• State Administration Coalition holds meeting

• Iraq-Turkey pipeline transit agreement extended

• Foreign Minister attends Ministerial Meeting in Support of Jerusalem

• Kurdistan Region’s President visits Damascus

• Fly Baghdad removed from US sanctions

• Arbaeen pilgrimage concludes

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After Prime Minister Ali Al-Zaidi initially failed to secure an extension to the expired 1973 Iraq-Turkey pipeline transit agreement during his trip to Ankara last week, a deal between the Iraqi and Turkish governments was reached over the weekend to extend the agreement for one year.

Influence and pressure from the United States is shaping Iraq’s relations with Turkey and Syria, particularly in the energy sector. American influence in the energy sector is growing even as US troop presence is coming to an end in Iraq. During Zaidi’s visit to Washington, he heralded this substitution of American troops for American companies, a sellable slogan to both the American and Iraqi publics. At the same time, Zaidi is not the architect of this idea, but it is central to an American vision of a new regional order.

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• Prime Minister travels to Ankara

• US-Saudi airstrikes target Iraq

• Lebanese Prime Minister visits Baghdad

• Taqaddum leader meets with KDP

• Ukraine refutes orchestrating attacks in Iraq

• Kuwaiti Interior Minister visits Basra

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Earlier today, the United States conducted airstrikes in Iraq, targeting Hashd locations in multiple provinces. These strikes have resulted in the killing of at least 20 paramilitary members and injuring another 32, some of whom were Islamic Revolutionary Guard Corps (IRGC) members. Although US strikes targeting armed groups in Iraq is not a new development, the announcement that this was done in collaboration with Saudi Arabia marks an unprecedented escalation in Iraqi-Saudi relations.

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Prime Minister Ali Al-Zaidi will travel to Turkey on July 28, marking his third visit since taking office and his second to a neighboring country. After concluding trips to Washington and Tehran, Zaidi will make his way to Ankara, for further difficult talks as he will have to negotiate with the Turks regarding longstanding issues that his predecessors have had to deal with, primarily the Iraq-Turkey pipeline transit agreement, as well as water sharing and regional security.

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• Prime Minister travels to Tehran

• Prime Minister travels to Doha

• Turkish Transport Minister visits Baghdad

• MP sentenced to prison

• CTS and Federal Police leadership change

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Latest budget execution figures released by the Ministry of Finance for May show the government has entered an aggressive fiscal consolidation phase, with spending now almost entirely focused on meeting its core social obligations to pay public sector salaries and social welfare.

Total government spending in May fell to just 8.9 trillion IQD, a 25% decline compared to the average monthly expenditure recorded in 2025. Operational spending dropped to 8.6 trillion IQD from a monthly average of 9.9 trillion IQD last year.

Most strikingly, salaries, pensions, and social security payments accounted for 99% of all operational spending during the month, highlighting how little fiscal space remains for other government functions.

The sharpest cuts have fallen on investment spending. Capital expenditure collapsed to just 236 billion IQD in May, representing an 87% reduction compared to the 2025 monthly average. The Zaidi government’s sweeping austerity measures include cancelling all capital projects that had not yet received funding allocations and suspending funded projects that were below 20% completion rate.

Other reductions include debt servicing, which amounted to just 225 billion IQD in May, well below last year’s monthly average of 724 billion IQD, reflecting another major source of expenditure restraint.

One notable exception is budget transfers to the KRG. Although transfers declined slightly from 1058 billion IQD in April to 987 billion IQD in May, they remain nearly 15% higher than the 2025 monthly average of 868 billion IQD.

It is well established that the primary driver behind these spending cuts is the unprecedented collapse in oil revenues following the outbreak of the conflict in Iran and the subsequent disruption to exports through the Strait of Hormuz. Because Iraq relies overwhelmingly on southern export terminals that depend on Hormuz, it has been more severely affected than any other Gulf oil exporter.

The impact was only fully reflected in May’s fiscal data. Oil revenues for February through April were partially insulated by pricing and contractual arrangements, but May became the first month in which the full effect of the export disruption appeared in government accounts.

Oil revenues fell to just 1.15 trillion IQD in May, an 87% collapse compared to the 2025 monthly average of 9.1 trillion IQD.

The slump in oil income has been partially offset by stronger non-oil revenues. In May, these reached 1.4 trillion IQD, around 15% higher than the 2025 monthly average. This improvement reflects continued gains in customs collections following the gradual rollout of customs automation and electronic payment reforms over the past several years.

Nevertheless, the increase in non-oil revenues is nowhere near sufficient to compensate for the loss of oil income. As a result, Iraq’s budget deficit is widening rapidly. By the end of May, the cumulative deficit had reached approximately 13 trillion IQD, compared to just 5 trillion IQD during the same period last year.

Unless a ceasefire to the regional conflict can be reached that leads to a recovery in oil exports, the Iraqi government will face increasingly difficult fiscal choices in the months ahead. With operational spending already reduced almost entirely to wages, pensions, and social protection, there is relatively little discretionary expenditure left to cut without directly affecting public services or household incomes.

Prime Minister Ali Al-Zaidi returned to Baghdad on Sunday after concluding his five-day visit to the United States. The trip was deemed a success in terms of the goals Zaidi planned to achieve in Washington, even if it is too early to determine the extent of its accomplishments. That perception is important because the visit has received both praise from some political factions and rejection from others. As a result, Zaidi now needs to manage relations with Iran while also taking advantage of the deals signed in the United States.

