The Coordination Framework, Iraq's alliance of Shia political blocs, nominated Al-Zaidi as a consensus candidate to succeed Mohammed Shia' Al-Sudani. His lack of a traditional power base is viewed as both an asset and a vulnerability. Supporters reckon it makes him less tied to specific factional interests and potentially more focused on practical economic management. Critics argue it leaves him exposed to pressure from competing forces—both domestic political blocs and the external powers that have significant stakes in Iraq's direction.
What's not in dispute is the economic expertise he brings. Iraq's facing a budget gap estimated at around $9.5 billion monthly due to disrupted oil exports from the Strait of Hormuz crisis. The Ministry of Finance is reportedly preparing a three-pronged emergency plan involving internal borrowing, external borrowing, and measures to maximise non-oil revenues through taxes, fees, and financial reforms. Having a Prime Minister with banking and business experience during a fiscal emergency could prove valuable—or at least, that's the bet Baghdad's political establishment is making.
Cabinet Composition and What's Missing
The ministers who secured parliamentary approval include some notable appointments. Basim Mohammed was named Oil Minister—a critical portfolio given that petroleum revenues still account for roughly 90 percent of government income. Fuad Hussein was kept on as Foreign Minister, providing continuity in Iraq's diplomatic relationships during a period of significant regional volatility. Sarwa Abdulwahid becomes Environment Minister, the only woman in the approved cabinet lineup.
The Finance Ministry went to Faleh Sari, while Muthanna Ali Mahdi Al Tamimi—a member of the Iran-backed Badr Organisation—secured the Water Resources portfolio. That last appointment matters because it signals that Iranian-aligned political groups maintain influence in the new government despite pressure from Washington to limit their role. The approved ministers represent a balancing act between competing domestic and foreign interests that Al-Zaidi will need to maintain throughout his term.
What's conspicuously missing are the Defence and Interior ministers—the security portfolios that control Iraq's military and police forces. Parliament failed to reach consensus on these critical posts, with heated exchanges among lawmakers over the Interior Minister nominee reportedly derailing the approval process. These positions are expected to be filled after Eid Al-Adha holidays at the end of May, but their absence from the initial cabinet reveals the ongoing tensions around security control and militia disarmament.
The Militia Question and US Backing
Al-Zaidi's government program explicitly includes "reforming the security apparatus by restricting weapons to state control and strengthening the capabilities of the security forces," according to the Iraqi News Agency. That's a direct challenge to the Iran-backed militia groups that have operated with considerable autonomy in Iraq for years. Whether a first-time Prime Minister with no independent power base can actually enforce state monopoly on weapons remains to be seen.
The political wing of Asa'ib Ahl al-Haq, one of the prominent Iran-aligned militia groups, announced it would only consider participating in the government after the weapons monopoly issue gets addressed. That's diplomatic language for "we're not giving up our guns just because the new PM says so." The standoff between Washington's demand that Iraq curb militia influence and Tehran's insistence on maintaining its Iraqi proxies hasn't been resolved—it's just been postponed while the partial cabinet gets on with governing.
US President Donald Trump personally voiced strong support for Al-Zaidi in a phone call on May 1, before the parliamentary vote. That American backing is significant because it signals Washington sees Al-Zaidi as someone they can work with—a crucial factor for Iraq's relationship with international financial institutions, foreign investment, and access to global markets. But it also paints a target on him from groups that oppose US influence in Iraq.
What This Means for Iraq's Economic Direction
For Australians holding Iraqi Dinar or watching Iraq's economic development, the formation of a new government matters because it ends the policy paralysis that's hampered decision-making for half a year. Iraq's been operating under caretaker government arrangements while oil revenues plummeted due to the Hormuz crisis, infrastructure needed attention, and banking reforms required implementation. Having an actual government with ministerial authority to make decisions and allocate resources represents a return to functional governance.
Al-Zaidi's business background suggests an economic policy orientation rather than purely ideological positioning. In his first public statement after nomination, he emphasised expanding efforts to improve social services and economic conditions while "assessing risks and capitalising on opportunities." That's corporate language, not revolutionary rhetoric—which might actually be what Iraq needs during a period requiring practical crisis management rather than grand visions.
The political balancing act he'll need to maintain—between US expectations for militia control, Iranian influence through aligned political blocs, domestic demands for economic improvement, and the practical challenges of governing with an incomplete cabinet—would test any leader. For someone without prior governmental experience, it's a baptism by fire. Whether his banking and business skills translate into effective political leadership will become clear over the coming months.
The incomplete cabinet creates both risks and opportunities. On one hand, operating without Defence and Interior ministers means critical security decisions may be delayed or complicated. On the other hand, it allowed the government to be formed without immediately resolving the militia participation question—buying time for negotiations while allowing other ministries to begin functioning. That's either pragmatic flexibility or dangerous procrastination, depending on your perspective.
Regional Context and Timing
Al-Zaidi takes office while Iraq navigates multiple simultaneous crises. The Strait of Hormuz remains effectively closed due to the US-Israel conflict with Iran, disrupting global oil markets and hammering Iraq's export volumes. Regional tensions remain high despite a temporary ceasefire announced in April between the US and Iran. Iraq's attempting to maintain neutrality in that conflict while hosting US military bases and Iranian-aligned militias—a precarious position that requires constant diplomatic navigation.
The government formation comes at a moment when Iraq desperately needs functioning leadership. Drought conditions have displaced nearly 180,000 Iraqis. Water scarcity threatens agriculture and food security. Infrastructure deficits constrain economic activity. And the fiscal gap from reduced oil exports requires immediate policy responses. Al-Zaidi's government doesn't have the luxury of a honeymoon period—they need to start managing crises immediately.
International observers are watching to see whether Iraq can maintain political stability during regional turbulence. The fact that parliament managed to approve even a partial cabinet after six months of deadlock represents progress compared to some previous government formation processes that dragged on even longer. That Al-Zaidi secured both US and Iranian expressions of support—however qualified—suggests he's managed the initial diplomatic balancing act successfully.
For observers interested in Iraq's economic trajectory, the new government formation provides concrete developments to track: cabinet completion after Eid, policy responses to the fiscal emergency, progress on banking sector reforms, infrastructure investment decisions, and the handling of the militia weapons question. These aren't speculative indicators—they're measurable outcomes that will reveal whether Iraq's political system can deliver functional governance during challenging circumstances.
Al-Zaidi's appointment as Iraq's first businessman Prime Minister represents either a pragmatic response to economic crisis or a desperate gamble on an untested leader, depending on who you ask. What's not in dispute is that he's inherited a complicated mess: regional conflict, fiscal emergency, political fragmentation, security challenges, and infrastructure deficits. Whether his business acumen translates into effective crisis management will determine not just his political survival but Iraq's economic stability through a genuinely difficult period.
The partial cabinet approval gets Iraq's government machinery moving again after half a year of paralysis. That's genuinely positive for anyone watching Iraq's institutional development. But the hard work—completing the cabinet, implementing fiscal emergency measures, managing competing foreign pressures, and delivering economic improvements to a population that's run out of patience—all lies ahead. The next few months will reveal whether Iraq's political system made a smart bet on an outsider or simply postponed difficult decisions by selecting someone without the power base to make them.
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