Iraq’s Struggle to Contend With the Sino-US Rivalry

  • Amjed Rasheed

    Dr. Rasheed is a research fellow at Durham University in the UK.

This article analyzes Iraq’s response to evolving US-China relations, focusing on its foreign-policy objectives of ending isolation, strengthening security, and fostering economic growth. Iraq seeks American support to attain these goals, aspiring to reintegrate into the international system and bolster its defense mechanisms. Simultaneously, Baghdad perceives China and its Belt and Road Initiative as instrumental to economic recovery. Despite these aspirations, Iraq encounters impediments that stem from its external environment and domestic politics. As a relatively feeble power, Iraq grapples with limited economic, political, and diplomatic influence, which constrains its ability to effectively respond to shifts in the Sino-US rivalry. In addition, the country engages in incoherent foreign behavior due to consociationalism and the nonstate armed groups that operate outside of the state`s orbit. The analysis concludes that Iraq’s responses to US-China tensions are reactive, not proactive; circumstantial, not strategic. This article is part of a special issue on the responses of Gulf countries to rising Sino-American competition, edited by Andrea Ghiselli, Anoushiravan Ehteshami, and Enrico Fardella.

Analyzing states’ strategies in the face of US-China tensions requires an analysis of their foreign policies.1 As the American political scientist Hal Brands puts it, national strategy is “the intellectual architecture that gives form and structure to foreign policy.”2 In the case of Iraq, little attention has been given to its foreign policy, and even less to its responses to the US-China rivalry, considering its recency. The existing body of research primarily analyzes Iraq’s foreign policy by focusing on its domestic politics.3 For instance, Adeed Dawisha and Eberhard Kienle adopt a constructivist approach to explain how pan-Arabism influenced Iraq’s foreign-policy orientation during the Baath regime.4 Malik Mufti takes a realist stand, arguing that the country’s foreign policy was shaped by incentives for regime survival.5 These thorough examinations demonstrate that Iraq’s approach was mostly based on a political mobilization strategy where “leaders engage in a confrontation- and prestige-oriented foreign policy so as to generate and sustain support for the government.”6 Previously, I have posited that Saddam Hussein’s absolute monopoly of power allowed his personality characteristics to shape foreign policy and grand strategy.7In this article, I analyze Iraq’s foreign policy on two levels: the external environment and domestic politics. The focus is on the state’s response to the changing relations between the United States and China. Theoretically, Iraq’s foreign-policy orientation appears inwardly focused, centering on three primary objectives: (i) ending international isolation and overcoming the legacy of the Baath regime; (ii) strengthening defense capabilities; and (iii) achieving economic growth. To achieve these ends, several strategies are considered. First, Iraq seeks help from the United States and Western powers to end its isolation, boost its defense capabilities, and reintegrate the country into global political and economic systems. Second, Iraq sees opportunities in China’s Belt and Road Initiative (BRI) to rebuild itself, particularly after years of conflict, and revitalize its economy. The means encompass (i) engaging in active regional diplomacy; (ii) enhancing diplomatic relations with arms-manufacturing states; (iii) reinforcing trade and investment ties; and (iv) prioritizing economic diplomacy.8In practice, however, these strategies—as well as the ability to navigate the complexities of US-China relations—face obstacles in both the external environment and domestic politics.

This article explains these challenges. It concludes that Iraq’s approach to US-China tensions is reactive rather than proactive, and circumstantial rather than strategic. Iraq’s policies and strategies continually fluctuate within the changing superpower relationship, with Baghdad adopting a passive and delicate balance to benefit from both sides. Unlike Gulf countries like Iran, Saudi Arabia, and the United Arab Emirates, Iraq cannot afford to take a firm stance on US-China tensions due to its lack of power.

The article is divided into two main sections. The bulk of the analysis focuses on Iraq’s vulnerability at the systemic level, including its complex relations with the United States since the 1990–91 war, particularly due to economic sanctions and Baghdad’s security relations with Washington. This section also analyzes Iraq’s ties with China within the context of the BRI, showing that despite the economic partnership, Iraq remains systemically constrained. As a result, Iraq finds itself unable to adopt a decisive stance amid the evolving relations between the United States and China. The second section centers on Iraq’s domestic politics, looking specifically at the inconsistency in its foreign behavior. It explores how the political order of the second republic, established in the 2005 constitution, contributes to Iraq’s fragmented foreign policy.


