Strategic Posture Review: Iraq

Strategic Posture Review: Iraq

From its initial emergence as a British mandate following World War I, to the post-independence monarchy from 1932-1958, through the military coups that ushered in the rule of first the Baath Party in 1968 and then Saddam Hussein in 1979, external threats and internal tensions have characterized the history of Iraq. Now that all U.S. military forces have left the country, Iraq’s government once again faces the challenge of overcoming internal divisions, even as it becomes fully and solely responsible for Iraq’s security for the first time since the U.S.-led invasion of 2003. Iraqi leaders must manage these interrelated challenges while trying to reintegrate Iraq into the regional and international order from which it has been largely isolated since 1991.

It was scarcely a century ago that the three Ottoman provinces of Basra, Baghdad and Mosul were claimed by the British and reconstituted as the territory that was to become the sovereign state of Iraq. The country’s western half consists mostly of sparsely populated desert. The southernmost province of Basra contains nearly 60 percent of the country’s population and is primarily inhabited by Shiite Arabs. The central province of Baghdad has 20 percent of the population, comprised of predominantly Sunni Arabs. The remaining 20 percent of Iraqis are found in the northernmost province of Mosul, which is mostly Sunni Kurdish with pockets of Arab, Turkmen and other ethnic minorities. A Christian Arab minority was tolerated for most of modern Iraqi history but has been persecuted heavily since Saddam’s fall in 2003, resulting in its mass exodus.

Wielding power in a country so easily divided by competing allegiances and identities has never been easy. For most of Iraq’s history, including under Saddam Hussein, the Sunni minority monopolized political power by centralizing it in Baghdad and repressing the Shiite Arabs and Sunni Kurds. This situation quickly changed after Iraq’s first democratic elections in 2005, from which current Prime Minister Nouri al-Maliki, leader of a loose alliance of Islamist Shiite Arab political parties, emerged as the winner. In the parliamentary elections of 2010, al-Maliki’s State of Law coalition garnered slightly fewer seats than fellow Shiite Ayad al-Allawi’s more inclusive and secular Iraqi National Movement, but al-Maliki retained power because he was more able to assemble a majority in the national parliament. The two political blocs have been feuding ever since, with al-Maliki slowly getting the upper hand but with most governmental affairs paralyzed in the interim. The situation has prevented the appointment of a new Iraqi defense minister and made it impossible for the Iraqi government to offer the U.S. the legal guarantees needed to keep a large American military force in Iraq beyond 2011.

Meanwhile, the Kurdistan Regional Government (KRG) has taken steps toward strengthening its de facto autonomy, including in the area of foreign policy. It has developed trade and diplomatic connections with other countries, signed oil deals and independently held meetings with foreign heads of state. These efforts reflect the Kurdish desire for a decentralized Iraqi government, instead of the strong centralized state favored by the current government in Baghdad. Iraq’s constitution already recognizes the KRG and the Kurdistan Parliament as autonomous regional institutions, and it identifies the Peshmerga (the Kurdish militia) as a legitimate regional military force.

Though a return to civil war between Iraq’s Shiite and Sunni populations has been the most commonly evoked threat to domestic stability following the withdrawal of U.S. troops, it is possible that tensions between Arabs and Kurds could result in open conflict as well.

Military Security

At present, Iraq’s security conditions are worrisome but not alarming. Whereas Iraq did not have a functioning army, air force or navy in 2003-2004, the Iraqi Security Forces (ISF) now number more than 700,000 people in the aggregate, if one includes their marine corps and various federal and local police forces. Iraq’s active military force consists of about 250,000 personnel. Of these, 238,000 are with the army, which contains one armored division, 10 mechanized infantry divisions, two presidential brigades, one infantry division as well as one light infantry division and two special forces brigades.

Although various insurgent groups are able to detonate bombs targeting police officers and hapless civilians, they are no longer able to hold Iraqi territory. And Iraq’s neighbors, though perhaps uneasy about the course of events, have refrained from intervening by sending conventional military forces into the country. But neither of these conditions is predestined to last forever.

