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Iraq's Shia leadership has nominated former prime minister Nouri al-Maliki to lead the country, a move that immediately triggered a sharp warning from the United States and highlighted the intense geopolitical struggle over Baghdad's future.

The nomination was announced on January 24 by the Coordination Framework, the dominant Shia political bloc. Just three days later, President Donald Trump made his position clear, stating, "If [Maliki is] elected, the United States of America will no longer help Iraq."

This declaration sets the stage for a major confrontation over the direction of the Iraqi government, pitting Washington's strategic goals against Tehran's deep-rooted influence.

A Nomination Mired in Controversy

While the Coordination Framework put Maliki forward to break an internal deadlock, his path to the premiership is far from certain. The decision did not have the full consensus of the bloc, which could create obstacles as he navigates Iraq's complex, multi-step process for forming a government. President Trump's public objection further complicates his prospects.

Regardless of whether Maliki ultimately succeeds, the underlying challenge remains: any new Iraqi leader will be subject to immense external pressure. In Iraq, the influence of the Islamic Republic of Iran is a powerful and pervasive force.

A Clash of Visions for Iraq

The Trump administration has ambitious plans for Iraq, aiming to steer the country away from Tehran's orbit while fostering economic growth and development. However, these hopes clash with the political reality on the ground.

Iran-backed Shia parties were the big winners in the November parliamentary elections. Shortly after the vote, the Coordination Framework declared itself the largest bloc and announced its intention to form the next government, setting a course that directly challenges American interests.

Washington Draws a Red Line

In response, Washington has reportedly communicated a clear message to Baghdad: Iran-backed militias should have no place in the next government. This "red line" is understood to mean that the prime minister and key cabinet ministers cannot be drawn from armed groups.

Some of the most powerful members of the Coordination Framework are representatives of militias with direct ties to Iran. These groups wield enormous power across the country, making the US demand a significant point of contention.

Maliki: The Militia "Godfather"

Though Nouri al-Maliki is not a member of an Iran-backed militia himself, his political history is deeply intertwined with them. He has acted as a political "godfather" and advocate for these groups throughout his career.

In 2014, Maliki founded the Popular Mobilization Forces (PMF), an official state security institution composed largely of Iran-backed militias. The PMF was created to formalize the militias' role in the fight against the Islamic State, but it also legitimized and empowered groups responsible for killing American service members, including US-designated Foreign Terrorist Organizations.

Iran's Inner Circle in Baghdad

The Coordination Framework has already demonstrated its willingness to elevate controversial, militia-aligned figures. The coalition's choice for First Deputy Speaker, Adnan Fayhan al-Dulaimi, raised immediate alarms in Washington.

Dulaimi is not only affiliated with Asaib Ahl al-Haq (AAH), a US-designated terror group, but was also involved in the 2007 Karbala attack where AAH forces killed one US soldier before kidnapping and executing four more.

Even if the new leadership avoids direct militia ties, this single appointment shows that Iran-aligned actors are already deeply entrenched in key government ministries and sectors of the economy. With the Coordination Framework backed by Tehran, Iran's favored militia leaders and politicians will have a seat at the table for every major decision.

Key Power Players in the Framework

The leadership of the Coordination Framework includes some of Iran's most powerful allies in Iraq:

• Qais Khazali: The leader of AAH, recognizable by his white turban, is a designated terrorist who was arrested for ordering the 2007 attack. He has claimed responsibility for thousands of attacks on US and coalition forces since 2003 and recently expressed pride in the Karbala operation.

• Hadi al-Amiri: As secretary-general of the Badr Organization, Amiri leads a group founded by Iran's Islamic Revolutionary Guard Corps (IRGC) in the 1980s. He has been a key figure in advancing Iran's interests in Iraq for decades and has described Iranian Supreme Leader Ali Khamenei as the leader of the entire "Islamic nation."

• Kataib Hezbollah: The political wing of one of Iraq's most violent Iran-backed terrorist groups is also a party to the Coordination Framework.

This cast of characters will be the driving force behind any government approved by the bloc, whether it is led by Maliki or another candidate.

A Strategic Challenge for the United States

For the Trump administration, the challenge is not just one candidate but the entire power structure of the Coordination Framework. To secure a genuine partner in Baghdad, the US must see Iran's most powerful allies sidelined not only from top government posts but also from the core Shia decision-making body itself.

This is not a problem that can be solved overnight. For the US, and for Iraqis weary of Iranian exploitation, the path forward will likely involve securing small but significant wins. Prohibiting Iran's closest allies from holding powerful government roles is a critical step toward eroding the militias' power and loosening Tehran's stranglehold on the country.

China’s economy officially hit its target in 2025, with the National Bureau of Statistics reporting 5% GDP growth. While this figure marks a successful conclusion to the 14th Five-Year Plan on paper, it obscures a crucial disconnect: the benefits of this growth are increasingly failing to reach the average person.

For investors and policymakers, understanding this gap is key. The headline number masks the reality that sustaining China's economic expansion has become more expensive, while the dividends for ordinary households are shrinking.

The Widening Gap Between GDP and Paychecks

The divergence between macroeconomic data and household finances is now too significant to overlook. While the economy expanded by 5% in 2025, median per capita disposable income—a more accurate measure of what typical families earn—grew by only 4.4%. This represents a slowdown from the 5.1% increase recorded in the previous year.

