In Iraq, violent spillover from the Iran conflict will further strain pre-existing domestic divisions, while likely stalling the government formation process and fueling U.S. pressure for militias to disarm; reduced state revenue from disrupted oil exports will also hamper public service provision and push Iraq to increase borrowing. On April 2, the U.S. embassy in Baghdad urged Americans to leave the country, warning that "Iraqi terrorist militia groups aligned with Iran may intend to conduct attacks in central Baghdad in the next 24-48 hours." The alert followed U.S. claims that Kataib Hezbollah, an Iran-backed militia within Iraq's Popular Mobilization Forces (PMF), had kidnapped an American journalist working in Baghdad on March 31. Since the United States and Israel began striking Iran in late February, PMF militias have conducted numerous retaliatory attacks across Iraq, including against the U.S. embassy in Baghdad, U.S. military bases and hotels frequented by Americans in the...
