Engage and Compete

Even as Iraq’s leaders declare military victory over the Islamic State, the country remains on the frontlines of three interlocking challenges: a worldwide ideological fight against the genocidal extremism of terrorist networks; a geopolitical competition to prevent Iran from dominating Iraq and the region; and a struggle among the region’s states and people to forge a peaceful coexistence across ethnosectarian divides.

The United States has a stake in each of these struggles—and not simply because the rise of the Islamic State showed how quickly Iraq’s governance and security failings can metastasize into global threats. An Iraq that finds realistic solutions to its political and security challenges can be a vital building block for a more stable Middle East and a more coherent U.S. strategy. Unlike its war-torn neighbors, Iraq can draw on a widely accepted constitution and existing institutions and mechanisms for power-sharing. Iraq continues to hold competitive and meaningful elections. Legitimate concerns about the country’s limitations in governance and deep societal divides risk becoming self-fulfilling prophecies if they prevent strategic follow-on investments in Iraq’s future.

In order to better understand the current state of Iraqi governance and security, in October 2017, the authors traveled to Baghdad for interviews with Iraqi political leaders, security officials, and academic experts as well as U.S. and international officials. Drawing on those interviews, this report examines U.S. policy options and calls for a sustained U.S. role in Iraq that is focused increasingly on civilian engagement in order to prevent a relapse into conflict. The U.S. role should also include a limited, focused follow-on U.S. military mission to sustain both Iraq’s counterterrorism forces and U.S. influence in Iraq.

The policy recommendations outlined in this report reflect two crosscutting imperatives: sustained engagement and stabilizing competition. These two imperatives reflect the United States’ continued interest in Iraqi stability—as the nation seeks to bridge geopolitical and ethnosectarian divides and fight terrorism—and the evolution of U.S. priorities as the fight against the Islamic State recedes, creating space to address other challenges.

Sustained engagement in Iraq should increasingly center on civilian political, economic, and humanitarian outreach, including direct aid to stabilize liberated areas. It should also include a follow-on U.S. military training mission. While Iraq’s political winds can shift quickly, during interviews, Iraqis expressed surprisingly widespread support for continued U.S. civilian and military presence but also a near total lack of clarity about America’s plans beyond counterterrorism.¹ Many questioned President Donald Trump’s reliability and worried that America, unlike Iran, would abandon Iraq. Sustaining U.S. influence will require a joint vision for enduring strategic cooperation that extends beyond counterterrorism and crisis management.

U.S. strategy in Iraq should also include stabilizing competition in order to counterbalance Iranian influence. Iraq has suffered greatly from destabilizing competition among its neighbors, which pitted Iraqis against one another, squandered their resources, and hollowed out national institutions to gain a zero-sum advantage. Stabilizing competition instead seeks to curb Iranian influence primarily by strengthening Iraqi institutions and balancing Iraq’s external relations through close U.S. partnership and the facilitation of renewed Arab ties. It recognizes not only that Iran’s outsized role in Iraq remains a serious problem but also that many proposed solutions would create more problems than they would solve. A policy that prioritizes rollback via direct confrontation with Iran and its proxies within Iraq risks backfiring, jeopardizing Iraqi stability and the preservation of America’s counterterrorism platform in the country. Moreover, the caricature of an all-powerful Iran underestimates the enduring sway of Iraqi nationalism. At times, more direct pushback will be necessary, for example, to deter threats to U.S. personnel. However, drawing on Iraqis’ widely stated desire to assert their sovereignty represents the most promising and viable long-term bulwark against Iran.

Likewise, ceding Baghdad as already lost to Tehran would only guarantee Iranian domination. Worse still, it would underestimate America’s ability to offer Iraq what Iran cannot: security ties that treat Iraqis as partners rather than proxies; international leadership that reintegrates Iraq into the Arab world and attracts donors for reconstruction; and cooperation that reinforces Iraqi sovereignty instead of undermining it.

