Iraq’s three vulnerable pillars: A blueprint for dysfunction

Iraqi sovereignty is undermined by the “Triad” of instability inherent in its structure. The Iraqi government is now a house divided: it has two rival standing armies with rival loyalties, a fragmented energy system in which the Iraqi Kurdistan region has a self-governing, legally recognized oil economy, and a political structure that has systematically drained the treasury. The trillions of Iraqi dollars hidden away in overseas tax havens mean that the Iraqi government is not just poorly managed; it is also being eviscerated from the inside out.

The security schism: Two armies, one sovereignty

Iraq is the only country in the world trying to function as if it had two different conventional armies. The ISF is the military representation of the federal government of Iraq. The Peshmerga are the military representation of the government of Kurdistan. The above-mentioned dichotomy is not only an administrative problem; it also constitutes an inherent risk to national unity.

This is because the click-and-share system prevents coordination between forces since there is no unified command. Intense rivalry and competitiveness between these forces represent a potential conflagration. This has led to what has been described as “overlapping and blurred lines of responsibility,” which ISIS has been taking advantage of. Currently, as of the end of 2025, the Kurdish representation within the Iraqi Army has been less than 1 per cent, indicating that the Iraqi government has retreated from its “inclusive military vision promised in 2005.

The difference is not measured only in numbers. According to a 2017 assessment by the Foreign Policy Research Institute, the Peshmerga lost over 10,000 fighters battling ISIS since 2014. Yet, they function with only 25 ambulances for over 150,000 fighters, while the ISF has over 1,250 ambulances. Such a difference signifies the exacerbation of disparity through the two-army structure. However, the U.S. has endeavored to close this disparity through significant investments, committing $1.25 billion in Foreign Military Financing since 2015 and maintaining $16.3 billion in active government-to-government sales cases with Iraq.

Without a cohesive chain of command, Iraq is less a sovereign nation than a territory of armed fiefdoms waiting on the next provocation. The ISF and Peshmerga lines of coordination remain the defining representation of the critical seam through which ISIS operates as one of the final remaining safe havens in Iraq.

The oil contradiction: A resource house divided

Oil is life to Iraq, but in fact, for many years, it has become a zone of legalized anarchy. Firstly, the independent sales policy adopted by the Kurdistan Regional Government (KRG) for many years has historically short-circuited the national State Organisation for Marketing of Oil  known as SOMO, depriving the national exchequer of billions. Although oil exports accounted for 91 per cent of total national revenue in 2024, estimated at $107 billion, the Kurdish Dispute has made the economy vulnerable to various risks.

After the March 2023 shutdown of the Iraqi–Turkish Oil Pipeline, the production of oil by the Kurds had drastically fallen. Production had only been slightly below 450,000 barrels a day before the pipeline was shut down. Thereafter, average production had only been 290,000 barrels a day in 2024. By the end of 2025, a compensation arrangement enabled the export of Iraqi oil at about 200,000 barrels per day. This had to be priced $30 a barrel lower than the international average. The legal dispute has not been settled.

The government in Baghdad deems Erbil’s resource management practices to contravene Article 111 of the Iraqi Constitution. In contrast, Erbil asserts that it has the right to manage the oil from unexplored areas, as provided in Articles 112 and 115 when the Constitution was ratified in 2005. Because of this deadlock, foreign companies are in a legal bind, owing billions in arrears and having halted operations pending a commitment to any outstanding debts and payments in writing.

The International Monetary Fund has warned of Iraq’s hazardous oil addiction, noting that the break-even oil price required to cover its budget rose to $84 in 2024, up from $54 in 2020. As long as oil is used for its geopolitical leverage, Iraq’s economy will remain as unpredictable as its pipelines stretching across its borders.

The great embezzlement: Reclaiming the stolen treasure

Perhaps the most debilitating “Achilles’ Heel” is the nationwide plundering of Iraq’s future by top politicians, militia chiefs, and former Iraqi presidents, including the self-proclaimed “thieves of Iraq’s national treasury.” Some of these individuals, who were dirt-poor in the pre-2003 United States-led invasion of Iraq, later found themselves to be among the wealthiest people in the world. To throw the public off their trail, the country’s former Iraqi presidents and prime ministers became frequent TV guests, conveniently explaining the “missing” billions to the Iraqi people. In a televised address in 2021, former Iraqi President Barham Salih showed off his remarkable figure: close to $150 billion in Iraq’s oil revenues had been siphoned out of the country since the 2003 invasion. Former Iraqi Prime Minister Mustafa Al-Kadhimi estimated in 2023 that the “cost of corruption in Iraq between 2003 and the middle of 2020, at no less than $600 billion,” with nationwide losses reaching a stunning “high of $1 trillion.” The swindlers are not limited to a particular ethnicity; they are Presidents and Prime Ministers, Arabs, Kurds, Turkmen, Muslims, Christians, seculars, religious leaders, and particularly militia leaders with deep loyalty to Iran.

The trillions stolen by a generation of politicians rest in foreign bank accounts, from London to Dubai, functioning as a leech on this nation. These are not just figures; these are the schools, hospitals, and energy systems that never existed because of this theft. The “Heist of the Century” that transpired in 2022, in which $2.5 billion was swindled from the General Commission of Taxes in Iraq, led to the recovery of $125 million after one businessman returned a portion of the funds extorted from him.

President Salih described the fight against corruption as dangerous as fighting terrorism, emphasizing the need to build an anti-corruption coalition, as has been done to fight ISIS. Although the Commission of Integrity in Iraq has recently recovered $17.4 million and gained access to INTERPOL databases to pursue fugitives, such efforts are no more than droplets in a sea of pilfered funds—Transparency International rates Iraq 160 out of 180 countries in its  Corruption Perceptions Index (CPI), which rates governance.

A true sovereignty will only be attained if the international community assists in forcing these “stolen trillions” back into the hands of the Iraqi people.

Conclusion: Reclaiming a sovereign Iraq

With the three wounds of military dualism, resource lawlessness, and systemic embezzlement, Iraq has been placed in a position of arrested development. A country cannot truly be upright when it hangs from two separate swords, or when its lifeline of oil continues to be drained through the back door. Perhaps most significantly, the replenishment of the ‘stolen trillions’ into Iraq’s treasury goes beyond an accounting exercise into the realm of national pride.

If a viable Iraqi future is to be achieved, rather than being held hostage by its own ineffectualness, the formula seems clear: the Peshmerga must be fully integrated with a single defence, oil petrodollars must be fully funneled per a clear, visible federal decree, and the world must be fully mobilised for this hidden oil wealth to be repatriated. By accomplishing this threefold, perhaps Iraqi disparate interests might at last be transformed into a single, wealthy, functional Iraqi nation, rather than the broken toes that currently threaten to topple the house.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.