U.S. Demands Iran Militia Dismantling From Vulnerable Iraqi Government

Why It Matters

Iraq is once again at the center of a volatile U.S. foreign policy challenge, and a newly updated Congressional Research Service report makes clear that the 119th Congress faces consequential decisions about money, military presence, and how hard to push a new Iraqi government that may not be able to deliver what Washington wants.

The central tension: The United States is demanding Iraq dismantle Iran-backed armed groups that have carried out hundreds of attacks on U.S. forces since February 2026, while the new Iraqi prime minister owes his job to a coalition that includes parties tied to those very groups.

The Big Picture

Iraq's November 2025 elections produced a new government only after a drawn-out formation process complicated by regional tensions and the spillover of the U.S.-Israel-Iran conflict. In May 2026, parliament approved Ali Al Zaydi, a Shia Arab businessman and political newcomer, as prime minister. His nomination came from the Coordination Framework, a Shia coalition whose members won the most seats in that election.

Al Zaydi inherits a country under serious strain. Since February 2026, when the United States launched Operation Epic Fury against Iran, Iran-backed Shia Iraqi armed groups have carried out hundreds of attacks on U.S. forces in Iraq, on civilian targets in the Kurdistan region, and on targets in neighboring countries. Those attacks triggered U.S. counterstrikes, some of which killed Iraqi security personnel, deepening nationalist pressure on Baghdad to assert its sovereignty.

The Iraq security situation is further complicated by the Popular Mobilization Forces, a state-sanctioned force with an estimated 238,000 personnel and a 2024 budget of roughly $3.4 billion. Some PMF-integrated units have ties to Iran-backed armed groups, making the U.S. demand to dismantle those networks a politically treacherous ask for any Iraqi leader, let alone one who just took office.

Under existing U.S.-Iraqi agreements, American forces have mostly withdrawn from central Iraq and consolidated in the Kurdistan region and the U.S. Embassy in Baghdad. According to U.S. defense officials cited in the report, the long-term vision for Iraq policy envisions "counterterrorism-focused training, intelligence sharing, and episodic presence without permanent basing." That framing reflects a significant reduction in ambition from the peak of U.S. involvement, but it still requires a functional Iraqi partner.

Adding to the complexity, more than 5,700 Islamic State prisoners were transferred from Syria to Iraq in 2026, requiring ongoing joint management between U.S. and Iraqi forces. Since 2014, Congress has appropriated more than $8.4 billion for counter-IS train and equip programs for Iraqis.

The Kurdistan region adds another layer. A September 2025 agreement between the Kurdistan Regional Government and Baghdad conditionally resolved long-standing disputes over oil, budgets, and territory, but resurging tensions between the Kurdistan Democratic Party and the Patriotic Union of Kurdistan have delayed formation of a new KRG cabinet since the October 2024 regional election. Turkey's ongoing military operations targeting the Kurdistan Workers' Party in the region remain a sovereignty irritant for Baghdad, though the PKK's 2025 decision to disarm could eventually shift Turkey's posture.

Political Stakes

For the Trump Administration

The U.S. military Iraq footprint is shrinking by design, but the threat environment is not. The administration is simultaneously pressing Iraq to crack down on Iran-aligned militias while managing the fallout from its own military operations against Iran, which helped trigger the surge in militia attacks in the first place.

The diplomatic posture reflects the tension. The position of U.S. Ambassador to Iraq remains vacant, with Joshua Harris serving as chargé d'affaires since September 2025. On May 31, 2026, President Trump named Tom Barrack, the U.S. Ambassador to Turkey, as Special Presidential Envoy to Iraq. The move signals elevated attention to U.S. Iraq relations, but also underscores that the administration has not filled the ambassadorial post through normal channels.

The FY2027 budget request seeks nearly $119 million for Iraq's military and Counter Terrorism Service, but notably does not include funding for the KRG Ministry of Peshmerga Affairs. That omission could affect Kurdish security capacity at a moment when U.S. forces are consolidating in the Kurdistan region.

For Congress

The House Armed Services Committee-passed version of H.R. 8800, the FY2027 defense authorization bill, would limit most U.S. defense aid for Iraq until the administration certifies that Iraq's government has reduced the capacity of Iran-aligned armed groups and improved internal controls. That conditionality puts Congress directly in the middle of the U.S.-Iraq security relationship and gives members a concrete lever over administration policy.

The 119th Congress authorized counter-IS train and equip programs through 2026, with related funds available through September 2027. How members handle the FY2027 defense authorization and appropriations bills will shape whether that cooperation continues and under what conditions.

For Iraq's New Government

Al Zaydi's political constraints are not incidental. The Coordination Framework that nominated him includes parties with documented ties to the PMF and to Iran-backed armed groups. The report notes he has welcomed decisions by some groups to disengage from the PMF and accede to state control of all arms, but his ability to go further may be limited and contingent on internal coalition dynamics.

Iraq's fiscal situation offers little cushion for political risk-taking. The country remains heavily dependent on oil export revenue, and regional conflict has limited trade and energy output, compounding the pressure on a new government still assembling its cabinet.

The Bottom Line

Two things stand out from this report for anyone tracking Middle East Iraq policy.

First, the U.S. is asking Iraq's new prime minister to do something politically dangerous, dismantle the Iran-backed armed groups, while the coalition that put him in power includes factions tied to those same groups. That structural contradiction does not have an easy resolution, and the CRS report makes no pretense that it does.

Second, Congress now holds real leverage. The conditionality written into the House-passed defense authorization bill means the administration cannot simply write checks to Baghdad and move on. Members will have to decide whether to use that leverage aggressively, risk cutting off a security partner, or find a middle path that keeps cooperation alive while pressing for accountability. How that question gets answered in the FY2027 defense and appropriations process will define the near-term trajectory of U.S. Iraq relations.

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