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Prime Minister-designate Ali Al Zaidi is under pressure from Washington to curtail the influence of Tehran-backed militias

A little-known Iraqi tycoon named Ali Al Zaidi has emerged as the likely next prime minister of Iraq with the backing of President Trump, who has invited the businessman to Washington and said the U.S. “is with him all the way.”

The White House endorsement has come with a demand that Zaidi exclude Iranian-backed militias from Iraq’s next government and curtail Tehran’s influence in Baghdad.

He has faced similar U.S. pressure before: Zaidi owns a bank that the Treasury banned from dollar transactions in 2024 over suspicions it was doing business with a militia leader linked to Iran’s Islamic Revolutionary Guard Corps, current and former U.S. officials said.

A political unknown who has never held office, Zaidi was a compromise choice after Trump warned that he would cut off U.S. assistance to Iraq when Nouri al-Maliki, a former prime minister close to Iran, was put forward for the job in January after months of political wrangling. The Coordination Framework, the Iraqi coalition dominated by pro-Iranian Shia political factions, turned to Zaidi late last month.

Iraqi officials ran the nomination by the U.S. and Iran before announcing it, Iraqi officials said. Zaidi has taken telephone calls from Trump and from Iran’s president, Masoud Pezeshkian. He is still working to assemble a coalition in Iraq’s Parliament that will vote him into office in coming weeks, along with his nominees to run Iraq’s ministries.

Gen. Esmail Qaani, a top officer with Iran’s Revolutionary Guard, during a visit to Baghdad on Sunday urged Iraqi officials not to keep militia leaders out of the government or to seek to disarm the groups, a senior Iraqi official said.

A senior State Department official said the U.S. is looking for concrete actions against the militias, which the U.S. says carried out 600 attacks on U.S. diplomatic and military facilities in Iraq since the U.S.-Israeli war with Iran began. The administration suspended the transfer of Iraq’s oil-sale revenue in dollars and security aid to Baghdad during the war.

For Zaidi, the White House demand that he take on the militias poses enormous political risk, analysts said. The militias emerged during the U.S. occupation of Iraq and later helped the U.S. vanquish Islamic State. Since then, they have boosted Tehran’s grip on Iraq’s politics and economy, including its banks, using them to acquire U.S. dollars, often through fraudulent transactions.

Any attempt to disarm them or reduce their influence could prompt a violent response, analysts said.

“The reality is that the militia groups have pretty deeply entrenched themselves into the Iraqi state and the economic system, and regardless of who the prime minister is, it will be a challenging and quite lengthy process to begin to chip away at those groups,” said Victoria Taylor, who oversaw Iraq policy as a State Department official during the Biden administration and is now at the Atlantic Council, a Washington think tank.

Zaidi amassed a personal fortune in banking, satellite broadcasting and government contracting, founding Al Janoob Islamic Bank a decade ago as well as Al Awees, an importer of agricultural commodities for Iraq’s Ministry of Trade.

Treasury’s decision to bar Al Janoob from the dollar system in 2024 rested on intelligence that the bank likely had connections to a militia leader named Shibl Al Zaidi, the current and former U.S. officials said. He was sanctioned by the U.S. in 2018 for alleged involvement with Iran’s Revolutionary Guard and for ties to Hezbollah, the Iranian-backed militia in Lebanon.

Another factor in the Treasury decision, the current and former officials said, was information that the bank likely had close ties to Kataib Hezbollah, a militia that has battled American forces for years and that the U.S. has designated as a terrorist group.

Ali Al Zaidi didn’t respond to questions from The Wall Street Journal. Al Janoob’s chairman, Mazen Ahmed, said the bank was “aware of these allegations” from Treasury that it has links to Shibl Al Zaidi and Kataib Hezbollah “but maintains that they are false and based on rumor and speculation.”

He added that the bank at Treasury’s request arranged for several independent reviews of its operations that found the allegations were unsubstantiated. He declined to provide copies of the reviews.

Ali Al Zaidi owns 9.90% of the bank’s stock and, with other family members, controls a majority of its shares. He “has no direct role or responsibility in the bank’s operations and has had no such role since 2019,” when he stepped down as chairman, Ahmed said. Neither the prime minister-designate nor Al Janoob are under formal U.S. sanctions.

A spokesman for Shibl Al Zaidi said, “there is no political or commercial relationship” between him and the prime minister-designate, nor are they related by marriage. The two are members of the Al Zaidi tribe, which has about 300,000 members, said the spokesman, Hasam Al Rubaie.

Shibl Al Zaidi is the secretary-general of an Iran-backed militia group called Kataib Al-Imam Ali, a U.S. designated terror group. Its headquarters and bases were repeatedly targeted by U.S. airstrikes in March and April.

He “served as a financial coordinator” between the Quds Force, an arm of Iran’s Revolutionary Guard, and militias in Iraq, Treasury said in 2018 when it sanctioned him. It added that he “assisted in facilitating Iraqi investments” for Qassem Soleimani, the Quds Force commander who was killed in a 2020 U.S. drone strike near Baghdad ordered by Trump.

“There is no evidence to support these claims, and the relationship with Qassem Soleimani was limited to the military sphere,” said Rubaie.

Shibl Al Zaidi remains a power broker, meeting openly with senior Iraqi officials. A 2025 report by the Washington Institute for Near East Policy described him as “one of the most commercially active and wealthy” militia leaders.

In addition to his militia role, he is chairman of the Khadamat Alliance, a political party that won nine seats in Iraq’s parliament last November and is part of the Coordination Framework coalition that nominated Ali Al Zaidi, said Rubaie, the Khadamat spokesman. Khadamat supported the nomination, he said.

Al Janoob was one of more than two dozen Iraqi banks that Treasury in 2023 and 2024 prohibited from receiving dollars from the Central Bank of Iraq over concerns that the militias were transferring the hard currency to Iran or using it to fund their activities, the officials said. The ban remains in effect.

“Treasury has worked closely with counterparts in Iraq to identify and take action against illicit finance threats, including money laundering and terrorism financing to Iran-aligned militias,” a Treasury spokeswoman said in response to questions about Shibl Al Zaidi and Al Janoob.

The decision to block Al Janoob was a blow to Baghdad because the bank handled international purchases of commodities by Zaidi’s other company, Al Awees, for Iraq’s food-basket program, a monthly government distribution of flour, rice, sugar, cooking oil and other staples to the needy.

The ban especially threatened Iraq’s huge imports of rice from U.S. producers, but Treasury and Iraqi officials devised a workaround that allows Al Awees to continue to buy American rice using euros, rather than U.S. dollars.