Based on monitoring reports from Hanwei International’s security officers stationed in Iraq and relevant media coverage, Hanwei International’s analysis concludes that Iraq’s security environment remained under sustained pressure in July, with prominent geopolitical spill‑over risks and concurrent multiple domestic security hazards. Politically and economically: Iraq’s new government simultaneously advanced nationwide anti‑corruption campaigns and militia weapons nationalisation reforms, triggering concentrated outbursts of multi‑party contradictions. The petroleum industry endured dual internal‑and‑external shocks, directly widening the fiscal deficit. Waves of protests erupted across multiple provinces over unemployment and deficient basic public services. In terms of regional conflicts: Iranian Kurdish opposition forces sustained persistent military strikes; nationwide counter‑terrorism mopping‑up operations kept rolling forward; and successive drone strikes hit the Iraq‑Kuwait border. For social security: violent incidents including abductions, knife‑attacks and armed assaults occurred frequently, and unidentified drone activity prevailed across Iraqi territory.
July 2026 witnessed repeated armed assaults targeting large‑scale engineering projects and industrial facilities in Iraq. On July 8, the construction site of a large water‑supply complex contracted by Chinese enterprises in Maymunah, Maysan Governorate in southern Iraq was struck by two rockets. Only property damage was incurred with zero casualties. On July 27, the Farouk Pipe Foundry in Al‑Ghazaliyah, western Baghdad was hit by grenades, leaving two people wounded. Most infrastructure projects are located in suburban or remote locales with weak perimeter security, making them potential targets for terrorists and local armed factions.
I. Political and Economic Dimensions
(I) Anti‑corruption drive advances alongside weapons nationalisation amid intensifying geopolitical rivalry
Iraq’s new government pressed ahead with the national anti‑corruption campaign “Operation Dawn” and militia weapons nationalisation this month. Coupled with heightened geopolitical tensions stemming from the new Prime Minister’s visit to the United States, frictions among domestic political factions and local militias flared up, posing severe challenges to Iraq’s political stability.
Anti‑corruption efforts: On June 28, Iraqi Prime Minister Al‑Zaidi launched “Operation Dawn”, a special anti‑corruption arrest campaign. Acting on testimony from the former Deputy Minister of Oil, elite security forces raided Baghdad’s Green Zone, arresting more than 60 senior officials from Shia, Sunni and other factions in the first round. Detainees included multiple parliamentarians from former Prime Minister Al‑Sudani’s bloc and the ex‑Governor of Wasit Governorate. Most arrestees were second‑ and third‑tier political figures; core high‑level corrupt officials remained untouched, drawing external accusations of selective law‑enforcement and political purging. On July 6, Operation Dawn entered its second phase, expanding crackdowns against incumbent and former officials at all ranks. Investigations focused on systemic graft within oil, power and health sectors, alongside tracing overseas assets. The anti‑corruption push unfolded amid cabinet vacancies, further exacerbating factional rivalry over ministerial portfolios and internal fragmentation. For instance, on July 7, both the Director and Deputy Director of a power‑distribution bureau in Qadisiyah Governorate were arrested by the Federal Integrity Commission on bribery‑for‑public‑office charges. On July 9, four employees of a power‑distribution company in Diyala Governorate were referred to local judiciary for allegedly stealing power‑sector materials worth 2 billion Iraqi dinars.
Armed‑forces reform: Iraq set September 30 as the deadline for irregular armed groups to hand over weapons, and established a dedicated committee to oversee militia integration and weapons nationalisation. Moderate factions have begun surrendering arms, yet Iran‑aligned hard‑line groups such as Harakat Hezbollah al‑Nujaba and Kata’ib Hezbollah have preconditions for disarmament and refuse full demilitarisation. On July 15, Prime Minister Al‑Zaidi visited the United States and held talks with U.S. President Trump. The U.S. side demanded that Iraq forcibly disarm pro‑Iran militias and tie bilateral energy and defence cooperation to tangible militia disarmament and control outcomes. Al‑Zaidi pledged resolute progress on disarmament and weapons hand‑overs by pro‑Iran armed groups, while noting that previous assassination operations predated his tenure. On July 17, Iraq’s Islamic Resistance Movement offered a USD 10 million bounty for the assassination of Trump, avenging senior Iranian general Soleimani and former deputy leader of the Popular Mobilisation Forces Al‑Muhandis. This signals a sharp escalation in confrontation between Iraqi hard‑line militias, the Iraqi government and the United States. Attacks targeting U.S.‑affiliated installations and government premises will rise markedly.