Improving the ISF requires progress in three dimensions. First, the forces need to continue to develop the capacity to suppress the remnants of anti-government insurgent groups. Second, the ISF must achieve the capacity to defend Iraq from potential foreign aggressors, though thankfully there is currently no immediate external threat from the country’s neighbors. Third, Iraq needs to develop an effective but acceptable military-support partnership with the United States.

Internal Security

One of the first acts of the U.S.-led occupation authorities in May 2003 was to dissolve Saddam’s military. This decision was justified on both moral and pragmatic grounds, but it had the unfortunate effect of inducing many newly unemployed but armed young men to become insurgents.

Insurgent attacks and bombings subsequently grew steadily and dramatically, reaching around 1,800 per month by the end of 2005. U.S. Central Command estimated that roughly 1,000 roadside bombs were detonated each week in 2006. By then, the sectarian tensions between Iraq’s majority Shiite population, suppressed for years by Saddam Hussein’s oppressive regime, and its heretofore politically dominant Sunni minority had erupted into a civil war. The Iraqi army was by now heavily Shiite, as was the Baghdad police force, which only helped intensify the sectarian conflict.

Only in 2007, following a surge of U.S. combat troops into the country and the adoption of a population-centric counterinsurgency doctrine, did the sectarian violence begin to subside.

The U.S. troop surge, which allowed for aggressive operations to secure Baghdad and other urban centers, was only one element leading to the stabilization of violence in Iraq. Also contributing to the counterinsurgency efforts were the Sunni Awakening movements, which reflected the gradual emergence of Sunni opposition to the brutal and often indiscriminant attacks carried out by al-Qaida in Iraq (AQI) and other radical groups. Beginning in Anbar province, sheikhs that had formerly led their fighters against U.S. and Iraqi forces began to cooperate with them by providing local security and intelligence information. American forces, and eventually the Iraqi government, paid these valuable allies regular salaries under the Sons of Iraq program and benefited from their contributions to internal security.

Equally important, the Iraqi government’s credibility and that of the ISF was boosted immeasurably in 2008 when al-Maliki, who had hesitated to move against prominent Shiite militia leaders and was accused of sectarian parochialism, boldly decided to conduct military offensives against Muqtada al-Sadr’s Jaysh al-Mahdi (JAM) militia units in Basra, Baghdad and Mosul. This demonstrated commitment to enforcing the rule of law in an impartial and national manner inspired confidence in the central government, winning over skeptics and Sunnis.

Al-Sadr soon called on his followers to observe a cease-fire, which contributed to a sharp reduction in Shiite-initiated violence. Many former fighters moved into mainstream political life to advance their distinct agendas. Iranian support for more-radical Shiite groups dwindled as the Iraqi government secured its authority, and widespread distrust of Iran caused many individuals to desert or inform on radical Shiite insurgents. Meanwhile, on the Sunni side, domestic and foreign recruiting for AQI significantly decreased.

Despite the significant security improvements, militant groups continue to carry out attacks in Iraq. Armed Sunni nationalist groups include Jaysh al-Islami, the 1920s Revolutionary Brigade and the Jaysh Rijal al-Tariq al-Naqshabandi. Many of these groups include former Baathists and remnants of the old Sunni insurgency dating back to the aftermath of the invasion. Meanwhile, Iran funds a variety of radical Shiite militias, including the Promised Day Brigade, splinter groups from the old JAM and Kata’ib Hizbollah. While mainstream Sadrists and members of Asaib Ahl al-Haqq have largely laid down their arms, these more radical groups remain active in southern Iraq and in urban areas as the most militant opponents of the government.

AQI has also continued in its quest to reignite sectarian violence, even as it tries to soften its image among Iraqi civilians. AQI is now reaching out to Sunnis using financial incentives, while agitating among disgruntled Sons of Iraq members, many of whom have yet to receive promised jobs in government ministries or in the ISF. In a further indication of the group’s adaptability, AQI released a sort of “counter-counterinsurgency” manual in 2010 that blames its setbacks on the successful psychological campaign of its opponents and on the Sunni Awakenings. Aiming to win over Iraqis after the U.S. withdrawal, the document calls for a full-scale media and psychological war and for the conservation of resources until this crucial period.

