Iraq Prepares for the Worst as Ceasefire Efforts Collapse

Trapped between three titans, Iraq must finally confront the illusion of neutrality and the burden of its geography

BAGHDAD, IRAQ —In the span of a week, Iraq has gone from uneasy observer to exposed frontline state in a conflict it neither wanted nor provoked. The country once again finds itself not just caught in the middle, but hollowed out by its position. The country’s vulnerability is structural, economic, and existential.

Iraq is trapped between three powers whose every move deepens the region’s chaos—an Israeli air campaign that keeps pushing the region closer to the brink, Iranian militias playing proxy games on Iraqi soil, and an American presence that helped ignite the crisis but now pretends to referee it. It’s not just a geopolitical mess; it’s a full-spectrum disaster, and Baghdad is smack in the middle.

In the early hours of June 22, the United States commenced Operation Midnight Hammer, a coordinated aerial campaign targeting key Iranian nuclear enrichment facilities in Natanz and Fordow. While framed as a last-resort preventative strike, the operation marked a perilous escalation in the long-simmering U.S.–Iran standoff.

A proposed ceasefire agreement hastily announced by the United States yesterday and cautiously echoed by Iranian officials collapsed almost instantly. Tehran’s missile barrage on Beersheba and Israel’s retaliatory strikes have erased any illusion of de-escalation. What was meant to be a pause now looks more like a prelude to something worse.

And amid this deepening uncertainty, Iraq is bracing for the fallout. Tehran’s threats to close the Strait of Hormuz carry severe implications. Multiple international shipping firms have already rerouted or suspended traffic through the chokepoint. If Iran follows through—disrupting a corridor that carries over 20% of the world’s oil—Iraq will be among the first to suffer, both economically and politically.

Iraq’s economic lifeblood flows through the Gulf. Over 90% of government revenue comes from oil exports, and most of that oil exits through Basra and travels via the Arabian Gulf. A disruption—even partial—would deliver a crippling blow:

• Oil Exports: Iraq stands to lose tens of millions of dollars daily if tankers can’t transit the strait or insurance premiums spike beyond viability.

• Imports and Inflation: Iraq’s ports are also entry points for everything from food staples to medicine to industrial parts. Any choke in this flow will ignite inflation and spark shortages. Already, Baghdad’s central markets are seeing hoarding behaviors.

• Investor Confidence: Just as Iraq was beginning to rebuild credibility with foreign investors, geopolitical tremors have prompted multiple international firms to suspend operations. The country’s sovereign credit outlook was downgraded on Friday.

And that’s before a single bullet has been fired on Iraqi soil.

Yet bullets may be coming.

In the last few days, U.S. bases in Anbar and Erbil have been placed on high alert. Iran-aligned militias have mobilized in the open, while anonymous drone strikes continue to hit convoys near the Syrian border. The U.S. Embassy in Baghdad has evacuated non-essential personnel and issued a “Level 4: Do Not Travel” advisory.

This is not the fog of war. It’s the prelude.

Iraq has long suffered from being seen as a passive space in which others wage war. After the 2003 invasion, it became a battleground for proxy conflict between Iran-backed groups and U.S. forces. That legacy never fully ended—it merely metastasized into politics, patronage, and militia domination.

Now, it threatens to reignite.

The war drums echo within a brittle Iraqi state. In the past week, thousands of Iraqis have returned to the streets in Baghdad, Basra, and Nasiriyah—not just in protest of geopolitical danger, but over the same grinding frustrations: no jobs, failing electricity grids, endemic corruption. This time, however, there is a deeper fear: that war will be used as a pretext for further repression.

The Iraqi political elite, paralyzed by factionalism and beholden to regional patrons, has responded with finger-pointing and televised platitudes. There is no credible crisis strategy. No national emergency committee. Parliament convened twice last week but could not agree on a unified foreign policy statement, let alone a civil contingency plan.

In a worst-case scenario, Iraq becomes what it was during the peak of ISIS—an arena of intersecting conflicts, abandoned by friends and preyed upon by neighbors.

Iraq cannot relocate itself on the map. But it can begin to act like a sovereign state rather than a venue for someone else’s war:

1. Diversify Trade Routes: The long-stalled Iraq–Jordan corridor via Aqaba and the Faw Grand Port project must be fast-tracked from aspiration to emergency priority. Northern export routes through Turkey must be politically rehabilitated despite tensions with Erbil.

2. Build Strategic Reserves: Iraq should immediately ramp up reserves of food, fuel, and medical supplies. The lesson from the COVID-19 pandemic remains: supply chains collapse quickly, and rebuilding them takes time.

3. Launch Real Diplomacy: Baghdad must stop playing the quiet go-between and start owning its regional diplomacy. It must engage in shuttle mediation, not just between Tehran and Washington, but with Riyadh, Ankara, and even Tel Aviv. Iraq cannot afford to be everyone’s friend if that means being no one’s priority.

4. Secure the Home Front: Protesters are not the problem—they are the warning system. The government must treat domestic stability as a core security issue. Real anti-corruption measures, not cosmetic cabinet reshuffles, are essential. Otherwise, the streets may become ungovernable in a time of regional crisis.

For decades, Iraq has tried to thread the needle between Iran and the United States, leaning one way or the other depending on the prime minister or pressure. That strategy is now obsolete. The winds from Hormuz are not just metaphorical—they are the gales of regional realignment, and they will tear down whatever is not fastened securely.

Neutrality, when credible and backed by capacity, can be a noble stance. But unmoored neutrality, devoid of strategy or spine, is indistinguishable from surrender.

Iraq’s window on sovereignty is narrowing. It must speak. It must act. Not to pick a side, but to ensure it still has a place in the room when the storm passes.

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