(II) Iraq’s petroleum industry squeezed from inside and out; fiscal deficit surges
Since early 2026, Iraq’s oil sector has confronted severe combined internal and external pressures. Externally: Shipping through the Strait of Hormuz has been persistently disrupted since late February. As OPEC’s second‑largest oil producer, Iraq’s June exports stood at merely around 20 % of pre‑conflict volumes. S&P Global Commodity Insights reported 8.3 million barrels of Iraqi crude stranded offshore for shipment, ranking fourth globally. Total stranded volumes across the Gulf surpassed 90.5 million barrels, with refined‑product inventories exceeding 100 million barrels. Internally: Deteriorating security in the northern Kurdistan Region prompted multiple foreign‑funded oil‑and‑gas operators to shut down fields. On July 20, Gulf Keystone Petroleum (GKP) temporarily suspended output at the Shaikan oil‑field in the Kurdistan Region, triggering a 6.6 % drop in its share price. On July 21, ShaMaran Petroleum halted production and pipeline exports from its Atrush and Sarsang oil‑fields in Duhok Governorate. Earlier, private UAE‑based Dana Gas had closed core facilities at the Kormor gas‑field in Sulaymaniyah following security‑threat alerts. Multiple shutdowns reflect grave security risks to Kurdistan’s oil‑and‑gas infrastructure. Capital markets fear sustained regional conflicts will disrupt energy production, prompting voluntary production halts for risk mitigation.
Crude‑export disruptions triggered precipitous revenue losses. Central Bank of Iraq data show the deficit reached 10.9 trillion Iraqi dinars (approx. USD 8.3 billion) in the first four months of 2026, a 68 % year‑on‑year increase. Occurring during the new government’s formation and policy‑adjustment phase, the severe fiscal crisis imposes immense governance pressure and risks cascading knock‑on effects.
(III) Unemployment compounded by water‑power crises fuel popular protests nationwide
Successive waves of demonstrations erupted across northern and southern Iraq this month amid mounting social unrest. Employment: On July 6, fresh graduates from petroleum and engineering disciplines in Basra Governorate launched an open‑ended sit‑in at the headquarters of Basra State Oil Company, demanding hiring compliance with state‑owned oil‑enterprise recruitment rules stipulated in the Federal Financial Management Law. Protesters alleged two consecutive days of physical harassment by company staff; circulated footage showed female graduates being assaulted. Power supply: Iraq’s Ministry of Electricity recorded national summer power demand exceeding 60 000 MW against a supply shortfall of nearly 40 000 MW, alongside transmission‑and‑distribution losses as high as 60 %. Widening power gaps sparked protests in southern governorates including Qadisiyah and Dhi Qar, with demonstrators burning tyres to block major highways. The Ministry of Electricity attributed worsening power shortages to interrupted Iranian gas deliveries. Water‑power access: Residents in the Dukhan area staged demonstrations over deteriorating public services. Daily blackouts exceeded six hours, disabling grid‑driven water‑pumping stations and triggering drinking‑water shortages. Protesters marched on foot and blockaded multiple key roads.
Overall, southern protests centred on youth unemployment, while northern Kurdistan’s grievances focused on water‑electricity supplies and municipal investment. Both the federal government and the Kurdistan Regional Government face acute livelihood‑related pressure, with public discontent building nationwide.
II. Regional‑Conflict Dimensions
(I) Sustained strikes against Iranian Kurdish opposition armed groups
Iranian Kurdish opposition factions based in northern Iraq endured repeated Iranian military strikes targeting positions belonging to the Kurdistan Freedom Party (PAK) and Komala Party. Attacks hit core locations in Erbil and Sulaymaniyah, primarily via drones and missiles.
July 9 and 13: Successive strikes targeted Iranian Kurdish opposition positions in suburban and central Erbil.