Consistent with these two pillars of sustained engagement and stabilizing competition, this report recommends the following approaches to U.S. strategy in Iraq:

• Work with Iraqis to forge a broader vision for sustained U.S. engagement that emphasizes civilian cooperation
• Urge leaders in Baghdad to capitalize on Iraq’s “nationalist moment” to advance cross-sectarian cooperation
• Help Baghdad and Iraqi Kurds reach agreement on new terms for peaceful coexistence within Iraq
• Sustain active U.S. support to the United Nations’ efforts to stabilize liberated areas within Iraq; mobilize international investors to finance Iraq’s reconstruction.
• Define a narrow follow-on security mission—which includes security sector reform—to train and advise Iraqi forces
• Launch a full-court diplomatic press to ensure that Iraq’s opening to Saudi Arabia delivers results for Iraqis and grows into a counterweight to Iran’s influence

The last time America helped Iraq to quell a terrorist insurgency, Iraqi politics deteriorated into ethnosectarian polarization under former Prime Minister Nouri al-Maliki, helping enable the Islamic State’s return. In 2018, parliamentary elections in May and the formation of the next Iraqi government present an opportunity for new leaders to demonstrate that Iraq can chart a different course.

In Baghdad, the authors heard reports of a “nationalist moment” for non-Kurdish Iraq. The combination of battlefield victories, the repudiation of Sunni rejectionist politics, the destruction of Sunni cities, and Baghdad’s forceful response in Kirkuk all contributed to a “new realism” among Sunnis that has created a chance for greater cross-sectarian cooperation.  Elections and government formation will offer important tests as to whether Iraq’s political marketplace can deliver the “new faces” that Sunnis want to represent them and whether Baghdad can respond constructively.² A first urgent challenge will be registering millions of displaced Iraqis—mostly Sunni Arab—whose disenfranchisement would mark a significant blow to sectarian reconciliation.

The downside to Iraq’s nationalist moment has been a spike in Arab-Kurdish tensions. After Iraqi Kurdistan’s independence referendum, Iraqi federal forces re-entered Kirkuk and other disputed areas. Now, the U.S. must help both sides find a sustainable way forward. The assertion of Iraqi federal control over Kirkuk, nearby oil fields, disputed territories, and border crossings all mark major changes. The Shia-Kurdish alliance that underpinned post-Saddam Iraq appears to be over. Kurdish leaders privately acknowledge their newfound weakness as Kurdistan Regional Government Prime Minister Nechirvan Barzani and Deputy Prime Minister Qubad Talabani aim to rebuild a functioning, conciliatory center for Kurdish politics.³ Iraqi Prime Minister Haider al-Abadi has demonstrated pragmatic instincts and professes to seek a path back to dialogue; however, Kurdish officials worry that hardliners in Baghdad and Tehran will seek to further factionalize the Kurds in order to divide and rule them. ⁴ As Abadi rides a wave of nationalist sentiment heading into elections, the question increasingly becomes whether Baghdad will overreach and whether it can contain tensions through elections and work constructively to resolve them afterward.

Disagreements over the Kurds’ referendum should not obscure the fact that America retains a strong interest in preserving its partnership with a unified, coherent Iraqi Kurdistan. Bolstered by a quarter-century of pro-U.S. sentiment, Iraqi Kurdish leaders have been close U.S. partners on key priorities, including military and intelligence cooperation; humanitarian issues; and pushback against pro-Iranian Shia domination in Baghdad. Even as Iraqi politics evolve, the United States has a stake in preserving these ties. It will take time to renegotiate the terms of Kurdish participation in Iraqi national politics on issues ranging from budgets to customs to peshmerga salaries. The U.S. is uniquely positioned to press both sides to reach a political accommodation and to revive joint security mechanisms. Some Kurdish officials have already declared their intention to participate in 2018 elections and conduct regional elections as well.⁵ When the authors visited Kurdish areas in October 2016, Kurds warned that, if not for the Islamic State, they might well be fighting each other. The erosion of Kurdistan’s governing institutions, economy, and political dialogue over several years created the conditions for President Masoud Barzani’s overreach and Kurdistan’s political implosion. The U.S. has a strong interest in helping the next generation of Kurdish leaders to reverse this deterioration.