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• Prime Minister travels to Washington

• Drones target Erbil

• Judiciary to ease sentences on corruption

• President travels to Doha

• Foreign Minister travels to Riyadh

• Arms shipment caught in Syria

• Iraq to ban gambling sites

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Prime Minister Ali Al-Zaidi arrived in Washington on Monday, marking his first foreign trip since taking office. The visit comes a week after Iraq hosted a large commemoration for the assassinated Iranian Supreme Leader, reflecting the balancing act the Iraqi government constantly performs between neighboring Iran and the United States.

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• Funeral procession of Iranian Supreme Leader held in Iraq

• MP-designate arrested

• Parliament dismisses head of NIC

• KDP appoint new head of Baghdad office

• Foreign Minister travels to Kuwait

• Turkish Energy Minister visits Baghdad

• Kurdish tribe leader arrested

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The Kurdistan Democratic Party (KDP) announced on Monday that senior member Hoshyar Zebari will lead the party’s political bureau office in Baghdad. Zebari had broken the news the day before in a television interview with Sharqiya News, and the party officially confirmed it the next day. The move comes as the KDP looks to reestablish its influence in the Iraqi capital after the Patriotic Union of Kurdistan (PUK) makes headway with its political alliances established in recent years. This means that Zebari now returns to Baghdad a decade after his last post in the federal government.

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• ISF conduct raids in Green Zone

• IHEC announces MP replacements

• Iranian Foreign Minister visits Iraq

• Iraqi Foreign Minister visits Syria

• GCC Secretary-General visits Baghdad

• US restarts dollar shipments to Iraq

• Arab Parliament elects Iraqi as deputy speaker

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News coverage of Iraq has been dominated by the corruption arrests and raids inside the Green Zone, all the while other developments have been unfolding in the realm of foreign policy. On Monday, Foreign Minister Fuad Hussein made his first visit to Damascus under the new Syrian regime. Until now, all Iraqi delegations to Syria since December 2024 had been led by the head of the Iraqi National Intelligence Service (INIS), Hamid Al-Shatri or politicians.

Hussein met with his Syrian counterpart, Asaad Al-Shaibani, and interim Syrian President Ahmed Al-Sharaa. Hussein was accompanied by his chief of staff, Salwan Sinjari, who previously served as Iraq's chargé d'affaires in Washington, DC.

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• FATF grey lists Iraq

• Iraq appoints new ambassador to the US

• Speaker’s residence targeted in drone attack

• Coordination Framework study the expansion of ministries

• Prime Minister appoints new advisors

• Former close confidant of Sudani sentenced for corruption

• Iraq enhances water cooperation with Syria

• Iraq’s World Cup campaign moves to Canada

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Prime Minister Ali Al-Zaidi has directed a comprehensive performance review of Iraq’s senior federal bureaucracy. The move echoes a similar initiative launched by former Prime Minister Sudani early in his premiership, when senior officials were subjected to performance assessments that resulted in both demotions and new appointments.

While Zaidi’s review…

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The Financial Action Task Force’s decision on June 19 to place Iraq back on its grey list marks a significant setback for Baghdad’s efforts to modernize its financial system and strengthen confidence in the country’s regulatory environment.

The move does not amount to sanctions, nor does it cut Iraq off from the international financial system, but it does place the country under increased monitoring and signals that Iraq must demonstrate tangible progress in addressing weaknesses in its anti-money laundering and counter-terrorist financing framework.

FATF’s official statement was not entirely negative. It noted that Iraq had made a high-level political commitment to work with FATF and its MENA subsidiary to strengthen the effectiveness of its AML/CFT regime. It also acknowledged that, since the adoption of Iraq’s Mutual Evaluation Report in November 2024, the country had made progress on several recommended actions. These included applying market entry controls to prevent criminals and terrorists from accessing important sectors, providing guidance and outreach to non-banking financial institutions, and introducing measures to mitigate risks in the real estate sector.

Iraq is therefore not being judged simply for failing to pass laws or issue regulations, but rather, FATF is focused on whether reforms are producing measurable outcomes. In this sense, Iraq’s grey-listing reflects a familiar problem in governance where there is a gap between formal reform measures and effective implementation.

The action plan agreed with FATF is extensive but can broadly be grouped into three areas: improving oversight of financial activity, strengthening transparency, and increasing enforcement. Iraq is expected to improve its understanding of money laundering and terrorist financing risks, strengthen oversight of informal money transfer networks, establish a regulatory framework for virtual assets, and ensure that banks and other high-risk sectors properly implement AML/CFT requirements.

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• US Special Envoy visits Iraq

• Iraq welcomes US-Iran MoU

• Challenges emerge over handover of Saraya Al-Salam

• Changes made to financial and security institutions

• Zaidi appoints new advisors

• Baghdad International Airport development contract terminated

• Iraq’s World Cup campaign begins

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The first significant test of the Zaidi government’s efforts to rein in paramilitary actors is unfolding in Samarra after Saraya al-Salam refused to comply with an order to change the leadership of the city’s operations command.

The dispute began when Hashd Commission chairman Falih Al-Fayyadh issued an order replacing the commander of Samarra Operations…

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• Arrest warrants issued for Sudani associates

• Prime Minister announces trip to Washington

• Four presidencies meet

• Former Governor of Ninewa released from prison

• Head of INIS travels to Syria

• Mosul International Airport operations remain delayed

• Iraqi national team players detained for hours in Chicago

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