Though some of these insurgent groups remain active, the new Iraqi army has achieved the capacity to deny militants of all stripes control over any major geographic area, forcing any remaining fighters to engage in acts of terrorism against civilians and other weaker targets. It has accomplished this despite the end of U.S. combat operations in August 2010 and months of political uncertainty due to the inconclusive election results and protracted coalition formation, which have prevented Iraq’s government institutions from reaching decisions to address the country’s present security problems.

External Security

In the last Pentagon video conference from Iraq, held on Dec. 7, the deputy commanding general of U.S. forces in the country, Lt. Gen. Frank Helmick, said that U.S. forces had left their Iraqi counterparts with “some of the best [equipment] we have,” including M1 Abram tanks, artillery and personnel protection equipment. But Helmick stressed that the most important legacy the U.S. military left Iraqi security forces is the professionalism, confidence and esprit de corps that now characterizes the ISF. He also claimed that Iraqi special operations forces “are the best in the region.” But even Helmick acknowledged that the ISF cannot yet ensure Iraq’s external security from foreign threats.

The ISF lacks essential capabilities and equipment that would be needed to combat a foreign military. At almost every level of command, from company to division, the Iraqi forces are vulnerable due to lack of air defense, anti-armor capabilities and chemical weapons defenses, which is historically a very real threat in this region as Iraq itself, when ruled by Saddam, proved. The Iraqis also lack strong artillery equipment to back up their conventional operations. Their weak air force cannot guarantee national air sovereignty or defend against air attacks. The underdeveloped navy cannot defend the country’s offshore oil platforms or the oil wells located in border regions. The ISF units’ ability to conduct integrated combined arms operations has yet to be demonstrated. This makes for a light, mobile and versatile force strongly suited for internal operations against asymmetric adversaries, but ill-suited for conventional foes.

Having acquired the capacity to pursue a successful counterinsurgency, the ISF is seeking to develop better leaders, more-advanced operational skills and expanded capabilities. During the U.S. military occupation, the Multi-National Security Transition Command (MNSTC-I) was responsible for organizing, training, equipping and developing the ISF. Through the U.S. Foreign Military Sales (FMS) program, the United States provided the ISF with more than 100 M1A1 tanks, more than 55,000 M16 and M4 assault rifles, and AC-208 Hellfire missiles. The Iraqi Ministry of Defense’s (MoD) Force Generation and Modernization plan calls for more arms purchases, including up to 36 F-16 fighter jets, additional M1A1 Abrams tanks, tactical truck support vehicles, military attack helicopters, light armored vehicles, Humvees and small arms, as well as the construction of military facilities to store and maintain all this equipment.

The MoD is also making small strides in acquiring its own equipment through means other than the FMS and the MNSCT-I, but it has a long way to go before it is anywhere near self-sufficient. An overly centralized decision-making process, late or absent funding, lack of technology and poor staffing have all compounded the problem of equipment acquisition. As the MoD attempts to purchase more arms and negotiate more deals by itself, these problems are becoming more apparent. In mid-2008, a $833 million secret arms deals between Serbia and Iraq came to light. Not only had Iraqi officials sidestepped the normal bidding process and their protocols for purchasing international arms, but they had also failed to notify any member of the U.S. military or civilian diplomatic corps normally involved in these types of purchases. The deal included planes, armored personnel carriers, mortar systems, machine guns, body armor, military uniforms and other equipment. Much of the equipment turned out to be of inferior quality or inappropriate for the ISF’s mission.

Other problems at the ministerial level reduce the efficiency and blunt the effectiveness of ISF operations. Staff members often lack qualifications and fail to use automated processes to increase efficiency. In 2009, severe budget shortfalls due to the decline in oil revenues led to a hiring freeze and arrested equipment-acquisition across the ISF. Meanwhile, in addition to impeding acquisitions, the MoD’s highly centralized decision-making process obstructs systematic development of plans and policies.

