By James Durso
In May 2025, U.S. Congressmen Joe Wilson (R-SC) and Greg Steube (R-FL) sent a letter to U.S. Secretary of State Marco Rubio expressing concern about the “complete subjugation” of Iraq to Iran.
The congressmen asked Secretary Rubio to expand sanctions on Iranian-backed militias, sanction Iraq’s importation of Iranian natural gas, sanction Iraq’s financial institutions supporting Iran, sanction Iran’s facilitators in Iraq, dismantle Iran’s smuggling networks in Iraq, and condition U.S. aid to Iraq on ending Iranian influence.
(In April 2025, Wilson introduced the Free Iraq From Iran Act, “To require an interagency strategy to free Iraq from Iran, and for other purposes.”)
By admitting that in 2025 Iraqis need to “reclaim their sovereignty,” Wilson and Steube admit the Iraq Liberation Act, economic sanctions on the Saddam Hussein regime, Operation Desert Storm, Operation Southern Watch, Operation Desert Fox, Operation Iraqi Freedom, the United Nations Special Commission (UNSCOM), $50 billion for post-war relief and reconstruction, over 4,400 dead American servicemen, over 300,000 dead Iraqis, over $2 trillion dollars for the Iraq wars, and whatever the CIA was up to, were all for nothing; Mission Not Accomplished.
The congressmen want the U.S. to designate the Popular Mobilization Forces (PMF) a terrorist organization, overlooking that the PMF isn’t a gang but was recognized in Iraqi law in 2016, reports to the commander of the armed forces, and is subject to all military laws and regulations. In March 2025, Iraq’s parliament tabled a bill to update the 2016 legislation, place the PMF under direct control of the prime minister, and prohibit political activity by PMF members, curious behavior if Iran really controls Iraq.
PMF units were allies of convenience for the U.S. when it fought the Islamic State in Iraq, though PMF elements have been accused of attacking U.S. forces in Iraq and Syria. Iraq’s prime minister, Mohammed Shia' Al Sudani, is heading into the November 2025 election atop a complicated electoral alliance, that includes the head of the PMF, and is making progress expanding state control over the militias, But not fast enough to suit some Americans, who ignore that weak state institutions are partly the result of the unprecedented economic and military campaign against Iraq that preceded the 2003 invasion, and the badly-managed reconstruction that followed.
The fact the PMF had to be hastily mobilized after the Iraqi armed forces collapsed when attacked by the Islamic State in 2014 calls into question the quality of the U.S. training of the regular forces. (The letter overlooks the other “popular forces” in Iraq, the Kurdish peshmerga.)
As Iran and Israel veer towards war, Sudani will be challenged to keep the militias on the sidelines and the country stable. If Iraqi airspace is used by Israel to attack Iran, or U.S. forces join the fray, the U.S. will be implicated and the American embassy and the 2,500 U.S. troops in country may be attacked. Last week, pro-Iran groups demanded the withdrawal of the U.S. troops, and Kataeb Hezbollah said Baghdad "must urgently remove these hostile foreign forces from the country in order to avoid additional wars in the region".
Following the defeat of the Islamic State, Iraq agreed to a continuing presence of U.S. troops, also curious if Iran is calling the shots and the PMF is as powerful as claimed.
Iraq imports badly-needed natural gas from Iran but the congressmen want that sanctioned, too. Iraq will have to find natural gas to replace the Iranian product and it may be available from Qatar and Oman, but it will disrupt Iraq’s energy supply chain as the season of peak demand looms.
Next, the Members want State to sanction Iraq’s financial institutions they claim support Iran, including state-owned Al-Rafidain Bank, Iraq’s largest, and the Minister of Finance, who they call “a key enabler of terrorist funding in Iraq.” Also to be targeted are the Trade Bank of Iraq, which “holds approximately 80% of the trade finance business in Iraq,” the Board of Supreme Audit, Iraq’s primary audit institution, akin to the U.S. Government Accountability Office, and most of the country’s banking sector.
In January 2025, the Middle East and North Africa Financial Action Task Force (MENAFATF) released a Mutual Evaluation Report on Iraq’s efforts to combat money laundering and terrorist financing. According to the Evaluation, Iraq was deemed Compliant for 14 and Largely Compliant for 13 of the FATF 40 recommendations. At the MENAFATF General Assembly in May 2024, the participants noted, "The acceptance of the assessors' report means that Iraq will not be included on the gray list, which is a list of high-risk countries in the field of AML/CFT…This is a testament to the Iraqi team's success in convincing the MENAFATF General Assembly of the adequacy of the measures taken in this area."
Transparency International reports Iraq has made progress in fighting corruption. The 2024 2024 Corruption Perceptions Index ranks Iraq as 140 (of 180 countries), an improvement on 2023 when it was 154 of 180.
In April 2025, Prime Minister Sudani met representatives of the leading U.S. financial services firm JP Morgan Chase about expanding cooperation in financial and banking services. According to the prime minister’s office, “JP Morgan’s delegation, in turn, expressed interest in expanding its footprint in Iraq’s financial system, confirming plans to increase correspondent accounts for local banks and expressing willingness to finance projects directly or through financial partners.”
By inviting JP Morgan Chase Iraq is undertaking an unprecedented level of scrutiny but Prime Minister Sudani understands if Iraq passes the test foreign direct investment will follow.
