Iraq will probably keep its borders. The danger is unfolding inside them, where armed factions can challenge the government, foreign powers can punish the country from above, and millions of citizens still depend on an oil-funded state that cannot fully decide when Iraq goes to war.
By The Editorial Team of TLF
The last American troops were due to leave Iraq on Wednesday. Iran-backed factions celebrated. In the Kurdish region, the mood was colder. The departure closes the military mission that returned in 2014, when Islamic State fighters swept through Mosul and exposed just how quickly the Iraqi state could buckle.
This time, tanks are unlikely to race toward Baghdad. There may be no dramatic declaration from Erbil, no freshly drawn border across Nineveh, and no television map split into Kurdish, Sunni and Shia colors.
Iraq can still come apart quietly.
The country already contains several centers of force with different commanders, patrons and sources of money. Federal units answer to Baghdad. Peshmerga forces guard the Kurdish region, though party loyalties still divide them. Popular Mobilization Forces draw salaries and legal status from the state, while some of their strongest factions retain their own commanders, arsenals and ties to Tehran. Along stretches of the border, at checkpoints and inside parts of the economy, the badge on a uniform does not always tell you who gives the final order.
Why Iraq's Borders Still Hold
Predictions of Iraq's formal partition have circulated since the first years after the 2003 invasion. They returned during the sectarian bloodshed, during the Islamic State's rise and after the Kurdistan Region's independence referendum in 2017.
That referendum won an overwhelming "yes" vote. It also showed the limits of Kurdish power. Baghdad retook Kirkuk within weeks, stripping the regional government of disputed territory and a large share of the oil resources it hoped would support independence. Turkey and Iran squeezed from either side. Washington withheld the support Kurdish leaders had counted on.
The arithmetic remains harsh in 2026, even after years of negotiation between Erbil, Baghdad and Ankara. The Kurdistan Region is landlocked, its export routes depend on deals with neighbors, and salary payments have repeatedly become bargaining chips in disputes with Baghdad. Its two dominant parties, the KDP and PUK, maintain separate zones of influence. Efforts to unite their Peshmerga forces remain unfinished.
Sunni leaders have their own grievances, but the appetite for a separate Sunni state is thin after the devastation left by the Islamic State. Political influence, provincial budgets and access to Baghdad offer a clearer path to survival. Shia parties control the federal center and have little reason to surrender territory. Iran also gains from an Iraq that remains whole, open to trade and governed by partners who can translate armed influence into ministries, contracts and law.
Oil supplies the glue. According to the International Monetary Fund, petroleum income is expected to provide over 90 percent of government revenue through 2030. Every major bloc has learned to fight for a larger slice of Baghdad's budget. Walking away would mean abandoning the table.
A War Iraq Cannot Control
The sharper threat became visible this summer. Iran-aligned Iraqi militias were accused of launching attacks against American and Saudi targets. In July, US and Saudi aircraft struck militia sites inside Iraq. Baghdad condemned the violation of its territory, yet it could neither prevent the attacks launched from Iraqi soil nor stop the foreign retaliation that followed.
That is a sovereignty failure in plain sight.
The withdrawal on September 30 removes a grievance militia leaders have used for years to justify keeping their weapons. It also removes a restraint. Five Iran-aligned groups rejected a government deadline to disarm, dissolve or enter the regular security forces, according to Reuters reporting published this month. Their answer was blunt. With Iran at war against the United States, they claimed that surrendering their weapons was impossible.
Baghdad is trapped. A direct assault on powerful militias could split the security establishment and bring fighting into the capital. Leaving them untouched tells every Iraqi that the government cannot enforce its own deadline. Integration offers a third route, though years of experience show how easily a militia can acquire a state title and salary while preserving its private chain of command.
The struggle also runs through Shia politics. Clerical networks, militia chiefs, former prime ministers and state officials compete for the same ministries, contracts and armed loyalties. Their rivalries can turn violent. Any forecast that treats "the Shia majority" as one political actor misses the fracture running through the center of power.