Iraq’s military lacks an effective and efficient logistical system to supply and coordinate forces in the field, operating on a “pull” system, in which units must request supplies, as opposed to a U.S.-style “push” system, in which logisticians try to predict units’ supply needs and send supplies even before they are requested. The current system clashes with the equipment needs of Iraqi units in the field and would cause coordination problems in the event that the Iraqi military engages in conventional operations against a foreign adversary.

Several other variables influence the effectiveness of the various military units, which is uneven. For example, the Iraqi special operations force is well-trained and disciplined, while the Facility Protection Service is poorly trained and inadequately equipped. Also, because some Iraqi army divisions are drawn from specific localities, these units can be more loyal to the dominant ethnic or religious group of that region than they are to the central government in Baghdad. For example, the 10th Division in Basra, a Shiite-dominated city, was unwilling to fight against the Mahdi army in 2008, while the mostly Kurdish 2nd Division in northern Iraq is considered to be more loyal to the Kurdish Regional Government than to the Iraqi government in Baghdad.

Despite all these obstacles, several causes for optimism exist. The MoD is slowly incorporating electronic databases, such as the Human Resources Information Management System, to facilitate personnel identification and store information. Early assessments of the Iraqi army warned of poor troop discipline, sectarian tensions and general incompetence, but training of new Iraqi army forces has been improving with time. Institutions such as the Iraqi Counterinsurgency School and the new Iraqi Field Artillery School, in particular, are helping to improve training, and both the navy and air force also have similar large schools around the country.

Quality small-unit leadership is essential in fighting shadowy enemies that operate in small groups. To this end, the Iraqi army continues to make progress in developing competent junior and noncommissioned officers who take initiative and show sound judgment. The Iraqi-run Counterinsurgency School established its Tactical Leader’s Course modeled after U.S. programs at Fort Leavenworth. Last year, the school began training cycles of brigade and battalion commanders in civil security operations and command techniques. The long-delayed NCO Education System is now fully functional and aims to field a professional NCO corps.

The combined effect of these improvements has had an impact on Iraqi perceptions of their national army, with more than 70 percent of Iraqis polled in November 2009 indicating that they feel more secure when the Iraqi army operates in their neighborhood. That, in turn, makes community-based intelligence gathering easier.

U.S. Security Assistance

The State Department aims to expand its role in Iraq to fill gaps left by the departing U.S. troops. If adequately funded — a big if — State will have as many as 16,000 employees in Iraq, of which 80 percent will be private security contractors. Many of these will help protect the remaining U.S. diplomats, while others will try to teach Iraqi forces how to use the new U.S.-made hardware they are purchasing. It will take years for the ISF to learn how to use such sophisticated equipment properly, especially since Iraq’s dwindling ranks of veteran officers were trained to use Soviet-origin weapons systems.

U.S. officials have indicated interest in having some U.S. troops return to Iraq as trainers now that the formal U.S. withdrawal has been completed, and al-Maliki has said he sees such a role for U.S. military forces to return. Though Vice President Joe Biden mentioned the issue when he visited Iraq at the end of 2011, no formal talks on such a resumed mission have yet begun.

Economic and Energy Resources

Iraq’s oil industry drives 90 percent of the economy and is therefore indispensable to economic growth. Troublingly, due to outdated infrastructure and low investment, the nation’s oil exports were virtually constant for the past few years, despite the decline in violence. Iraqi officials did conduct bidding and recently awarded 10 contracts to international oil companies. Over the next decade, these oil investments could bring as much as $100 billion to Iraq.

However, many of the internal dangers facing Iraq’s leadership are grounded in the country’s economic dependence on oil. Price instability in the international oil market constantly threatens to reduce government and private investment and restrict funding for the ISF. The implications of oil market fluctuations for the country’s political future were made clear in 2009, when the Iraqi government based its budget of approximately $80 billion on the assumption that prices would average $106 per barrel. A dramatic fall in the price of oil in the second half of that year necessitated deep cuts in the national budget, which eventually totaled less than $60 billion at the time of passage.

