Iraq
An enterprise-decision view of Iraq’s operational risk over the next 90 days. Scenario probabilities, sanctions exposure, chokepoints, and political outlook — for risk officers, supply chain teams, and analysts who need to act, not just read.
Iraq has already obtained a US sanctions waiver to resume Iranian flights and Foreign Minister Hussein is actively negotiating expanded relief. The convergence of Iraq's financial pressure, Iran's sanctions evasion strategy, and existing geopolitical leverage creates a 72% probability Iraq will systematically expand its role as a sanctions circumvention hub. Economic losses exceed $2B daily, providing strong domestic political incentive.
- Direct flights to Iran resume via Najaf Airport (40 daily flights approved)
- Iraqi Foreign Minister negotiating sanctions relief for Iranian aircraft services
- Iraq positioning itself as transit hub for Iran's sanctions-busting corridors
- Political backlash within Iraq over economic losses from flight cancellations
Houthi military sophistication and Iran-backed militia consolidation demonstrate credible strike capacity. Iraq's oil economy is acutely vulnerable-the nation has already lost $60B and relies on Hormuz transit. A 0.65 probability reflects sustained regional tension, recent Iranian military posturing, and demonstrated Houthi operational range.
- Houthi demonstrated capability striking Saudi airports 300+ miles away; 13 killed in October attack
- Iranian foreign minister signals maritime tensions resolvable in 7 days if conditions met
- Strait of Hormuz shipping costs elevated; Iraq already lost $60B to regional conflict
- Iran-backed militias consolidating strength post-9-month conflict
Iraq's weak institutional state and documented sectarian political dysfunction create environment for militia autonomy. Intelligence indicates factions are actively consolidating rather than disarming post-US transition. Economic pressure isolating militia funding may accelerate competition for state capture rather than cooperation.
- Atlantic Council reports Iran-backed militias will not disband post-US withdrawal
- Armed factions reorganizing to consolidate power independent of state authority
- Sectarian appointments (e.g., unqualified interior minister via family connections) undermining institutional capacity
- International sanctions isolating militia funding (Oct 18 reporting)
- Houthi/Iran regional momentum emboldening proxy expansion
Iraq's dinar devaluation has already triggered observable price spirals affecting vulnerable populations. IMF engagement introduces external conditionality that may conflict with domestic political priorities and PM Al-Zeidi's coalition management. 0.54 probability reflects real macroeconomic stress with uncertain policy correction pathway.
- 15% dinar devaluation triggered sharp food price increases across staples
- Fixed-wage workers and low-income families reducing consumption
- Iraq seeking IMF loan despite prior assurances contradicting devaluation rationale
- Economic experts criticizing policy credibility erosion
- Economist friction over macroeconomic management and IMF coordination
Iraq is demonstrating nascent diversification away from pure Iran-oil dependency via airspace liberalization, transit infrastructure, and Western energy deals. PM Zeidan's Saudi visit and French pipeline interest signal potential geopolitical rebalancing. However, 0.42 probability reflects fragility-this requires sustained security, currency stability, and institutional discipline Iraq has not yet demonstrated.
- 31% surge in airspace traffic after military zone removal
- TIR transit system operational; first Turkey-UAE shipment received
- France planning Iraqi oil/gas pipelines to Europe
- Turkish Foreign Minister bilateral engagement on trade expansion
- Iraq hosting 55-nation OIC ministerial forum, raising diplomatic profile
Prime Minister Ali Zeidi is attempting a delicate calibration between US security partnership and Iran-Iraq proximity, evidenced by his Saudi visit and simultaneous support for Iranian flights. However, documented appointment of unqualified officials via sectarian quotas indicates governance institutional weakness. Iran-backed militias are consolidating autonomy rather than accepting state integration, and international sanctions on militia funding may accelerate irregular finance and state capture. The PM's political coalition appears stable enough to govern near-term, but factional discipline is eroding and macro instability (currency, inflation) is creating social pressure that traditional sectarian power-sharing cannot easily absorb.
+Glossary & methodology
Operational risk here means the practical exposure that a business, government, or institution operating in or around Iraq would face. We model five dimensions (Political / Security / Economic / Regulatory / Operational) using a weighted blend of seven underlying pillars.
Scenarios are generated daily under ICD 203 analytic-tradecraft standards. Each scenario carries a calibrated probability, named indicators that would confirm or deny it, and impact across regulatory / kinetic / economic axes.
This page is the deeper-read companion to the Iraq country page for risk officers and operators. The country page covers daily news, judgments, and watchlist; this page covers 90-day strategic outlook.