Updated June 4, 2021
Iraq and U.S. Policy
Iraq Prepares for October 2021 Election associated with the protest movement may compete in the
as Security, Fiscal Challenges Persist
election, though some have called for an electoral boycott.
Iraq is preparing for a national election planned for October
Figure 1. Iraq
10, 2021, roughly six months earlier than required, but later
than originally proposed. Since ending the Islamic State (IS,
aka ISIS/ISIL) group’s control of territory in Iraq in 2017,
Iraqis have sought more accountable governance, improved
service delivery, and greater economic opportunity.
Security institutions have used force to contain and disperse
mass demonstrations, and a shadowy campaign of violence
by militia actors has sought to silence activists.
Prime Minister Mustafa al Kadhimi has led Iraq’s
government since May 2020, after months of political
deadlock following the protestor-demanded resignation in
late 2019 of his predecessor. Extensive negotiations leading
to Kadhimi’s nomination occurred during a period of
serious escalation in U.S.-Iran tensions that played out
through attacks in Iraq. Ongoing attacks by Iran-backed
groups targeting U.S. and Coalition forces—and their Iraqi
hosts—have tested Kadhimi’s tenure.
Continued dependence on oil revenues and expansive state
liabilities left Iraq vulnerable to financial collapse in 2020,
as the systemic effects of the Coronavirus Disease-2019

