A Baghdad-sanctioned umbrella organization of an estimated 50 mainly Shiite militias, including some backed by Iran, engaged in illicit activities in recent months that undermine security and stability in Iraq, the office of the inspector general (OIG) at the U.S. Department of Defense (DOD) stressed this week.

In its latest quarterly (October 1 thru December 31, 2018) assessment of the mission against the Islamic State (ISIS/ISIL) in Iraq and Syria, the inspector general (IG) noted:

[A] significant factor affecting Iraq’s security sector is the presence and activities of the Popular Mobilization Forces (PMF) and the destabilizing actions of some elements of the PMF that are affiliated with or backed by Iran, and which operate outside the control of the Iraqi security institutions. … While the PMF played a significant role in the defeat of ISIS in Iraq, [U.S.-designated state sponsor of terrorism] Iran’s support to many elements of the PMF has also allowed Iran to maintain influence in Iraq, and the Iraqi government has been unable to assert centralized control over the PMF.

The PMF, also known as Hashd al Shaabi, is involved in the region’s drug trade and other illicit activities, the OIG suggested, noting: “Iran also conducts other illicit activity in Iraq that undermines security and stability. In Basrah, the police chief accused Iran of being the source of 80 percent of all drugs in the province.”

Tehran’s PMF proxies “have recently increased their involvement in Basrah,” the IG added.

Citing threats from Iran-allied militias, the United States closed its consulate in Basrah last year, a move that has contributed “to instability and increase Iran’s ability to influence the area,” the IG found.

Fighters linked to Iran are also reportedly involved in “smuggling oil, sending fighters around the region, and gathering intelligence.”

The IG also noted that the PMF represented a menace for the civilian population, particularly the already disenfranchised Sunni community. Some human rights groups like Amnesty International have accused the Shiite fighters of committing atrocities and war crimes against civilians.

Sunni resentment contributed to the rise of ISIS. The Sunni terrorist group no longer controls territory in Iraq, but it remains a threat, the Pentagon IG noted in its latest report, adding:

[T]here has been an increase in reports of violence, abuse, and tension in areas patrolled by the PMF, and that these trends will likely continue as long as the PMF competes with local police or other ISF [Iraqi Security Forces] formations for control of territory and influence.

Late last year, Reuters described the situation near the Syrian border in Anbar province as the “wild west,” highlighting the tension between the Shiite troops and American forces in the area. A strong PMF presence in the area allows the Shiite fighters to provide support to their counterparts in Syria where Iran is backing dictator Bashar al-Assad.

Baghdad has legalized the PMF as a component of the ISF. Some PMF factions, however, are operating outside the control of the Iraqi government, threatening the estimated 5,000 American troops in Iraq, the Pentagon IG reported in its previous quarterly report to Congress.

On Monday, however, the IG noted:

While [the U.S. military] stated that Iranian-backed groups in Iraq did not threaten Coalition personnel or facilities this quarter, [the U.S. military] stated that the Iranian presence and provision of aid to Iran-aligned terrorist organizations in Iraq did hamper the counter-ISIS campaign.

Despite the wave of U.S. sanctions, Iran continues to find ways to fund its terrorist proxies in Iraq, the IG found, adding:

[The U.S. military] said that Iranian activity in Iraq included the delivery of humanitarian aid and “kinetic aid” to “numerous terrorist organizations operating independently from ISIS in Iraq.” That Iranian assistance, [the U.S. military] reported, allowed those terrorist organizations to be better positioned and equipped to target Coalition and Iraqi government operations.

Iranian activities in Iraq — which tend to involve the PMF — forced the U.S. Central Command (CENTCOM) to divert resources from the fight against ISIS.

“USCENTCOM said that as a result, ISIS was able to reconstitute in areas close to the Iran-Iraq border,” the inspector general said.

U.S. officials consider some PMF factions, particularly Kata’ib Hezbollah (KH) and Asa’ib Ahl al-Haq (AAH), to be terrorist groups. KH and AAH leaders have repeatedly threatened to attack American troops if they do not leave Iraq.

U.S. President Donald Trump has indicated there are no plans to draw down America’s military presence in Iraq, to the dismay of the PMF and Iraqi politicians.

While the Pentagon has repeatedly claimed that it only assists PMF fighters vetted for affiliation with Iran and terrorist groups as a whole, the U.S.-led coalition denied supporting the PMF.

The IG reported:

[DOD] reported that Coalition visibility into the actions of the PMF is limited because the Coalition does not provide assistance to the PMF. As a result, [DOD] was unable to provide any information about the involvement of PMF units in drug smuggling and other illicit trafficking activities in Iraq.

Trump administration officials have repeatedly urged the Iraqi government to disarm and disband PMF fighters who refuse to integrate with the Iraqi security forces, to no avail, the inspector general reported.

Instead, the newly elected government began implementing measures to pay the Iran-allied fighters the same rate as Iraqi security forces.

“The salaries could result in providing funds to Iran-aligned groups without impacting their loyalties to Iran” the IG warned.

ISIS no longer controls territory in Iraq, but it remains a threat, the IG noted in its report, adding that the group “remains active in rural parts of the country.”

U.S. Gen. Joseph Votel, the top American commander in the Middle East, told lawmakers this week that the United States mission in Iraq remains the defeat of ISIS, not combating Iran and its proxies.

While the vast majority of PMF fighters are Shiite, the force also includes Sunnis, Kurds, and religious minority groups, like Christians.

The estimated 50 factions that make up the PMF include up to 150,000 members. Currently, the Shiite group is “enjoying unprecedented military and political power in Iraq” after it won nearly a third of the seats in parliament during the recent elections, the Washington Post reported early last month.