Al Zaidi rejects dragging Iraq into U.S. sanctions against Iran

Baghdad (IraqiNews.com) — Iraq’s governing State Administration Coalition convened its 38th regular session at the Government Palace on Sunday, September 6, 2026, issuing a strong warning on the necessity of insulating Iraq from the repercussions of U.S. sanctions imposed on regional states, emphasizing that the country’s tight fiscal situation leaves zero margin for geopolitical risk. During the meeting, Prime Minister Ali Al-Zaidi announced an immediate moratorium on the demolition of informal settlements until the distribution of the sovereign one-million residential plot initiative is completed. The premier also confirmed the imminent release of a fresh liquidity tranche to clear long-standing state arrears owed to local farmers and private contracting firms. Key Outcomes & Policy Directives Insulating Against Regional Sanctions: The coalition explicitly stressed shielding Iraq from secondary impacts of Washington’s sanctions targeting regional neighbors (chiefly Iran). Political leaders warned that ongoing liquidity shortages and mounting fiscal pressures mean Iraq cannot endure financial isolation or retaliatory banking measures. Moratorium on Slum Demolitions: Prime Minister Al-Zaidi ordered municipal authorities to halt all eviction and demolition campaigns targeting informal housing until eligible, propertyless families receive deeds under the one-million serviced plot program. Liquidity Injections for Farmers & Contractors: A new sovereign funding disbursement will be released shortly to settle dues for domestic grain producers and infrastructure contractors, easing liquidity bottlenecks across the real economy. Oil & Gas Draft Law Progress: The coalition reviewed an updated draft of the federal Oil and Gas Law, finalizing consensus terms before its formal transmission to the Council of Representatives (parliament). Cabinet Completion Dialogues: Political blocs agreed to launch direct negotiations next week to fill remaining vacant ministerial portfolios. Anti-Corruption & Institutional Reform: Leaders reaffirmed unanimous political backing for Al-Zaidi’s anti-graft drive and judicial referrals, while reviewing the draft Federal Internal Oversight Authority Law. Major Policy Decisions at the 38th Coalition Meeting Policy FileDirect Executive ActionStrategic SignificanceRegional Geopolitics & SanctionsStrict neutrality; protecting banking and oil flows from U.S. sanctionsPreserves dollar-clearing access and safeguards fragile financial stability.Housing & Informal SettlementsHalt on property demolitions pending plot allocationPrevents social displacement; aligns urban clearance with the 1M land initiative.Public Dues & ArrearsImminent payment tranche for farmers and commercial contractorsInjects state liquidity directly into the agricultural and construction sectors.Hydrocarbon LegislationFinalizing the Federal Oil & Gas Law draftCreates a binding statutory formula between Baghdad, Erbil, and producing provinces.Government FormationDialogues with entitled parliamentary blocs begin next weekResolves vacant cabinet seats to strengthen executive decision-making.Institutional AccountabilityAdvancing the Federal Internal Oversight Authority billReinforces internal audit mechanics across ministries and state-owned banks. The coalition’s explicit warning regarding U.S. sanctions highlights heightened sensitivity within Baghdad’s ruling elite over banking compliance, correspondent account access, and external financial exposure. With public debt climbing and mandatory spending on civil salaries and social programs averaging over 7.4 trillion IQD per month, preserving open financial channels with Western institutions is viewed by the coalition as an essential safeguard for national economic solvency.