Before diving into Iraq’s external settings, it is important to recognize the country as a weak power. Such states have particular characteristics. They are weak “because of geographical, physical, or fundamental economic constraints; basically strong, but temporarily or situationally weak because of internal antagonisms, management flaws, greed, despotism, or external attacks; and a mixture of the two.”9 Moreover, they frequently grapple with social fragmentation and tensions among diverse ethnic, religious, linguistic, or societal groups.10 In weak states, essential services deteriorate, infrastructure suffers, corruption escalates, and authoritarian leaders often rule, undermining the rule of law and suppressing civil society.11 Externally, weak powers find themselves positioned at the margins of this system primarily due to the unequal nature of the international economic and political order. Thus, they tend to react passively to systemic constraints.12

Iraq falls within this category. Recently, the spokesperson for the Iraqi Ministry of Foreign Affairs, Ahmed al-Sahaf, told the media that the country has regained power since the defeat of the Islamic State (IS) in 2017. He stated that the country’s foreign policy has transitioned from reactive to proactive.13 However, the statement was largely wishful thinking. The country of the two rivers faces significant challenges, due to three successive armed conflicts: the Iran-Iraq War of the 1980s, the Kuwait crisis in 1990, and the US invasion in 2003, with its subsequent insurgencies, sectarian violence, and establishment of the IS caliphate.14 The short- and long-term impacts of these crises cannot be underestimated. These shocks have hampered Iraq’s ability to develop stable institutions or project regional, let alone global, influence.15

This section substantiates this premise. It focuses on the country’s economic fragility and its complex security ties with the United States. It then analyzes relations between Baghdad and Beijing to illustrate how China’s continued economic dominance in Iraq underscores its commitment to influencing the broader geopolitical and economic dynamics of the Gulf, West Asia, and North Africa. However, this dominance does not offer significant political leverage for Iraq within the context of shifting US-China relations.

Iraq’s Financial Vulnerability

As the Iran-Iraq War ended in 1988, oil prices dropped, and the Soviet Union was at the edge of collapse. Iraq was left politically and economically weak, in debt to Paris Club members as well as other countries, mainly those of the Gulf Cooperation Council (GCC). The massive debt is compared in Tables 1 and 2. As a result, it lost the power of bargaining in its foreign relations and became extremely weak in the international system. The analyst Simon Hinrichsen notes, “In less than fifteen years, the war turned Iraq from a net creditor in 1979 to having a government debt-to-GDP ratio of over ten. Its economy and institutions crumbled, and while Iraq was victorious militarily, it emerged from the war with Iran a failed state.”16

TABLE 1. Iraqi Debt by Creditor, 1979
Creditor Outstanding debt ($ billion) % of GDP
Paris Club 2 3
Gulf states
Soviets and allies
Reparations (non-debt)
Commercial debt 1 2
Foreign exchange rate −35 −65
Total −33 −60

Source: Simon Hinrichsen, “Tracing Iraqi Sovereign Debt Through Defaults and Restructuring,” Economic History Working Papers, no. 304, London School of Economics, 2019, 7.

TABLE 2. Iraqi Debt by Creditor, 2003
Creditor Outstanding debt ($ billion) % of GDP
Paris Club 39 139
Gulf states 53 189
Soviets and allies 17 60
Reparations (non-debt) 32 114
Commercial debt 20 70
Foreign exchange rate 0
Total debt (ex-reparations) 128 458
Total liabilities 160 573

Source: Hinrichsen, “Tracing Iraqi Sovereign Debt,” 21.

To worsen an already precarious situation, President Saddam Hussein invaded and annexed Kuwait in the summer of 1990. It was a political and strategic disaster, and it led to severe consequences and setbacks from which Iraq has yet to fully recover. Indeed, as Williamson Murray and Mark Grimsley observe, “Mistakes in operations and tactics can be corrected, but political and strategic mistakes live forever.”17

The comprehensive sanctions imposed after the invasion of Kuwait severely crippled Iraq’s financial capacity and placed its oil revenues at the mercy of the United Nations and the United States. The UN Oil-for-Food Programme was proposed to alleviate Iraq’s economic hardships while ensuring compliance with disarmament requirements.18 Although the Security Council resolution creating the program authorized $1.6 billion, Iraq had access to just around $1 billion.19 The remaining funds were allocated to the United Nations Compensation Commission for Kuwait, UN operations, and oil transit fees for Turkey. Iraq rejected the initial resolution, but in 1995, it accepted Resolution 986, which allowed Iraq to sell $2 billion worth of oil every six months. Proceeds from oil sales were held in an escrow account managed by BNP Paribas and other entities, and UN approval was necessary for all payments.20 After deductions for the compensation fund and UN operations, Iraq received $1.3 billion for essential imports.

