Iraq has tried to stay out of the US-Israeli war with Iran but has instead become one of its most consequential secondary fronts.

Over the past two months, Iran-aligned Iraqi militias have launched drones and rockets not only at U.S. targets in Iraq and the Kurdistan region, but also at Saudi Arabia, Bahrain, Kuwait, Jordan, and other Persian Gulf Arab states.

According to a Saudi assessment cited by the Wall Street Journal, up to half of the nearly 1,000 drone attacks targeting the kingdom originated from Iraqi territory. The Crisis Group notes that Iran-aligned groups under the Islamic Resistance in Iraq umbrella have claimed more than 750 strikes on U.S. targets in Iraq and the wider region — while Iran and aligned groups conducted nearly 500 missile and drone strikes on the Kurdistan area before a fragile April 8 ceasefire.

The scale and persistence of these attacks are transforming Iraq’s role in the conflict. During previous rounds of escalation between Iran and its adversaries, Iraqi armed groups generally operated under tighter constraints — especially after a drone attack on a U.S. base in Jordan in 2024 killed three U.S. service members. The militias avoided sustained attacks against Gulf monarchies during the 2025 Twelve-Day War on Iran.

This time, however, Iran-backed factions inside Iraq increasingly appear to view the conflict as existential both for Tehran and their own political and military future. As a result, Iraq has evolved from a buffer between competing regional powers into an active launchpad for proxy warfare.

The strikes have targeted both strategic and civilian infrastructure. Drones launched from Iraq hit Saudi energy facilities in the Eastern Province and near Yanbu, the Red Sea hub that has become increasingly important for Saudi efforts to bypass the blockaded Strait of Hormuz. Kuwait’s only civilian airport was targeted, while Bahrain accused Iraq-based groups of conducting repeated drone attacks against the kingdom even after the announcement of the ceasefire.

On April 24, Kuwait’s army announced that two drones launched from Iraq targeted military border posts in the country’s north, causing material damage but no casualties. Saudi Arabia condemned the strikes, reiterating its “categorical rejection of the violation of the sovereignty of nations” and calling on Baghdad to act “responsibly” to prevent threats against Gulf states.

The significance of these incidents lies not only in their operational impact, but in what they reveal about Iraq’s deteriorating regional position. Baghdad’s problem is no longer simply that Iraqi sovereignty is being violated by non-state actors. It is that parts of Iraq’s own fragmented security architecture are being used to project force beyond the country’s borders.

Although many Popular Mobilization Forces (PMF or Hashd al-Shaabi) factions were formally integrated into the Iraqi state after 2016, the groups most closely aligned with Iran continue to operate with considerable autonomy. Organizations such as Kataib Hezbollah, Asa’ib Ahl al-Haq, and Harakat al-Nujaba maintain strong ties with Iran’s Islamic Revolutionary Guard Corps (IRGC) while retaining their own command structures, weapons networks, and operational priorities. According to the Crisis Group, these factions have used Hashd bases and weaponry while remaining, in practice, outside the prime minister’s chain of command — a dynamic that blurs the line between state assets and militia operations.

This ambiguity creates a dangerous situation for Baghdad. Iran-aligned factions can exploit infrastructure, logistics networks, and political cover associated with state institutions while remaining largely outside effective government control. The Iraqi government, meanwhile, lacks both the political consensus and coercive capacity necessary to confront the militias directly. Any serious attempt to crack down on these factions would risk both political fragmentation within Iraq’s Shi’ite-led ruling coalition and confrontation between state security institutions and Iran-aligned armed groups at a moment of continuing fragility following November 2025 parliamentary elections.

The continuation of attacks after the ceasefire announcement has further intensified Gulf concerns. Bahrain summoned Iraq’s chargé d’affaires on April 13 to protest what it described as “continued malicious drone attacks” launched from Iraqi territory. Saudi Arabia and the United Arab Emirates issued similar diplomatic protests, while GCC states and Jordan jointly demanded that Baghdad prevent its territory from being used for attacks against neighboring countries.

In Gulf states, there is a growing concern that even if direct confrontation between Iran and the United States does not resume, proxy warfare emanating from Iraq may continue. In this sense, the April 8 ceasefire has reduced escalation without fully containing the broader regional conflict. Iraq remains an active theater where tensions can persist at lower intensity but with significant strategic consequences.

The political damage for Baghdad could prove substantial. Over the past several years, Iraq and Gulf Arab states had slowly rebuilt ties after decades of mistrust following Saddam Hussein’s invasion of Kuwait in 1990, the 1991 Gulf War, and the post-2003 U.S. toppling of Saddam and subsequent expansion of Iranian influence in Iraq. Saudi Arabia and other Gulf capitals gradually reopened diplomatic channels, expanded investment discussions, and pursued greater economic integration with Baghdad in an effort both to stabilize the country and to reduce Tehran’s dominance.

