Baghdad doesn’t control much of its own territory.
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As U.S. and Israeli airstrikes and Iranian retaliation plunge much of the Persian Gulf, Iran, and Israel into turmoil with no clear end, Iraq has largely been an afterthought for Western pundits and policymakers. Iranian missiles and Israeli jets have crossed its airspace while its political leaders and Iran-aligned militias have largely stayed silent. Iraq’s ability to remain on the sidelines began to visibly change when a drone struck the Baghdad Diplomatic Support Center, a logistical hub for U.S. diplomats near Baghdad International Airport, and there was an attack on the U.S. Embassy itself. It surged back into the headlines after American journalist Shelly Kittleson was kidnapped off the street last week in broad daylight in Baghdad following an unsuccessful car chase.
Iraq is already feeling the war’s spillover. The conflict is affecting the country in several overlapping ways, turning Iraqi territory into a potential secondary battlefield, intensifying pressure from Iran-backed militias, exposing Baghdad’s weak sovereignty, disrupting aviation and energy flows, and sharpening Iraq’s own political contradictions.
As U.S. and Israeli airstrikes and Iranian retaliation plunge much of the Persian Gulf, Iran, and Israel into turmoil with no clear end, Iraq has largely been an afterthought for Western pundits and policymakers. Iranian missiles and Israeli jets have crossed its airspace while its political leaders and Iran-aligned militias have largely stayed silent. Iraq’s ability to remain on the sidelines began to visibly change when a drone struck the Baghdad Diplomatic Support Center, a logistical hub for U.S. diplomats near Baghdad International Airport, and there was an attack on the U.S. Embassy itself. It surged back into the headlines after American journalist Shelly Kittleson was kidnapped off the street last week in broad daylight in Baghdad following an unsuccessful car chase.
Iraq is already feeling the war’s spillover. The conflict is affecting the country in several overlapping ways, turning Iraqi territory into a potential secondary battlefield, intensifying pressure from Iran-backed militias, exposing Baghdad’s weak sovereignty, disrupting aviation and energy flows, and sharpening Iraq’s own political contradictions.
Iraq is being pulled into the war militarily even though its government says it is not a party to the conflict. Baghdad has publicly stressed that Iraqi territory should not be used to harm neighboring states, but in practice, Iraqi soil contains U.S. facilities, diplomatic compounds, militia infrastructure, and transit corridors that make neutrality very hard to enforce. Recent attacks on major U.S. diplomatic facilities in Iraq show that the country is already functioning as an arena for retaliation, signaling, and proxy pressure.
For the past two decades, Iraqi leaders have walked a careful tightrope between Washington and Tehran. The United States is Iraq’s formal financial patron and a gatekeeper to the global financial system. Iran is the powerful neighbor next door, with deep political, religious, and cultural ties inside Iraq and its own gray financial patronage network. Subnational actors have leaned one way or the other. Kurdish parties such as the Kurdistan Democratic Party have traditionally been closer to Washington, while other factions maintain stronger ties with Tehran.
Yet mainstream Shiite politicians, even those with close links to Iran, have had little choice but to balance between the two. Washington has historically stopped short of forcing Baghdad to choose, recognizing that doing so would pose an impossible dilemma. The second Trump administration’s war with Iran threatens to change that.
The war is also testing Iraq’s numerous Iran-backed armed groups, such as Kata’ib Hezbollah and Harakat Hezbollah al-Nujaba. Remarkably, many proxies have not fully mobilized on Iran’s behalf. Several groups have launched a relatively small number of attacks and appear divided over how far to go. Some are likely deterred by Israeli and U.S. surveillance and strike capabilities; others are increasingly invested in Iraqi political influence, patronage, and business networks, which a wider war could jeopardize. These militias are calibrating rather than abstaining. Even limited drone or rocket attacks can trigger counterstrikes, kill commanders, and drag Iraq deeper into a war it says it does not want.
The role of the militias underscores Iraq’s sovereignty problem. Iraq’s central dilemma is that the state does not fully control the armed actors operating on its territory, yet it bears the consequences when those actors fire on U.S. or allied targets. That problem predates the current war, but the war makes it much more acute. Baghdad is trapped: The continued U.S. presence fuels militia justification for retaining arms, but militia autonomy invites U.S. retaliation and weakens the state.
Iraq is also being hit economically and logistically. The war disrupted regional commercial airspace almost immediately. Airline suspensions and rerouting matter for Iraq not only because of passenger disruption but because they isolate a country that already depends heavily on fragile transport and insurance networks. The closure or avoidance of Iraqi airspace sends a broader message to investors and businesses, namely that Iraq is once again a war-risk environment. This will also affect prospects for bigger projects like the Development Road.
Energy is a double-edged issue for Iraq. In the short run, higher oil prices can boost Iraqi state revenues because Iraq is a major oil exporter. But the same regional war is also disrupting refining, transport, and energy infrastructure across the Gulf. Iraq can benefit from price spikes on paper while still suffering from bottlenecks, higher insurance costs, market volatility, and general regional economic stress.
Iraqi Kurdistan is under particular pressure. Threats against hotels and sites frequented by foreigners in the Kurdistan Region show that the north is not insulated. Kurdistan has long been the relatively safer, more internationally connected part of Iraq. If militias begin using drones or intimidation there more regularly, the region’s economic model—foreign investment, expatriate presence, aviation links, and a perception of stability—comes under strain.
This is why attacks or threats in Erbil and the wider Kurdistan Region matter beyond the immediate security incident: They degrade one of the few Iraqi zones that still markets itself as predictable. Floated U.S. efforts to drag Iraqi Kurds directly into the conflict by using the Kurdistan Region as a staging base for operations within Iran pose serious risks.
Finally, the political effects may be the most lasting. The war puts Baghdad under simultaneous pressure from Washington, Tehran, the militias, and Iraqi public opinion. Despite the reduced U.S. footprint, the second Trump administration had already demanded that Baghdad disarm Iran-aligned militias or face severe economic consequences and potentially airstrikes. U.S. President Donald Trump also strongly opposed Nouri al-Maliki’s bid to return as prime minister, writing on Truth Social that the “last time Maliki was in power, the country descended into poverty and total chaos,” and threatening to end U.S. assistance if he were chosen. The pressure has helped prolong Iraq’s political crisis, with the country still without a formed government more than four months after elections.
If the government moves too close to the United States, it risks militia escalation and accusations of complicity in attacks on Iran. If it moves too close to Tehran or fails to curb militia attacks, it risks U.S. economic and political retaliation. The current Iran war will test whether the Iraqi state can act as a sovereign mediator, or whether it remains what critics have long said it is—a battleground where stronger outside forces and semi-autonomous armed actors set the real limits of policy. Iraq may not have chosen this war, but it is already paying for it.
This post is part of FP’s ongoing coverage. Read more here.
Steven Simon is a distinguished fellow and visiting professor at Dartmouth College and the author of Grand Delusion: The Rise and Fall of American Ambition in the Middle East. He spent 20 years in the U.S. government, holding senior positions in the State Department and at the National Security Council. X: @sns_1239
Adam Weinstein is deputy director of the Middle East Program at the Quincy Institute.
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