Iraq Economic News and Points To Ponder Tuesday Evening 5-5-26
Al-Zaidi Is Close To Announcing His Government: Internal Consensus, International Openness, And Escalating Iranian Concern
Baghdad – One News 5/05/2026 Monte Carlo International Radio reported that Ali al-Zaidi, who is tasked with forming the Iraqi government, informed the Coordination Framework forces that his government formation is ready in preparation for presenting it to Parliament next week, in a move that indicates the political scene is nearing resolution after a period of intensive consultations.
According to the sources, the anticipated government is heading towards broad participation that includes various political parties, with a notable presence of factions within the ministerial formation, reflecting an attempt to achieve internal balance and contain the various active forces.
In the same context, information indicated that there was no American veto on al-Zaydi’s ministerial choices, in exchange for clear pledges regarding dealing with the armed factions file, which may pave the way for a more stable relationship between Baghdad and Washington during the next stage.
In contrast, Iranian circles expressed concern about the extent of American and Western support that al-Zaidi enjoys, considering that this may affect the nature of the political balances within Iraq.
These developments come at a sensitive time, as the Iraqi public awaits the results of the new government formation and its ability to meet internal demands and maintain balance in regional and international relations.
https://1news-iq.net/الزيدي-يقترب-من-إعلان-حكومته-توافق-داخ/
The Fragility Of The Iraqi Economy Is Exacerbated By The Repercussions Of The Iran-Iraq War And The Closure Of The Strait Of Hormuz
Baghdad – One News 5/05/2026 The Lebanese newspaper Al-Akhbar stated that the Iraqi economy is the most fragile among the countries affected by the Strait of Hormuz closure crisis, due to its heavy reliance on oil revenues, which constituted about 86.3% of the budget revenues in 2024.
She pointed out that Iraq also depends on the passage of the majority of its imports, both food and non-food, through the strait, making it vulnerable to direct impacts in the event of a disruption to navigation, amid existing economic and social challenges, including an unemployment rate of about 15.5% and a poverty rate of nearly 17.5%.
She added that any disruption to shipping traffic in the Strait of Hormuz would quickly affect the government’s ability to finance public spending and implement its development plans, with concerns about delayed salary payments and rising commodity prices in local markets, further straining citizens’ purchasing power. https://1news-iq.net/الأخبار-اللبنانية-هشاشة-الاقتصاد-الع/
Al-Zaidi Offers To Mediate Between Iran And America To Resolve The Ongoing Conflict
Baghdad = One News 5/05/2026 Prime Minister-designate Ali al-Zaidi received a phone call from the Iranian President, who congratulated him on his official appointment to form the new government.
Both sides agreed to exchange visits during the next phase.
Al-Zaydi affirmed Iraq’s support for the diplomatic path and the adoption of dialogue to resolve disputes and contain crises, noting Baghdad’s ability to play a mediating role between Iran and the United States.
The Mediator In The Room: President Barzani Comes To Baghdad With More Than Erbil's Demands
2026-05-05 Shafaq News In Baghdad, governments are not born from ballot boxes alone; they emerge from a long chain of understandings, guarantees, and mutual anxieties, and it was into this chain that Kurdistan Region President Nechirvan Barzani pressed his weight during a two-day visit to the capital that, in its timing and the breadth of its meetings, amounted to something more deliberate than protocol.
On the surface, the visit followed a familiar pattern: a Kurdish leader arrives in Baghdad ahead of a new government cycle, reaffirms constitutional principles, and returns to Erbil.
But the political moment it landed in was anything but routine. Iraq's government formation process is unfolding under simultaneous pressure from an unresolved regional conflict, Washington's recalibrating posture toward Baghdad, Tehran's calculations about the next Iraqi cabinet, and a set of Erbil-Baghdad disputes —oil, salaries, budget allocations, the status of disputed territories under Article 140— that have not left the negotiating table in years.
Within the first hours of his arrival, Barzani met with leaders of the Shiite ruling Coordination Framework, including State of Law head, Nouri al-Maliki, caretaker Prime Minister Mohammed Shia al-Sudani, al-Hikma (Wisdom) Movement leader Ammar al-Hakim, then with prime minister-designate Ali Falah al-Zaidi, and leaders of the Sunni National Political Council.
Read more: Who is Ali Al-Zaidi? The businessman tapped for Iraq's premiership
The agenda moved from government formation to oil revenue sharing, salary arrears, the federal budget, and the necessity of insulating Iraq from regional escalation —a range that reflected not a courtesy call but a substantive attempt to shape the parameters of what comes next.
Official statements from the meetings emphasized the need for a government "commensurate with the challenges of the current phase," capable of meeting the demands of Iraq's constituent communities while resolving outstanding Erbil-Baghdad disputes on a constitutional basis. (Oil & Gas Law/HCL) Barzani also reaffirmed Kurdistan's readiness to support the new government's formation.
Read more: Ali al-Zaidi named Iraq's prime minister: Easy nomination, harder road ahead
Testing the Ground
Kurdish politician Abd al-Salam Barwari described the visit as "a new positive development for breaking the tensions that accompanied the post-presidential election phase" —tensions that had been building since the KDP staked a claim to the Iraqi presidency as a matter of established political entitlement, only to find Sunni and Shiite coalition leaders divided between rival Kurdish candidates, with some backing the PUK's nominee, Nizar Amedi, over Fuad Hussein, one of the KDP's most senior figures.
