Editor’s Note: This column is based on excerpts from a paper originally published in the latest issue of the CTC Sentinel. The paper examines the rapid expansion of Iraq’s digital economy and the growing influence of Iran-backed militias in the telecommunications sector, highlighting emerging risks for both Iraq and international stakeholders.
Iraq’s digital economy has emerged as one of its fastest-growing sectors, fueled by a youthful population, a transition toward e-governance, and the potential for the country to become a regional hub for data transit. Yet, as with the country’s oil sector, this growth has attracted the attention of U.S.-designated terrorist groups who see the telecommunications industry as both a source of revenue and a means of exerting control over the population. In the lead-up to Iraq’s November 2025 elections, the outgoing government under Prime Minister Mohammed Shia al-Sudani revealed the depth of militia penetration in the sector. Sensitive telecommunications contracts were awarded to a militia-controlled conglomerate, U.S.-origin equipment was provided to militias, and lucrative 5G licenses were channeled to militia-linked businessmen, exposing the increasing overlap of state and militia interests in Iraq’s economy.
This analysis follows a series of studies tracing the rise of Tehran-backed resistance factions in Iraq and their integration into the state apparatus. Earlier research documented the establishment of the Popular Mobilization Forces, Iraq’s parallel security structure modeled on Iran’s IRGC, and its secure funding from the Iraqi government. More recently, attention has shifted to the penetration of economic and technical sectors, including the oil and telecommunications industries. The oil sector study highlighted Iraq’s transformation into a terrorist-run state with unprecedented financial resources controlled by Iran-backed actors. Building on this, the current analysis examines how similar patterns of control are taking root in the telecommunications sector, with potentially profound implications for domestic security and international engagement.
Telecommunications networks present Iranian and pro-Iran factions with two key advantages. They allow control over information flows within Iraq and between Iraq and the outside world, enabling surveillance of civilians, suppression of dissent, and monitoring of foreign diplomatic and military actors. At the same time, these networks are a lucrative financial asset. Monopoly control over fiber optic lines, microwave towers, and international connectivity allows factions to profit by selling bandwidth or granting preferential access, while also ensuring that secure networks remain exclusive to trusted groups. The potential monetization of unused capacity, particularly in U.S. dollars or other hard currency, presents an additional avenue for financing sanctioned groups.
Iran’s approach to telecommunications control has provided a model for its proxies. The regime developed a playbook following domestic unrest, most notably the 2009 Green Movement protests, that emphasizes centralized control of internet gateways, dominance over regulatory agencies, and access to key infrastructure such as fiber optic junctions and data centers. Deep Packet Inspection and other surveillance technologies are deployed to track users, analyze traffic, and intercept communications. Lebanese Hezbollah, Yemen’s Houthis, and now Iraqi militias have applied variations of this strategy, demonstrating its adaptability and effectiveness for consolidating both power and revenue.
In Iraq, Iran-backed factions accelerated their telecommunications strategy under the al-Sudani government, building on previous attempts by U.S.-designated terrorist networks to enter the sector. Where prior efforts had been blocked due to oversight and scrutiny, the appointment of cabinet ministers and agency heads sympathetic to the militias allowed unprecedented influence over the Ministry of Communications and the Communications and Media Commission. Leadership roles were filled with individuals closely tied to sanctioned groups, including Falah al-Fayyadh, the PMF chairman, and his associates. This created a direct pipeline through which militia-controlled entities could access state resources and shape regulatory decisions.
A key milestone in this process was the awarding of two major fiber optic contracts to the Muhandis General Company, a construction and engineering firm under the PMF umbrella. The contracts, fast-tracked without competitive bidding, gave the company access to Iraq’s entire fiber optic network and the ability to establish new routes for both commercial and strategic purposes. The pricing and speed of contract approvals suggested deliberate political favoritism, while the work itself provided both surveillance capabilities and potential revenue streams. The existing fiber optic network could be tapped for monitoring traffic, implementing service throttling, or establishing secure lines for PMF operations.
