Iraq Revokes Terrorist Designation for Hezbollah and Houthis Amid Political Pressure

On November 17, 2023, Iraq's Justice Ministry mistakenly included Lebanon's Hezbollah and Yemen's Houthi movement (Ansar Allah) in a national asset-freeze list, designating them as terrorist organizations. This decision, which grouped them alongside groups like al-Qaeda and the Islamic State, was met with immediate backlash from various political factions within Iraq. Following significant political pressure, the Iraqi government reversed this designation on December 7, 2023, labeling the initial inclusion as an "error made before consideration."

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The designation of Hezbollah and the Houthis as terrorists was seen as a potential shift in Iraq's foreign policy, particularly under Prime Minister Mohammed Shia al-Sudani, whose government is largely composed of parties with ties to Iran. Analysts noted that the move could have been interpreted as capitulating to U.S. pressure to curb Iranian influence in the region. In response to the backlash, al-Sudani ordered an urgent investigation into the circumstances surrounding the error, emphasizing that the mistake did not reflect Iraq's actual policy stance.

Sudani orders investigation into Hezbollah, Houthi asset freeze errorYnetNewsIraq revokes recognition of Hezbollah and Houthis as terrorists, calling it a "mistake"South China Morning PostMiddle East Eye

Political factions aligned with Iran, including powerful Shiite militias, expressed outrage over the designation. They accused the government of jeopardizing regional alliances and risking confrontation with Tehran. Hussain Mouanes, an MP from the Iran-backed Kataeb Hezbollah faction, criticized the government as "irresponsible," while Iraqi political analyst Ali al-Mikdam warned that labeling these groups as terrorists could provoke serious internal tensions.

Middle East EyeIraq revokes recognition of Hezbollah and Houthis as terrorists, calling it a "mistake"YnetNewsSudani orders investigation into Hezbollah, Houthi asset freeze errorSouth China Morning Post

In a statement, Prime Minister al-Sudani clarified that the asset freeze was intended only for entities linked to the Islamic State and al-Qaeda, following a request from Malaysia. He reiterated Iraq's principled humanitarian stance regarding conflicts in Lebanon and Palestine, asserting that the government supports the legitimate rights of affected populations.

South China Morning PostSudani orders investigation into Hezbollah, Houthi asset freeze errorYnetNewsIraq revokes recognition of Hezbollah and Houthis as terrorists, calling it a "mistake"Middle East Eye

The Justice Ministry later confirmed that the list published was not current and would be corrected, removing groups not affiliated with ISIS or al-Qaeda. Al-Sudani's office emphasized that the designation was a bureaucratic error and did not reflect Iraq's political or humanitarian positions.

Sudani orders investigation into Hezbollah, Houthi asset freeze error

While the Iraqi government maintains that the designation was a mistake, some analysts question whether the reversal was a genuine error or a strategic retreat to appease powerful Iranian-aligned factions. The rapid withdrawal of the designation has raised concerns about the government's ability to navigate the complex political landscape, balancing U.S. demands with regional alliances.

Iraq revokes recognition of Hezbollah and Houthis as terrorists, calling it a "mistake"

• “Rhe approval of the Iraqi side to freeze the funds based on the request of the Malaysian side was limited to listing the entities and individuals associated with the terrorist organizations [the Islamic State (ISIS)] and al-Qaeda.” — Mohammed Shia al-Sudani, Prime Minister of Iraq

Sudani orders investigation into Hezbollah, Houthi asset freeze error

• “Therefore, labelling these groups as terrorist organisations carries significant risks and could provoke serious internal tensions with affiliated or allied factions.” — Ali al-Mikdam, Iraqi Analyst

Middle East Eye

• “This is precisely what occurred, as the government, under intense pressure, hastily framed the move as an 'unintentional error' and withdrew it from the official gazette.” — Unattributed Source

Middle East Eye

The incident underscores the delicate balance Iraq must maintain between U.S. interests and its relationships with Iran and its regional allies. As Prime Minister al-Sudani seeks to solidify his leadership, the implications of this controversy may have lasting effects on Iraq's political landscape and its foreign relations.

Middle East Eye