In his first term, Trump had plans to impose a financial blockade on Iraq. What might Baghdad face if the populist president rules for a second term? And what if Harris wins the US presidency? Will she maintain Biden's approach? About the next US president’s agenda for Iraq.

While hosting the Israeli Prime Minister, Benjamin Netanyahu, at his Mar-a-Lago resort in Florida on July 26, former US President Donald Trump warned of the possibility of a major war in the Middle East or even World War III if he lost the November election. He expressed concern about his country’s “incompetent” management. 

A day earlier, in a post on Truth Social, when commenting on a video in which Netanyahu discussed the Islamic Republic’s threats of assassination during his speech to Congress, Trump called on America to annihilate Iran if it assassinated him. The remarks came after intelligence revealed an Iranian plot to kill Trump, weeks before he was shot at a campaign rally in Pennsylvania on July 13, in retaliation for the killing of Qassem Soleimani. 

Overnight, Trump went from being a harbinger of war that would wipe out Iran to a harbinger of hope that would stabilize the Middle East and the world. The Republican presidential candidate as always is difficult to understand and predict. He faced a Democratic Party engulfed in chaos, until the current US President, Joe Biden, withdrew from the presidential race following demands from many party figures and donors who raised concerns about his faltering debate performance and scepticism about his mental abilities. Trump’s fortunes flourished further following the failed assassination attempt. Then Biden’s deputy, Kamala Harris, quickly replaced him as the Democratic Party’s presidential candidate. She shifted opinion polls, revived her party, and got donations flowing again. Democrats hoped to maintain the White House or achieve a majority in the House of Representatives and the Senate during the concurrent midterm elections. 

The days in the lead up to the November election promise still more surprises. However, the least likely possibility is that these elections will result in a third-party victory for anyone other than Harris or Trump. What are the scenarios and consequences of either of them winning for the Middle East in general and for Iraq in particular? 

Harris…four more years of Biden 

If Harris wins, we are likely to witness a repeat of Joe Biden’s approach. She is already part of the decision-making process in the current US administration. There might possibly be minor differences on the domestic front regarding identity politics because she is a black American and would be the first female president in US history. As for US foreign policy, because she is younger and more energetic than both Biden and Trump, she may bring new blood into US politics. She directly challenged Netanyahu by talking about the difficulty of overlooking the crimes committed in Gaza. This may mean an uncalculated risk. It would be difficult for an American presidential candidate to win the election if they have lost the Zionist lobby and relying on the support of other lobbies in order to achieve balance in US foreign policy is never enough. 

If Harris wins, Russia and China may become a bigger priority for the US. This is unless Israel is subjected to another violent shock, especially in the midst of escalating tensions between Iran and Israel. With a Harris victory, she will have more room to pressure Israel than Biden had in the last months of his term, largely due to the proximity of the elections and his apparent keenness to secure the support of the Zionist lobby to win a second term. This pressure disappeared after his withdrawal from the presidential race. However, this position might affect the chances of the alternative Democratic candidate. In general, no major change is expected with present economic sanctions on Iran, despite the existence of some financial easing for Iran in recent years. Returning to the negotiating table, even if in secret, could also be a possibility, with the aim of reaching an agreement with Iran. The arrival of a woman to the Oval Office may affect the efforts of Shia parties to impose laws that may harm the rights of Iraqi women, especially with the escalation of efforts to amend the Personal Status Law of 1959. 

This is because what Biden did, he did with his team, in which Harris was a key player. Because Harris is expected to be an extension of Biden’s policies, we will summarise the most prominent actions the current Democratic president has taken towards Iraq and the region, in the context of speculating about what Trump might do around the same issues. 

Trump and the Middle East: Israeli Honey and Iranian Onions 

While Trump’s decisions are difficult to predict, his first term could shed light on his mindset as an isolationist and a reckless businessman. In 2018, Trump declared that America was being cheated and had “spent $7 trillion in the Middle East” without receiving anything in return. This declaration accompanied him announcing his desire to control Iraqi oil. 