Following the US invasion of Iraq in 2003, the Oil-for-Food Programme was terminated, and the Development Fund for Iraq (DFI) was created and is held in an account at the Federal Reserve Bank of New York. The DFI was tasked with managing the frozen assets of the former regime, settling claims from the Kuwait war, and ensuring that Iraq’s oil revenues were utilized for the citizens’ welfare.21 Since then, oil revenues have been deposited into the DFI, and 5 percent has been deducted by the bank as compensation for Kuwait.22

At the same time, UN Security Council (UNSC) Resolution 1483 lifted the economic embargo on Iraq and reinstated its pre-1990 status. The resolution called for an account to be opened at the Federal Reserve Bank of New York and accorded international immunity to prevent seizure or confiscation, due to decisions from international courts, stemming from lawsuits and claims against the former Baath regime.23

After the official end of occupation in Iraq, UNSC Resolution 1956 of 2010 dissolved the DFI at Iraq’s request. Prime Minister Nouri al-Maliki ended censorship, immunity, and supervision of the Central Bank of Iraq.24 In addition, he renewed the agreement with the US Federal Reserve to retain Iraqi funds.25 The deal extended one made during the period of the Coalition Provisional Authority’s post-invasion administration of Iraq (April 2003 through June 2004). Therefore, oil revenues continue to be deposited in Iraq’s official accounts at the New York Federal Reserve, exposing the country financially. No other Gulf countries analyzed in this special issue of Middle East Policy are subject to such a process, and there are no signs of this changing.

Alongside rules concerning debt and war reparations, Iraq’s oil revenues are subject to a special process. Buyers do not send payments directly to Iraq. Instead, revenues are routed through the Federal Reserve Bank. Subsequently, these funds are transferred in cash via airplane to the Central Bank of Iraq in Baghdad.26 Each plane carries half a billion dollars, necessitating expenses for transportation, protection, and insurance, all covered by the Iraqi treasury.27 In addition, a significant volume of dollars is transferred electronically through transactions facilitated by Iraq’s private banks. These transactions originate from Iraq’s authorized accounts held at the New York Federal Reserve.28

Moreover, as its oil is traded in dollars, imposing sanctions on Iraq is relatively straightforward, a troubling issue for the country recently. Since 2019, some factions within the Popular Mobilization Forces (PMF), the state-sponsored paramilitary group, have been implicated in attacks against the United States, initially inside Iraq and more recently in Syria. Reports also suggest that volunteers from the PMF have traveled to Donetsk and Luhansk to engage in combat alongside Russian forces against Ukraine.29 Russia has reportedly been using weapons smuggled by Iran from Iraq.30

In November 2022, the Federal Reserve Bank of New York imposed sanctions on Iraqi banks. This aimed to halt financial transactions between Iraq and Iran that might support activities considered harmful to US national-security interests.31 The US Treasury Department asked Iraq to implement an electronic system to make dollar transactions transparent and to address issues related to money laundering and illicit dollar transfers to Iran, Syria, and Turkey. These measures also aimed to enforce robust counterterrorism financing controls and identify Iraqi individuals, entities, or banks providing support to terrorist organizations or those involved in illicit financial transactions.32 These moves have resulted in the rejection of approximately 80 percent of dollar-transfer requests in Iraq.33 This, by default, increased the value of the dollar versus the Iraqi dinar, and with it the price of commodities and services inside the country.34

The complex financial constraints imposed on Iraq since the Kuwait shock, from stringent Federal Reserve measures on transactions to limitations on currency auctions, have precipitated a grave economic predicament and weakened Iraq in the international economic order. Adding to this is the troubled US relationship with the PMF, which has weakened the state even further.

US-Iraq Security Relations

The relationship between the United States and Iraq has evolved over the years, especially after the 2003 invasion. Even after sovereignty was transferred back to Baghdad in June 2004, Iraqi politics remained closely intertwined with its relations with the United States. In 2005, the Iraqi constitution abolished the Coalition Provisional Authority and gave birth to the second republic. Three years later, Washington and Baghdad agreed to the US-Iraq Status of Forces Agreement (SOFA).35 The deal was forged through extensive negotiations, which were disrupted amid sectarian strife between 2006 and 2008.

The SOFA, signed December 31, 2011, recognized Iraq’s sovereignty and required the United States to support its security and stability. The agreement provided the foundations for comprehensive cooperation in political, economic, cultural, and security realms, focusing on integrating Iraq into the global economy, promoting development and cultural exchange, and advancing the rule of law and human rights.36 It also prioritized political dialogue and diplomatic engagement to address regional and global challenges.37

As soon as the Islamic State established its self-proclaimed caliphate in the summer of 2014, the Iraqi government requested US intervention to help the fight. One would assume that the SOFA provided the legal basis for the redeployment of American forces to Iraq. However, the Obama administration based its actions on the Authorization for Use of Military Force Against Iraq (AUMF). This law was originally passed by the US Congress in October 2002 in response to concerns about Iraq’s possession of weapons of mass destruction and alleged ties to terrorist groups. While the original intent of the authorization was to address activities attributed to Saddam, subsequent interpretations allowed it to cover other security issues, including the fight against IS, obviating the president’s need to seek congressional approval.38

The American intervention to fight IS was supported by Baghdad, which extended an invitation to the international community for assistance in combating the terrorist group.39 This created a legal basis under the principle of self-defense, as recognized by international law. The Iraqi government’s request can be seen as a valid basis for military intervention to address a shared threat anticipated by the SOFA.40

The creative use of the AUMF and Iraq’s invitation for international assistance expanded legal grounds for US intervention, illustrating the adaptability of American legal frameworks to address evolving threats. The process indicates the fluidity and complexity of the US-Iraq relationship—shaped by geopolitical shifts, shared security concerns, and the dynamics of international agreements—and explains how the United States became Iraq’s top security partner.

