With a sudden pre-election threat to quit Iraq, US further degrades bilateral relationship

A 27 September threat by US Secretary of State Mike Pompeo to shut the US Embassy in Baghdad and strike Iran-backed armed groups in Iraq will severely degrade the already fragile US-Iraq relationship.

• The threat reflects US frustration at a surge in attacks against US assets in Iraq since March, despite prior claims by US officials to have “restored deterrence” against Iran in Iraq.
• Pompeo’s move is a conscious display of the administration’s hardline approach to Tehran ahead of the US presidential election on 3 November.
• The threat itself will likely degrade the US-Iraq relationship beyond 3 November; should US President Trump lose, his administration would likely act aggressively in a bid to durably shape US policy in the region.
• Even if the US ultimately remains in Baghdad, its uneven and coercive stance to Iraq will impair opportunities for foreign investment, hamper Iraq’s attempts to pursue economic recovery, and leave the current Iraqi administration isolated and vulnerable to challenge internally.

Threat to leave

The 27 September threat built on a 20 September warning that Pompeo had issued to Iraqi President Barham Salih, which Salih then passed on to Iraqi political leaders and officials in the Popular Mobilisation Units (PMUs – federal forces that include some Iran-backed factions).

The threat came as a shock to Iraqi leaders. Almost all of Iraq’s political leaders – even those ideologically and operationally tied to Iran – rushed to condemn attacks on diplomatic facilities, fearing military escalation from the US that could follow a diplomatic withdrawal. 

Iraq politicians’ call for a cessation of attacks increased again after a 28 September resistance splinter group (RSGs – anti-US militias supported by Iran-backed PMUs) rocket attack impacted on a civilian home in the Radwaniyah district in Baghdad, killing five children and two women. By 29 September, all but the most hardline Iran-backed PMUs had spoken out against the rockets.

On 14 October Pompeo rowed back the threat by expressing approval for limited recent improvements made to security in the International Zone (IZ), which houses the US embassy, saying he was “happy that the Iraqis are doing more to provide increased security for our team on the ground.” 

However, the IZ security improvements are not the factor responsible for a lull in RSG attacks. Instead, attacks have largely halted because of a 10 October unilateral ceasefire made by Iran-backed armed groups in Iraq, on condition of an immediate US proposal for a quick and complete military exit. 

The ceasefire is unreliable and prone to reversal. And by making it, the PMUs and RSGS – which brand themselves the Iraqi Resistance – have overtly positioned themselves as the primary actor in the US/Baghdad/PMU conflict, and as a unified political and military actor operating a parallel foreign policy to that of the Iraqi government. Far from deterring these actors, Pompeo’s threat has encouraged them by putting a US diplomatic withdrawal squarely in play. Pompeo stopped short of withdrawing the threat to shut the embassy. As such, the US is likely to continue to condition its diplomatic presence and tentative support to the Iraqi government on the status of the threat to its embassy, a threat that remains elevated.

Pompeo’s threat marked a significant change from the US position when it hosted Kadhimi in Washington just a month ago. At the August meeting, Trump questioned whether the US was benefitting from the bilateral relationship, but US officials generally expressed approval for Kadhimi’s gradualist approach to dealing with Iran-backed armed groups by removing their streams of illicit revenue, conducting limited raids on PMU facilities supporting RSGs, and improving the discipline and capacity of Iraq’s conventional security forces.

US patience has now apparently expired. Although short-term electoral considerations play a part, the flip is a hallmark of the increasingly narrow, transactional and coercive stance to Iraq that the US has had since Trump took office.

Pompeo’s threat was likely timed as a show of strength for the US domestic audience ahead of US President Trump’s bid for re-election on 3 November. As such, it reflects short-term imperatives rather than a considered, strategic position, and is therefore prone to delay or being reversed after the election.

Fissures within the Trump administration appeared on 21 September, when a Wall Street Journal report, citing anonymous US officials, claimed that the immediate threat from Iran was actually subsiding in the run-up to the US election. Officials stated (accurately) that while the number of attacks had increased, the number of rockets deployed in each attack had decreased. 

The US administration’s determination to increase its demands of Kadhimi in the face of defence assessments signals that the Trump administration remains determined to pit itself against Iran within Iraq, regardless of the outcome of the 3 November election. Should Trump lose, his administration would likely escalate against Iran to spoil chances of rapprochement between Tehran and Washington for a future Biden administration. Security and political stability risks within Iraq will therefore come under short-run upward pressure, should Biden win.

Leery of triggering a violent blowback, Kadhimi is unlikely to rise to US demands for a decisive military confrontation to definitively remove the PMU/RSG threat to US assets. Several thousand KH and other PMU fighters remain inside the International Zone in Baghdad who would pose a direct threat to the government and to foreign diplomatic facilities if Kadhimi were to escalate the fight against them. 

Instead, Kadhimi will continue incremental and indirect approach to reducing the PMU/RSG threat. His actions have included the appointment of new leadership to security service securing the IZ, increased troop deployments there, and a slow-rolling indirect confrontation against Iran-backed PMUs led by investigations against their violent excesses and asserting state control over lucrative border crossings. 

Yet Kadhimi is facing an opponent willing and able to escalate. Pompeo’s initial threat forced PMUs and RSGs to recalibrate, but the degrading Iraq-US bilateral relationship remains an opportunity to secure a prized US withdrawal, even at significant cost. RSGs are supported by Kataib Hizbullah (KH), the most powerful Iran-backed PMU in Iraq. Via KH, these groups likely have access to heavier grade weapons than they are currently deploying, which, if used, would pose a much greater threat to US personnel in diplomatic facilities. 

The implications of a quick US diplomatic withdrawal for Iraqi security and political stability would be dire. Other embassies would reconsider their presence in Baghdad as they piggyback on the large US security presence in Baghdad’s International Zone. The loss of diplomatic support would force foreign companies and organisations in Iraq to reconsider their operations and investments.

The US embassy is also the central operational node for the US-led anti-Islamic State (IS) coalition: although some US assets can be redeployed to military bases in Erbil, the intelligence sharing and airstrike coordination critical to keeping a lid on the IS insurgency would likely be significantly curtailed.

Then there are secondary implications. The standing of the US within Iraq’s security services and political elites would be impaired by a sudden exit. Reduced US diplomatic engagement would greatly impede Iraq’s attempts within the next six months to obtain international debt financing and support from multilateral finance institutions that it needs to prevent an ongoing fiscal crisis from degenerating into financial collapse. A diplomatic withdrawal carries with it the threat of an end to the US government management and protection of Iraq’s oil export revenues via the Federal Reserve Bank of New York, a protection that Pompeo already threatened in January.

The US relationship with Iraq is no longer based on the assistance it can offer, but the threats arising from what it can take away. The US’s exit from Baghdad remains a low probability, high threat prospect. But by threatening to leave, Pompeo is renting an already frayed relationship to the point where broader disengagement in the next year may become inevitable.