In brokering among factions, the United States should not lose sight of the fact that Iraq’s stability also depends on elites delivering a better economic bargain for all citizens. As Iraq constricts government spending, it will need to grow the private sector, attract investment, and create jobs.⁶ Prime Minister Abadi’s team has created a small council to cut red tape on foreign investment, rein in its more than 100 state-owned enterprises,⁷ and advance its own “Vision 2030” in order to streamline business in Iraq.⁸ In a recent survey, more Iraqis listed corruption as their top concern than security, sectarianism, or jobs.⁹ Prime Minister Abadi declared that Iraq’s next war will be on corruption and that, while previous efforts failed, the U.S. should vocally support this agenda, which can reinforce stabilization and free up needed revenue.¹⁰

On these issues, U.S. strategic engagement and constructive competition go hand in hand; shoring up Kurdish politics, forging cross-sectarian political cooperation, and curbing graft all help prevent fissures for Iran or the Islamic State to exploit.

Engaging and competing also means supporting efforts to stabilize areas liberated from the Islamic State and helping displaced populations before others can exploit gaps in security, aid, or governance. More than 3.2 million Iraqis have now returned home, but 2.6 million remain displaced by the crisis.¹¹ Concerns over security—including the composition of local security forces—remain the primary reason for continued displacement, ¹² alongside damage to homes and lack of services or job opportunities.^{13, 14}

The U.N. Development Programme (UNDP) has spearheaded the international contribution to stabilizing liberated areas. Since the Center for American Progress first analyzed the stabilization program in summer 2017, the number of Iraqis returning home has almost tripled.¹⁵ The UNDP has committed more than $500 million to some 1,500 stabilization projects in 23 liberated cities and districts.¹⁶ While the United Nations has received additional funding, an additional $300 million will be needed.¹⁷ Unfortunately, U.S. funding for stabilization has become less predictable. In October 2017, Vice President Mike Pence called out the United Nations for failing to prioritize Christian communities, pledging instead to work “with faith-based groups and private organizations.”¹⁸ U.S. Agency for International Development (USAID) funding for UNDP in Iraq was then frozen temporarily.¹⁹ In January, the Trump administration split its pledged contribution of $150 million into two tranches.²⁰Two-thirds of the first tranche of $75 million was earmarked specifically for Christian and other minority communities; the second tranche was withheld, subject to new monitoring and evaluation mechanisms. There are also reports of additional funds that may be directed to Christians. Capable local governance is another challenge. Several interviewees raised concerns about Mosul’s provincial authorities and governor,²¹ who has been criticized as a major bottleneck in the delivery of badly needed services and suspended from the job.²²

But the biggest challenge will come once stabilization ends. In July, Iraq estimated that reconstruction would cost $100 billion over a decade.²³ The United States has rightly moved away from U.S.-financed nation building but, nonetheless, has a stake in finding other ways to help Iraq rebuild. Having weathered twin fiscal shocks of war and collapsing oil prices, Iraq will have to draw down its reserves to finance spending.²⁴ Both Baghdad and Washington hope that Arab Gulf states will make significant investments. The World Bank pledged $400 million for reconstruction of liberated areas—a welcome first step.²⁵ The first real test will come in early 2018 at Iraq’s investor conference in Kuwait, where Iraq aims to raise $20 billion.²⁶

As Iraqi forces attack the Islamic State’s last desert hideaways, the moment has arrived to define the future of America’s military mission in Iraq.

The first order of business remains decisively defeating the remnants of the Islamic State. Senior Iraqi officials described a threefold challenge:²⁷

• To defeat Islamic State fighters scattered across Iraq’s vast, sparsely populated western desert
• To control key border crossings with Syria and prevent reinfiltration
• To return to more traditional counterterrorism operations as the Islamic State reverts to asymmetric warfare²⁸

Looking ahead, Iraq must shift from wartime footing. Since mid-2014, Iraqi Security Forces transformed, with U.S. support, from a force that melted away in Mosul into formidable urban fighters that retook the city; however, getting there required the cannibalization of Iraqi forces. Now, Iraq’s Counterterrorism Service (CTS), for example, will need to rebuild and revert to its original mission as an elite special operations corps. Many forces will need to be rationalized due to an Iraqi budget deficit that, even after budget cuts and rising oil prices, remains around $8 billion.²⁹

