Middle East Eye
Iraq's new PM wants business deals with Trump, but militias cloud visit
Iraq's new PM wants business deals with Trump, but militias cloud visit
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Sean Mathews
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Fri, 07/10/2026 - 21:20
Prime minister wants US to continue flow of oil funds as war tests Baghdad's delicate dance between Tehran and Washington
This handout picture shows new prime minister-designate Ali al-Zaidi, centre, sitting ahead of presenting his government to the parliament in Baghdad, on 14 2026 (Iraqi prime minister's press office/AFP)
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When Ali al-Zaidi was nominated as Iraq’s Prime Minister in April, a senior Iraqi diplomat sitting with Middle East Eye breathed a sigh of relief and called Zaidi to congratulate him.
“This was Trump’s pick. He is an Iraqi Trump, a businessman,” the official said. “Now, the funds will flow again."
Sure enough, Iraq confirmed on Thursday that the US had resumed air shipments of Iraqi oil income that is kept at the Federal Reserve Bank of New York, just in time for Zaidi’s landmark visit to the White House next week.
In keeping with the monetary theme of the visit, Zaidi - whose business empire extends to real estate, banking, and logistics - has deals set to sign when he meets Trump, a separate senior Iraqi official told MEE, speaking on condition of anonymity.
The Iraqi premier will expand on a preliminary agreement for Chevron to develop an oil field in Basra, and a US firm will deepen its activities at the Akkas gas field in al-Anbar province.
Iraq and the US will also sign a deal to rehabilitate the five-decade-old Kirkuk Baniyas pipeline, which connected Iraq with Syria’s coast, the official said.
Tom Barrack, Trump’s ambassador to Turkey and envoy to Syria and Iraq, has been pushing for a preliminary deal before Zaidi’s visit as part of efforts to reduce Iran’s control in the Strait of Hormuz.
“Trump and Zaidi come from a business background. Iraq is coming to the US with deals,” the Iraqi official said.
The Iraqi premier wants to focus on business ties while buying time for his plan to disarm militias that joined Iran in attacking US forces and Gulf states during the US-Israeli war on the Islamic Republic.
“Zaidi is looking at Ahmed al-Sharaa and other Middle East leaders who have charmed Trump. He knows the key is to establish a personal rapport,” Renad Mansour, director of the Iraq Initiative at Chatham House, told MEE, referring to the president of Syria.
The anecdote about Iraq’s frozen oil funds underscores why Zaidi’s trip is so important to Baghdad.
'No camouflage'
The US withdrew all of its troops from Iraq’s federal territory at the beginning of this year, with just an estimated 2,000 remaining in the semiautonomous Kurdistan region. But more than 20 years after the US invasion, Washington still holds massive leverage over Baghdad through its control of Iraqi oil income.
Iraqi militia member marks their separation from the Sadrist movement and their integration into the Iraqi security forces, on 4 June 2026 (Ahmad al-Rubaye/AFP)
The Trump administration froze shipments of Iraq’s money in April, ostensibly over attacks on American facilities inside the country and its neighbours. But the US was also lobbying hard, both publicly and privately, to ensure that a candidate it preferred was selected as Iraq’s next prime minister.
At the beginning of the year, Trump tweeted that he opposed the nomination of Nouri al-Maliki, a two-time premier who is close to Iran and oversaw the formation of Shia militias to combat the Islamic State militant group a decade ago.
“Zaidi enjoys obvious support in Washington,” Abbas Kadhim, director of the Iraq programme at the Arab Gulf States Institute, told MEE.
“His nomination was unprecedented in US-Iraq relations. He was endorsed by the US before there was even a vote to confirm the cabinet. The US always tried to negotiate behind closed doors on the PM’s selection. This was the most overt a president has ever been. There was no camouflage,” he said.
'There are no indications that the hardline, Iran-aligned militias are willing to relinquish their heavy weapons'
- Harith Hasan, Doha Institute
Zaidi was a compromise candidate, diplomats and analysts say. His acceptability to Washington was smoothed over by Faiq Zaidan, the powerful head of Iraq’s judicial council.
Once close to Iran and a disciple of Qassem Soleimani, Iran’s Quds Force commander, he has shifted closer to the US orbit.
But Zaidi relied on support from the Co-ordination Framework, an alliance of Shia political parties that is dominated by groups close to Iran. It serves as an effective kingmaker in the country, where the PM position is unofficially reserved for a Shia, the presidency for a Kurd, and the speaker of parliament seat goes to a Sunni.
