There are many scenarios being put forward in Baghdad, from bureaucratic error to political sabotage, to explain how Hezbollah in Lebanon and Yemen’s Houthi rebels ended up on an Iraqi government anti-terrorism list.
But officials and analysts say one fact is unavoidable: Iraq is under intense and conflicting pressure from both Iran and the US, and the government has stumbled into a diplomatic storm.
The controversy began when the Justice Ministry published a proclamation, in the government gazette in November, listing Hezbollah and the Houthis among 24 organisations to come under a national asset-freeze order.
The document accused them of “participating in committing a terrorist act”.
The publication was short-lived. Amid immediate uproar, the government moved to reverse course.
The Terrorist Funds Freezing Committee, which issued the order, later said that several “unrelated groups were mistakenly included because the list was released before final revisions were completed.” It promised that those names would be removed in a corrected version to be reissued, although no date has been announced.
Despite the committee’s explanation, Iraqi politicians and experts say political dynamics, not "editorial mistakes", explain the sudden reversal.
Pressure from Iranian-backed groups was central, they said. One politician, who requested anonymity, said the government is facing “heat over it from the Co-ordination Framework, which has close ties with Hezbollah, the Houthis and Iran".
“All the decisions have a political agenda in Iraq, but this time around the Framework believes it is a way to normalise ties with Israel,” he said.
The Co-ordination Framework — an alliance of major Shiite parties with close ties to Tehran — backed Prime Minister Mohammed Shia Al Sudani’s rise to power in 2022.
According to the same politician, the publication still carries legal force.
“The decision has been published for a while, and the gazette is the legal entity of the government; therefore, it is the official mouthpiece of the government and is still binding,” the politician said.
Sabotaging a new mandate
Former deputy prime minister and foreign minister Hoshyar Zebari said the reversal reflected the government’s dependence on armed groups linked to Iran.
Mr Zebari defended the committee’s original listing, saying that “the committee has done the professional work to identify and freeze the assets of the terrorist groups".
Some Iraqi officials believe the episode was engineered to weaken Mr Al Sudani’s prospects for a second term by harming his relations with Tehran-backed groups.
One official said the move was intended to “ensure” that Mr Al Sudani does not secure another mandate. “Opponents of the Prime Minister sought to sabotage his bid to run for office,” he said, adding that “whether he can recover from this blow remains unknown.”
During the last elections, Mr Al Sudani ran under an independent list and did not formally join the Co-ordination Framework, despite its backing.
Pro-Iranian lawmaker Mustafa Sanad condemned the government’s handling of the crisis on social media, writing that it had “taken a disgraceful stance that no other Arab state has done".
“Shame on you," he wrote.
An adviser to Mr Al Sudani rejected accusations of political pressure entirely, telling the media that the administration “is not facing any pressures from any sides” and that “the government did not take part in the designations".
Ongoing pressure
On Thursday, the Prime Minister announced an investigation to hold "those responsible for the error". He added that Iraq has only approved freezing the funds of organisations tied to ISIS and Al Qaeda. “Our government will not compromise its stance when it comes to Lebanon and the Palestinians,” he said.
While Iran-backed groups pushed Baghdad to retract the designations, Washington had been pressing in the opposite direction.
“The Iraqi government is under significant pressure by the US to rein in the factions of the PMF,” said Renad Mansour, director of the Iraq Initiative at London’s Chatham House. “The US sent a very strong message to the government, and Prime Minister Mohammed Shia Al Sudani succumbed to this pressure and the need to designate the groups.”
According to Mr Mansour, the pressure intensified after an attack last week on the Khor Mor gasfield in the Kurdistan Region, which Kurdish authorities blamed on Iran-backed militias.
Mr Al Sudani “took the first step to respond to US pressure” by placing Hezbollah and the Houthis on the list, he said. “Such a decision would have significant backlash because to use the word terrorist and designation would put them in the same category as ISIS."
For years, Iraq has attempted to maintain a precarious balance between Tehran and Washington. Both powers continue to push for influence, and both are exerting pressure on Baghdad at a moment when the Prime Minister is navigating domestic rivalries and a volatile security environment.
Mr Al Sudani has said he intends to keep armed groups “in check” as he seeks a second term. He has also signalled a desire to deepen ties with the US administration, while maintaining relations with Iran-backed parties that helped elevate him to power in 2022.
The US continues to sanction Iraqis accused of assisting Tehran in evading financial restrictions.