The continuing tensions over the targeting of American interests and personnel by Iran-backed militias present a complex challenge, not only to Iraq’s security but also to its ability to balance bilateral relations with Tehran and Washington. Efforts made by Prime Minister Mohammed Shia al-Sudani to address this issue through investigations and security measures have been met with skepticism, and pro-Tehran factions inside the Popular Mobilization Forces remain to be used as tools in Iran’s foreign policy.41 Since the start of the current war in Gaza, the United States has been carrying out targeted assassinations against commanders within the PMF, including Abu Baqir al-Saadi of Kataib Hezbollah, who was linked to the killing of three US troops in a drone attack near Jordan and Syria. If the United States were to end its mission and sever diplomatic ties with Baghdad as a result of these developments, it could exacerbate internal conflicts, undermine Baghdad’s efforts against violent extremism, and cause economic disruption. It would potentially consolidate Iran’s influence over the country.

Is China Really an Opportunity?

China’s calculated and persistent engagement in Iraq demonstrates its strategic ambitions and commitment to shaping the economic and geopolitical landscape of the Gulf and the broader region. For the Chinese, Sino-Iraqi ties remain rooted in economic cooperation, and Beijing assumes the lion’s share of this collaboration. Therefore, one could argue that the relationship does not provide Iraq with the power that would allow it to free itself from systemic constraints and take a proactive stand within the shifting US-China rivalry.

Sino-Iraqi relations can be traced back to the wave of regional coups in the 1950s, such as the 1958 military takeover and establishment of the first republic of Iraq. Before the coup, China viewed Iraq as part of global imperialism, especially since Iraq was a founding member of the 1955 Baghdad Pact, a Western-led alliance aimed at countering global communism. China at that time perceived the world as divided into blocs, distinguishing among global imperialists, colonialists (criticizing the Soviet Union for being both), and non-aligned, third world countries.42

But after the coup, given the anti-Western leadership of Prime Minister Abdul Karim Qasim, China saw Iraq as an entry point into the region. Qasim withdrew Iraq from the Baghdad Pact, included the Iraqi Communist Party (ICP) in the government, and abstained from supporting the Tibetan revolt of 1958–59.43 Despite periodic rifts in relations due to Iraqi behavior, such as the mistreatment of ICP members after the 1963 coup and Baghdad’s close ties with the Soviet Union, China sustained its engagement.44

Baghdad and Beijing maintained economic and technical agreements even after the former signed the 1972 Iraq-Soviet Treaty of Friendship. Diplomatic channels remained open, leading to expanded relations in 1975, involving infrastructure projects, sulfur and oil concessions, and other collaborations.45 China’s Iraq policy at that time primarily focused on economic cooperation and represented a broader approach within the region.

The Iran-Iraq War of the 1980s had a notable impact on China’s regional strategy, as it increased US and Soviet presence in the Gulf. China adhered to its policy of noninterference and advocated for a peaceful resolution.46 Later, however, the war presented an opportunity, as China became one of Iraq’s top arms suppliers, providing $5 billion worth of weapons.47 The two countries also strengthened cooperation across sectors like phosphate, nitrogen fertilizers, dates, Chinese textiles, and Chinese-led construction projects. In 1981, the China Petroleum Engineering and Construction Corporation, a subsidiary of the China National Petroleum Corporation (CNPC), made history as the first Chinese oil company to initiate operations in Iraq.48

Sino-Iraqi economic relations were halted immediately after the imposition of sanctions over the invasion of Kuwait. As a result, the disruptions to promised post-Iran-Iraq War construction projects caused a major economic setback for the Chinese.49 The crisis coincided with China’s efforts to manage the fallout from the 1989 Tiananmen Square massacre, which resulted in significant losses with its Gulf partners.50 It also occurred during a shift in the global order following the Soviet Union’s collapse, causing unease in Beijing. This led the United States to adopt a more assertive stance in safeguarding its interests. Washington began to perceive Chinese engagement in the Gulf, especially in the arms trade, as a “dangerous trespassing.”51

The Kuwait crisis highlighted Iraq’s peripheral position in China’s grand strategy. Despite Beijing’s decisiveness in advocating for the unconditional withdrawal of Iraqi forces from Kuwait and seeking a peaceful resolution, its overall policy remained vague.52 China facilitated the expulsion of Iraqi forces by abstaining from the voting on UNSC Resolution 678, which authorized the use of force to drive the Iraqi army out of Kuwait.53 Its only support to Iraq was humanitarian aid like medicine and essential foodstuffs, which were excluded from the UN embargo.54 Iraq by then had a few cards in hand and welcomed any gesture from its friends.

