Iran’s popularity in Iraq plummeted to near zero after its violent treatment of protesters, a new academic report has said.
Despite being seen as the “winner” after the 2003 US-led invasion of Iraq, Iran’s continued interference has led to increasingly hard feelings towards Tehran.
In particular the violence meted out by Iran-backed militias, including assassinations, has seen trust evaporate, the report by the London School of Economics' Middle East Centre said.
“Anti-Iranian sentiment has effectively undermined Iran’s claim that its activities in Iraq are at the behest of the people,” it stated.
Approval ratings for Iran reached a high of 86 per cent in 2015 during the fight against ISIS.
But the latest polling among pro-reform protesters in Iraq showed only 1 per cent trusted Iran, compared with 7 per cent who trusted the US, and 30 per cent who trusted the UN.
But Iran’s influence still extends over the political elite, militias and at a grass-roots level, the report written by Dr Jessica Watkins said.
The Tehran regime relied on “patronage networks” that would not be “easily dislodged” by military operations.
“Over the past 17 years, the Islamic Republic has gained extensive leverage over Iraq’s national security and political decision-making at local and national levels,” the paper said.
But within Iraq, Iran’s public image had suffered enormously since mass public protests against its influence broke out across the country in October 2019.
The violence of Iran-backed militias had led to the groups being regarded as “predators rather than liberators”, the report said.
Iran’s influence, including the allocation of public-sector jobs, was “a core source of grievance motivating the Iraqi youth protest movement”, the report said.
The young protesters wanted an “end to cronyism and corruption within public office”, and for the government to address unemployment and poor public services.
“In this respect, they favour the same type of transparency and accountability within government that western states seek to promote," the report said.
"However, the US and its allies are also widely distrusted.”
America appears to have concluded that, aside from military action against Iran or its proxies, “it can do little to confront Iranian smart power and has significantly downgraded its diplomatic relations with the government of Iraq”.
Relations with the US plunged after President Donald Trump ordered the assassination of the Iranian commander Qassem Suleimani and Iraqi militia leader Abu Mahdi Al Muhandis.
But the appointment of Mustafa Al Kadhimi as Iraq’s Prime Minister in May, after six months of paralysis, showed that the American conduct “has not negated US influence over domestic affairs”.
The US assassinations had also produced a “charisma deficit” in the paramilitary leadership, where the ability of their replacements to command equal loyalty was “doubtful”.
While Iranian allies in Iraq have publicly deferred to the supreme leader Ayatollah Ali Al Sistani, some have capitalised on his name to raise funds and popularity.
The paper cautioned that when Mr Al Sistani, 88, passed away, his death would create a vacuum in religious authority, which Tehran would probably seek to exploit.
At home, Iran is increasingly coming under public pressure to cease its funding of causes abroad at a time of severe domestic economic hardship.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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