By that point, Trump had inherited a Middle East engulfed in wars in Syria, Iraq, and Yemen from his predecessor, Democratic President Barak Obama. He also inherited Obama’s signing of the Iran nuclear deal and the lifting of many sanctions on Iran. Trump had succeeded in curbing Islamic State (IS) with minimal American intervention by early 2018. Just a week after the US-backed Syrian Democratic Forces launched an offensive to defeat IS in its last stronghold in Syria, Trump withdrew from the nuclear deal with Iran on May 1, 2018, and imposed comprehensive “maximum pressure” sanctions on the Iranian regime. Iran then became more aggressive through its armed proxies in Iraq and Syria. Trump ordered the assassination of General Qassem Soleimani, the commander of the Revolutionary Guards’ Quds Force, and seen as the godfather to many Iranian armed factions in the region. 

Despite its focus on an “America First” vision, Trump’s 2025 plan is a massive 920-page policy paper with proposals that reflect those from his first term in office. The plan devotes more than 200 pages to confronting China’s threats to US national security, as well as what are perceived to be more real threats from Russia, Iran, North Korea, and transnational terrorism. 

The 2025 project classifies Iran as a country that poses a dual threat to the stability of the Middle East through its armed proxies in the region and the expansion of its nuclear program. To counter this, the project proposes issuing an Arab-Israeli understanding with the full support of the American military-industrial complex, along with imposing sanctions to contain the Iranian nuclear program. It does not rule out a final blow to the Iranian nuclear program or the elimination of Iran’s armed proxies. What further complicates the scene is Iran’s transformation into a junior partner for both Russia and China, acting as a reliable source of military ammunition and arsenal logistics, in addition to being a strategic supplier of oil for China. In 2019, Trump warned, in an interview with NBC’s Meet the Press, that Iran would face “annihilation like it has never seen before” if it obtained nuclear weapons. 

In his previous term, Trump’s approach to the Middle East was characterised by strong support for Israel. At the same time, Iran’s allies welcomed his victory as means of ending support for the opposition in Syria plus for his demand for money from Saudi Arabia and the Gulf states in exchange for protection. He ultimately strengthened relations with Saudi Arabia. 

Trump also sought to broker a regional peace deal and focused on defeating Islamist terrorist groups such as ISIS. Trump oversaw the Abraham Accords, bilateral agreements on Arab-Israeli normalisation. In January 2020, he released a Middle East peace plan that would have given Israel sovereignty over much of the occupied Palestinian territories. 

Trump also focused on isolating Iran, which he described as the “leading state sponsor of terrorism,” by withdrawing from the nuclear deal and reimposing sweeping economic sanctions. In his final act in office, he designated Yemen’s Iran-backed Houthi movement as a foreign terrorist organisation. Biden removed that designation and then reimposed it in 2024 after the Houthis attacked commercial ships in the Red Sea in response to the war between Israel and Hamas. 

Overall, Trump and Republicans are outperforming the Democrats in projecting unity and pushing an agenda of energy independence, tax cuts, an “America First” policy that promises to end all wars, and an all-out war on immigration. 

Trump’s Impact on Iraq 

If Trump wins a second term, it is expected to have implications on several issues in Iraq, including: 

1. The future of the US military presence: 

On July 23, four Iraqi sources spoke about Iraq’s desire for the US-led military coalition to begin withdrawing in September, with some advisors potentially remaining, and officially ending the coalition’s work by September 2025. The matter is still under discussion with officials in Washington DC at a security summit without any formal agreement or timetable for deciding on the matter. 

However, US State Department spokesman, Matthew Miller, said that the two sides met to determine how the US-led coalition’s mission will transition based on the threat posed by IS. Amid talk of its possible resurgence, the US military said that the jihadist group is still carrying out attacks in Iraq and Syria and is on track to double the number of attacks that were carried out in Syria in 2023. This is in addition to their carrying out attacks in Iran and Russia in recent months, as well as an attack in Oman for the first time. 

This coincides with quarterly reports by the US Department of Defense’s lead inspector general about gaps in the capability of the Iraqi security forces, the Iraqi Counter-Terrorism Service, and the Peshmerga to effectively combat ISIS without coalition support. In addition, there are concerns that Iran-affiliated factions, including the Popular Mobilisation Forces, could exploit these gaps, giving Tehran more influence in the region. 

The United States currently has about 2,500 troops in Iraq and is the head of a coalition of more than 80 member countries which was formed in 2014 to repel the Islamic State group. The troops are based at three main bases in Baghdad, Anbar and the Kurdistan Region. 

