Sudani government is willing to take action against US-designated terrorist groups. This may increase US pressure on Sudani to also outlaw ‘resistance’ factions. Yet it is doubtful that the prime minister will heed such a demand given his reliance on the Coordination Framework and friendly relations with Tehran.

Ultimately, while the Iraqi prime minister will arrive in Washington with an eagerness and desire to maximize an opportunity to strategically engage on economic, political, and security issues, he must also consider the preferences of his domestic political allies and balance vis-à-vis Iran. Still, the Biden administration has room to make significant progress; both in mediating relations between Baghdad and Erbil, and in guaranteeing US interests in Iraq. To achieve such an outcome, President Biden needs to clear about his priorities—and realistic about the concessions he can extract from his Iraqi guest.