Iraqi Prime Minister Directs Defense Industries Commission to Contract Directly with Manufacturers, Bypassing Intermediaries

Updated 10 min 21 sec ago

November 7, 2026 12:12

Iraqi Prime Minister Ali Al-Zaidi has ordered the Defense Industries Commission to award contracts directly to manufacturing companies, circumventing intermediary firms that have been funneling funds to armed factions. The move seeks to tighten oversight of government procurement and dismantle middle‑men networks that serve as economic lifelines for various armed groups.

The new policy is part of a broader effort to restructure the relationship between state institutions and armed formations, including their commercial activities. Al‑Zaidi emphasized during a visit to the Defense Industries Commission that “dealing directly with parent manufacturing companies is essential, and we will not engage with intermediary companies under any circumstances.”

A statement from his office indicated that the directive aims to ensure contract transparency, close loopholes that enable corruption, and reduce the additional costs incurred by the state due to multiple layers of intermediaries. The government asserts that Iraq possesses the national expertise required to meet its weapons and equipment needs, and that building an advanced defense industry is a cornerstone of national sovereignty.

The Defense Industries Commission, which succeeded the Military Industrialization Commission established during the Iran‑Iraq War, is tasked with producing and developing military equipment for Iraq.

Intermediary networks have drawn renewed scrutiny under the new directive. Sources indicate that these firms are often linked to the economic interests of armed factions and exploit political and administrative influence to expand their operations within state institutions. Some companies are said to be connected to Al‑Muhandis Company—a Popular Mobilization Forces (PMF) formation—and its front entities, which are used to secure government contracts and channel financial resources to armed groups.

According to an informant who spoke to Asharq Al‑Awsat, these companies function as part of a financing mechanism for armed factions operating on two fronts: generating revenue from state contracting and procurement, and laundering funds to legitimize income derived from illicit activities such as oil and drug smuggling. The informant added that the firms’ activities are not confined to a single authority or ministry but extend across various state institutions, leveraging political clout to obtain official cover for commercial transactions.

Politically, tensions have escalated between certain armed factions and parties within the Coordination Framework. Some factions accuse government and political forces of cooperating with Al‑Zaidi to diminish their economic and security influence, a response they claim is driven by external pressures. Recent reports have highlighted the commercial activities of figures within groups such as Kataib Hezbollah, though these accounts have not been independently verified.

A growing public debate questions the evolution of these factions from self‑styled “resistance forces” to entities managing extensive economic interests and commercial influence networks. The discussion centers on the nature of these commercial ventures, their ties to the groups’ weapons capabilities, and the potential strategic costs to Iraq should the factions draw the country into a broader regional conflict.

Political analyst Hussein Allawi commented that Al‑Zaidi’s visit to the Defense Industries Commission signaled a commitment to safeguarding public funds and bolstering Iraq’s defense capabilities through direct engagement with international manufacturers. Allawi told Asharq Al‑Awsat that strengthening the defense industry is a sensitive area requiring transparency and sound governance to ensure the quality of weapons and equipment used by the military.

Security researcher Mukhlad Hazem described the decision as a significant step toward confronting corporate networks that exploit the influence of political or armed factions to secure government contracts. He noted that such networks are not new, having expanded their activities over several years, and that certain groups monopolize large state contracts to finance their economic entities, often without delivering commensurate returns in product quality or execution terms.

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