Steven Sahiounie of MideastDiscourse interviewed Iraqi journalist and political commentator Ali Al-Habib for his analysis on the key issues facing Iraq today.
#1. Steven Sahiounie (SS): What are the implications of Iraq shutting down oil production at the West Qurna-2 field due to a pipeline leak, and how might this affect the country’s oil output and economy?
Ali Al-Habib (AAH): This reveals a scene of grave weakness threatening the very pillars of the Iraqi state. A catastrophic leak in an export pipeline has led to the shutdown of production at the West Qurna-2 oil field, depriving Iraqis of 480,000 barrels of black gold per day—representing a devastating blow to 10% of Iraq’s national production, which exceeds 4 million barrels daily, in a country that relies on oil revenues for more than 90% of its livelihood and survival.
This incident is not merely a passing technical failure, but a loud alarm exposing the fragility of a dilapidated infrastructure vulnerable to collapse at any moment, especially in the volatile province of Basra, plagued by endless political and security conflicts. This situation threatens the loss of millions of dollars daily and places a sword over the neck of the financial and service sectors, particularly the salary file, which depends directly on oil revenues.
Amid this chaos, serious questions arise regarding the Russian company Lukoil, which is under severe U.S. sanctions, raising deep suspicions about whether this leak was a coincidence or a deliberate conspiracy aimed at reshaping control over the company. There are loud calls for U.S. companies such as ExxonMobil to seize the Russian stake, strengthening Washington’s grip on Iraq’s energy sector and pushing Russian companies out of Iraqi oil investments, within a regional balance that threatens to ignite new fires in the Middle East amid the global struggle over energy. The Iraqi government must undertake radical reforms to maintain and protect infrastructure to prevent the recurrence of such incidents, so as not to violate Iraq’s commitments to OPEC+ or expose the country to international criticism or open the door to aggressive external interventions.
#2. SS: How is Iraq’s political landscape evolving regarding the selection of a new prime minister, and what role is the Coordination Framework playing in the latest meetings?
AAH: The Iraqi political scene continues to evolve at a rapid pace following the results of the 2025 parliamentary elections, which produced the Reconstruction and Development Alliance, led by outgoing Prime Minister Mohammed Shia’ al-Sudani, as the biggest winner. This outcome strengthens his position in the race for a second term as prime minister in the next government in 2026. However, this development comes amid deep and deeply rooted disagreements within the Shiite Coordination Framework, which is considered the largest parliamentary bloc under constitutional procedures.
The Coordination Framework plays a pivotal role in determining electoral and national outcomes through the formation of leadership committees tasked with discussing candidates and developing a unified vision for governing the state. This process focuses on criteria announced by the Framework, emphasizing professionalism and national character, and also includes conditions such as refraining from engaging in political activity, participating in upcoming elections, or establishing new political parties—reflecting an attempt to ensure government stability away from personal rivalries.
Recent meetings of the Coordination Framework have witnessed intense competition and significant conflict between two main contenders: al-Sudani, who insists on a second term backed by his electoral achievements, and Nouri al-Maliki, who remains a formidable figure preserving his political influence despite being outside formal office. This rivalry has deepened internal divisions within the Framework, which has yet to settle on a single candidate, despite statements by some members of the State of Law Coalition (a party alliance led by al-Maliki) suggesting that they are close to deciding on the next prime ministerial figure.
These internal dynamics are further complicated by increasing U.S. pressure on Baghdad to strike a balance between domestic and external considerations, particularly regarding the disarmament of armed factions and distancing Iraq from the Iranian axis. This pressure disrupts negotiations and opens the door to the possibility of new names emerging as compromise candidates to resolve this file—candidates that al-Maliki may seek to impose on the Coordination Framework.
This conflict threatens to delay the formation of the government until the summer of 2026 if disagreements persist. It also coincides with repeated warnings by the President of the Supreme Judicial Council against exceeding constitutional deadlines for assuming the positions of President of the Republic, Prime Minister, and Speaker of Parliament, so as to avoid plunging the political situation into a constitutional vacuum.