One could argue that no power in the world, including China, could have challenged Washington at that time. Beijing hoped that the war would cause a substantial setback for the United States and weaken its global influence.55 This might have balanced against the decline of the Soviet Union and softened the blow of the American-led sanctions imposed on China following the events at Tiananmen Square.56 None of this occurred. Instead, the decisive, technology-driven US triumph surprised China and forced it to re-evaluate itself.57

Much like the situation during the Iran-Iraq War, China seized the opportunity presented by the Kuwait crisis, notably by increasing arms exports to the region. This included supplying ballistic missiles to Saudi Arabia and Iran, positioning itself as a significant benefactor.58 In addition, CNPC and the Iraqi government agreed in 1997 to develop the Ahdab oil field, though this was never implemented due to the international economic sanctions imposed on Iraq at that time.59

When the war on Iraq was declared in 2003, China announced its opposition despite improved relations with Washington. The war occurred only three years after the signing of the US-China Relations Act, an American law granting Beijing permanent normal trade relations and paving the way for China to join the World Trade Organization (WTO).60 Many US policy makers and experts believed at the time that China would naturally integrate into the WTO, an assumption that led to a certain degree of complacency in addressing the potential challenge posed by the East Asian power’s rise.61 Indeed, China was able to expand its influence on the global stage without encountering substantial opposition.

China’s primary concerns about the 2003 war were not solely its relations with Iraq but also the wider Gulf region and its oil supply. Beijing feared that the upheaval could disrupt oil flows not only from Iraq but those other states, potentially hampering its impressive modernization efforts and overall development.62

Now, two decades after the US invasion, China appears to have emerged as the primary beneficiary of the conflict, as the geopolitical implications of the war and the broader American terror fight unexpectedly contributed to Beijing’s substantial growth.63 China embraced the advantages of participating in a broader international community, while the United States found itself stuck in protracted military and nation-building efforts in Afghanistan and Iraq.64 Beijing, meanwhile, was watching from afar and making friends.65

China intensified its involvement in the Iraqi energy sector, making it the largest beneficiary of the Belt and Road Initiative. In 2015, Baghdad and Beijing signed a strategic-partnership deal that, in addition to energy, included cooperation in areas like electricity, communications, infrastructure, and security.66 Indeed, while Iraq’s oil exports to China were valueless in 2007, reports indicate China’s annual imports are now 300 million barrels. Iraq in 2021 attracted “by far the most energy investments” from China among the BRI countries, and it was “the third most important partner in the BRI for energy engagement between 2013 and 2021,” after Pakistan and Russia.67 Moreover, China depends on Iraq for more than 10 percent of its oil supply, accounting for 30 percent of Iraq’s production.68 In this way, energy ties have laid the foundation for other areas of cooperation.

Iraq has estimated a need for nearly $90 billion to rebuild areas previously under the control of IS.69 In 2019, Iraq and China signed an “oil for reconstruction” agreement, exchanging 100,000 barrels per day for Chinese firms’ construction projects in the Gulf state.70

Several state-led Chinese oil companies like CNPC, Sinopec, the China National Offshore Oil Corporation (CNOOC), and Sinochem have established a substantial presence in Iraq, especially in the southern region. From 2006 to 2022, these firms secured projects totaling more than $35 billion.71 Although Iraq does not possess as much gas as oil, nearly $6 billion flowed into the gas sector between 2011 and 2022, 78 percent of this after the launch of the BRI. CNPC has invested nearly $22 billion in Iraq since 2006.72 China’s other major national offshore-oil company, CNOOC, invested $220 million in Iraqi oil in 2018. China International Trust Investment Corporation also made a major, $2.85 billion investment in oil in 2021.73

Iraq, despite its vast hydrocarbon reserves, has not fully capitalized on its wealth in the energy sector. Recently, the government has started diversifying, notably in electricity generation. Thus, an agreement between the Chinese state-owned PowerChina and Iraq’s Ministry of Electricity outlines plans for a 2,000-megawatt solar-power plant.74

China’s engagement with Iraq has been described as a “quantum leap” and “more worthy of watching than Iran.”75 However, this study suggests that this is exaggerated. First, Baghdad is not among President Xi Jinping’s favorite destinations—such as Cairo, Riyadh, or Tehran—indicating that there is truth to the premise of this article, that Iraq is a weak state within the broader region. Second, China sees Iraq’s stability as a necessary step toward wider regional security. Third, China’s risk-taking approach is key to explaining its substantial presence in the country. Few if any other economic powers possess the courage to take these actions. A marketing manager at the Iraqi State Organization for Marketing of Oil, who wishes to remain anonymous, observed that only Chinese companies dare to engage in business within Iraq. “Iraq is the least business-friendly country due to ongoing security concerns and political crises,” according to this source. “Only China demonstrates the willingness to invest in Iraq.”76 He further emphasized that “even Western companies have begun offloading their oil shares in favor of Chinese entities, as they are the sole risk-takers in conducting business here….As much as we are happy about the Chinese hunger for Iraqi oil, we are also anxious about putting all our eggs in the Chinese basket. But we do not have a choice.”77