July 17: Two missile salvos struck Komala’s headquarters in Sulaymaniyah. The first strike killed nine and wounded multiple people; the second only inflicted property damage. Reportedly, the organisation had suffered more than 40 Iranian strikes within roughly 40 days, totalling 100 missiles and drones.
July 19: Another missile hit Komala’s headquarters inside Erbil; the Kurdistan Freedom Party (PAK) reported a drone attack on its premises.
July 22: Combined missile‑and‑drone strikes against PAK’s Erbil headquarters injured six persons.
July 27: Missile assaults hit two camps belonging to the Kurdish National Army and PAK plus eastern mountain zones within Erbil Governorate.
As a forward theatre for Iran’s operations against opposition groups, the Kurdistan Region bears persistent cross‑border fire. Residential suburbs and villages face spill‑over hazards, gravely endangering civilian lives and property.
(II) Nation‑wide counter‑terrorism operations in progress
Iraq’s federal counter‑terrorism forces and Kurdistan Regional security agencies carried out counter‑terrorism raids across multiple governorates, focusing on western and northern provinces of Anbar, Nineveh, Kirkuk and Sulaymaniyah — long‑time ISIS strongholds.
July 8: Kurdistan security forces detained three ISIS‑linked suspects in Kirkuk and Sulaymaniyah accused of disseminating extremist content across ten social‑media platforms including Facebook, TikTok, Instagram and YouTube.
July 12: Iraqi Counter‑Terrorism Service conducted three arrest operations in Anbar Governorate, detaining three suspected terrorist militants.
Financial measures: Iraq’s Ministry of Finance instructed state‑owned financial institutions to implement the latest OFAC sanctions list, targeting individuals and entities with financial links to ISIS as well as networks affiliated with Lebanese Hezbollah.
July 17: Military‑intelligence services apprehended five terror‑related suspects across Kirkuk, Diyala and Nineveh. Two further counter‑terrorism missions in Sulaymaniyah Governorate and Raparin District arrested two ISIS fighters and rescued one woman and one child.
July 27: Anbar police together with army units conducted clearance operations in Rawah District, arresting four terror suspects and seizing firearms‑ammunition, communications equipment and large cash sums on‑site.
(III) Rising security risks along the Iraq‑Kuwait border
Direct U.S.‑Iran military confrontation continued spilling over, turning the Iraq‑Kuwait frontier into a conflict flashpoint. On the night of July 16, four missiles allegedly originating from Iran landed inside Kuwait, merely hundreds of metres from Iraq’s maritime boundary, causing no casualties or property losses. Kuwaiti air‑defence assets reportedly intercepted four missiles and 21 drones, though some installations sustained damage. On July 23, Kuwait’s Ministry of Defence reported two rounds of drone attacks on the Abdali Border Crossing, the key land passage between Iraq and Kuwait, damaging facilities without human casualties.
U.S. strikes on Iranian targets prompted Iranian retaliation using cross‑border missiles and drones against neighbouring states hosting U.S. troops. Some attack flight‑paths traversed southern Iraqi airspace. Attacks on the Iraq‑Kuwait border disrupted commercial flows and threatened maritime lives and property. Southern Iraq’s border security pressures have surged sharply.
III. Social‑Security Dimensions
(I) Surge in violent criminal incidents
Serious violent episodes including abductions, knife homicides and armed assaults plagued Dhi Qar Governorate in southern Iraq, Baghdad and Kirkuk in the north, reflecting worsening public‑order conditions.
July 6: In southern Nasiriyah (Dhi Qar), a steel merchant was lured to a meeting spot while negotiating a 100‑ton steel transaction. He and his son were abducted by gunmen, who fled immediately.
July 8: In Shatra, northern Dhi Qar, a father‑son pair stabbed a local resident to death and absconded.
July 9: In Fadhiliyah, eastern Baghdad, a Ministry of Defence employee shot dead his brother, who served with the Counter‑Terrorism Service, following a monetary dispute; the perpetrator fled.
July 15: In Lelan, south‑eastern Kirkuk, a man in military uniform broke into a private dwelling and opened fire, killing one resident and wounding another.