(COVID-19) pandemic exacerbated underlying economic
Sources: CRS, using ESRI and U.S. State Department data.
and fiscal challenges. Strains between the national
government and the federally recognized Kurdistan
Economic and Fiscal Dif iculties Mount
Regional Government (KRG) have not been resolved, and
During 2020, COVID-19 mitigation measures deepened an
remnants of the Islamic State group exploit resulting
economic contraction that had already begun in urban areas
weaknesses in Iraqi security arrangements.
paralyzed by protests in late 2019. In parallel, a precipitous
drop in global oil prices slashed state revenues through the
Protests subsided in early 2020 amid COVID-19 mitigation
middle of 2020, but price increases have since created some
measures, but again spread and intensified in May 2021,
fiscal breathing room. Iraq estimates that its gross domestic
with demonstrators insisting that the government identify
product declined 11% in 2020, and the budget deficit grew
and prosecute suspects in a series of assassinations and
to 20%. Iraq remains dependent on oil exports for more
kidnappings since 2020 of protest leaders, activists, and a
than 90% of its budget revenue, most of which pays salaries
prominent security researcher. These incidents have
and benefits to state employees and retirees. The
intensified public scrutiny of Prime Minister Al Kadhimi’s
International Monetary Fund has recommended “reversing
credibility and his government’s ability to act against armed
the unsustainable expansion of wage and pension bills,
groups operating outside state control.
reducing inefficient energy subsidies, and raising non-oil
New Election Law, Established Political Elites
revenues,” along with supporting vulnerable citizens with
In late 2019, Iraq’s parliament (Council of Representatives,
targeted cash transfers.
COR) adopted a new election law to replace the country’s
Iraqi leaders publicly describe the condition of state
list-based electoral system with an individual candidate-
finances as dire, but they have not changed patterns of state
and district-based system. In October 2020, the COR
spending fundamentally. After the COR declined to
finalized the law, creating 83 multi-seat electoral districts in
approve a 2020 budget, it granted the government approval
which candidates will compete as individuals rather than
to borrow to pay state salaries in November 2020. In
running as members of party lists across governorate
December 2020, the Central Bank of Iraq devalued the
(province)-wide districts. Some voting systems experts and
dinar by more than 20% relative to the U.S. dollar, allowing
observers of Iraqi politics warn that the electoral system
the government to more easily meet domestic payment
changes alone will not ensure more accountable leadership
commitments, but raising consumer fears of inflation. Since
or result in better governance. Established politicians have
2020, protests have followed some cabinet-approved public
organized into coalitions that largely mirror those that
spending cuts, and some politicians have derided austerity
competed in the 2018 national election. Individuals
measures in populist critiques of the government. The
COR-approved 2021 budget did not include some cabinet-
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Iraq and U.S. Policy
proposed spending reforms. The $89 billion budget foresees
Secretary-General (SRSG) Jeanine Hennis -Plasschaert
a $20 billion deficit based on an assumed oil price of $45
warned in May 2021 that “ambiguous wording opens the
per barrel (The June 3 OPEC Basket price was $69.89.)
door to divergent interpretations and mutual accusations of
non-compliance.” Human rights in the Kurdistan region
Islamic State Remnants and Militias Pose Threats
have come under additional scrutiny since the October 2020
Iraqi forces continue to combat remaining Islamic State
arrests and subsequent convictions and sentencing of
insurgents, who retain an ability to operate in rural areas
individuals who had reported on corruption and protests.
and particularly in under-secured, disputed territories
The U.S government has resumed paying stipends to
between the Kurdistan region of northern Iraq and areas to
peshmerga fighters associated with the KRG Ministry of
the south secured by national government forces. U.S.
Peshmerga Affairs Regional Guard Brigades .
military oversight reporting stated that in the first half of
Partnership with the United States
2021, the Islamic State maintained an insurgency in Iraq,
but “remained territorially defeated, controlled no major
On April 7, 2021, U.S. and Iraqi officials concluded the
third round of strategic dialogue between the two
population centers, and had limited finances at its disposal.”
governments, and “reaffirmed their strong bilateral
Tensions involving militia groups have remained high
relationship.” Started in 2020, the talks proceed with
following a series of attacks by Iran-backed groups in Iraq
reference to the bilateral 2008 Strategic Framework
during 2019, the January 2020 U.S. killing in Iraq of
Agreement, and address issues in areas such as security,
Iranian Islamic Revolutionary Guard Qods Force
economic development, energy, natural resources, human
Commander Qassem Soleimani and Iraqi Popular
rights, consular affairs, and cultural exchange. The Biden
Mobilization Forces (PMF) leader Abu Mahdi al Muhandis,
Administration renewed a sanctions waiver on specific Iraqi
and retaliatory Iranian attacks on Iraqi sites hosting U.S.
energy purchases from Iran in March 2021. U.S. officials
forces. In January 2020, the COR voted to direct then-
continue to advocate for Iraqi protestors’ rights to
acting Prime Minister Adel Abd Al Mahdi to remove
demonstrate and express themselves, while urging Iraqi
foreign forces from Iraq, but Prime Minister Al Kadhimi
leaders to investigate and prosecute related killings .
instead has reaffirmed Iraq’s invitation for U.S. and
Since March 2020, the U.S. Embassy in Baghdad has
Coalition forces to remain, subject to agreed terms . Rocket
operated under ordered departure rules because of “security
and improvised explosive device (IED) attacks against U.S.
conditions and restricted travel options as a result of the
and Iraqi facilities and convoys are ongoing, and reports
COVID-19 pandemic.” The U.S. Consulate in Erbil remains
suggest some attackers are now using explosive-laden
open; the State Department suspended operations at the
drones. U.S. military officials report that militia threats
U.S. Consulate in the southern city of Basrah in 2018.
have not disrupted counter-IS operations.
COVID-19 Surges, Vaccines Arrive
Iraqi and U.S. officials have endorsed continued security
cooperation, including a U.S. military presence. U.S. force
Iraq’s public and private health systems have significant
levels in Iraq declined from 5,200 in 2020 to 2,500 in
shortcomings and limited capacity. The World Bank
January 2021, based on U.S. assessments that Iraq’s
estimates that Iraq has 0.8 physicians and 1.3 hospital beds
security forces increasingly are capable of independent
per 1,000 people (below the global averages of 1.5 and 2.7,
operations again the remnants of the Islamic State group.
respectively). Data is incomplete, but reported COVID-19
Congress has authorized U.S. train and equip programs for
infections increased through August 2020 and then declined
Iraq through December 2021, including aid to KRG forces,
before resurging in 2021, with new case rates reaching a
and has appropriated defense funding for train and equip
peak of more than 8,500 daily in late April before declining
programs in Iraq through September 2022. Since 2014,
again. As of June 3, Iraq had recorded more than 1,200,000
Congress has allocated nearly $7 billion for train and equip
COVID-19 cases with more than 16,430 deaths. Iraq
programs for Iraqis. The Biden Administration’s FY2022
received some Sinopharm vaccine from China and is
defense appropriations request seeks $345 million for train
receiving shipments of other vaccines via the COVID-19
and equip efforts under Iraq-specific authorities, including
Vaccines Global Access Facility (COVAX) that should
$240 million for KRG peshmerga stipends.
allow for vaccination of 20% of its population in 2021.
The United States provides foreign aid in Iraq in support of
Views from the Kurdistan Region
de-mining programs, public sector financial management
Leaders of Iraq’s Kurdistan Regional Government (KRG)
reform, U.N.-coordinated stabilization, and other goals. The
seek to preserve the Kurdistan federal region’s rights under
U.S. government has obligated more than $405 million for
Iraq’s constitution and remain engaged with counterparts in
stabilization of liberated areas of Iraq since 2016, including
Baghdad to resolve differences over oil production, the
funds for religious and ethnic minority communities.
budget, disputed territories, and security. The two largest
Congress allocated $454.1 million for U.S. foreign aid
Kurdish parties, the Erbil-based Kurdistan Democratic
programs in Iraq in FY2021. The Biden Administration has
Party (KDP) and the Suleimaniyah-based Patriotic Union of
requested $448.5 million for FY2022. The United States is
Kurdistan (PUK), hold significant numbers of COR seats
the top humanitarian funding donor for Iraq and provided
and won the most seats in the KRG’s September 2018
more than $348 million in humanitarian aid for Iraq in
regional election. KDP leader Masrour Barzani serves as
FY2020 and FY2021, including more than $47 million for
KRG Prime Minister. His cousin Nechirvan Barzani is
COVID-19 programs. Nearly 1.2 million Iraqis remain
KRG President. The KRG’s internal fiscal situation has
internally displaced and many more are in need of aid.
been severely strained in recent years. In March 2021 KRG
and national government leaders reached a new budget
agreement, although U.N. Special Representative of the
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Iraq and U.S. Policy

IF10404
Christopher M. Blanchard, Specialist in Middle Eastern
Affairs


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