For an outlaw country and center of terror financing, Iraq is making all the wrong moves: cooperating with the FATF, improving its anti-corruption score, and inviting in a major U.S. financial institution that will undertake serious due diligence before it spends one dollar.
Also to be sanctioned are “Iraqi politicians and their aides, who facilitate Iran’s control of Iraq,” including former ministers, prime ministers, and parliamentarians. Not overlooked is the chief justice of Iraq’s Federal Supreme Court “who is known to take directions from the Iranian regime.”
The State Department is exhorted to “sanction all entities and networks involved in illicit trade that funds Iran’s proxies,” including the state-owned companies for selling and transporting oil, the oil minister and his top managers. They are alleged to be implicated in fuel smuggling and diversion to benefit Iran and its proxies.
The last demand is to condition U.S. aid to Iraq on ending Iranian influence, and includes an audit by the Department of Government Efficiency and denying a U.S. visit by the head of Iraq’s Counter Terrorism Service, which is a U.S. partner in the “enduring defeat” of the Islamic State, and receives American training and financial support (almost $80 million in 2025).
The congressmen’s plan is a decapitation attack on Iraq’s government and state institutions and will disrupt the economy and weaken U.S. allies, and to what end? And for whom?
Since 2020, Iraq has held early parliamentary elections, formed a more balanced government, launched anti-corruption campaigns, and pursued efforts to restrict weapons to state control.
After decades of sanctions, two military defeats by the U.S., and a poorly-policed occupation and reconstruction. Iraq is rebuilding its society and institutions. The long-term effects of United Nations Security Council sanctions, “the worst humanitarian catastrophe ever imposed in the name of global governance,” include weakened state institutions, malnutrition, disease, reduced years of schooling, high child mortality rates and deteriorating public health infrastructure, what Safoura Moeeni of the World Bank calls “The Intergenerational Effects of Economic Sanctions.”
The Members’ plan will weaken America’s partners in Iraq, weaken the police and armed forces, and slow Iraq’s plans for energy security. It makes a mockery of “democracy and the rule of law” by threatening what will effectively be collective punishment if certain factions participate in government, even if they are freely elected. Iraq has abundant press and social media and U.S. actions that damage the economy will be widely known, further eroding support for America in Iraq and the region.
Reckless U.S. actions will boost China’s presence in Iraq.
China has positioned itself as an economic partner of choice for Iraq, and the countries concluded the 2019 Oil for Reconstruction Agreement and 2021 Iran-China Framework Agreement. Iraq received a large share of China’s Belt and Road investments in the region and China is a major customer for Iraq’s oil exports, taking a third of Iraq’s production of crude, making Beijing Iraq’s biggest trading partner.
Iraq’s plan may be to pursue major economic deals with China, such as the Basra-to-Turkey Development Road, leaving the U.S. as a security provider to be satisfied by continued access (to keep an eye on Iran) and an occasional weapons or infrastructure deal. Simon Watkins of OilPrice.com says, “China’s involvement reflects a long-term strategy to fill the geopolitical and economic void left by the U.S. in Iraq and Iran.”
In 2024, Arab Barometer reported “51 percent of Iraqis say China’s policy is better in promoting economic development versus 18 percent who say the US’s policy is better.”
The survey found Iraqis see “Chinese policies as better at maintaining regional security and order than American policies,” “China’s policies as on par with US’s at protecting human rights,” and “China’s policies on tackling climate change are better than the US’s polices than the reverse.” China does not have an insurmountable lead over the U.S., but American action that damages Iraq’s economy and disenfranchises voters by blocking participation by freely elected persons and factions is a labor-saving device for China’s diplomats.
Aside from misunderstanding Iraq’s political and economic environment, the letter uses emotive language (“puppet militias”) and vague terms (“Iranian dominance”) and lacks sources for its allegations that Iraqi leaders and institutions are in Iran’s pocket. It fails to specify steps Iraq can make to remedy the allegations of terror financing and Iranian influence. And the authors use what historian Robert Conquest called “the Stalin method of argument,” echoing “as is well known” and “it is no coincidence.”
Last, the letter lays a trap for Iraq by saying a terror designation will “enable Gold Star families to seek justice,” meaning endless civil suits for billions of dollars in U.S. courts by surviving family members of troops killed in alleged PMF attacks.
Hay’at Tahrir al-Sham (HTS), the Islamist terror group formerly headed by Syria’s president and former al-Qaeda insurgent, Ahmed al-Sharaa, is reportedly integrating its armed wing into Syria’s restructured military. And al-Sharaa will visit the U.S. in September to address the United Nations General Assembly. So, if you fight with the U.S. (PMF) you may be sanctioned, but if you fight against the U.S., you get a first-class ticket to New York City.
Will the congressman call for the same treatment for HTS they plan for the PMF?
The only humorous thing about the letter is that it lays all the blame on Barack Obama but makes no mention of a fellow named George W. Bush.
The Iran hawks (in 2003 they were the Iraq hawks) “learned nothing and forgot nothing,” are single-mindedly focused Iran to avenge the humiliation of 1979, and believe Iraq is acceptable collateral damage in their ongoing crusade against Tehran.
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This article has been published in Real Clear World previously
James Durso (@james_durso) is a regular commentator on foreign policy and national security matters. Mr. Durso served in the U.S. Navy for 20 years and has worked in Kuwait, Saudi