(II) Frequent unidentified drone incursions nationwide
Mysterious drone sightings multiplied across Iraq: coastal ports in southern Basra, Babylon Governorate in central Iraq, Erbil Governorate in the north, and the full length of the Iraq‑Kuwait border. Numerous drones transited Iraqi airspace; some targeted external installations, while others crashed uncontrolled inside Iraq, carrying fire risks and posing latent threats to ports, border crossings and engineering works.
July 15: An unclaimed drone crashed within the Grand Faw Port project compound in Basra Governorate.
July 20: A crashed unexploded drone was discovered at an abandoned farm near Ras‑Bisha in Al‑Faw district, Basra; no injuries occurred.
July 22: Erbil air‑defence systems engaged aerial drones; four explosions were heard.
July 23: Drone strikes hit the Abdali border crossing on the Iraq‑Kuwait frontier, damaging facilities without casualties.
July 27: Debris from an unknown drone was found in Milhah, northern Babylon Governorate; no casualties reported.
Mitigation Recommendations for Chinese‑funded Enterprises and Nationals in Iraq
Enterprise‑level measures
Fully upgrade compliance controls to insulate against anti‑corruption‑investigation spill‑over risks. Operate strictly in compliance with regulations; firmly reject grey‑zone public‑relations practices and disguised bribery. Eliminate non‑essential payments such as consultancy and agency fees without substantive service deliverables, and retain supporting documentation for every commercial transaction. Chinese‑funded entities operating in high‑risk sectors including oil, power and healthcare are advised to conduct rigorous formal background vetting for local subcontractors and business partners to avoid entities implicated in anti‑corruption probes or militia‑linked organisations.
Proactively adjust operational footprints and steer clear of high‑risk conflict zones. Scale back field deployments and long‑haul transport near Baghdad’s Green Zone, premises hosting U.S. or foreign forces, operating zones of hard‑line militias such as Kata’ib Hezbollah, and northern‑southern border areas. In provinces prone to missile‑and‑drone strikes (Erbil, Basra, Sulaymaniyah), reduce open‑air construction and long‑distance logistics; avoid remote locations and night‑time movements.
Elevate camp‑security standards against armed assaults and social unrest. Install round‑the‑clock high‑definition surveillance and infrared‑alarm systems at barracks, plant compounds and project sites. Deploy professional security personnel for 24‑hour rotating sentry duty at key zones. Strengthen access control with strict registration and inspection for all visitors and vehicles. Reinforce warehouses and finance offices with multi‑layer protection to deter armed looting.
Individual‑level measures
Regulate speech and social conduct and maintain strict neutrality. Avoid discussions on sensitive topics including anti‑corruption campaigns, militia disarmament and assassination bounties. Do not observe, photograph or repost footage of armed clashes or disarmament‑related scenes. Avoid public or private contacts with unknown armed actors or graft‑tarnished officials so as not to be drawn into factional infighting.
Restrict travel and steer clear of hot‑spot zones. Refrain from non‑essential travel to sensitive sites: U.S.‑run premises, parliament buildings, militia bases, border crossings and northern Kurdish mountainous terrain. Carry copies of passport and residence permits and remain calm during security checks. Follow the “no non‑essential outings” principle. Never travel alone after dark; prefer daytime travel in pairs with professional security escorts where available. Stay away from street rallies, protests and militia activities; avoid prolonged stays in crowded public venues.
Reinforce residential‑security awareness and emergency‑evasion skills. Prioritise low‑rise accommodation with small window surfaces. Keep doors and windows secured indoors. Upon hearing drone engines, blasts or gunfire, take immediate cover and refrain from peering out or venturing outside. Maintain stockpiles of power‑banks, torches, food and first‑aid kits. Do not keep large sums of cash or valuables in living quarters to prevent losses from civil unrest or robberies.
In case of emergency, contact relevant parties promptly. Iraq Police Emergency: 130 Iraq Medical Emergency: 105 24‑Hour Global Consular Protection & Service Hotline of China’s Ministry of Foreign Affairs: +86‑10‑12308, +86‑10‑65612308 Consular Protection & Assistance, Chinese Embassy in Iraq: +964‑7901912315 Consular Protection & Assistance, Chinese Consulate‑General in Erbil: +964‑7515477820 Consular Protection & Assistance, Chinese Consulate‑General in Basra: +964‑7858618940