Some see the withdrawal question as highly politicised, with Iraqi political factions allied to Iran seeking to show they are expelling the country’s former occupiers once again. US officials want to avoid giving Iran and its allies a win. 

The deal to scale back the coalition could mean political gain for Prime Minister Mohammed Shia Al-Sudani, who has been under pressure from pro-Iran factions to expel U.S. forces but has sought to do so in a way that balances Iraq’s delicate position as a dual ally of both Washington and Tehran. 

Trump is unlikely to deviate from the current Pentagon view on the importance of the US military presence in Iraq. He had already threatened Iraq with severe sanctions after the Iraqi parliament voted to withdraw US forces following the assassination of Soleimani in 2020. A potential large-scale military escalation in the country could push the US toward other options, for example moving its forces to the Kurdistan Region where the US is still welcome. Freed from the concern of protecting its forces, Washington would have more room to engage Iraq on its relationship with Iran and halt sanctions in the country. 

As a US isolationist trend grows, some experts fear that, after the end of Operation Inherent Resolve against IS, the United States has no clear contingency plans for the region. The operation includes support for IraqiIraqi Kurdish forces in Syria – for example providing engineering, aviation, and logistics support – but the tense relationship between the Kurdistan Regional Government (KRG) and the Syrian Democratic Forces complicates any potential cooperation. 

Following Trump’s 2019 decision to withdraw troops from northern Syria, fears of a similar withdrawal in Iraq remain. This is despite criticism of the Biden administration’s withdrawal from Afghanistan in 2021. 

It should be noted that the United States may be forced to rapidly withdraw or reduce its forces in Iraq due to the escalation of attacks by pro-Iranian armed factions. Between October 2023 and February 2024, these armed factions targeted US and coalition forces in Iraq and Syria on nearly 200 occasions. A reduction in the number of forces could also be triggered if regional pressures increase, such as an escalation of the conflict between Israel and Iran. For the same reason, Trump may choose to maintain and enhance the presence of these forces. Israel is the one exception to his isolationist foreign policy. It is likely that Trump will not hesitate to use significant force on this occassion. 

2. Balance of Power in Iraq: 

Under Biden, Sunni Arabs and Kurds felt an imbalance in favour of Shia forces, which led to increased centralisation and a decline in the influence of the Kurdistan Region in favour of Baghdad. The Biden administration tried to address the situation by securing the salaries of Kurdish employees.However, the most prominent position for Sunnis, the Speaker of the House of Representatives, has been vacant for months. 

If Trump wins and his administration pursues an isolationist policy, Washington may resort back to the Strategic Framework Agreement (SFA) with Iraq. In this agreement, Washington will commit to protecting Iraqi democratic institutions and minorities. In the event of a deterioration in relations, Washington may consider measures such as doubling control over the Ain al-Assad base in Anbar or supporting the establishment of a Sunni region in Anbar under American protection. This would enhance Sunni influence but could also lead to an escalation of internal tensions and complicate the overall situation in Iraq. 

3. Iraq’s Regional Relations: 

Under Biden, Iraq’s foreign relations have come more in line with Iran, which has affected Gulf and Arab policies. This has pushed many countries to reposition themselves defensively and consider relations with Iraq as part of the requirements for dealing with Tehran’s regional strategy. The Biden administration allowed Baghdad to build broader relations with China in the oil sector and trade exchange, as well as supporting cooperation with Turkey in the Development Road project with its various geopolitical and economic dimensions. 

If Trump wins a second term, he is expected to redress regional balances by strengthening Arab-Iraqi relations, which could increase pressure on Iran. Iran may seek to strengthen its position by negotiating with Trump and making concessions in the Iraqi government and armed groups, giving Baghdad more independence in shaping its foreign relations, especially with Arab and Gulf states. 

4. Attitude toward armed factions: 

Trump is likely to adopt a “deal-based” approach to foreign relations, including with Iran and its armed factionsin Iraq. Although he may not stop the ongoing talks with Baghdad on the status of forces and the future of the international coalition, an escalatory approach by his administration with the armed factions inside Iraq remains a possibility. This is particularly true given the involvement of some of these armed factions – and factions close to Iran – in the escalating conflict between rael and given the possibility of its expansion. This path may change the rules and balances within the Shia forces closest to Iran in favour of the more extremist armed factions such as Kataib Hezbollah, Harakat al-Nujaba, and Kataib Sayyid al-Shuhada and at the expense of other armed factions which are aligned to the ruling Coordination Framework, an umbrella bloc of Iraqi Shiite parties.  