However, in the wake of the latest attacks, Gulf policymakers increasingly fear that, in certain security domains, militias can override or bypass Iraqi state authority.

The timing is also particularly sensitive because Iraq is attempting to emerge from months of political paralysis. On April 28, Iraqi businessman Ali al-Zaidi was nominated as prime minister-designate after prolonged disputes within the Shi’ite Coordination Framework — the main parliamentary bloc — over who should lead the next government.

Unlike former Prime Minister Nouri al-Maliki — whose candidacy reportedly alarmed both Gulf states and Washington — Zaidi appears to enjoy relatively broad acceptance among Iraqi factions and his business background may also reassure external actors concerned about escalating instability.

His nomination comes in the context of intense new U.S. pressure on Iraq. Washington has announced new rewards for information leading to the arrest of senior militia commanders and reportedly suspended nearly $500 million in dollar shipments to Iraq to push Baghdad to curb Iran-aligned groups. Since Iraqi oil revenues are deposited through the Federal Reserve in New York, the United States retains significant leverage over Iraq’s financial system and dollar liquidity.

At the same time, Gulf capitals appear reluctant to pursue direct military escalation against Iraq itself. Saudi Arabia, Bahrain, Kuwait, and the UAE have little interest in destabilizing Iraq further or pushing it deeper into Tehran’s orbit. Their likely strategy involves sustained diplomatic pressure, tighter security coordination, and greater scrutiny of political and economic engagement with Baghdad.

This pressure may ultimately prove more consequential than military retaliation. Iraq urgently needs regional investment, infrastructure cooperation, and energy integration — especially regarding its electricity grid — to address the country’s structural vulnerabilities. This is particularly important as Baghdad attempts to position itself as a regional transit and logistics hub through projects such as the Development Road corridor, a $17 billion initiative launched in 2023 to connect the Persian Gulf to Turkey and Europe through railways, highways, and the Grand Faw Port. Iraqi officials increasingly view these initiatives not only as economic projects, but also as strategic mechanisms to reduce dependence on vulnerable maritime chokepoints and partially diversify Iraq’s connectivity away from routes tied to Iran and the Strait of Hormuz. Yet those very projects depend on political trust and perceptions of stability that are being undermined by the continued militia attacks.

The vulnerability is particularly acute in the energy sector. Iraq remains heavily dependent on oil exports through routes linked to the Strait of Hormuz and approximately 90% of government revenue derives from hydrocarbons. Iranian restrictions on Hormuz and attacks on regional energy infrastructure disrupted Iraqi exports and forced a halt to most production in the Basra fields, which normally account for roughly 3.3 million barrels per day of Iraqi exports.

Against this backdrop, Baghdad has revived discussions with Saudi Arabia regarding the reopening of a long-idle Iraq-Saudi oil pipeline to Yanbu on the Red Sea. Originally constructed during the 1980s and shut down after the 1990 Gulf crisis, the pipeline would provide Iraq with an alternative export route bypassing Hormuz while deepening strategic interdependence between Iraq and Saudi Arabia.

However, if Iraq increasingly comes to be perceived as a launchpad for attacks on Gulf infrastructure, the appetite for long-term economic integration may weaken considerably. This is especially relevant for projects that depend heavily on Gulf financing and political backing. The UAE and Qatar — both viewed as key potential investors in Iraq’s infrastructure ambitions — are the Gulf states most frustrated by Baghdad’s inability to curb militia activity. Abu Dhabi had expanded its role in projects linked to the Grand Faw Port through Abu Dhabi Ports Group, while Qatar increased its exposure to Iraq through energy and infrastructure investments, including a 25% stake in Iraq’s Gas Growth Integrated Project. Continued attacks risk undermining the external funding and political confidence necessary to transform projects such as the Development Road from strategic vision into operational reality.

The deterioration comes amid a broader fragmentation of Gulf politics. On April 28, the UAE announced that it would leave OPEC and OPEC+, marking the most significant departure from the organization in decades. Although Abu Dhabi framed the move primarily as an energy and strategic decision linked to long-standing tensions over production policy, it also reflected widening geopolitical divergences within the Gulf itself.

The war has amplified these tensions. Saudi Arabia and the UAE increasingly differ on regional priorities, energy policy, and strategic alignments. Emirati officials and analysts have openly questioned the effectiveness of Gulf strategies toward Iran. Against this backdrop, worsening GCC-Iraq relations further weaken an already fragile regional environment marked by mistrust, competing alignments, and diverging security priorities.

For Iraq, the danger is therefore not simply being pulled deeper into the war. It is the gradual erosion of trust with the very Gulf partners it needs to diversify export routes, attract investment, and reduce economic vulnerability. A war intended to weaken Iran if not change its regime could wind up undermining Iraq’s reintegration into its Arab neighborhood and reviving a key member of Iran’s Axis of Resistance.