The fate of Iraq’s government remains up in the air following the 12 May election and its upheaval of the political landscape.

Notably, the previously dominant State of Law coalition led by former Prime Minister Nouri al-Maliki dramatically shrank in size in December 2017 – following the departure of Hadi al-Amari, head of the influential Badr Organisation, and incumbent Prime Minister Haider al-Abadi.

The polls were subsequently topped by the Saeroun (Forward) electoral coalition, led by populist Shia cleric Muqtada al-Sadr, which secured 54 seats in the 329-seat parliament.

The Iran-linked Fatah Alliance, led by Al-Amari, secured the second-largest vote tally and 47 seats, followed by the Victory coalition, led by Al-Abadi, with 42 seats.

The State of Law coalition secured just 25 seats, the same as the Kurdistan Democratic Party, meaning a diminished role for the former premier of two terms and current vice-premier Al-Maliki.

In contrast, Al-Sadr’s star appears to be ascendant, and even more so since his coalition’s partnership in June with Fatah, Al-Amari’s coalition of Shia paramilitary groups, ahead of talks to form a new government.

The combined coalition will control 101 seats, still far from the 165 required to form a working majority in the 329-seat parliament, but a major step forward ahead of upcoming parliamentary negotiations.

New alliance

Al-Sadr’s alliance with Al-Amari, one of Iraq’s most pro-Iran political operators, nevertheless came as a surprise to political observers given the many months spent by Al-Sadr campaigning on a platform of staunch Iraqi nationalism and opposition to Iranian influence.

At an event announcing the political alliance in Najaf, Al-Sadr reiterated his commitment to nationalistic goals, while sidestepping the potentially thorny issue of Fatah’s links to Iran.

“We had a very positive meeting in order to end the suffering of the country and the people,” Al-Sadr said. “Our new alliance is a nationalist one and within the national frames.”

Back in January, a very different political alignment was in the offing, after Al-Amari briefly announced his partnership with the Victory coalition. This would have placed Prime Minister Al-Abadi in a strong position to seek re-election, but the agreement unravelled in a matter of days.

Now, since Iraq’s constitution dictates that the largest coalition gets first shot at forming a government, Al-Sadr stands as kingmaker, and Al-Abadi’s only route back to power will be cap in hand.

Strained relations

Exactly what all of this will mean for Iraq’s governance moving forward remains unclear, but what is certain is that the strengthening of both Al-Sadr and Iran-backed elements in Iraq’s government bodes poorly for relations with Washington, for whom both the Sadrists and the Badr Organisation have presented long-term antagonists in Iraq.

Al-Sadr-led militiamen actively fought US troops in the aftermath of the 2003 invasion, backed at the time by Iran.

Al-Sadr has more recently sought to distance himself from Iranian influence, and his Saeroun coalition, which includes the Iraqi Communist Party, has steered away from sectarian discourse and instead focused on domestic issues, such as the need to tackle rampant corruption.

Assuming these overtures on corruption are in earnest, the formation of a government with the Sadrist block at its centre could prove to be a welcome development, but this holds true only if rhetoric is translated into hard policy.

The more immediate question is if the dominant parties can form a strong government that will have a major impact on Iraq’s very necessary programme of infrastructure projects, and the speed of the process will likely weigh heavily on general economic sentiment and foreign direct investment.

Any protracted jostling for power, a delay in the formation of a working majority, or a lack of political consensus thereafter will present the risk of stalling decision-making and sapping economic momentum.

This article is part of MEED Business Review’s Iraq Market Focus, which will be published in the July edition. The rest of the Market Focus section will also appear online at meed.com. This feature has been unlocked to allow non-subscribers to sample MEED’s content for FREE. MEED provides exclusive news, data and analysis about the Middle East every day. Subscribe to MEED to have full access to Middle East business intelligence. Click here
Baghdad, Iraq
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Databank: July 2018