There are concerns that a lack of cooperation between the US and Baghdad on the intelligence and operational levels will contribute to the resurgence of IS in areas where it still maintains sleeper cells. In addition, the withdrawal of US forces to the Kurdistan Region may encourage Erbil to reclaim the influence and independence which it had recently lost to Baghdad. 

5. Economic sanctions on Iraqi banks: 

Because of its dual alliance with Iran and the United States, and its possession of currency reserves exceeding $100 billion in the United States, Iraq relies heavily on Washington’s goodwill to ensure access to oil revenues and financing. The US uses this money to pressure Iraq, accusing Iraqi banks of smuggling dollars to Iran to bypass sanctions. Under Trump – on January 5, 2020 – the Iraqi parliament voted to expel foreign forces after the killing of Qassem Soleimani and Abu Mahdi al-Muhandis in a US strike, angering Trump who threatened to impose sanctions that would block 90 percent of Baghdad’s budget. These sanctions included blocking access to the Iraqi Central Bank’s account at the US Federal Reserve, where Baghdad keeps the oil revenues that account for 90 percent of its national budget. 

In response to Soleimani’s killing, Iran fired 15 missiles at Iraqi military bases which housed US and coalition forces. Trump, who did not want a military escalation, emphasised in his statements that there were no US casualties and threatened to impose more economic sanctions. The Trump administration has used similar sanctions to pressure Iran, targeting nearly 1,000 individuals and entities, including sanctions on Iran’s largest shipping company and largest airline for their alleged support for the proliferation of weapons of mass destruction. 

In July 2023, at Washington’s request, Iraq banned 14 banks from conducting transactions in US dollars to prevent the smuggling of dollars to Iran. The decision led to a decline in the value of the Iraqi dinar and protests took place outside the Central Bank in Baghdad. As the Biden administration expanded sanctions, 32 Iraqi banks were banned from trading in dollars, raising the market rate of the dollar from 1,470 to 1,570 dinars. 

In November 2023, the US Office of Foreign Assets Control (OFAC) placed six individuals affiliated with Kataib Hezbollah on the sanctions list following attacks against US personnel and allies. In early 2024, the US Treasury imposed sanctions on the airline company, Fly Baghdad, and on its CEO Bashir Abdul Kadhim Alwan Al Shabani, for providing assistance to Iran’s military wing and groups associated with it in Iraq, Syria, and Lebanon. 

On January 29, 2024, the Treasury Department accused Al-Huda Bank of financing terrorism and money laundering and proposed cutting it off from the US financial system. The sanctions also included designating Hamad al-Musawi, the owner and chairman of Al-Huda Bank and a member of parliament for the State of Law Coalition, as a terrorist and placing him on the sanctions list under Executive Order 13224 on charges of supporting the Iranian Revolutionary Guard Corps and Kataib Hezbollah including money laundering. The US Treasury reported that al-Musawi was under directives from the Quds Force to establish Al-Huda Bank to launder money, and that the bank used forged documents to transfer at least $6 billion out of Iraq. 

In February 2024, Iraq banned eight local banks from dealing in US dollars to combat fraud and money laundering after Brian Nelson, the U.S. Treasury’s Under Secretary for Terrorism and Financial Intelligence, visited and met with Iraqi officials, including Prime Minister Mohammed Shia al-Sudani. This coincided with the killing of three American soldiers in Jordan, in a drone attack blamed on extremist Iraqi Shia factions. This was the first attack after Hamas’s Operation Flood of Al-Aqsa and the devastating Israeli attack on Gaza that followed. 

According to Reuters, the list of banned banks includes: Ashur International Investment Bank, Iraqi Investment Bank, Iraqi Union Bank, Kurdistan International Islamic Bank for Investment and Development (BKUI), Al-Huda Bank, South Islamic Bank for Investment and Finance, Arab Islamic Bank, and Hammurabi Commercial Bank. 

Under the ban, these Iraqi banks are prohibited from trading in the Central Bank of Iraq’s daily dollar auction but are allowed to conduct transactions in other currencies. 

