The road north from Erbil, the capital of the Kurdistan Regional Government in northern Iraq, is festooned with construction equipment for work on a large modernization project. Earthworks have been churned up, bridges are under construction, like the new multilane span across the Great Zab River. It is part of an artery for trade heading north to Dohuk and Turkey. The construction presents a contrast with the poorer farmers who line the road to sell tomatoes, tea and fish.

On October 17 an area north of these nice pastoral areas became host to refugees fleeing fighting in neighboring Syria. Up to eighteen hundred people, mostly Kurds, had come to a camp near Bardarash. They had come from border areas under bombardment by the Turkish air force and under assault by the Syrian National Army, a collection of Syrian rebel groups. Families from Sere Kaniye (Ras al-Ayn) said they fled to Qamishli and then south to the border crossing in northern Iraq that links Syria with the Kurdistan Regional Government (KRG). This emerging instability in eastern Syria, an area that the KRG authorities had assumed would remain quiet for years due to the U.S. presence, is now on the list of concerns in Erbil.

The contrasts of instability and stability in this region is symbolic of the autonomous Kurdistan region as a whole. In Erbil the pulsating nightlife and broad ring roads that swaddle the city present a picture of prosperity and stability in the new Iraq that has emerged after the war on ISIS. However, there are lingering problems such as disputes between Erbil and Baghdad over budgets and arms for the Kurdish security forces, called Peshmerga. There are vacuums between the defensive lines where the Peshmerga and Iraqi security forces are supposed to meet and where ISIS remnants have found small ungoverned spaces to exploit. Most of all, there is the strategic position of the region, politically closer to the United States and Ankara, and wary of the rising power of Iran and Iranian-backed political and paramilitary groups that dominate parts of Iraq. The protests that erupted across central and southern Iraq on October 1, leading to the deaths of dozens and a harsh crackdown by Baghdad, were not felt in the Kurdistan region. While Baghdad suppressed social media and cut off the internet, in Erbil people could still use apps and cellphones.

A recent multiday visit to the region reveals the hurdles the KRG faces two years after it held an independence referendum that was condemned by its neighbors and largely ignored or opposed by the international community. Under new and younger leadership of President Nechirvan Barzani and Prime Minister Masrour Barzani, the region has moved on from a focus on national dreams of independence to more pragmatic day-to-day issues of economic revival and working with Baghdad to secure the region’s demands under Iraq’s 2005 Constitution.

In mid-September Nechirvan Barzani held a series of important meetings. He met with the U.S. ambassador to Iraq, the Speaker of Iraq’s Parliament, the president of the country, and other officials. India’s minister of state for external affairs arrived in Erbil on September 17 to unveil a statue of Mahatma Gandhi. Prior to that, on September 15, the deputy prime minister of the KRG, Qubad Talabani, met China’s consul-general in Iraq to discuss bilateral relations. This capped a month of similar important meetings and discussions, including a phone call between Nechirvan Barzani and Vice President Mike Pence in late August. During the phone call Pence commended the region’s efforts at aiding the war on ISIS and hosting displaced civilians. The Kurdistan region is asserting itself on the international stage and attempting to show Baghdad how it is a key to stability in the country. “The people here  suffered a great deal, we need to focus on reconstructing the country and looking to the future, a secure and brighter future cannot happen unless there is stability,” said Falah Mustafa, the senior policy advisor to the regional president.

While the region appears stable and its officials and Peshmerga generals often describe it as an island amid a region that is plagued by extremism and sectarianism, there are fears that  a combination of threats are a rising tide around the island. ISIS is seeking to reorganize itself to the west, just an hour’s drive from Erbil. Baghdad’s Iraqi security forces are stretched thin and U.S. coalition advisors can only assist in encouraging the Peshmerga and Iraqi forces to work more closely together. The KRG is wary of the pro-Iranian Shi’ite militias or Popular Mobilization Units (PMU) that man checkpoints across Nineveh plains down toward Kirkuk to the south, disputed areas that Baghdad wrested from Kurdish control in 2017. There is lasting anger at the way Peshmerga were evicted from Kirkuk in 2017. In the KRG there is a feeling that the United States, a key partner, turned its back on Erbil and enabled U.S.-supplied tanks and weapons sent to Baghdad for the ISIS war to be used against the Kurds. Local officials have said that a security mechanism is needed and trust-building necessary to normalize the situation.

