Washington signals sanctions as Iraq faces rising Iranian influence

Tensions in Iraq’s political landscape have intensified as leaks from government sources—including the Ministry of Foreign Affairs—suggest that the United States may impose a new wave of economic and political sanctions. These measures are expected to target financial institutions, investment firms, banks, and individuals or groups accused by Washington of ties to Iran, sanctions evasion, or human rights violations.

Three Iraqi political and government officials stated that US representatives visiting Baghdad indicated that the sanctions would focus on individuals and groups engaged in money laundering or financial activities benefiting Iranian or Iran-aligned actors, The New Arab reports.

“There is significant anticipation in Baghdad regarding a new US sanctions package targeting political, economic, and private entities and individuals accused of dealing with Iran,” said senior political figure Aed al-Helali, an ally of Prime Minister Mohammed Shia’ al-Sudani.

The anticipated sanctions coincide with Iraq’s government formation process and come amid heightened US pressure to limit Iranian influence and control over armed groups. Analysts note that the measures could be among the most comprehensive in recent years and may be applied incrementally to avoid sudden political or economic disruptions.

The reports follow Iraq’s recent reversal of a controversial decision temporarily designating Lebanon’s Hezbollah and Yemen’s Houthis as “terrorist organisations,” a move that drew domestic criticism. Prime Minister al-Sudani called the listing an administrative error, stating that those responsible were under investigation. However, opposition parties and militia groups question whether the decision was influenced by Washington.

A Foreign Ministry official noted that sanctions could include “prominent names in armed factions that now hold seats in the new parliament.” Washington is expected to deploy Treasury measures against militia groups accused of attacking oil and gas sites in the Kurdistan Region and smuggling US dollars to Iran.

The US National Defence Authorisation Act draft links future security assistance to Iraq’s efforts to curb Iran-aligned militias and enhances the prime minister’s authority, with the Defence Secretary empowered to waive restrictions for up to 180 days if deemed in US national interest.

Since 2003, Washington has maintained a substantial military and political role in Iraq, including counter-ISIS operations, though the troop presence is slated to decline by 2026 at Baghdad’s request.

By Vafa Guliyeva