Since 2018, the United States has considered many Iraqi businessmen and banks as part of a network that helps Iran and armed factions access dollars, evade sanctions, and finance their influence inside the Iraqi state. This network was part of the political economy that allowed militias to move from armed groups into centers of influence across money, banking, contracts, and state institutions. Among the names tied to this environment were Ali Ghulam, Salim Ahmed, Aqeel Muften, and Ali al-Zaidi.
Al-Zaidi’s nomination also comes amid the rise of Asaib Ahl al-Haq leader Qais al-Khazali inside the state.
Al-Zaidi is the man the Iran-backed Coordination Framework has now chosen as its nominee for prime minister after an internal struggle between Mohammed Shia’ al-Sudani and Nouri al-Maliki. Al-Zaidi is linked to South Islamic Bank, one of the Iraqi banks barred from dollar transactions under measures taken by the Central Bank of Iraq after U.S. pressure over money laundering, dollar smuggling, and illegal use of the U.S. currency. He also owns al-Owais Group, which has interests in food, agriculture, construction, oil, and security services. He is the beneficiary around whom allegations of corruption swirl.
Al-Zaidi’s nomination also comes amid the rise of Asaib Ahl al-Haq leader Qais al-Khazali inside the state. In Baghdad, al-Zaidi is the candidate of the Asaib Ahl al-Haq leader, with the support of Faiq Zaidan, the president of the Court of Cassation of Iraq, who again shows that he will not break from the Coordination Framework’s equation. Zaidan could have been part of a path that limited Iranian and militia influence inside the state but instead chose to protect the existing balance.
Al-Khazali no longer relies only on the power of his militia or parliamentary bloc. In recent years, he has expanded his influence inside security, economic, and political institutions. After the Green Zone clashes with followers of populist cleric Muqtada al-Sadr, he presented himself as the actor who protected the political system from collapse, amplifying his role inside the state.
Beyond parliamentary proxies and economic interests, al-Khazali has strengthened his influence in sensitive security institutions, including the Counter-Terrorism Service after the removal of Abdul-Wahab al-Saadi and the rise of leaders closer to the Framework and its constituent parties. If his candidate reaches the premiership, his influence will move from leverage inside the government to near-total control over it.
Al-Khazali’s supporters in Baghdad promote the idea that the U.S. government accepts him and that Washington will deal with him the way it dealt with terrorist-turned-interim President Ahmed al-Sharaa in Syria. This comparison presents al-Khazali not as the leader of an Iran-backed faction, but as a new reality Washington can work with, if he guarantees stability and brings the factions under one umbrella. But the differences are obvious: Al-Sharaa emerged in a different context, with broader Arab and regional backing. Al-Khazali comes from inside an Iranian-backed armed, economic, and political network that hollowed out Iraqi sovereignty.
The irony is that Washington, after years of pressuring Iraqi banks and dollar networks to stop Iran and the factions from evading sanctions, now appears ready to treat al-Zaidi as an acceptable candidate for prime minister.
This makes Washington’s acceptance of al-Zaidi even more problematic. It is not only dealing with a candidate tied to controversial banking and business files; it is dealing with a man viewed in Baghdad as being close to al-Khazali, the leader of a U.S.-designated terrorist faction tied to Iran.
[Al-Zaidi’s] nomination may be simply to buy time to allow the Framework to see where the confrontation between Washington and Tehran goes.
In essence, President Donald Trump and Secretary of State Marco Rubio promote a continuity of President Joe Biden and Secretary of State Antony Blinken’s policy treating the Coordination Framework as a partner and guarantor of stability, not as an Iranian proxy. Their move has cheerleaders. Victoria Taylor, the Biden-era deputy assistant secretary of State for Iraq and Iran, from her Atlantic Council perch, seeks to normalize ties to al-Khazali’s faction on the grounds that the United States has no better option.
From another angle, al-Zaidi’s nomination may not be final. Article 76 of the Iraqi constitution gives the prime minister-designate thirty days to form a government. If he fails, the Framework will choose another nominee. In essence, his nomination may be simply to buy time to allow the Framework to see where the confrontation between Washington and Tehran goes. Either way, the premiership remains inside the same network.
If the al-Khazali network, black money, and the factions manage to form the government, Iran will have won four more years to evade sanctions, entrench its influence, and cement the control of its allies inside the Iraqi state.