Barwari was careful to characterize Barzani's meetings as exploratory rather than conclusive— closer to preliminary consultations for testing positions and exchanging views before the moment of decision than to a finalized political settlement.
Speaking to Shafaq News, Barwari pointed to al-Zaidi's recent visit to Erbil, where the prime minister-designate met separately with Kurdistan Democratic Party (KDP) leader Masoud Barzani, President Nechirvan Barzani, PM Masrour Barzani, and Patriotic Union of Kurdistan head, Bafel Talabani, as evidence that the Kurdistan Region's position is being treated as a structural variable in the government formation calculus, not an afterthought.
The KDP's weight in that calculus is concrete: the party secured over one million votes in November's parliamentary elections, the highest total of any single party nationwide, translating into 26 seats in parliament, making it a bloc no government formation can ignore mathematically. Political circles in Baghdad read that visit as an attempt to avoid repeating the crises that plagued previous governments' relationships with the Region from the outset.
Researcher in political affairs Suhad al-Shammari offered a broader frame, noting that the current government formation is unfolding in conditions meaningfully different from previous cycles, with a prime minister-designate navigating simultaneously between rebuilding trust among political forces, managing divisions within each community, and arranging a working relationship with the Kurdistan Region that does not begin in confrontation.
Barzani's visit, in her assessment, signals Kurdistan's readiness to “engage constructively,” though she stopped short of predicting specific outcomes, describing the visit's likely contribution as “bringing positions closer rather than resolving the underlying disputes.”
That picture from the meetings said more than any statement. In one session with leaders of the Sunni National Political Council, Barzani sat at the center flanked by prominent Sunni figures, including rivals Khamis al-Khanjar and Mohammed al-Halbousi, a composition that appeared to summarize the visit's function.
He was not present solely as Erbil's representative but as someone operating in the grey space between adversaries, attempting to anchor a proposition: that the next government cannot be born from an internal Shiite understanding alone, nor from an isolated distribution of positions, but from a broader equilibrium that includes Kurds, Sunnis, and Shiites within a single political architecture.
Both sides agreed that the new government must prioritize services and reconstruction, and that dialogue among political forces must be the entry point for resolving crises rather than a formality that follows them.
Files That Never Leave the Table
Political analyst Ali al-Baydar situated the visit within a structural argument, telling Shafaq News that the issue is less about individual political figures than about the prevailing political culture, and that the next government will largely be a continuation of the Coordination Framework's internal balances, with the variable being how Baghdad manages its relationship with Erbil rather than whether that relationship changes fundamentally.
Al-Baydar assessed al-Zaidi as someone disinclined toward escalation with the Region or toward unilateral decisions against it, suggesting the new prime minister-designate may offer more room for addressing outstanding files within constitutional frameworks than his predecessors, while leaving open whether that room translates into resolved disputes.
Hussein al-Kinani, head of al-Hadaf Center for Studies, noted to Shafaq News that Barzani's meetings with al-Zaidi fall within the standard pattern of coalition-building that precedes every new government cycle, but that their substantive content centers on concrete unresolved files: the federal budget, oil exports, oil and non-oil revenues, and the degree to which both Erbil and Baghdad have honored previous agreements.
Those files carry weight beyond the political. Salaries in the Kurdistan Region have become a recurring living crisis for the population.
Oil has become the permanent headline of the constitutional and financial dispute between Erbil and Baghdad, a dispute sharpened in 2023 when the International Chamber of Commerce in Paris ruled that Turkiye must pay Iraq approximately $1.5 billion for breaching the Iraq-Turkiye Pipeline agreement by allowing unauthorized Kurdish oil exports, halting loading, and export operations through the pipeline, and significantly impacting the Region's revenues.
The budget, renegotiated in cycles, has exposed the fragility of arrangements that both sides treat as temporary. Taken together, they make Barzani's visit an early test of whether the incoming government intends to manage these crises as it finds them or move toward closing them, a distinction that matters more to the Region's population than to the political class on either side.
Read more: Into 2026, Baghdad and Erbil face the same disputes—with higher stakes
Al-Zaidi is operating under time pressure, constitutionally required to present his cabinet within 30 days, and aware that passing the government will require more than a numerical parliamentary majority; it will require understandings that ensure Kurdish and Sunni participation within an arrangement that no party feels excluded from.
Barzani's visit, in this reading, functions as an attempt to produce a dual political guarantee: an assurance to Erbil that the incoming Baghdad will not revert to the language of financial pressure and punitive measures, and an assurance to Baghdad that the Region will be a source of governmental stability rather than a recurring source of tension.
The details of ministerial portfolios and the distribution of positions also remain subject to ongoing negotiation. What Barzani's visit makes visible is that the contest over the next government is not only about who enters the cabinet, but about the shape of the state that cabinet will manage, the boundaries of the relationship between center and Region, and Iraq's capacity to hold its internal arrangements together in a region changing faster than its political class is moving to keep pace.
The Bill Comes Due
Three baseline conditions Barzani wanted to stress before the new government takes shape: genuine partnership in decision-making, constitutional rather than provisional solutions to the outstanding files, and Iraq's insulation from the currents of regional escalation. Whether those conditions become structurally embedded in the next government or remain aspirational language in post-meeting statements is the question the visit leaves open.
Written and edited by Shafaq News staff.