There are two key looming questions. First, what will be the future mission of U.S. forces? This report recommends a limited U.S. follow-on mission focused on training and advising Iraqi forces as well as U.S. support for Iraqi security sector reform. While in Iraq, the authors heard broad private support among political leaders for continued U.S. military presence, so long as it remains low-profile and without permanent bases. Iraqi politics make such support subject to change. The most practical arrangement would be to ask the incoming prime minister and government to renew Iraq’s invitation for U.S. forces to remain. A follow-on training mission could help sustain the professionalism and counterterrorism capabilities of Iraqi forces that deteriorated after U.S. troops withdrew in 2011. However, just as important, it would give the U.S. a greater voice to influence Iraqi politics and security.

The second outstanding question pertains to the future of the Popular Mobilization Units (PMU), across widely varying 40 militia units and 80,000 to 120,000 Iraqi fighters.³⁰ In October 2017, U.S. Secretary of State Rex Tillerson demanded that “Iranian militias that are in Iraq, now that the fight against Daesh and ISIS is coming to a close, those militias need to go home.”³¹ Tillerson’s concerns are legitimate. The most militant of the PMU pose multiple risks: Some take direction from Iran; others perpetrate abuses; and, in the past, pro-Iranian Shia militiamen have killed American troops.

However, a zero tolerance approach faces insurmountable obstacles. Iraq’s parliament has already passed legislation bringing the PMU under government authority. Many Iraqis see the PMU not as Iranian proxies but instead as volunteers who left home to defend their country.³² An April 2017 poll found that over 95 percent of people in southern Iraq and Baghdad and 77 percent in western areas of the country approved of the PMU’s role in fighting the Islamic State.³³ Moreover, a zero tolerance approach also fails to capitalize on differences among the PMU. While some harbor ambitions like those of Lebanese Hezbollah,³⁴ a second cluster of “Shrine” PMU—those who responded to cleric Ayatollah Ali al-Sistani’s call for volunteer defense forces—are said to favor integration with the Iraqi military, and many are expected to heed Shia clerics’ call for demobilization.³⁵ Lumping such groups together as Iranian vassals foregoes an important wedge and threatens to project weakness when militias refuse to disband.

So far, Abadi seems to be pursuing a governing strategy that involves integrating some PMU into Iraqi Security Forces while hoping to bring those backed by Iran to heel over time. The Abadi government lacks the strength necessary to take on the militias directly and has sought their political support ahead of elections.³⁶ Even integrating ad hoc PMU into trained hierarchical Iraqi military units will take time. The U.S. should recognize the need for a patient, persistent approach; seek to curb militia inroads into Iraqi politics; deter threats to U.S. forces; insist that militia not receive heavy weapons from the Iraqi government; and quietly exert pressure on Iraq’s leaders in order to seek opportunities to reign in hardline militias and prevent their further entrenchment within Iraq’s institutions.

Here, too, the U.S. must engage to compete. America’s role as Iraq’s security partner of choice has served as a brake on Iran. As Iraq contends with its militia problem, strong U.S. ties to Iraq’s counterterrorism service help to ensure that the most capable fighting force inside Iraq looks to the United States, not Iran, as its primary outside partner. By contrast, withdrawing all U.S. troops sends a message of impunity to militias and to Iran—one that Iraqi politicians would be forced to heed.

Iran seeks a “land bridge” of contiguous territory held by sympathetic locals, through Iraq to its proxies in Syria and Lebanon. Constructive competition means helping Iraq build a bridge— diplomatic and economic, as well as physical infrastructure—to better connect to its Arab partners in the Gulf. With U.S. help, Iraq and Saudi Arabia have quickly reconciled, including an October leader-level summit in Riyadh.³⁷ Most immediately, Iraqis and Americans alike hope Saudi Arabia can provide funds for investment and the rebuilding of Iraqi cities, as it has proposed to do. Saudi Arabia is studying investments in several Iraqi sectors, such as power generation, and has recently helped attract a Coca-Cola factory to Iraq.³⁸ Moreover, several Iraqis—including relatively hardline Shia politicians such as former Prime Minister Nouri al-Maliki—voiced hope that, over time, closer Saudi ties might help reinforce Iraq’s independence from Iran.³⁹ Iraqis have been impressed that Saudi Arabia reached out to Iraqi Shia leaders such as Prime Minister Abadi and Muqtada al-Sadr, an approach meant to signal support for Iraq as a whole. ⁴⁰