Meanwhile, without substantial investments in infrastructure and security, increasing production to compensate for loss in revenues is not a feasible option. A significant proportion of Iraq’s critical oil infrastructure remains dilapidated, with the country’s only pipeline to its southern oil terminal having been operational for roughly twice its designed lifetime. It is estimated that billions of dollars in investment are still needed to increase production to target levels of 3.5 million barrels per day.

Nevertheless, with the proper investment, Iraq’s oil-producing potential is enormous. According to the Energy Information Administration, Iraq held 115 billion barrels of proven reserves in 2009, the fourth-largest in the world. More-recent figures cited in the press and financial media point to 143 billion barrels, making it the world’s second- or third-largest. Other sources say there is much more to be found, with estimates of as much as 214 billion barrels in additional unconfirmed reserves or in unexplored areas.

The Iraqi government, however, faces significant challenges as it seeks to further exploit these reserves. One of those challenges arises from the demographic and political tensions caused by the geographic distribution of the oil within its borders. Iraq’s known oil reserves are concentrated in the Kurdish-dominated north and the Shiite-dominated south, leaving the Sunnis vulnerable to exclusion and the Baghdad government with a revenue-allocation challenge inextricably embedded with ethnic and regional tensions. The government has not yet agreed on a hydrocarbon law that establishes a scheme for oil revenue distribution among the provinces. The agreement that Exxon Mobil recently signed with the KRG to invest in oil extraction in northern Iraq represents a clear challenge to the central government’s sovereignty, and highlights the Kurds’ willingness to act independently of Baghdad in what amounts to a high-stakes game of chicken between the two sides.

In addition to resolving the thorny problem of oil-revenue distribution, it is imperative for Iraq to diversify its economy and develop other industries in order to reduce the country’s economic vulnerability to downswings in the energy market, such as those that forced significant budget cuts in 2008 and 2009. Efforts to do so, however, will in part depend on improving perceptions of the country’s security environment among international investors.

Foreign Policy

Now that all U.S. combat troops have withdrawn from Iraq, neighboring powers are actively maneuvering to advance their interests in the new environment. Although the Gulf Cooperation Council states and Iran have been the most prominent rivals, competing directly and through local proxies, Turkey has made a recent surge and now looks ready to face off with Iran for influence over their mutual neighbor.

Gulf Cooperation Council

With a population of almost 29 million people and the fourth-largest oil reserves in the world, Iraq is a potential giant in the Persian Gulf region, from an economic and demographic perspective. Yet decades of war and Iraq’s aggressive stance toward its Gulf Cooperation Council (GCC) neighbors during the Saddam regime forced the Gulf monarchies to approach the country with prudence. Since Saddam’s overthrow, Iraq’s ties with the GCC have been revived, including, for example, its reintegration into the GCC Union of Commerce and Industry Chambers in 2010.

Iraq’s relations with the GCC further improved with the December 2010 repeal of U.N. Security Council Resolution 661, which imposed a number of sanctions on the Saddam regime for the 1990 invasion of Kuwait.

The GCC governments want Iraq to be stable so as not to export regional chaos, prosperous in order to buy their goods and nonaggressive so as to not threaten them again. At the same time, they want Iraq not only to possess sufficient military power to balance Iran’s regional influence, but also to be sufficiently independent of Iranian control to have the willingness to do so. GCC capabilities to pursue these goals are limited, however, and have been further diluted by their governments’ need to devote attention to the Arab Spring disorders that threaten their own countries. With the U.S. military withdrawal, the GCC states may feel a need to supplement decreased U.S. influence in Iraq by raising their own profiles in the country.