A wealthy businessman, Zaidi’s own bank, Al Janoob Islamic Bank, was sanctioned by the US in 2024 over its alleged ties to Iranian-backed militias.
Zaidi’s selection underscores the delicate dance Iraq’s elite must play between the US, which holds the purse strings over Baghdad and Iran, its neighbour that supports dozens of militias.
The mainly Shia Popular Mobilisation Forces (PMF) arose to combat the Islamic State group more than a decade ago. They have since entrenched themselves in the Iraqi system. While the US has financial leverage over Baghdad, the militias give Tehran its own influence.
'Iran-linked militias feel stronger'
Today, the PMF boasts more than 150,000 fighters. They maintain vast patronage networks and are partially incorporated into Iraq’s official state security apparatus, with the Iraqi government paying their salaries. They have been accused of kidnappings, assassinations and suppressing peaceful protests.
Successive US administrations have called on Iraq to disband the militias, but multiple Iraqi prime ministers have been wary of taking the PMF on because of their military heft and deep networks within the state. The Trump administration has pressed Zaidi’s government to curtail payments to the PMF.
'Iran has shown it supports its allies'
- Sarhang Hamasaeed, independent Iraqi analyst
Zaidi led a corruption crackdown last month that targeted Shia and Sunni political figures, including those close to his predecessor, Mohammed Shia Sudani.
Officials close to the PMF were included in the raids.
Zaidi took office and issued a deadline for the militias to surrender their weapons to the state and disband by 30 September. Some factions say they are willing to hand over their arms, but the most powerful, including Kataib Hezbollah, have refused.
“The US wants Iranian-linked armed groups reined in, and economic links to Iran reduced. It also wants attacks to stop against the US’s interests and partners, particularly the Gulf states,” Sarhang Hamasaeed, an independent Iraqi analyst, told MEE.
Unlike Lebanese Hezbollah and the Houthis in Yemen, Iraq’s Iran-linked militias largely sat out the war on Gaza that followed the Hamas-led 7 October 2023 attack on southern Israel.
A brief flare-up in fighting in late 2024 resulted in US air strikes. But after the US-Israeli attack on Iran in February, the militias threw themselves into the fight.
US forces in Iraqi Kurdistan came under repeated attack from some militias. But the more intense fire was directed at Gulf states, including Saudi Arabia and Kuwait, Arab Gulf and US officials told MEE.
Baghdad’s ties to Kuwait and the UAE have been severely strained because it failed to prevent the attacks, analysts say.
Experts say that Zaidi’s plan to disarm the militias has only become harder as a result of the war.
“It is difficult to take the September 30 deadline very seriously at this stage. There are no indications that the hardline, Iran-aligned militias, such as Kataib Hezbollah and Harakat al-Nujaba, are willing to relinquish their heavy weapons, nor is there any sign that Tehran is prepared to accept such a move,” Harith Hasan, an Iraq expert at the Doha Institute, told MEE.
“So far, the measures taken have been largely cosmetic and implemented by groups that have not been deeply involved in attacks,” he added.
Iraq in crossfire
Despite ferocious US and Israeli strikes, Iran is widely seen in the region as having emerged emboldened from the war on the Islamic Republic. Iran is working to assert its control of the Strait of Hormuz. It also rallied to the defence of Hezbollah in Lebanon, refusing to sign a US ceasefire extension until Israel agreed to halt its attacks on its ally.
“The armed groups [in Iraq] came out in a more direct way in solidarity with Iran during the war. That makes Baghdad’s ability to manoeuvre harder,” Hamasaeed said. “These groups now feel stronger. They have fought directly with Iran, and Iran has shown it supports its allies,” he added.
“The Islamic Revolutionary Guard Corps is doubling down on the militias. So they are getting significant support and direction from the IRGC. The Iranians aren’t going to stand down,” Mansour, at Chatham House, said.
Experts say that Zaidi hopes that his focus on business deals will soothe the Trump administration. Iraq is in desperate straits.
The country depends on oil revenue for 90 percent of its government budget. Despite some militias' closeness to Iran, Iraqi oil shipments have enjoyed no special treatment in the Strait of Hormuz, where Iran has resumed firing on vessels, experts say. Iraq is also dependent on the Strait of Hormuz for critical imports.
“Unlike after 7 October [2023], when Iraq managed to insulate itself. This war has put Iraq in the crossfire,” Kadhim said.
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