Such fear echoes Iraqi oil expert Hamza al-Jawaheri, who declared that Iraq is “concerned about surrendering the country’s oil sector to the Chinese companies,” which is why it “rather seeks to achieve eastern-western diversity in its market.”78 Indeed, while Western oil companies like BP, ExxonMobil, and Shell aimed to sell their Iraqi stakes in mid-2021 due to investment concerns, the government successfully halted potential sales to Chinese firms.79 Therefore, as noted by Tang Tianbo, it is essential to recognize that Chinese oil companies are not stepping in to fill the vacuum created by the West.80 Fourth, the post-2003 political order established a sort of elite-based crony capitalism and corrupted system, which prevents the country from benefiting from the partnership with China and its BRI, unlike the rest of the Gulf countries, as this special issue of Middle East Policy highlights.

As the Sino-Iraqi relationship is primarily rooted in economic cooperation, China is the predominant player. Beijing’s continuous engagement with Iraq highlights its intentions to shape the economic and geopolitical settings across the Gulf and the broader region. China does not directly grant Iraq the systemic power necessary for it to navigate freely within the shifting dynamics of US-China relations. Further, Iraq faces challenges in converting these economic advantages into political influence, primarily due to its unstable domestic politics.


While Iraq’s external environment determines its foreign behavior, internal frictions arising from consociationalism and the impact of nonstate armed groups diminish the cohesion of Iraq’s foreign policy. In addition, Iraq’s efforts amid these internal tensions to balance relationships with major powers create paradoxes in its foreign policy and negatively affect its global engagement.

While considered liberal by some scholars, the post-2003 political order of consociationalism, envisioned to eradicate authoritarianism and promote inclusivity, inadvertently established an inefficient and corrupt political system.81 It prioritized ethno-sectarian and party affiliations over merit in appointments. Consequently, it severely undermines the state’s structure and often causes political instability.

Based on this consociationalism, Iraq’s formal approach to foreign policy revolves around the accommodation of elite factions. Typically, the process entails constant concessions among parties and groups with conflicting interests. Under such conditions, Joe D. Hagan argues, “policy initiatives, including resource commitments, are ‘watered down.’”82

Hence, foreign policy is entangled in a complex network of overlapping power configurations and suffers from undefined priorities. Thus, the government, led by the prime minister, may adopt a position, only to find the minister of foreign affairs standing in opposition. The constitutional order holds that the position of prime minister is usually given to the party or bloc that gains the most seats in the Council of Representatives (CoR), which is usually aligned with the Shia majority.83 Based on the power-sharing system, the Ministry of Foreign Affairs is usually led by a Kurd, while the CoR speakership is held by a Sunni. Within this check-and-balance arrangement, the prime minister and the minister of foreign affairs can disagree on foreign policy. While formal discourse does not explicitly indicate this, Iraqi prime ministers traditionally (though not necessarily entirely) lean toward Iran, while Kurdish Iraqi foreign ministers traditionally (though not necessarily entirely) align with the West.84

For instance, Maliki during his tenure (2006–2014) maintained special relations with Iran, while Foreign Minister Hoshyar Zebari, a member of the political bureau of the Kurdistan Democratic Party (KDP), maintained close relations with Western powers and was Iran’s primary rival in Baghdad.85 In response, Maliki sought to open an office directly linked to his office to weaken Zebari and deal with international affairs. In addition, he held talks with another politician from the KDP to take over, a cunning move to show his commitment to the power-sharing system. That Kurdish politician, who preferred to remain anonymous, rejected the offer and accused Maliki of establishing a state within the state.86

Further, the post-2003 political order fosters sect-based state capture and competition over resources. As a result, the line between clientelism and cronyism is blurry, making the country “the breeding ground for organized corruption syndicates.”87 A significant portion of Iraq’s political leadership is driven by motivations like power, self-interest, privilege, corruption, and the allure of oil money. This effectively makes the Iraqi state a vast corporate entity. There are frequent instances of officials offering or accepting bribes, exploiting substantial public funds. Due to the flawed nature of political accommodation, the system lacks crucial checks and balances, making the prosecution of office abuse exceptionally challenging, if not entirely impossible. Despite efforts by the current government under Sudani to implement measures aimed at eliminating the root causes of corruption, this issue persists.88 Thus, contrary to Korany and Dessouki, who consider the distribution of resources as one of the key foreign-policy variables in the region, the case of Iraq shows that oil contributes to fragmentation.89

At the same time, the conflicting forces governing Iraqi foreign behavior agree on maintaining balance on the regional and international stages. The majority seeks to end the country’s isolation, build its military and economic capacity through diplomatic relations with manufacturing states, and boost trade and investment.90 Sahaf, the Ministry of Foreign Affairs spokesperson, recently told the media that Iraqi foreign policy is based on intensive diplomacy to balance and revitalize relations with all states.91

Moreover, these conflicting positions have paradoxically offered a limited, yet unintended, competence in maintaining a delicate balance among external forces with divergent interests. Consequently, Iraq has managed to some extent to negotiate a fine equilibrium among Russia, Iran, the United States, Turkey, Syria, and China—especially with the help of the PMF, discussed below.