Historical factors dating back to the First Gulf War and beyond make Iraq’s relations with GCC member Kuwait especially important. Iraq has already paid about $30 billion in war reparations to Kuwait, but still owes about $20 billion. The substantial payments, amounting to 5 percent of Iraq’s annual oil revenues, are a point of frustration for the new Iraqi state, which desperately needs funds for development and resents its accountability for Saddam’s actions.

In late-May 2010, Iraq sent its first ambassador to Kuwait since the outbreak of the First Gulf War. Kuwait has had an ambassador in Iraq since 2008, and officials from both countries have exchanged visits, including a recent trip to Iraq by the Kuwaiti prime minister, the first such visit in two decades. Yet, sources of tension persist, and even the border issue ostensibly used by Saddam to justify the 1990 invasion resurfaced in July 2010 when the Iraqi representative to the Arab League, Qays al-Azzawi, made statements rejecting the United Nation’s demarcation of the Iraq-Kuwait border. Iraq promptly stated that al-Azzawi was misquoted and denied any intention to dispute the official Iraq-Kuwait border. Underlying these issues is general Iraqi resentment about the reversal of roles, in which Kuwaitis can defy Iraq in ways they never would have dared under Saddam.

More recently, new sources of tension with the GCC have arisen over how best to deal with the Syrian crisis. Leading an essentially Shiite-dominated government, al-Maliki fears that the removal of Syrian President Bashar al-Assad could result in yet another Sunni-dominated government on Iraq’s border that might join with Turkey and GCC states in backing Iraq’s Sunni minority.


Prior to becoming an independent country with a strong central government, Iraq, then known as Mesopotamia, had for centuries been the object of clashing imperial ambitions between the Ottoman Empire and Safavid Persian dynasties. Today, Ankara and Tehran continue to have divergent preferences regarding Iraq’s trajectory. Iranian officials generally prefer that Iraq remain a divided and weak state that cannot challenge Tehran’s quest for primacy in the Persian Gulf region by regaining its economic and military power. They further want to see a subservient Shiite coalition ruling in Baghdad, one that will not resist Iranian political and economic control over southern Iraq.

In contrast, Turkey favors a strong but democratic Iraqi state ruled by a coalition of political forces that can maintain domestic stability as well as contribute to regional security. These conditions would favor a revival of Iraqi hydrocarbon production, which would benefit Turkey as a key transit state for Iraqi oil and gas, and promote strong economic growth, which would benefit Turkish investors and traders. A strong Iraqi state would also be able to repress the PKK, a Kurdish terrorist group that launches strikes against Turkish targets from bases in northern Iraq. Although Iran may dispose of more hard power assets in Iraq thanks to its Sadrist and other militant proxies, Turkey wields superior soft power thanks to the attractiveness of its moderate democratic traditions and its more prosperous economy.

Nonetheless, Turkish officials appreciate that an explicitly sectarian approach would be counterproductive, since Iraqis have reacted poorly to the more visible efforts of Iran and Saudi Arabia to use proxies to advance their interests in Iraq. As a result, Turkey has sought to avoid giving the impression of being a Sunni Muslim patron seeking to marginalize Iraq’s long-repressed Shiite majority. Instead, Turkey aims to buttress its position further in Iraq by solving its own Kurdish problem at home and establishing an acceptable framework for managing the region’s water assets, removing what in previous years had been a source of tension between Turkey and the downstream countries of Iraq and Syria.

Many Iraqis welcome Turkey’s growing role in their country. Turkish business activities in Iraq generate economic growth and jobs, helping the country recover from decades of war and civil strife. Furthermore, many Iraqis see Turkey’s Islamic-influenced but essentially secular orientation as a model of the type of political and social system that could work well in Iraq, with its large Sunni minority and secular tradition, or at least as one that offers a superior alternative to that of an Iranian-style Shiite autocracy. But other Iraqis either prefer Iran’s more overtly religious form of government or simply want to have a Shiite patron.

