Iran-aligned militias in Iraq have warned they will target US military installations if Washington escalates attacks on Iran. The threat comes as the probability of a US-Iran deal for reconstruction funding in 2026 sits at just 26.5%, according to available market odds.
Who's making the threat
The warning was issued by groups that operate under the umbrella of Iran-backed militias in Iraq. These factions have long viewed US bases as legitimate targets during periods of heightened tension between Washington and Tehran. The specific language of the threat ties any future US strikes on Iran directly to attacks on American forces stationed in Iraq.
Iraq hosts roughly 2,500 US troops, mostly in an advisory role. The bases have come under rocket and drone fire before, but a coordinated campaign linked to a US-Iran confrontation would mark a serious escalation.
The odds of a deal
Prediction markets currently put the chance of a US-Iran reconstruction funding agreement in 2026 at 26.5% YES. That number reflects deep skepticism that the two countries can bridge their differences on nuclear enrichment, sanctions relief, and regional influence. Reconstruction funding would likely involve international or US-backed financing for Iranian infrastructure, but the low probability suggests traders see major hurdles.
No formal negotiations are public. The Biden administration has pursued indirect talks in the past, but those stalled. The 26.5% figure implies a roughly one-in-four chance that a deal materializes within the next two years.
What's at stake for Iraq
Iraq is caught in the middle. Its government relies on both US security cooperation and ties to Iran. A militia campaign against US bases would put Baghdad in an impossible position — unable to fully control the armed groups, yet responsible for the safety of foreign troops on its soil.
Any escalation could also disrupt Iraq's own reconstruction efforts. The country is still rebuilding after decades of war and needs foreign investment. A new round of violence would scare off investors and deepen the economic crisis.
Next steps
The Pentagon has not publicly responded to the militia threat. Iraqi officials have called for restraint on all sides. Whether the US will adjust its posture in Iraq or pursue new diplomatic channels with Iran remains an open question. The 26.5% odds suggest the market isn't betting on a breakthrough anytime soon.
