In late February, the U.S. State Department noted and protested a $195 million Iran-Iraq arms deal. The Nouri Al-Maliki government was quick to deny the transaction, but admitted that Iran had indeed competed for a small arms contract that the Iraqi Ministry of Defense had put out for international bidding. The U.S. was concerned. Iraq was helping Iran break out of an international sanctions regime that forbids arms trade with Iran. As the U.S. balked at this potential “breach,” I could only think of Rick’s Café Américain, the notorious casino of Casablanca. I’m shocked, shocked to find that shady arms deals are going on in here!

In a recent trip to Baghdad, a small arms deal with Iran seemed like a small matter indeed to most. I spoke to scores of government officials at several ministries, most of whom felt free to defend and criticize their government’s behavior, depending on the particular political trend and religious sect they represented. The purchase from Iran was dwarfed by two more significant factors: U.S. military assistance to Iraq and, more to the point, Iran’s political alliance with the Maliki government.

In a recent contract, the U.S. Air Force signed off $838 million to Michael Baker International, a U.S. defense giant, to build an airbase in Iraq that would provide maintenance, spare parts and personnel training for the eventual stationing of a large F-16 sale to Iraq’s air force. Pending final approval in Congress, a small arms package, hellfire missiles and Apache helicopters, among other sundry ammunition and ordinance are on their way to Baghdad. The near $1 billion USAF contract, in other words, is but the tip of the iceberg in terms of Foreign Military Sales (FMS) to Iraq, a country clearly destined to become one of America’s most important arms clients.

Since there are no longer any U.S. troops on Iraqi soil, and no plans for stationing any in the foreseeable future, the value to the U.S. of such large sales would have to be seen in commercial terms and in any benefits derived from the use they might be put to by Iraqi forces; and therein lies the rub. Iraq’s internal security and general armed forces have been noted abusers of their population’s human rights since their reconstruction after the fall of Saddam. More ominously, the ongoing war in Iraq’s western region involves not only a legitimate confrontation with Al-Qaeda affiliated forces coming across the borders from Syria, but also Sunni tribal forces defending their homes and cities from central government forces from Baghdad.

The use of these weapons is highly contested. In recent conversations I had with Iraqi officials, journalists and scholars, I found a high degree of polarization on the situation in the country’s western, Sunni majority region and, particularly the explosive Syrian border. The mostly Shia ministry officials were defensive about their government’s policies of using force to suppress what they saw as increasingly lawless regions harboring terrorist elements supported by foreign (read: Arab Gulf) governments. Ironically, some Shia officials with Sunni spouses were less vocal in public but showed more sensitivity in private to the suffering of Sunni families and innocent civilians who did not wish to identify with either Prime Minister Maliki’s military campaign or with Jihadi efforts to retake the streets of the Anbar district, Iraq’s Sunni majority western region which was dominated after the fall of Saddam by Al-Qaeda affiliated forces. Sunni voices were to be heard complaining outright against the government mostly on pan-Arab media or on Sunni owned TV stations.  Sunnis in government, being a minority in Baghdad, generally preferred to tone down any criticisms they may have of the government’s crackdown on their brethren in Anbar.

The problem with Anbar is only tangentially a Shia-Sunni problem. In essence, it is a fundamental disagreement over the implementation of federalism. Having lived under a strong central government since independence, Iraqis were at first suspicious of federalist concepts suggested after the fall of Saddam Hussein in 2003, suspecting that the West, as the source of such ideas, merely wanted to dismember Iraq, along with other Arab countries, to keep them weak and divided. Tensions between central and local government were quick to emerge however, particularly under Maliki.

To be sure, Maliki’s crackdown against Shia militias in Baghdad and in Basra in 2008 (and again in 2011) were popular at first and gave the impression of impartiality. Maliki’s popularity in southern Shia districts dipped, however, when complaints mounted against tough police tactics, including prison torture, corrupt government officials and lack of services particularly to the oil-rich southern region of Basra, where joblessness, electricity blackouts poor housing conditions indicated neglect and a lack of respect of the region’s rights under federal law. A request by the citizens of Basra to hold a referendum on greater autonomy for the region went unheard by Maliki and the government in Baghdad.

Maliki’s crackdown against Sunni opposition in western Iraq began in earnest with his defeat of his main rival for the premiership, Iyad Allawi, who had successfully courted the Sunni vote, in 2010 . Maliki, whose party actually received less votes than Allawi’s in the parliamentary elections, won the premiership by forging a broader alliance in parliament and consolidated his Shia power base thereafter. In 2011, and upon the full withdrawal of U.S. troops from Iraq, Maliki accused his Sunni vice president Tareq Al-Hashemi of sponsoring terrorist squads. The latter fled north to Kurdish areas.

In the wake of the Arab Uprising in Tunisia and Egypt, the Sunnis of Anbar started their own protest movement, including a sit-in in a public square. Maliki, who failed to sway the opposition with promises of jobs and government positions, finally used the Syria spillover to shut down the square by force, declaring it had become a haven for terrorists. It actually did provide an excuse with the infiltration of Islamic State of Iraq and Syria (ISIS) fighters into Sunni towns. Maliki’s forces surrounded and shelled the main cities of Fallujah and Ramadi, with daily clashes escalating. But has the government has thus far refrained from a full-scale assault on the cities.

Ironically, while Maliki’s forces surround and pound ISIS forces, the borders are left with wide-open gaps for two-way traffic, in and out of Syria. To be sure, there are Sunni tribes with sympathies for relatives and Sunni rebels across the borders in Syria and assistance in various forms has been getting across the borders into Syria of late. In recent months , the traffic of Sunni Jihadis into Iraq has made itself evident in various Iraq cities. On the other hand, Iraq’s land borders and skies have been used repeatedly by Shia militias as well as by Iran to assist the Bashar Al-Assad regime. When I asked security ministry officials, as they complained about the lawlessness along the Syrian border, if they cracked down just as hard on Shia militias crossing in the other direction, they chuckled and said with a wink “that’s a problem of a different order of course.” While Iraq does not officially takes sides in the conflict taking place inside Syria, it is clear that while it cracks down with a heavy hand on Sunni Iraqis taking advantage of the porous nature of the borders to help Syrian rebels, it looks the other way as Shia militias cross into Syria to help the Assad regime.

Which brings us back to the two main points in the introduction to this article: U.S. military assistance is pouring into Iraq at a time when political differences with the Maliki government abound on critical internal and external issues. Towards the end of his second term in office, Maliki has shown a poor human rights record. He is failing to keep the country together, north, south and west. And for, all the oil wealth of Iraq, he has little to show by way of economic growth. In term of foreign policy, he has failed to steer a balanced course. His tilt towards Iran and the Assad regime has caused a serious spillover of the Syrian crisis into Iraq with a potentially disastrous deterioration of the security situation for Iraqis and a worsening of relations with the Gulf Cooperation Council states. His relations with Saudi Arabia in particular, already bad, may lead to a complete rupture should he win a third term in office in the upcoming elections this spring. It is these conditions combined that should concern the U.S. The sanctions-busting $195 million arms transaction with Iran is no big deal by comparison.

Nabeel Khoury is Senior Fellow for Middle East and National Security at the Chicago Council on Global Affairs. He previously served as Deputy Chief of Mission in Yemen (2004-2007), Deputy Director of the Media Outreach Centre in London (2002-2004), and Consul General in Morocco (1998-2002). In 2003, during the Iraq war, he served as State Department spokesperson at U.S. Central Command in Doha and in Baghdad.