Only two weeks after being nominated to try and form a new government in Baghdad, Mustafa Al Kadhimi has hit major obstacles.

The outcome of a six-month political crisis in Baghdad will be a key indicator of the balance of power in the Middle East between Washington and Tehran.

Mr Al Kadhimi is the third person to try and form a new government in Iraq after incumbent Adil Abdul Mahdi resigned in the face of a bloody crackdown on protesters in November.

A source close to the former intelligence chief since 2016 said the prime minister designate was reluctant to take up the mantle until he received assurances from Shiite factions that he would have their backing and Iran would not block him.

But a more assertive posture by Tehran, which helped limit damage to Iran from splits among its proteges in Baghdad, have derailed his efforts, insiders told The National.

A senior parliamentarian from the hardline Shiite Al Fateh grouping in the legislature said that “problems have started” between the sect’s main players and Mr Al Kadhimi on major policy issues, as well as on senior cabinet appointments.

Sensing blood, caretaker prime minister Adil Abdul Mahdi has been raising his public profile, partly by assuming decision making on coronavirus containment measures, making it clear that he should be restored officially as prime minister to avoid further instability.

Iraq is in a precarious position. The country was rocked by months-long protests from October as thousands took to the streets to demand an end to corruption, early elections and a new political system that could provide jobs and reverse years of mismanagement.

Coupled with the internal crisis is the coronavirus pandemic that has exacerbated the economic hardship of many Iraqis who were told to stay home. Global oil prices fell dramatically, cutting billions of dollars from the state’s income and potentially denting its ability to finance projects to improve living standards. The country is also a battleground of the tensions between the United States and Iran.

Although not mandated by the country’s constitution, precedent has been set since 2004 for the prime minister of Iraq to be Shiite. However, candidates need the backing of all the major sects and cannot govern alone in the divided parliament.

One of the key cleavage lines is over the appointment of ministers. The main sects demand the prime minister appoints from their respective list of nominees. Given the current political situation and the demands on the streets, Mr Al Kadhimi – similar to one of his two unsuccessful predecessors – is seeking to forge his own government, not beholden to one grouping or another.

This week Mr Al Kadhimi said cabinet formation talks "are progressing positively", but local media reported that he met with Shiite power brokers on Wednesday and no progress appears to have been made.

One of the attendees of the meeting was Fateh head Hadi Al Amiri. The bloc is closely linked to the most lethal Shiite militias loyal to Iran and its chief also supervises the Badr Organisation militia, which was founded in Iran in the 1980s as a unit of the Islamic Revolutionary Guard Corps.

But Mr Al Amiri appeared to be an early supporter of Mr Al Kadhimi. He attended President Barham Salih’s formal nomination of the prime minister designate in front of TV cameras on April 9 - the 17th anniversary of the toppling of Saddam Hussein.

Mr Al Amiri also did not back the allegations by Kataib Hezbollah, a junior member of Fateh, that Mr Al Kadhimi was complicit in the US raid on January 3 that killed Iran’s Quds Force head Qassem Suleimani.

But the Fateh parliamentarian warned Mr Al Kadhimi to “keep a uniform distance from everyone,” saying that his political fate, similar to two prior nominees who had quit, depended on the Shiite players.

The parliamentarian said the differences with Mr Al Kadhimi comprises his government manifesto and the main cabinet portfolios of foreign affairs, defence, interior, finance and planning.

The killing of Suleimani, Iran’s point man in Iraq and much of the region, dented Tehran’s ability to corral Shiite allies into a uniform position. But the sources told The National that the most loyal factions have united to sideline the less committed Shiite blocs in parliament who might have voted for Mr Al Kadhimi, seen as a supported by Washington.

David Schenker, US assistant secretary for near eastern affairs, told reporters this month that Mr Al Kadhimi “did a fine job” as head of intelligence and that if he became prime minister “this would be great for Iraq, and I think it would be great for our bilateral relationship.”

Mr Al Kadhimi's decision to accept the title of prime minister designate also carries risks for the United States in Iraq.

As head of the Iraqi National Intelligence Service, Mr Kadhimi held one of the most powerful positions in Iraq. However, he has vacated that role to pursue the political appointment and a failure to form a cabinet would make it difficult for him to return to his old role, with sources close to him saying that this could allow Iran to try and force one of its allies into the post in order to bring the agency under their sway.

Mr Al Kadhimi is secular with a history of espousing nonviolence. He is, however, familiar with the abrupt shifts in Iraqi politics, having joined the opposition to Saddam in the 1990s.

Back then Mr Al Kadhimi was a member of the Iraqi National Congress, set up by opposition leader Ahmad Chalabi.

Mr Chalabi played a major role in the downfall of Saddam but the same opposition figures he propelled to prominence turned against him after they reached Baghdad.

But Mr Al Kadhimi’s inability, so far, to form a government is not just due to Shiite opposition.

Even the Kurds, whose cause Mr Al Kadhimi supported when he was in the opposition, have been less than glowing in their backing of him in recent days.

Arafat Karam, a member of Kurdish leader Masoud Barzani’s inner circle, told Kurdish broadcaster Rudaw that Mr Al Kadhimi was “the nominee of the Shiite parties” and as such he was not entitled to choose Kurdish or Sunni ministers. The Kurdish alliance in parliament has insisted that Kurdish finance minister Fuad Hussain in the outgoing government remains in his position, refusing any other candidate.

The dominance of Shiite players and their association with militia powers played a major role in bringing down Mr Al Kadhimi's two unsuccessful predecessors.

The first, former education minister Mohammed Allawi, was a well-connected insider but proved too divisive of a figure among the Shiite political class.

The second, intelligence operative and former Najaf governor Adan Al Zurfi, was seen as too allied with the US. Iran, which publicly opposed Mr Al Zurfi, showed no public objection to Mr Al Kadhimi’s nomination.

Iraq is one of the top oil exporters in Opec but it has teetered on the edge of becoming a failed state in the 15 years since the first post-Saddam democratic election. The poll ushered in Shiite political ascendency but the country's new leaders showed little interest in stemming corruption or supporting rule of law.

A World Bank report this month said, "lower oil prices, the spread of Covid-19 and ongoing political turmoil are all challenges that the Government of Iraq will need to navigate in the short-term."

The report expected the economy to shrink by 5.1 per cent in 2020, compared with 4.1 per cent growth last year. Public debt is forecast to deepen over the same period from 58.5 per cent of GDP to 66.9 per cent.

But some in Iraq see the flip-flopping of the Shiite players proposing a candidate and then not supporting him to form a government as part of a long-term strategy to consolidate power.

Iraqi political commentator Ahmed Rushdi said that Mr Al Kadhimi’s nomination was “a play for time” while the Shiite parties sort out their internal differences in the wake of Suleimani’s killing.

He said the Shiites politicians and their militia associates could end up choosing a trusted protege they can agree on as prime minister.

Mr Rushdi said that Mr Abdul Mahdi, who started his political career as a Maoist then turned into a Baathist before settling on becoming an Islamist, serves Iran’s allies well but remains largely acceptable to Washington.

“In the final analysis, the Shiites have in Abdul Mahdi, a figure who is obediently signing the cheques for the militias every month,” Mr Rushdi said. “Why should they bring someone and risk experimenting with him, knowing he does not owe them allegiance?”