In light of this, a prospective second Trump administration is expected to expand governance measures in Iraq, especially as financial flows to Iran continue and adapt to the evolving US sanctions regime. US efforts may focus on improving transparency and oversight of Iraqi economic, administrative, and financial transactions to effectively counter the sophisticated methods of Iran’s illicit oil exports. 

6. Iranian Gas Waivers: 

After Trump imposed sanctions on Iran, the US administration allowed Iraq to purchase energy from Iran on the condition that the money was not paid in hard currency. In July 2017, the Iraqi Minister of Electricity confirmed that Iraq would rely on Iranian gas to generate electricity for at least the next seven years, as Iranian gas constitutes about 20 percent of the electricity produced in Iraq. In fact, Iraq meets only 70 percent of its electricity demand. Iraq sends Iranian oil to pay for its gas imports and to pay its electricity-related debts. In June 2023, Iraq was granted a sanctions waiver from the United States to pay $2.7 billion of its gas and electricity debts to Iran. Iranian officials claimed that the money in Iraqi banks might reach $10 billion or more. In March 2024, the Biden administration issued another sanctions waiver for Iran, releasing up to $10 billion in frozen Iranian funds.  

The renewal of the sanctions waiver that allowed Iraq to pay for electricity to Iran and transfer Iranian funds from the Trade Bank of Iraq to a bank in Oman prompted a group of Republican lawmakers led by Rep. Bill Huizenga to write to Treasury Secretary Janet Yellen and Secretary of State Antony Blinken, questioning the rationale for the decision. Elizabeth Rosenberg, the U.S. assistant secretary of the Treasury, acknowledged two transactions by Iran at a House Financial Services Committee hearing in December 2023. 

These events were preceded by a Qatari-sponsored prisoner exchange between Tehran and Washington in September 2023, in which five American prisoners were transferred from Iran to Qatar. Two of five Iranians held by Washington were transferred to Doha. The other three prisoners chose not to return to Iran. This coincided with the transfer of six billion dollars of Iran’s frozen assets under sanctions from Switzerland to Qatar. However, the US House of Representatives voted again to freeze their release in December of the same year, which was after the Israeli war on Gaza intensified and Lebanon’s Hezbollah became involved in what has been called a “distracting front”. Armed factions in Iraq, Syria and Yemen intervened by striking, or at least threatening, American targets or those linked to them. 

With the escalation of attacks on ships in the Red Sea by the Iranian-backed Houthis, criticism of the Biden administration’s dealings with Iran has increased. In March 2024, the commander of US Central Command, General Eric Kurilla, formally addressed the Senate Armed Services Committee confirming that Iran supports Hamas, Hezbollah and the Houthis without paying a price for their “heinous” activities in the region. 

Given these developments, Trump may take more aggressive measures, such as ending waivers on Iranian gas exports to Iraq or restricting Chinese economic expansion in Iraq. During his 2018 – 2021 term, the Trump administration imposed more than 1,500 distinct sanction measures on Iran, targeting major institutions such as the Supreme Leader’s office, the Revolutionary Guards, and their Central Bank. These sanctions were part of Trump’s “maximum pressure” campaign after withdrawing from the Iran nuclear deal, and focused on Iran’s nuclear program, ballistic missiles, regional support for armed factions, cyberattacks, and human rights abuses. Many of these sanctions were originally imposed by the Obama administration to pressure Iran to scale back its nuclear program. Trump reimposed them and issued new sanctions to increase pressure. 

In sum, if Trump wins, he is likely to adopt a more aggressive policy toward Iraq. This may include reducing the exemptions granted to Iran from sanctions, strengthening his maximum pressure campaign, and increasing economic and political pressure on Iraq, with a focus on improving transparency and combating dollar smuggling to Iran. His electoral victory may resolve the situation regarding the decreasing influence of the Kurdish region and the decline in the representation of Sunni Arabs, and may push agendas of rapprochement with Arab countries and Iraq. However, because Trump is an improvisational, populist figure whose presence degrades institutions, he may do more than he did in his first four years in office. He could deescalate wars, or he could inflame them. He might tighten the screws on Iran, or he may be open to reaching a new agreement. Trump might chase the related photo opportunity. He knows full well that if he wins the presidential election, these four years will be his last in the Oval Office. He will think twice about what he will put on his agenda. 

* This article is published in partnership with the Iraqi Network for Investigative Journalism (NIRIJ)