Regardless of their religious affiliation, Iraqis appreciate that Turkey is one of their most important regional partners. The leaders of the Baghdad government are eager to have good relations with Turkey and would like to see a prominent Turkish presence throughout Iraq. Whereas Shiites seek to limit the influence of the Persian Gulf monarchies, and Kurds and Sunnis want to constrain Iranian influence in their country, there is no Iraqi ethnic or sectarian group that strongly opposes Turkey’s growing sway in their country. Economic considerations are also leading Iraqis to favor deeper ties with Turkey. Most of Iraqi Kurdistan’s trade and foreign investment involves Turkish firms, but even Iraqis located elsewhere understand that Turkey is the most prosperous and industrialized of Iraq’s neighbors, offers routes to and from Western markets and provides an outlet to the Mediterranean Sea for Iraqi hydrocarbons.

Turkey will invariably exert enormous influence in Iraqi affairs due to its proximity, its powerful economy and its possible role as a conduit linking Iraq to Europe. Nevertheless, sources of tension exist in the relationship. The Turkish military regularly violates Iraqi sovereignty by attacking PKK targets in northern Iraq, sometimes through large cross-border ground invasions. Some Iraqis still suspect that Turkey would like to establish de facto control over northern Iraq, which used to belong to the Ottoman Empire. Moreover, Turkey and Iraq have regularly disputed access to water and the management of shared waterways, with Iraqis objecting in the past to various Turkish dam projects that could reduce the flow of water to downstream countries like Iraq and Syria. But more than any other factor, Iran represents the main barrier to Turkey’s ambitions in Iraq.


Since the removal of Saddam, Iran has become the most influential foreign country in Iraq by developing economic, religious, social, political and security ties with a wide range of the country’s Shiite parties and factions. Tehran disposes of several important assets in the country, including geographic proximity, a newly self-conscious and empowered Shiite majority that appreciates Iran’s centrality to the Shiite faith, and influential pro-Iranian factions embedded within Iraq’s government, military and economy. Iran also enjoys clear military superiority over Iraq’s armed forces.

Although Iran failed in its effort to co-opt the transnational Shiite clerical network based in Najaf, it has succeeded in influencing Iraqi public opinion through direct propaganda and economic ties. Iraq has also become a major destination for Iranian religious tourists. Each month, some 40,000 Iranians visit Iraq’s holy cities, with an estimated 3 million to 4 million visiting during the annual Ashura commemorations. Najaf, a traditional center of the Shiite world and emerging as an important Iraqi political center, has become a focus of Iranian investment that disproportionately benefits Tehran’s local political allies.

The two countries have signed more than 100 economic cooperation agreements, with bilateral trade reportedly reaching $7 billion in 2009 and Iranians heading numerous reconstruction projects in Iraq. Iran has made up for Iraq’s electricity shortages by supplying about 10 percent of its needs, and the percentage is actually much higher for several provinces that border Iran. In May 2011, Iraq signed a five-year agreement with Iran to import natural gas to reduce the country’s power outages. Iran’s main exports to Iraq include fresh produce, processed foodstuffs, cheap consumer goods, cars and construction materials such as cement, glass and bricks. Iraqi exports to Iran consist largely of crude and refined oil products.

Significantly, Iran now operates five banks in Iraq, including a Bank Melli branch in Baghdad, an agricultural bank and three retail banks with branches in Baghdad, Najaf and Karbala. This has allowed Iraqi banks to open letters of credit with their Iranian counterparts, thereby facilitating trade. The Iranian government has also offered Iraq a number of billion-dollar soft loans to undertake projects in Iraq that use Iranian contractors and equipment. Iran’s economic ties with Iraq are especially important given all the sanctions constraining Iranian economic exchanges with other countries.

In March 2008, Iranian President Mahmoud Ahmadinejad became the first Iranian president to visit Iraq since Iran’s 1979 Islamic Revolution. Al-Maliki has made several state visits to Iran since 2006.