Another reason for paradox in Iraq’s formal foreign policy lies in the foreign behavior of the Kurdistan Region of Iraq (KRI). Despite frequently experiencing internal divisions, the KRI maintains a unique position in the region, notably in dealing with Turkey, Iran, Russia, and the United States. Facilitated by its good relations with Western powers since 1991, the KRI’s foreign maneuvering is reinforced by its possession of substantial reserves of oil and natural gas. Further, Iraq’s failure since 2007 to pass a hydrocarbon law prompted the KRI to establish its own oil policy, independent of Baghdad’s oversight. This was largely facilitated by the absence of a second chamber of the legislature that could have regulated the relationship between the federal government and the region.92 This has enabled the KRI to develop relations with Turkey, Russia, and other Western countries, irrespective of Baghdad’s wishes.

While exporting oil to the international market via tankers through Turkey, the KRI finalized its pipeline infrastructure in 2013, linking the Taq Taq, Khurmala, and Tawke fields to the old Kirkuk-Ceyhan pipeline, which opened in 1987. This development provided the KRI with an independent route to export oil to the world market and engage in agreements with international firms. “Such partnerships” with foreign firms, argues one analyst, “sat well with the Kurdish government, whose existence and survival had been owed to Western support.”93

The KRI indeed maintains alliances with the United States and Turkey. Moreover, it has successfully forged oil agreements with state-owned Russian energy firms like Rosneft and Gazprom. The latter collaboration poses risks that could strain the KRI’s rapport with Western powers. But it is perceived as a strategic move aimed at balancing influence, particularly concerning the federal government in Baghdad, and at maintaining a global foothold, especially with Western allies, making the KRI an effective partner to balance power in the region.94

Although the KRI’s independent oil trade was deemed illegal by Iraq’s Federal Supreme Court in 2023, along with a similar ruling by the International Court of Arbitration that same year, the region sustains a robust network of foreign relations.95 The capital of Erbil serves as a major hub and hosts several consulates, including those of the United States, Russia, and China, which help facilitate diplomatic interactions and foster the region’s international ties. This is especially notable in relation to counterterrorism efforts against IS.

Iraq’s informal foreign behavior is epitomized by the involvement of the Popular Mobilization Forces in regional conflicts beyond the state’s official policies. Initially formed as a paramilitary organization in response to the emergence of IS in Iraq, the PMF officially became part of Iraq’s defense system in 2016 and secured political representation in the CoR. However, it operates autonomously, and some factions within the organization enjoy support from political parties and clerics with ties to Iran. Consequently, it has established itself as a quasi-state entity. Given the group’s hybrid nature, the PMF’s foreign behavior is characterized by the political mobilization of the masses, based on ideology and anti-US sentiment, and political accommodation, as it is a powerful actor in elite negotiation processes across high and low politics.

While the primary focus of the PMF has been inside Iraq, reports indicate that some PMF units or individuals have operated in Syria, especially in areas where IS had a presence and near the Iraqi-Syrian border. Several factions within the PMF, such as Kataib Hezbollah, the Badr Organization, Asa’ib Ahl al-Haq, and Harakat al-Nujaba, have conducted operations aligned with Iran’s interests.96 They have established positions along both sides of the Iraq-Syria border with the intent of obstructing anti-IS operations conducted by US-backed forces in eastern Syria. Following the Iraqi Kurdistan independence referendum in September 2017, pro-Iran PMF factions expanded their presence and influence in Iraq. This continued after the 2020 US assassinations of Qasem Soleimani, the powerful chief of Iran’s Quds Force, and PMF deputy Abu Mahdi al-Muhandis.97

The group’s reach has extended beyond the region. In 2022, as noted above, more than 600 PMF volunteers reportedly traveled to Donetsk and Luhansk to join the Ukraine war alongside Russian forces.98 While the credibility of this information is uncertain and requires further verification, the increasing connections between the PMF and Russia within the Iraqi context are seen as strategically significant.