Beyond fiber optics, the PMF also gained access to U.S.-origin satellite communications systems through contracts executed under the Ministry of Communications. While relatively small in monetary terms, these contracts allowed the transfer of advanced communications technology to the PMF, raising concerns about end-user monitoring and compliance with U.S. export restrictions. The broader implication is that Iran-backed militias are now positioned to leverage both terrestrial and satellite networks for operational advantage.
The next frontier in Iraq’s digital economy is 5G mobile services. As most of Iraq remains reliant on 4G or even 3G networks, the rollout of 5G represents a significant commercial and strategic opportunity. Militia-linked entities have sought to dominate this space through the creation of the National Mobile Telecommunications Company, a consortium funded through state institutions and partially staffed by CF-linked actors. While foreign companies like Vodafone and Nokia were nominally involved, the structure of the consortia ensured that control remained effectively in the hands of militia-aligned groups. Legal challenges have slowed but not halted this process, highlighting the tension between formal regulatory structures and militia influence.
The broader implications of these developments are profound. Iraq’s digital economy, if unchecked, may become an instrument of both financial gain and social control for Iran-backed groups. E-government systems, voter registries, electronic payment platforms, health insurance databases, and other digital infrastructure are all potential targets for surveillance, manipulation, or revenue generation. The overlapping networks of control within the CF, PMF, and affiliated economic entities complicate efforts to enforce accountability or ensure transparency. Competition and collaboration among militia factions further obscure the operational picture, making it difficult for analysts to identify clear lines of authority or control.
From a policy perspective, several areas demand attention. First, close monitoring of leadership appointments within the Ministry of Communications, its subsidiaries, and regulatory bodies is critical. Second, non-competed contracts, particularly those involving foreign technology or sensitive infrastructure, should be carefully scrutinized to prevent further empowerment of sanctioned actors. Third, the relationships between Iraqi telecom entities and foreign vendors, including Chinese and Russian firms, must be assessed for potential security and compliance risks. Finally, efforts should focus on identifying and sanctioning subsidiaries or commercial partners of the PMF, including those involved in construction, engineering, or data management, to disrupt the financial and operational networks supporting these groups.
Intelligence analysis must also consider structural reforms within Iraq’s telecommunications sector. The potential establishment of a specialized digital regulator, if influenced by Iran-backed groups, could replicate the Iranian model of a Supreme Committee on Cyberspace, centralizing control and further limiting oversight. Similarly, public-private partnerships must be managed to preserve transparency and prevent forced acquisitions by militia-linked entities. Ensuring that legitimate service providers and ISPs maintain operational independence is essential to preserving the integrity of Iraq’s digital ecosystem.
The pace of digitalization in Iraq suggests that these challenges will only intensify. As paper records and cash transactions give way to electronic systems, the volume of data under the influence of militias and terrorist actors will expand dramatically. Voter registries, social service databases, and digital financial records represent both strategic leverage and economic opportunity for groups seeking to consolidate power. Without active engagement from both Iraqi authorities and international partners, the risk is that Iraq’s telecommunications sector will evolve into a dual-use system: one that supports legitimate commerce while simultaneously enabling state capture and financial exploitation by militias.
Ultimately, Iraq’s telecommunications sector is emblematic of the broader struggle over the country’s political and economic trajectory. The rapid penetration of militia networks into digital infrastructure underscores the convergence of security, commercial, and technological considerations in a context of weak governance and contested authority. While U.S. sanctions, regulatory oversight, and diplomatic engagement provide important tools for mitigating risk, the challenge remains that these networks are embedded within the state itself. Analysts and policymakers must therefore adopt a holistic approach, combining intelligence, regulatory scrutiny, and targeted sanctions to prevent further entrenchment of militia power.
The evidence presented in the original study highlights that Iraq’s telecommunications networks are no longer simply a technical or commercial concern. They represent a strategic asset, one that shapes political power, facilitates revenue generation, and provides capabilities for surveillance and social control. The integration of Iran-backed militias into this sector demonstrates the sophisticated application of the Iranian playbook in a new environment, with consequences for Iraq, its citizens, and the broader international community. The actions taken by actors like the Muhandis General Company and other PMF subsidiaries illustrate the importance of monitoring not only traditional security threats but also the evolving digital landscape, where control over information flows is as consequential as control over oil fields or military installations.