The role of Iran in Iraq is a sensitive issue in Erbil but it is also one that comes up in almost every discussion. This includes complaints that Shi’ite religious groups are fanning the flames of incitement against the Kurds. For instance, scurrilous reports in Baghdad in late August suggested there was an Israeli base in the Kurdish region, leading the authorities to issue a denial. This comes amid near-daily reports of suspicious air strikes on PMU positions across central and western Iraq that Iraqi prime minister Adel Abdul Mahdi has blamed on Israel. PMU figures have also blamed the United States and Israel for the attacks that began in late July and often target PMU munitions. It has led PMU members such as Abu Mahdi al-Muhandis to suggest the PMU needs an air force. Iran’s ambassador to Iraq has condemned the United States. The Kurdish region views these comments as a dangerous development. Some in Erbil now believe the PMU is seeking to become an Iraqi version of the Iranian Islamic Revolutionary Guard Corps, a kind of parallel state with its own powerful army, economy and maybe even air power.

The rise of  the PMU, now an official paramilitary force in Iraq paid by Baghdad and once described by former Iraqi prime minister Haider Abadi as the “hope of the country and region,” leads to questions about why Baghdad is not paying Peshmerga salaries. Unlike the PMU, the Kurdish Peshmerga are part of the Iraqi constitution. Negotiations for  the budget have dragged on and despite promises from Baghdad the Peshmerga are systematically underfunded. A visit to their bases and frontlines reveals the reality, they often lack heavy weapons, uniform armored vehicles and even the proper barracks and facilities for the men. During the war on ISIS the Coalition helped train the Peshmerga and equipped some brigades, and millions in funding from Washington is still supposed to be forthcoming. The Peshmerga want support to reform their units, and they desire anti-tank weapons, body armor, as well as anti-drone capabilities. But the concern is that support, if it ever arrives, will be too little and too late as Iran’s allies grow more powerful and through their power in the largely Sunni provinces liberated from ISIS a new conflict with extremists will emerge. A Peshmerga general warned that currently his men receive only two percent of the equipment and budget they should receive. “All of the rest of it ends up with Iraqi Security Forces and the PMU.”

Some of the tensions have improved under Iraq’s Prime Minister Abdul-Mahdi. But he lacks power and is not rooted in either the Fatah Alliance that is linked to the PMU or Muqtada al-Sadr’s party, which has the largest number of seats in Iraq’s parliament. The protests in early October appeared to erode what little authority he has. Evidence points to the abuses by the PMU, including sniper fire against protesters. Iran may benefit from the instability in Baghdad, even though some protesters have condemned Iran’s role in Iraq. Sadr showed up in Tehran for a ceremony on September 10 with Iran’s Supreme Leader Ayatollah Ali Khamenei and IRGC Quds Force commander Qassem Soleimani. The symbolism was not lost in Erbil. “It shows no matter how much Saudi Arabia  or others pay Sadr, he is in their [Iran’s] pocket,” said one official.

With a relatively benign prime minister in Baghdad, a rising Iran, sectarian paramilitaries on the border and ISIS resurgence, the Kurdistan region looks to the United States and other western powers for support. “Who do you have as a friend, ally and partner, with an open and welcoming society,” say those in Erbil, suggesting Erbil shares values with western democracies. After many years working with Washington, Erbil wants a clearer statement or kind of “white paper” that expresses U.S. commitment and intentions. But there are simple hurdles that make the region more distant. For instance in the absence of a visit by Baghdad’s leaders to Washington the KRG’s leaders have been told that protocol means they cannot come. Iraqi president Bahram Salih met Secretary of State Mike Pompeo on September 23 during the UN General Assembly. But closer relations between Baghdad and Washington are overshadowed by Iran tensions and protocol appears to prevent a high level visit from the KRG, even though it would be in the interest of both the United States and Iraq. For instance, President Donald Trump’s visit to Iraq in December 2018, in which he didn’t meet officials, was seen as snub in Baghdad. Comments about using Iraq to “watch” Iran ruffled feathers. In Erbil the region would welcome a high-level visit though.