The U.S. needs to move from rhetoric to results by ensuring that Saudis deliver on recent pledges to support reconstruction in Anbar Province and elsewhere and, ultimately, invest in projects that Iraqis cannot afford and that America will not fund.⁴¹ During his interview, a top official in Iraq’s electricity ministry maintained that possibilities exist for infrastructure, electricity, agriculture, and water projects that span the Iraq-Saudi border.⁴² And, as one senior Iraqi official put it, “[I]f Jordanians are worried about their electricity [from Iraq], maybe they will send engineers and investors instead of [terrorist Abu Musab al-] Zarqawi; if Emiratis’ breakfast comes from southern Iraq, they’ll be invested.”⁴³ Completing the road project linking Iraq with Jordan and Saudi Arabia will also be vital.

The second major challenge is whether Iraqi-Saudi progress can be insulated from escalating Saudi-Iranian tensions. Saudi Arabia’s deliberate approach to Iraq stands in stark contrast to its more impulsive and imperious policies toward Lebanon and Qatar. U.S. encouragement and pressure will be crucial to ensuring it remains that way. If rapprochement succeeds, Iraqis will have a compelling sales pitch to the world, focused on regional economic integration and geopolitical balance for Iraq.

Push Iraqis toward inclusive politics

The United States should resist the temptation to write off Iraqi politics as a lost cause. U.S. influence in the country still matters, and despite all its flaws, Iraq’s political order provides an arena in which to resolve disputes peacefully and choose the country’s leaders. Upcoming elections and government formation provide a critical window for Iraqi progress. Iraqis still look to the United States for political input and legitimacy, and the U.S. should push for on-time elections that enfranchise displaced Sunnis, an inclusive government, and a program for political and economic reform. The Iraqi government’s 2014 national program, which committed Prime Minister Abadi and his political coalition to take steps to govern inclusively, represents a starting point for political cooperation and reform—one that must be reaffirmed and updated.⁴⁴ To help update, recommit to, and execute the goals established in the program, the U.S. should work with Iraq’s next government to forge a broad-based vision for intensified civilian cooperation. The 2008 Strategic Framework agreement offers an irreplaceable starting point and legitimating rationale.⁴⁵ But both sides must articulate and deliver on concrete priorities for 2018, including economic reforms to strengthen Iraq’s private sector, build up its regulatory framework, attract international investment, and fight corruption.⁴⁶

Help leaders in Baghdad and Iraqi Kurdistan reach agreement

America has an interest in preserving its longstanding partnership with Iraqi Kurds and in preventing further conflict with Baghdad. U.S. military and diplomatic officials should work together to press Kurdish peshmerga and Iraqi Security Forces to agree on joint security arrangements and confidence-building measures such as deconfliction and joint patrols. Now that Baghdad has blocked the Kurds’ path to independence, America must push both sides to reach a mutually beneficial understanding on the Kurds’ role within a unified and federal Iraq. This effort must pressure Baghdad not to press its current advantage while also intensely engaging with Kurdish leaders to prevent further political breakdown and fragmentation within Kurdish politics. Here, again, U.S. engagement in the country’s upcoming elections is imperative. The Kurds will have leverage after the elections to help select Iraq’s next prime minister, and the United States should press Kurdish leadership to contribute to the formation of the country’s new government.

Sustain U.S. support to stabilize liberated areas and mobilize others to finance reconstruction

Iraq’s security and progress depends on quick stabilization of liberated areas. While the U.S. should continue to demand attention and resources for Iraq’s religious minorities—as CAP has argued previously—it should also continue to provide direct U.S. support for the UNDP’s stabilization fund.⁴⁷ There is no doubt that Iraqi Christians and other religious minorities have suffered greatly at the hands of the Islamic State. However, the Trump administration should resist the temptation to earmark stabilization funding for these communities at the expense of a needs-based approach—one that allocates resources on the basis of humanitarian priorities and facilitates sustainable returns. The U.S. should also work with international institutions, donors, and the Iraqi government to plan and raise funds for Iraqi reconstruction.

