With US troops departing, Iraq looks beyond balancing Washington and Tehran

What Happened

Iraqi Prime Minister Ali Falih Kadhim al-Zaidi is pursuing an institutional reform agenda aimed at strengthening state control, including a 30 September deadline for the disarmament of all militias and their reintegration into state apparatus. Simultaneously, the US-led Coalition is set to complete its withdrawal from Federal Iraq by 30 September, per Baghdad's efforts to redefine bilateral ties toward deeper economic cooperation—underscored by 48 agreements signed during al-Zaidi's Washington visit. The reforms, particularly banking sector changes, are described by Chatham House's Hayder al-Shakeri as unintentionally constraining channels of Iranian influence. Iraq also seeks to reduce reliance on Iranian gas imports, currently meeting around 40 percent of its electricity needs, through US-partnered gas-capture projects. The viability of these shifts is linked to a lasting end to the US-Iran conflict; a settlement under the June Memorandum of Understanding, which would lift sanctions on Iran, could ease militia disarmament and unlock broader economic ties.

Key Actors

Why It Matters

This moment could enable Iraq to transcend its perennial US-Iran balancing act, moving toward greater sovereignty and economic autonomy. The intersecting deadlines for US troop withdrawal and militia disarmament, coupled with banking and energy reforms, could reduce Iran's informal influence while binding Iraq closer to Western financial systems. A broader US-Iran settlement would further stabilize the security environment, potentially curbing militia attacks and unlocking large-scale trade and infrastructure projects that have been stalled by sanctions.

Watch For

Concrete steps toward militia disarmament and reintegration by the 30 September deadline; completion of US-led Coalition withdrawal from Federal Iraq; progress in US-Iran negotiations under the June MoU framework, including sanctions relief; and implementation of US-Iraqi energy agreements, particularly the associated gas-capture projects aimed at cutting Iranian gas imports.