As the shadow of regional conflict deepens across the Middle East, Iraq's parliament has completed the formation of Prime Minister Ali al-Zaidi's government by approving previously vacant cabinet posts and three deputy prime ministers, including one under United States sanctions, according to Al Jazeera. The vote, held on a Thursday as reported by Al Jazeera, AP, and Reuters, marks a critical political milestone for the administration as it grapples with severe financial constraints.

According to Al Jazeera, lawmakers approved 11 portfolios during the session. These appointments include Nayef al-Shammari as defence minister, Yasir al-Maliki as interior minister, alongside positions for planning, culture, and higher education and scientific research. However, Al Jazeera reported that a vote on the nominee for migration and displacement minister was postponed due to disagreements among political parties.

Among the three approved deputy prime ministers is Laith al-Khazali, noted by Al Jazeera as a senior leader of the Iran-backed Asaib Ahl al-Haq movement and brother of the group's leader, Qais al-Khazali. Al Jazeera detailed that the United States designated Asaib Ahl al-Haq as a foreign terrorist organisation in 2020 and named both brothers as specially designated global terrorists due to past attacks, while the US Treasury Department previously sanctioned them in 2019 over the killing of protesters.

Following the cabinet approval, Prime Minister al-Zaidi issued a statement thanking parliament and calling upon his ministers to fulfill their responsibilities with high levels of commitment, competence, and integrity, as reported by Al Jazeera. Al Jazeera noted that the prime minister emphasized the need for accelerated work to address exceptional economic and security challenges stemming from the US-Israel war on Iran, which began on February 28.

Background

According to Al Jazeera, Iraq is facing severe liquidity shortages driven by the ongoing conflict. Prior to the war, the country exported roughly 3.5 million barrels of oil per day through the Strait of Hormuz, generating 90 percent of government revenue. Al-Zaidi stated that the war has imposed extraordinary economic challenges on the nation.

To cover essential public spending and government salaries, Al Jazeera reported that al-Zaidi—a former banker—devalued the Iraqi dinar by almost 15 percent against the US dollar. The administration inherited public debt exceeding 208 trillion Iraqi dinars ($139 billion at the new exchange rate) when it took office in May, raising questions about the administration of former Prime Minister Mohammed Shia al-Sudani. The state requires about 10 trillion dinars ($6.7 billion) monthly to cover salaries and critical spending, according to Al Jazeera.

Al Jazeera added that al-Zaidi has vowed to fight corruption, disarm non-state armed groups, and strengthen national sovereignty by completing the withdrawal of US forces from the country.

Why it matters

For readers in Pakistan and across the wider region, economic instability and conflict in major energy-producing nations like Iraq highlight the fragile nature of global supply chains and financial markets. Disruptions to oil exports and regional trade routes directly influence international petroleum prices, foreign exchange reserves, and import costs for developing economies throughout South Asia.