Although ties between Iran and Iraq are strong, there are still unresolved sources of tension. In dumping cheap, subsidized food products and consumer goods into Iraq, Iran has undermined Iraq’s agricultural and manufacturing sectors. Iran’s damming and diversion of rivers feeding the Shatt al-Arab waterway has undermined Iraqi agriculture in the south and prevented efforts to revive Iraq’s marshlands. Iran’s periodic border incursions, such as the seizure of the Fakka oil well in late-2009, have fueled Arab nationalism and further divided the different Shiite parties by raising suspicions regarding Iran’s intentions among some Arab Shiites.

Further complicating relations is the fact that Iran’s policy toward Iraq has at times lacked consistency. Iran has often supported the Iraqi government while at the same time backing violent militias that aim to undermine Baghdad’s authority. Recent years have also demonstrated that Iranian efforts to influence Iraqi politics have frequently been poorly integrated with other Iranian activities in the country, such as support for militant groups or the handling of border disputes, indicating poor coordination in Iran’s whole-of-government approach to Iraq.

As long as a pro-Iranian government rules in Baghdad and potential opposition is weakened by ethnic and sectarian divisions, however, Iranian influence in Iraq is likely to grow further now that all U.S. troops have left the country.

Challenges, Priorities and Future Scenarios

For the Iraqi government, the first challenge and priority remains ensuring that the ISF has sufficient capabilities to counter internal threats throughout Iraq from terrorists and other nonstate actors.

The second challenge is to avert renewed civil war. Some provinces are already in conflict with the central government in Baghdad over revenue and administrative autonomy, but conflicts between the provinces themselves are also possible on the bases of ethnic divisions, territorial disputes and resource wars. Sectarian tensions between Sunnis and Shiites are already growing due to al-Maliki’s efforts to remove some Sunnis from power.

The third challenge facing Iraqis emanates from foreign interference in Iraqi affairs. The withdrawal of U.S. troops from Iraq could lead Iran, Turkey, Saudi Arabia and other regional actors to seek to expand their own influence within Iraq, most often in alliance with Iraqi proxies.

A fourth challenge is the need to define Iraq’s new relationship with the United States, which will likely seesaw between cooperation and conflict for the foreseeable future. At present, relations between Washington and Baghdad are deteriorating as Iraqis and Americans give vent to mutual frustrations and Washington turns its attention elsewhere. But relations could easily rebound as the two governments realize they need one another to balance Iran, manage regional extremism and revive Iraqi oil production.

Finally, Iraqi leaders must address internal problems that weaken the country’s international power and status. These range from the aforementioned sectarian and regional conflicts to the need to establish a functioning Iraqi government that can reduce factionalism, corruption and other weaknesses.

Depending on how these challenges evolve and how Iraqi leaders respond to them, one can posit several future scenarios for Iraq.

Perhaps the one most often envisaged is a return to civil war among the country’s Shiite, Sunni and Kurdish populations, backed by foreign state sponsors, which would see Iraq become a fertile environment for terrorism and regional chaos. Kurds and Sunnis might try to take advantage of the security vacuum to secure their independence from a Shiite-dominated government in Baghdad. Turkey, Iran and Syria might take military action to prevent an independent Kurdish state, which would encourage separatist agitation among their own large Kurdish minorities. Meanwhile, the GCC states, perhaps backed by Turkey and a post-Assad Syria, might intervene to defend Iraq’s Sunni minority from a Baghdad government dominated by Iran.

An Arab Spring scenario for Iraq is also often discussed. Iraq suffers from high unemployment, especially among the youth; a dependency on natural resource exports; popular complaints over inadequate public services; and other factors that have contributed to mass protests in other Arab countries. There is also the power of example, as Iraqis are well-aware of internal developments in other Arab states.

In the end, Iraq’s future depends most heavily on Iraqis themselves if they are to avert enduring internal conflicts and foreign interventions, while rebuilding their country’s domestic and international status and influence. Such an ideal scenario will be challenging to achieve, but by no means impossible for a nation that has managed to thrive at times, despite centuries of adversity.

Richard Weitz is a senior fellow at the Hudson Institute and a World Politics Review senior editor. His weekly WPR column, Global Insights, appears every Tuesday.