Event

With the freeing of Mosul and Tal Aftar completed, the fight against IS in Iraq has entered its final stretch. This comes three years after the group rose to prominence by seizing large parts of Syria and Iraq and by declaring the establishment of its caliphate in the city of Mosul. While the group has no more strongholds left in Iraq, it continues to occupy some smaller parts of the country and still holds significant parts of Syria.

Impact on country risk

Now the defeat of IS in Iraq seems imminent, the country is entering a new phase in its history but at the same time the country is facing a number of significant challenges. First of all there is the humanitarian situation in the country. The conflict with IS has led to an estimated 3 million internally displaced people, 30% of the population in need of humanitarian assistance, and strong destruction of the country’s infrastructure. Moreover, potential sectarian (Sunni-Shia-Kurdish) tensions are looming, as with the defeat of IS the common enemy of the different fractions battling against IS is disappearing. This is important given that the war against IS has succeeded in temporarily pushing toxic domestic politics struggle to the background. Now this threat risks resurfacing due to three main factors. First factor is the Kurdish bid for independence. On 25 September, a non-binding referendum for independence will be held in the Kurdish-controlled areas of Iraq. The Kurdish political parties will try to use the referendum as a basis to negotiate for more autonomy, something the central government strongly opposes. This matter is further complicated by the fact that the Kurdish security forces are currently controlling territory that is not officially territory considered part of the Kurdish region in Iraq. Secondly, a large part of the country north of Bagdad and south of the Kurdish region is currently controlled by Shia-dominated Popular Mobilisation Units (PMUs), this is an umbrella organisation for a large number of militia that are sponsored by Iran. While they are currently cooperating with the Iraqi government in the fight against IS, it remains uncertain how they will behave after the defeat of IS given that they also have their own agenda. Lastly, federal elections in Iraq will be held in 2018. It remains to be seen how these will turn out given that the re-election of the Prime Minister, Abadi, remains uncertain. The elections could lead to stability if they lead to a national settlement over the role of the different fractions in Iraq. But the next government could also remain hamstrung by sectarian infighting if it is not possible to reach this national settlement. The representation of the Sunnis population in the federal government, the role of the Kurds and the role of the PMUs in post-IS Iraq will for example be difficult topics. Nevertheless, the risk outlook for the ST political risk currently remains stable in category 6.

Analyst: Jan-Pieter Laleman, jp.laleman@credendo.com