Hezbollah, Houthis briefly labeled terrorists in Iraq, prompt backlash against PM Sudani

Report by Nada Andraos, English adaptation by Mariella Succar

On Thursday morning at 7 a.m. Baghdad time, the Iraqi Official Gazette published a decision from the committee responsible for freezing terrorists’ assets at the Central Bank of Iraq. 

The decision included Hezbollah and the Houthi Ansar Allah alongside ISIS and al-Qaeda on the terrorism list, freezing their financial assets within Iraq.

As the Official Gazette is the state’s formal publication and the official reference for government and judicial decisions, the listing was considered effective immediately, sparking a political shock both inside Iraq and abroad.

Within hours, the decision became the center of debate over Iraq’s position in the regional conflict and the motives behind the government’s timing. 

Some accused Prime Minister Mohammed Shia’ Al Sudani of attempting to court U.S. favor at the expense of relations with Tehran, in what was seen as a move to bolster his chances for a second term.

This criticism was fueled by unwelcoming signals from the United States, including warnings attributed to Tom Barrack that forming the next government would carry little weight in Washington unless aligned with U.S. priorities.

The decision was quickly removed from the Gazette, with authorities claiming it had been published before final review. The government later released a revised statement.

Prime Minister Sudani issued an official statement announcing an urgent investigation to determine responsibility and hold accountable those responsible for what he described as an error in the committee’s decision.

The rapid retraction did not quell the crisis; instead, it increased suspicion that the removal was merely a media maneuver to defuse political and popular anger.

The episode clearly reflected Iraq’s internal political struggle. Sudani recognizes that the balance of power is not in his favor, with Iranian influence remaining strong and controlling key levers of political decision-making. 

His attempt to seek cover through relations with Washington left him almost entirely isolated, lacking strong internal support.

Meanwhile, Shiite forces — whether factions aligned with Iran or traditional groups —  were united in their opposition to Sudani’s continuation, albeit for different reasons, collectively aiming to protect the Shiite political system and prevent manipulation of internal divisions.

The outcome was a political setback for the prime minister: he failed to secure decisive U.S. support, alienated Iranian interests, and found his position increasingly precarious on the eve of upcoming government milestones. 

Analysts suggest the incident will also draw greater U.S. attention to what it views as Iran’s dominance over Iraqi decision-making, indicating that future American pressure may target not only the Iraqi government but Tehran’s influence within the country as well.