Iraq's Prime Minister Adel Abdul Mahdi said on Friday he would step down after two months of street protests across the country's south and centre.

The announcement came hours after Iraq's top Shia religious leader, Ayatollah Ali al-Sistani, released a statement calling for a change in leadership in Iraq. On Thursday, powerful Shia leader Moqtada al-Sadr, who leads the largest bloc in parliament, Sairoon, had also demanded that the government resign and said that if it did not do so, it would be "the beginning of the end of Iraq".

Over the past week, an escalation of violence took the lives of more than 60 people, with many victims shot dead. Since the start of the protests in early October, some 400 people have died. Demonstrators have demanded the resignation of the government and a complete overhaul of the political system. They have also called for an end to foreign interference in Iraqi political affairs, with their anger directed primarily at Iran.

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Currently, there is confusion in Baghdad about the legal process the prime minister must follow in formally offering his resignation. Regardless of whether it is submitted to the parliament or the president, Abdul Mahdi's government will remain as a caretaker one until a new prime minister is chosen. 

As various forces collide in Iraq's political arena, officials and analysts say the country is facing political deadlock and is at risk of a civil war. The situation is compounded by the two important foreign players in Iraq - Iran and the United States. While Tehran has interfered, escalating the violence in Iraq to protect its interests, Washington's position has been harder to read.

These developments come as the US is pivoting out of the Middle East, leaving behind a political vacuum.

Political uncertainty

Since the outbreak of the crisis in early October, protesters called for Abdul Mahdi to quit, but he also faced intense pressure to remain in his position from Iran, which feared losing the strong positions it had established in Iraq if another government was to be negotiated.

Other forces within the country, including the key political blocs in parliament, al-Sistani and the Kurdistan Regional Government (KRG) also wanted him to remain in power for lack of an alternative.

The KRG, in particular, had found in Abdul Mahdi a partner willing to negotiate and put an end to the five-year-old dispute between Erbil and Baghdad over budget allocations and the KRG's oil sales, which the previous two Iraqi prime ministers had escalated. The negotiations with his cabinet were continuing when he announced his resignation.

The escalation of violence earlier this week changed the political calculus in Baghdad. According to Haider Saeed, an Iraq researcher at the Arab Center for Research and Policy Studies, the crackdown by security forces was meant to send a message from Iran to the Iraqi political forces that Abdul Mahdi must stay. That, however, caused al-Sistani to intervene.

A source from one of the significant parliamentary parties told Al Jazeera that the process of selecting the next prime minister started shortly after al-Sistani's statement.

While protesters in Baghdad and other major Iraqi cities celebrated the prime minister's resignation, the development may not resolve the current political crisis.

Hassan Ahmadian, an assistant professor of the Middle East and North Africa Studies at the University of Tehran, told Al Jazeera that the resignation of Abdul Mahdi would prolong the Iraqi crisis. "The question of alternative will be more pressing with no easy and ready answers," he said.

Abdul Mahdi was appointed the prime minister in October 2018 after a summer of anti-government protests and months of negotiations between various political forces in Iraq, as well as Iran and the US. Lacking a party of his own to back him, he was a consensus figure who wielded little personal political power.

The Iraqi public expected him to form a new technocratic government and push through important reforms. But faced with political bickering between pro and anti-Iran parties and an uncooperative parliament, he achieved neither. He was pressured by various forces to appoint specific candidates for ministers which were then blocked in parliament; his appointees for key ministries, like defence, interior and justice, were not approved until eight months into his premiership.

Western and Iraqi officials told Al Jazeera the prime minister was often blocked from taking decisions by external and domestic powers and orders he issued were overridden by people in his own office linked to Iran.

According to these sources, the head of the prime minister's office, Abu Jihad al-Hashimi, and the head of the defence office, Abu Muntazar al-Husseini - both linked to the pro-Iranian militia Popular Mobilization Forces (PMF), which were formed in 2014 to fight the Islamic State of Iraq and the Levant (ISIL or ISIS) - had the real decision-making power. 

Abdul Mahdi's resignation means he will not be able to pass any pressing reforms to respond to pressure from the streets. 

With the current parliament in place, where there is no one bloc wielding a majority of seats, appointing a new prime minister could mean another arduous negotiation process. Even if a consensus is reached, the new appointee would not have a parliamentary majority that would allow him to take decisive action on political and economic reform.

The only way forward would then be to hold early elections, for which the parliament would have to draft a new electoral law, as per the demands of the protesters.

Anxiety in Tehran

The events in Iraq over the past two months have unsettled Iran, which has had to deal simultaneously with multiple crises, including a widespread demonstration at home and increasing pressure in Lebanon against its ally, Hezbollah. 

In Iraq, given its proximity and political-economic significance, the Iranian regime became involved directly in the crackdown on the protests. In early October, shortly after the outbreak of the protests, General Qassem Soleimani, the head of the Quds Force of Iran's Islamic Revolutionary Guard Corps, was dispatched to Baghdad where he chaired a meeting of Iraqi security officials. He made at least one more visit to the Iraqi capital that month.

Soleimani is a frequent visitor to Iraq, especially at times of crisis, as he is said to be responsible for the Iraqi file within the Iranian security establishment. 

