By Noussaibah Younis

June 11 (Reuters) – The battle to determine the composition of the next Iraqi government has not yet been won, but Iran could secure a strategic victory in the face of lackluster engagement by the United States. Senior U.S. foreign policy officials are distracted by the upcoming summit with North Korea, while those assigned to push back against Iranian influence are solely focused on re-imposing sanctions – failing to appreciate the significance of this potential turning point for Tehran’s regional influence.

The elections, which took place on May 12, distributed parliamentary seats across a highly fragmented set of political parties and groups. Iraqi politicians are now negotiating hard to try to build a viable coalition. But the Iraqis are not engaging in this process alone. Foreign powers, particularly Iran and the United States, shape the process of coalition building that follows every election. These powers can bring disparate political parties together, can incentivize them to collaborate, and can act as a referee to ensure that pledges made in the coalition-forming process are honored.

To form a government, a coalition of at least 165 members of parliament must be created. Three moderate groups, Sairoon, Hikmah, and Wataniyya, have joined forces and though, collectively, they have 99 seats, they will struggle to reach 165 without U.S. support.

Iran, meanwhile, is heavily engaged in efforts to broker an alternative governing coalition that could protect its extensive political, security and economic interests in Iraq. Tehran wants to ensure that the next Iraqi government continues the process of institutionalizing the Popular Mobilization Units, the Shia-dominated paramilitary groups who have links with Tehran. It wants to prevent U.S. and Coalition forces from establishing a permanent military presence in the country. It wants Iraq to tacitly support its regional goals, particularly its support of the Syrian regime and of Hezbollah in Lebanon. And it wants to ensure wide-ranging access to the Iraqi formal and informal economy.

The urgency of these long-standing Iranian goals has been heightened by the U.S. withdrawal from the Iran nuclear deal. The impact of renewed sanctions makes Iranian access to Iraq’s foreign currency markets, its import markets, and its trade routes essential to countering coming economic strains. The public humiliation implicit in President Donald Trump’s withdrawal from the accord also strengthens Iran’s resolve to expand its regional influence at Washington’s expense.

The Trump administration has professed that pushing back against Iran’s regional ambitions is a key policy priority. The United States wants to see a new Iraqi government that either backs Washington, or at least stays neutral, in regional conflicts. It wants to see a stable and unified Iraq in which the Iraqi government addresses Sunni and Kurdish grievances. And it wants to continue to strengthen the official Iraqi Security Forces to reduce the influence of the Popular Mobilization Units and to enhance the state’s ability to defend itself against a potential Islamic State resurgence.

Despite these goals, the Trump administration is investing little to influence the coalition-building process. Officials have failed to understand that Iran could substantially expand its influence in Iraq by shaping Iraqi government formation, with far-reaching consequences for the balance of power between Iran and the United States in the Middle East.

At the working level, my recent visits to Iraq and Washington left me with the view that some are complacent that a new government will be favorable to the United States; others are deeply cynical about Washington’s ability to influence Iraqi politics.

The most likely government to emerge in Iraq is a grand coalition of all the major political entities, but how this coalition comes about will determine the level of Iranian or U.S. influence in Baghdad. Iran wants to see Fatah, the alliance linked to the Popular Mobilization Units, take a lead in forming a grand coalition. This would involve Fatah persuading the Nasr alliance, led by current Prime Minister Haider al-Abadi, and the State of Law alliance, led by former Prime Minister Nouri al-Maliki, and the Kurdish political parties to enter into coalition with it. Fatah already enjoys a good relationship with State of Law, and it could persuade Abadi to join it by offering him the prime minister’s position. It could bring Kurds on board by offering the Kurdistan Region a better economic deal with Baghdad.

All these promises would be underwritten by Iranian guarantees. If Fatah manages to secure these key coalition partners, it will gain unstoppable momentum, and other parties will fight to join the coalition in an effort to capture key government positions. Such an outcome will empower Fatah to make key decisions about the distribution of ministries, and will enable Fatah to keep important security and economy linked ministries for itself. Fatah would be the central power-broker in the next Iraqi government, and its extensive links with Iran would ensure that Iran would be further empowered in Iraq.

The alternative is that Moqtada al-Sadr’s Sairoon alliance leads the coalition-building process by bringing together Haider al-Abadi’s Nasr, the Hikmah party led by moderate Shia cleric Ammar al-Hakim, and the Kurdish parties. Although Sadr is certainly not pro-American, he tries to protect Iraq from excessive Iranian influence, and a strong role for him in the next government is the best possible outcome for the United States. From the perspective of his potential Iraqi coalition partners, however, Sadr, is a risky bet. He makes massive demands of his political partners and he is quick to mobilize his supporters in mass demonstrations when the desired political outcomes are not achieved. Moreover, promises made by Sadr are not underwritten by an international actor, since the United States is not deeply engaged in brokering this deal, so a coalition led by him would be more vulnerable to collapse. Abadi and the Kurds may look at these factors and decide that entering into a deal with Fatah is a safer option.

The Trump administration has made it a top priority to counter Iranian influence in the Middle East, but in practice it has mainly pursued this goal by destroying the nuclear deal. In reality, diminishing Iranian influence requires the United States to compete to shape political realities in the Middle East through painstaking local political engagement, including by sending senior administration officials to Baghdad, by allocating resources that can be used to reward a favorable new government, and by intensively overseeing the work of U.S. officials in Iraq.

As Iraq looks set to undergo a lengthy vote recount in the face of accusations of fraud and, more recently, a fire at a ballot storage site, the United States has time to reenergize its engagement with Baghdad. But if there is no shift in approach, Washington could squander a valuable opportunity to hold the line against the expansion of Iranian power in the Middle East.

(Nussaibah Younis is an associate fellow at Chatham House. She directs the Iraq Young Leadership Fellows Program at the American University of Iraq, Sulaimani, and was previously director of the task force on the Future of Iraq at the Atlantic Council. The opinions expressed are her own.)