The first session of parliament, following the Federal Supreme Court’s ratification of the election results, is scheduled for December 29, 2025, as determined by the current President of the Republic in an official letter addressed to the political blocs that won seats in the elections. At the same time, the role of Sunni and Kurdish forces comes into focus, as they too have been delayed in resolving the issue of their nominees in line with Iraqi political customs. These customs stipulate that the presidency goes to Kurdish forces, the speakership of parliament to Sunni forces, and the prime ministership to Shiite forces.
There had been a vision to resolve these files collectively and place them in a single package, but it now appears that such an approach has become out of reach for the three presidencies. This could further complicate the overall political landscape and open the door to greater regional and international intervention, especially in light of the Iraqi public’s desire for economic and security reforms commensurate with current challenges. It places the Coordination Framework before a real test of its ability to preserve its unity as a dominant Shiite bloc amid internal pressures from new electoral alliances and external pressures from Washington, which seeks to reorder the balance of power in Baghdad.
#3. SS: What security measures has the Iraqi government implemented in response to regional tensions and recent external military actions, and how might this affect stability within Iraq?
AAH: By late 2025, the Iraqi government is dealing with escalating regional tensions through a series of defensive and cooperative security measures. It has focused on strengthening air defenses to counter repeated drone attacks on energy sites in the Kurdistan Region, such as thwarting attempted incursions in November 2025 using advanced radar and joint interception technology with the Peshmerga forces. This prevented significant damage to fields such as Khor Mor, which suffered two drone attacks in December, reflecting a rapid response to potential threats from Iranian-backed militias or other actors amid Israeli-Iranian tensions.
At the same time, the government conducted intensive investigations into airspace violations, such as those in June 2025, when missile and drone strikes caused damage to Kirkuk International Airport and energy facilities, with findings indicating that some attacks originated from within Iraqi territory. This prompted enhanced counterterrorism operations against ISIS, which carried out 21 attacks between April and October 2025. Additionally, Baghdad established joint security coordination centers with Turkey to address its military operations against the PKK in northern Iraq. Iraq allowed land access for Turkish forces and closed PKK-linked offices in 2024, while the group announced its withdrawal from key border areas in November 2025 as a step toward peace. These measures fall under a strategic framework agreement signed in April 2024, encompassing 26 security and economic memoranda of understanding.
These actions coincide with the end of the UN Assistance Mission for Iraq on December 31, 2025, with responsibilities transferred to a UN team and Iraqi authorities. While intended to strengthen national sovereignty, these measures could negatively affect internal stability if they trigger sectarian or regional tensions—especially in Kurdistan, where drone attacks have caused widespread power outages and delays in energy projects, exacerbating economic pressures in a country already burdened by disputes over oil revenue distribution. Cooperation with Turkey may reduce border threats and open opportunities for projects such as the Development Road linking the Port of al-Faw to Turkey, but it raises concerns over sovereignty violations and increased Turkish influence in the north. This could ignite internal conflicts between the Kurds and the central government or among Iran-aligned factions that view such cooperation as a threat to their interests, particularly amid U.S. pressure to curb Tehran’s influence in forming the new government after the November 2025 elections. Thus, these measures may deliver temporary stability if they succeed in limiting external attacks, but they risk deepening internal fractures if not managed with political caution that respects regional and sectarian balances.
#4. SS: In what ways are Iraq’s reconstruction and investment efforts expanding, including new projects approved by the government to boost housing, energy, and industry?
AAH: In 2025, Iraq is attempting to rise from its ashes through reconstruction efforts that appear ambitious on paper but, in reality, are mired in corruption and poor governance. This signals a looming financial crisis that could strike the country in the coming months and set it back decades. The government boasts of grand plans: a new national housing policy pledging to build 60 residential cities, six of which have already begun; the French GGIP project worth $27 billion for solar energy and gas; 158 new industrial licenses; and the Development Road project, which has reached 87% completion in some sections. All promise thousands of jobs and economic transformation away from oil dependence.