The situation was even more challenging for urban residents, whose median income growth fell to just 3.7%, a notable drop from 4.6% in 2024. Although these percentage changes seem minor, they point to a fundamental weakness in the economic model: the system that once efficiently turned national growth into widespread prosperity is faltering.

This pattern can be described as "frictional growth"—an economy generating activity but delivering less forward momentum. While this doesn't signal a collapse, it suggests that growth is becoming a tool for maintenance rather than a driver of genuine expansion.

Why Companies Are Hoarding Cash, Not Hiring

The primary bottleneck is the corporate sector. In 2025, industrial profits saw a modest 0.6% increase, the first annual gain since 2021. This slight recovery only highlights how weak the post-pandemic rebound has been for Chinese businesses.

Adding to the pressure, producer prices fell for 39 consecutive months through December 2025, contracting by 2.6% over the full year. Faced with relentless price deflation, companies have responded logically by prioritizing survival. They are preserving cash, reducing debt, and minimizing risk instead of expanding payrolls or increasing wages.

This defensive stance turns businesses from channels of wealth distribution into centers of wealth retention. When companies focus on staying afloat rather than expanding, the gains seen in national accounts do not flow down to workers and consumers. As a result, macroeconomic statistics show growth, but the microeconomic reality for households remains stagnant.

Consumer Caution and the Surge in Savings

Households have reacted to this uncertainty with equal logic. Retail sales growth slowed dramatically through 2025, hitting just 0.9% year-on-year in December—the lowest rate since the end of 2022.

Instead of spending, people are saving. Household deposits surged by nearly 10% in 2025. A quarterly survey by the central bank in the third quarter of 2025 found that 62.3% of urban residents preferred saving over spending or investing, a significant increase from 58% in early 2023.

To be clear, consumer activity hasn't stopped entirely. Spending on services like culture, sports, and recreation has shown resilience with double-digit growth. However, households have clearly become more cautious, pulling back on big-ticket items such as cars and property-related goods.

Beijing's Plan to Fix the Transmission

China's leadership is aware of these structural problems. The Central Economic Work Conference in December 2025 made boosting domestic demand and household income a top priority. Officials called for:

• Implementing "urban-rural income growth plans."

• Expanding social safety nets.

The Finance Ministry has pledged that fiscal spending will "only increase" in 2026, signaling a commitment to deploy significant resources. Furthermore, repeated calls to combat "involution"—destructive, value-destroying price competition among firms—show that the government recognizes the damage caused by the current corporate environment.

However, acknowledging a problem is different from solving it. The core issues holding back consumption—such as wealth losses from falling property values, inadequate social insurance, and a soft labor market—require sustained, multi-year reforms. Temporary subsidies for consumer goods have produced only fleeting results, with retail sales growth dropping sharply after the stimulus effects wore off. The impulse to save won't reverse until households feel confident about their income security and asset values again.

Beyond the 5% Target: What Really Matters

The critical question for 2026 and beyond is whether Beijing can restructure its growth model before the current one becomes unsustainable. The immediate risk isn't a sudden GDP collapse, as authorities have plenty of tools to maintain headline figures. The deeper danger is that growth becomes a cost to be borne rather than a benefit to be shared.

When prosperity is purchased with larger fiscal deficits and persistent deflation, it ceases to be prosperity at all. For global observers, the metric to watch is no longer whether China can hit another 5% growth target, but whether it can restore the income channels that are essential for sustainable, long-term demand.

President Donald Trump announced on Thursday his plan to speak with Iran, a diplomatic overture that comes as the United States simultaneously dispatches another warship to the Middle East. The move highlights a dual strategy of potential engagement backed by a significant show of military force.

Speaking to reporters, Trump confirmed his intentions but did not provide details on the timing or nature of the dialogue, nor did he specify who would lead negotiations for Washington.

"I am planning on it, yeah," Trump stated when asked about discussions with Tehran. He immediately followed this by referencing the American military presence in the region, adding, "We have a lot of very big, very powerful ships sailing to Iran right now, and it would be great if we didn't have to use them."

Tensions Rise Amid Military Buildup

The backdrop for these developments is a period of soaring U.S.-Iranian tensions, which recently escalated following a bloody crackdown on widespread protests by Iran's clerical authorities. U.S. officials have indicated that Trump is reviewing his options but has not yet decided whether to authorize a military strike against Iran.

The protests, driven by economic hardship and political repression, have since subsided. However, Trump had previously threatened U.S. intervention if the Iranian government continued its violent suppression of demonstrators.

At a cabinet meeting, Trump asked Pentagon chief Pete Hegseth to comment on the situation. Hegseth affirmed the military's readiness to act on the president's orders.

"We will be prepared to deliver whatever this president expects of the War Department," Hegseth said, using the Trump administration's unofficial term for the Defense Department.

U.S. Red Lines on Nuclear Ambitions

Hegseth also issued a direct warning to Tehran regarding its nuclear program, a key point of contention. "They should not pursue nuclear capabilities," he stated.

President Trump has previously made it clear the United States would act if Iran resumed its nuclear program. This follows air strikes conducted by Israeli and U.S. forces in June on key Iranian nuclear installations, which were aimed at disrupting Tehran's progress.