Both of his visits in October were followed by an escalation of the crackdown on protests in which hundreds of protesters were killed. The latest wave of violence came after demonstrators attacked and torched the Iranian consulate in Najaf.

According to Saeed, who cited sources in Iraq, during one of Soleimani's trips to Baghdad, he told Abdul Mahdi that Iran would keep him in power the way it propped up Bashar al-Assad. In Saeed's opinion, there is a risk that Iran's actions could lead to a civil conflict in Iraq similar to the one in Syria, where Iranian militias have been involved in fighting forces opposing the regime in Damascus since 2012. 

Iraqi and foreign officials told Al Jazeera last month that Iran and its allies within the government and local militias had directed the security response to the protests. 

Iraqi officials said that the officers within the police forces have repeatedly refused to crack down on protests and in some cases have even leaked information about security operations to protesters. The Counter-Terrorism Service (CTS), which enjoys relative popularity among Iraqis, also did not follow orders to deploy in the streets of Baghdad. In late September, an order issued by Abdul Mahdi's office to remove highly popular CTS commander General Abdul-Wahab al-Saadi was met with public anger and contributed to the breakout of protests.

When asked to identify the security forces responsible for the violence, Falah al-Fayadh, the national security adviser to the prime minister and head of the government PMF commission, told Al Jazeera that the government has launched investigations into violent incidents and is calling on anyone who has information about who is responsible to submit it to the judiciary. 

On November 25, online outlet Al-Monitor reported that al-Fayadh attended a meeting with Iranian Supreme Leader Ali Khamenei in Tehran on November 21, along with Hadi al-Amiri, the head of the Badr Organisation, and al-Hashimi, in which it was decided that protests will be suppressed no matter the cost. 

Tehran went as far as applying pressure on al-Sadr, who maintains a nationalist, anti-Iranian stance. In late October, the Shia Muslim leader visited Iran, where, according to two sources who spoke to Al Jazeera on condition of anonymity, he was pressured to try and establish himself as the leader of the protest movement. 

Upon his return to Iraq, he went to Najaf to join the demonstrations but his attempts to take a leading role in the protest movement failed. A spokesperson for Sairoon did not respond to a request for comment. In his latest statement, Sadr rejected accusations that he has been trying to "ride the wave" of the protests. 

The violent crackdown has provoked public anger against pro-Iran militias and led to their offices in a number of cities in the south being set on fire by protesters. The Iranian consulate in Karbala was also torched.

Although since Friday, violence against the protesters has subsided, according to Hiwa Osman, a Baghdad-based journalist, "the setup that conducted most of the killing over the past two months" is still intact. Yet, in his opinion, the protests have managed to weaken Iran's position in Iraq.

"Any new PM will have to have a clear distance from Iran," he said.

According to Saeed, if violence diminishes, the protest movement has the potential to transform Iraq. The uprising has managed to rekindle Iraqi nationalism and elevate national identity above ethnic and sectarian ones.

"In this protest movement, there is a complex: that the toppling of Saddam Hussein's regime was not at the hands of Iraqis," he said. "So their idea is: from now on, we'll determine the political path of Iraq, not a foreign power."

US on its way out

The crisis in Iraq comes against the backdrop of Washington's gradual withdrawal from the Middle East. The Trump administration so far has paid little attention to the protests in Iraq.

On November 1, after a month of silence, the US State Department released a short statement saying the government of Iraq should "listen to the legitimate demands made by the Iraqi people" and called on "all sides to reject violence". This was followed by a tweet by President Donald Trump of a video showing the Iranian consulate in Karbala after it was attacked by protesters and a White House statement calling for early elections. 

On November 23, Vice President Mike Pence paid an unexpected visit to Iraq, skipping Baghdad and going to Erbil, the capital of the Kurdish region of northern Iraq, where he met its President Nechirvan Barzani. This was perceived as a political snub in Baghdad and angered Iraqi officials. After Abdul Mahdi announced he would resign, the State Department made a short statement, expressing support for the demands of the protesters.

The mixed messages from Washington reflect not only the lack of coordination on foreign policy between the White House, State Department and the Pentagon, but also growing perceptions within the US presidency that Washington should invest less effort and resources in Iraq.

According to Western current and former diplomats, Trump and Pence perceive Baghdad as a "lost cause" - that it is inherently pro-Iran and that no amount of US funding or presence would change that. The sources told Al Jazeera that the two are pushing for disengagement, which the Pentagon and to a certain extent the State Department are resisting, fearing the return of ISIL and entrenchment of Iran's positions in Iraq.

According to David Pollock, a fellow at The Washington Institute and former State Department official, the US policy on Iraq is unlikely to change even if violence escalates. "They will probably do nothing. Maybe issue a statement," he said.

The lack of clarity in the US position has worried not only Baghdad but also Erbil, which fears the upheaval could hurt its autonomy. The fact that there seems to be a bipartisan consensus that the US should pivot out of the Middle East in order to focus on Europe and the Pacific, is causing even more anxiety in Iraq and beyond, where US allies fear that they may have to face Iran's geopolitical ambitions alone.

Follow Mariya Petkova on Twitter: @mkpetkova