Yes, there are small, painful successes: thousands of housing units built in Bismayah and some liberated areas, a small solar power station launched in Karbala, and the operation of a few new factories. But these modest achievements are drowning in a sea of severe delays and daily failure. The bitter reality is that most of these projects are progressing at a snail’s pace, with delays stretching into years, costs rising by 20% or more due to inflation and dubious deals, and financing reliant on foreign investments that are retreating out of fear of instability.
Associated gas flaring still consumes 40% of production, electricity outages continue to torment citizens, and the promised new cities are turning into ghostly shells of unfinished concrete, while entrenched corruption devours billions of dollars through fictitious contracts, secret commissions, and tailor-made tenders for the powerful. With a potential decline in oil prices and delays in forming a new government, a devastating financial crisis looms: budget deficits, delayed salary payments, declining basic services, and a collapse of trust in the state’s ability to deliver on its promises. These small successes we celebrate today are nothing more than a fragile façade concealing catastrophic stagnation and corruption gnawing at the backbone of the economy, threatening to drag Iraq back into poverty and blind dependence on oil unless corruption is decisively uprooted and reforms accelerated before it Is too late.
#5. SS: How might potential U.S. sanctions on Iran-linked groups operating in Iraq influence political and economic relations, both domestically and with international partners?
AAH: Potential U.S. sanctions reveal mounting pressure on Iran-linked groups operating in Iraq, such as Kataib Hezbollah and Harakat al-Nujaba. These sanctions target financial institutions, banks, and individuals suspected of money laundering and smuggling Iranian oil, aiming to undermine Iran’s funding networks and compel Baghdad to curtail Tehran’s influence within state institutions. This comes especially after the reversal of the designation of Hezbollah and the Houthis as terrorist organizations, which Prime Minister Mohammed Shia’ al-Sudani described as an administrative error—reflecting internal political tensions that deepen divisions within the Shiite Coordination Framework during the formation of a new government following the November 2025 elections.
U.S. pressure is pushing some factions to retreat from hardline positions on weapons and to raise the idea of confining arms to the state as a way to avoid international isolation. The U.S. Special Envoy for Iraq, Mark Savaya, stressed that disarmament statements must be backed by comprehensive, irreversible practical steps to reintegrate militia members into civilian life in accordance with the constitution, which restricts arms possession to official institutions. This could lead to splits within armed factions between hardliners who see this as a concession of sovereignty and others seeking compromise to preserve internal stability.
Economically, sanctions affect the value of the iraqi dinar against the U.S. dollar and exacerbate liquidity shortages beyond their current levels, delaying approval of the 2026 budget and increasing financial pressures in a country dependent on oil revenues. There are also risks of freezing U.S. security assistance linked to the U.S. National Defense Authorization Act, which conditions aid on reducing militia activity outside government control. This complicates internal relations between the central government and armed factions, some of which are integrated into security institutions, while opening the door to greater regional interventions—by Iran to support its allies or by Turkey to reinforce counterbalances to Tehran.
Internationally, these sanctions strengthen U.S. efforts to reshape power balances in the Middle East in confrontation with Iranian influence. They could improve Iraq’s relations with Washington if partial disarmament is successfully implemented, but they also risk escalating tensions with Tehran, which may respond by increasing support for militias or obstructing joint economic projects such as gas and electricity. This threatens regional stability and turns Iraq into a geopolitical battleground, especially amid U.S. calls for a binding national framework prohibiting armed formations outside the state to avoid collapse into chaos and international isolation. Consequently, these sanctions may serve as a catalyst for internal reforms leading to a gradual retreat from autonomous power in favor of state sovereignty, but they also carry the risk of deepening sectarian fractures if not carefully managed.
Steven Sahiounie is a two-time award-winning journalist.