Washington's Hand on the Cash Valve
America's strongest instrument may now sit outside Iraq. Revenue from Iraqi oil sales passes through an account at the Federal Reserve Bank of New York, a structure created after the 2003 invasion. The money belongs to Iraq, but Washington can tighten access to dollar shipments, banks and international payment channels.
It has already tested that pressure. Earlier this year, the United States halted a shipment of roughly $500 million in physical currency and suspended parts of its security cooperation after militia attacks. Some cash shipments resumed in July after Baghdad accepted tighter safeguards. Electronic transfers used for trade had continued. Washington stopped short of seizing Iraq's oil wealth, but its warning reached every exchange shop and government office.
A broader financial cutoff could hurt Baghdad faster than an armored offensive. The state supports several million employees and pensioners. Salaries and pensions are on course to consume 54 percent of public spending by 2030, the IMF says. The oil price needed to balance the budget had already climbed to about $84 a barrel in 2024.
There are buffers. Iraq held over $100 billion in foreign reserves at the end of 2024, and high wartime oil prices can refill the treasury. Then the Strait of Hormuz became a war zone. A country can have billions of barrels underground and still struggle to move them, collect payment and deliver cash to its citizens.
The Crisis Growing in the Rivers
War commands attention. Water may do greater damage over time.
The Tigris and Euphrates carry the decisions of Turkey, Iran and a changing climate into Iraqi farms, marshes and cities. Years of drought and upstream restrictions have emptied reservoirs, damaged crops and pushed rural families toward crowded urban districts. In Basra, bad water and failed electricity have already fed summer protests.
Heavy rain during the winter of 2025 and 2026 brought temporary relief. National storage recovered, according to a United Nations assessment, but the Euphrates still received inadequate flows from Turkey. Crop restrictions remain. The UN expects wheat output to fall between 30 and 50 percent, and 186,006 people remain displaced by climate pressures.
Those figures rarely produce the shock of an airstrike. They reach deeper into daily life. A failed harvest empties a village, raises food prices and sends another family toward a city where state employment is already the main ladder into the middle class. Anger over a dry tap can quickly become anger at the entire political order.
Islamic State Is Waiting for Empty Ground
Iraqi forces in 2026 bear little resemblance to the hollow divisions that fled Mosul in 2014. The Islamic State has been reduced to scattered cells. A return to the days when it governed major cities would require a much wider collapse of the army, police and political system.
The smaller danger is persistent and ugly. Gaps between federal forces and Peshmerga units around disputed territory give militants room to hide. The Hamrin Mountains, rural Diyala and the Syrian border remain difficult ground. Intelligence, surveillance and air support supplied by the departing coalition helped Iraqi units find small cells before they could rebuild.
ISIS can deepen the country's divisions without conquering Baghdad. A run of bombings, assassinations or attacks on isolated villages could revive sectarian fear and force local communities back toward armed protectors. In a state crowded with competing forces, that is enough.
The State Will Probably Survive
Formal partition remains a remote outcome during the next five years. It would take a collapse in Baghdad, a united Kurdish leadership and a foreign sponsor willing to protect a new state. None is present today.
Iraq also retains strengths that fatalistic accounts ignore. Its institutions have survived repeated elections, nationwide protest waves, sudden oil shocks and wars that destroyed much of the country's north. The armed forces can still fight. The treasury has reserves. Political elites know that open civil war could destroy the patronage system that keeps them rich and powerful.
Survival carries a low bar, though. An Iraqi government may keep paying salaries and holding elections while losing the authority to decide which armed groups operate, which neighbor crosses its territory and when a foreign aircraft attacks. The flag will still fly over every province. Real authority shifts at checkpoints, party offices, militia compounds and bank counters.
On September 30, the last American soldiers packed up after a mission that had stretched, with one long interruption, across more than two decades. Baghdad's own deadline had also arrived. By nightfall, no major Iran-aligned faction had announced that it would surrender its weapons.
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