Seek stabilizing ways to compete with Iran

Rather than making unrealistic demands, the United States should help Iraqis strengthen national institutions and diversify its regional ties beyond Iran. U.S. leaders should exert quiet but persistent pressure on Iraqi leaders to gradually demobilize and control Iraqi militias. Should Iran test certain limits, such as threatening Americans inside Iraq via its proxies, more aggressive pushback against Iran and its proxies may be required to enforce deterrence. However, neither direct U.S.-Iranian confrontation nor pre-emptive withdrawal can successfully address the underlying problem of extensive and sometimes destabilizing Iranian influence. Rather, the path most likely to win sustainable support involves long-term U.S. competition for influence within Iraq, drawing on Iraqis’ national pride to strengthen their country via U.S. engagement.

Help Iraq build a bridge to the Arab world

Recent diplomatic advances between Iraq and Saudi Arabia hold the promise of delivering desperately needed benefits to Iraqis—such as much-needed investment and reconstruction projects—and empowering nationalists to assert independence from Iran. These advancements, which include leader-level visits, border openings, and exploration of joint projects inside Iraq, were made possible by U.S. engagement. Direct and persistent high-level U.S. encouragement as well as technical advice will be key to ensure both sides deliver results.

Pursue a limited U.S. follow-on security mission to train and advise Iraqi troops

The United States should maintain a residual troop presence in order to train and advise Iraqis on issues such as counterterrorist operational planning, logistics, and intelligence fusion. Iraq’s fiscal realities demand security sector streamlining, which the United States should advise and help shape. A follow-on presence would help preserve America’s investment in rebuilding Iraq’s counterterrorism capabilities while maintaining U.S. influence.

What happens in Iraq still matters to the United States. Even as the Islamic State reverts to insurgency, Iraq remains a fragile multiethnic society at the center of gravity of the region’s struggle for peaceful ethnosectarian coexistence; at the hinge-point of dangerously polarized geopolitical conflict; and on the frontlines of the worldwide fight against terrorism. Iraq is still at risk of lapsing into a Sunni insurgency, ethnosectarian conflict, or deepening Iranian domination. But there is also a significant chance that Iraq could defy the odds and its antagonists to forge a measure of stability for itself. The United States can and must advance its interests and values by making a sustained and sustainable investment in Iraqi’s military success and political stability.

Daniel Benaim is a senior fellow at the Center for American Progress and a visiting assistant professor at New York University. Previously, he served as a Middle East policy adviser and foreign policy speechwriter to former U.S. Vice President Joe Biden; a speechwriter to former Secretary of State Hillary Clinton, as well as a member of her policy planning staff; and a professional staff member to former Senate Foreign Relations Committee Chairman John Kerry. Benaim received an M.A. in law and diplomacy from The Fletcher School and a B.A. in English literature from Yale University. He is a term member and former international affairs fellow at the Council on Foreign Relations. His publications have appeared in The New York Times, The Wall Street Journal, and Foreign Affairs.

Hardin Lang was a senior fellow at the Center for American Progress until December 2017. Prior to that, he spent 20 years working in peacekeeping, peacebuiding, and humanitarian relief operations with the United Nations. He served as head of office for former U.S. President Bill Clinton in his role as U.N. special envoy for Haiti and also served as a senior adviser to the U.N. special representative to Iraq. Lang helped launch the U.N. stabilization in Mali and helped manage peace operations in Afghanistan and the Balkans. Lang has written for Foreign Policy, Newsweek, U.S. News & World Report, and The Wall Street Journal. He has appeared on BBC, MSNBC, NPR, and Fox News. Lang holds a master’s degree in public policy from Princeton University’s Woodrow Wilson School of Public and International Affairs and a master’s degree in international history from the London School of Economics.