Iraq approved on Monday the establishment of a trading company to be run by the government-sanctioned paramilitary group known as the Popular Mobilisation Forces.
The move, which came during a cabinet meeting, will empower the PMF economically and bolster their political clout in the country.
Influential Tehran-backed Shiite militias are the backbone of the PMF and many of them were accused of human rights violations during the gruelling fight against ISIS from mid-2014 to late 2017, as well as corruption.
The new company will operate with a capital of 100 billion Iraqi Dinars (about $67 million), the government statement said.
Previously, militias have muscled in on the scrap metal trade in Mosul and they have been accused of smuggling oil and running checkpoints to extract taxes from lorries carrying goods.
Much of this business is officially illegal, or has seldom been reported, such as the PMF's role in private security at Iraq's Grand Al Faw port project, first reported by The National last year.
In pictures: Iraq's Iran-backed militias
The new company will be named Al Muhandis, after the slain de facto PMF commander and leader of influential Kataib Hezbollah militia in Iraq, Abu Mahdi Al Muhandis, whose real name was Jamal Jaafar Ibrahimi.
Al Muhandis and Iranian commander Qassem Suleimani were killed on January 3, 2020, in a drone strike ordered by former US president Donald Trump. American drones fired three missiles at their convoy as it left Baghdad airport, killing the two men and several aides.
The assassination was the culmination of a long-running, low level conflict between pro-Tehran militias and the US. It sent shock waves across the region and sparked fears of a direct military confrontation between Washington and Tehran.
For the most part, Iran-backed Shiite militias have been launching rocket and drone attacks against US-linked sites in Iraq, including the US embassy in Baghdad.
When ISIS swept through large parts in northern and western Iraq, US-trained security forces collapsed in a humiliating defeat.
To face the advancing extremist militants, thousands of Shiite volunteers answered the call to arms by Iraq’s influential Shiite cleric Sayyed Ali Al Sistani.
At the time, the government of former prime minister Nouri Al Maliki had already formed the PMF to organise and supervise the volunteers as parallel forces.
Shortly after its formation, several powerful Iran-backed Shiite militias joined the PMF. By then, some of them were fighting alongside Bashar Al Assad's forces in Syria’s civil war.
During the fight against ISIS, some of these militias were accused of human rights violations against civilians in Sunni areas. The Iraqi government and PMF acknowledged these violations as “individual acts”.
The US has blacklisted several PMF leaders in a bid to increase pressure on Iran's proxies in Iraq, sanctioning senior figures between 2019 and 2021 under the Global Magnitsky Human Rights Accountability Act.
Since declaring ISIS defeated in late 2017, the PMF and mainly Tehran-aligned militias have emerged as a powerful force in Iraq and grown more defiant towards the government and opposition groups.
They have joined the political process, competing in two national elections, and assumed senior posts in government, such as ministers of higher education and labour affairs.
The current government — led by Prime Minister Mohammed Shia Al Sudani — is backed by the Co-ordination Framework, the largest political group in parliament, made up of representatives of pro-Tehran militias and political parties.