With the Islamic State’s establishment of its self-proclaimed caliphate in 2014, Iraq created an alliance with Iran, Syria, and Russia to fight the nonstate actor. Russia initiated relations with the PMF to create a military bloc paralleling the international coalition led by the United States. Russia directly communicated with PMF factions to coordinate actions on the Iraqi-Syrian border, enabling them to access weaponry. The head of the PMF, Faleh al-Fayyad, visited Moscow in 2016 to meet the Russian National Security Council secretary, carrying a message from Iraqi Prime Minister Haider al-Abadi to President Vladimir Putin.99 This marked the first official visit by a PMF leader to the country.100

IS was finally defeated in 2017, thanks to the international coalition and the heroic roles of the Iraqi army, the PMF, and the Kurdish peshmerga. The United States maintained a force of about 2,500 soldiers amid increasing attacks against American interests in the region and Iraq, carried out by the Iran-backed factions within the PMF.101 After the Soleimani assassination in early 2020, Iraq’s CoR voted to demand a withdrawal of all remaining troops, and the prime minister told the United States to start working on a pullout. In January 2024, the United States and Iraq began formal discussions to establish a committee tasked with negotiating the terms for concluding the American mission. The two agreed to establish “expert working groups of military and defence professionals” as part of the joint commission.102 Relations between Iraq and the United States are currently at a critical juncture because of the PMF attacks against US forces, and the American targeted assassinations of PMF commanders on Iraqi soil. All signs indicate that future decisions, whatever they may be, will greatly impact the direction of the bilateral relationship.

Since July 2019, Israel has initiated attacks on PMF factions. In response, Fayyad pursued Russian military support, including the acquisition of the S-400 air-defense system, aiming to reduce dependency on government funding. At that time, the group encountered difficulties in executing the purchase through a US-based account.103 Due to Israel’s opposition, Moscow declined the PMF’s request for the S-400 but did provide Russian-made helicopters and light arms.

The PMF’s move toward Russia aimed to secure alternative sources for weapons and military equipment to bypass US sanctions. It was also intended to establish an alliance that would balance against the United States and Israel, and to fill the political void left by the Americans. It could also serve to boost the PMF’s legitimacy beyond the perception that it is merely an Iranian proxy.104

In these ways, the internal dynamics stemming from the processes of political accommodation and the mobilization of the formal and informal actors complicate Iraq’s foreign-policy making. The challenges faced in balancing relationships with major powers amid internal tensions are leading to paradoxes in foreign policy that adversely affect foreign engagement.


Iraq’s strategy to balance the United States and China is reactive and driven by its external environment and domestic politics. Externally, the country of the two rivers grapples with multi-layered financial constraints, including stringent Federal Reserve measures to combat illicit transactions and limits on currency auctions, creating a fragile economy. In addition, the 2014 US intervention demonstrates the complexity of Iraq’s relationship with the Americans. Although Baghdad has established alliances with Moscow and Tehran in its fight against terrorism, the United States remains by far the main security actor in the country. While the United States and Iraq are negotiating the end of the US mission, Baghdad is expected to seek continued American support in bolstering defense capabilities, reintegrating itself into the international arena, and stimulating economic recovery. This indicates Iraq’s recognition of the strategic importance of global partnerships. Balancing relationships with Iran and the United States is crucial to Iraq’s stability and prosperity; the stability and welfare of the country require Baghdad to avoid worsening ties with Washington. Iraq has so far managed to hold the stick from the middle, but this is now in peril, given the tensions inflamed by the war in Gaza.

As for China, Iraq’s perception of the East Asian power and the Belt and Road Initiative as an avenue for economic resurgence highlights its adaptive approach to leveraging international opportunities. Despite the significant economic boost from its relationship with the Chinese, Iraq has not gained the systemic power required to navigate the evolving US-China rivalry. This limitation stems from the fact that China has taken the largest share of the benefits, while Iraq’s internal political dynamics—centered around accommodation and mobilization—make the country incapable of converting economic opportunities into tangible influence.

Iraq is trying to change these dynamics. Sudani has declared that Iraq wants to strengthen its relations with Washington through other areas of cooperation, such as economic and energy investments beyond security. Iraq’s relationship with the United States “should not be only within a security dimension,” he said. “While we are open to bilateral security co-operation…we will not be part of any sphere of influence….We are not in need of combat troops; what we have are military advisers, but even their presence needs regulation, in terms of their size, location and how long they remain.”105 (However, the appetite for further strengthening US-Iraq relations is currently at its lowest point after the assassination campaign against the PMF, which Baghdad considers a violation of its sovereignty.) As part of this attempt to diversify its economic partners, Iraq and Total Energy in 2023 signed a $27 billion deal known as the Gas Growth Integrated Project.106 These efforts aim to harness Iraq’s natural resources, diversify its economic partners, and break free from China’s economic dominance in Iraq.

While Iraq aims to end isolation and boost global ties, leading to an unintended balance between external forces, its difficulties in foreign policy are further driven by the divisions in its domestic politics. Its formal policy making faces challenges due to political fragmentation and corruption, which aggravate sectarianism, and the absence of formal power-sharing agreements. Furthermore, the informal foreign behavior of some of the factions within the PMF aligns with Iran’s and Russia’s interests, further complicating Iraq’s relations with major powers. Therefore, Iraq’s foreign policy reflects internal divides, resulting in a nuanced and often contradictory global engagement.


  • Amjed Rasheed

    Dr. Rasheed is a research fellow at Durham University in the UK.

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