The Iraqi government has launched a sweeping anticorruption crackdown centred on the Jurf al-Sakhar area, a stronghold of Iran-linked militias near Baghdad.

The campaign has seen the dismissal and judicial referral of nine senior officials accused of corruption. It has also led to the sacking of top security directors, the Babil police chief and the director of the Oil Pipelines Company at the Ministry of Oil.

While officially framed as an initiative to protect public funds from a widespread smuggling network, analysts believe the move is a highly calculated strategy to sever the financial arteries of armed factions that refuse to integrate into the state apparatus.

At the heart of this confrontation is Jurf al-Sakhar – also known as Jurf al-Nasr – a stronghold of the Kataib Hezbollah group, believed to have close links to Iran.

For over a decade, Jurf al-Nasr has allegedly harboured illicit oil refineries. An intelligence report released last week claimed that the area was at the centre of a major corruption scheme involving oil revenues and Iran-linked militias.

That led Iraq’s Prime Minister Ali al-Zaidi to launch the crackdown, with an Iraqi security committee entering Jurf al-Nasr on Friday to investigate, following the arrest of other officials accused of graft. The formerly Sunni-majority area has long been considered outside government control since Iraqi militias seized the area a decade ago.

Michael Knights, head of MENA research at Horizon Engage, told Al Jazeera that Jurf al-Sakhar’s value is deeply rooted in recent developments in Iraq, when Iran-linked militias used the campaign against ISIL (ISIS) to stamp their authority in the country.

“Iran-backed militias illegally seized and renamed Jurf al-Sakr when they conducted sectarian cleansing of the Sunni residents in the area in 2014, under the cover of the anti-Daesh [ISIL] war,” Knights explained.

The town, about 60km (37 miles) from Baghdad, is at a critical point near the Shia pilgrimage route between the Iraqi capital and Karbala.

It was once the site of Saddam Hussein’s military industrial complexes, which made Jurf al-Nasr an ideal place for Iraqi militias to test, build and hide rockets, drones and missiles, said Knights.

“If full control is taken, which is unlikely, the government would be able to finally tell Iraqis that a militia had been removed from its base and the legal residents of the area allowed to return,” he said. “This would be like taking back the Bekaa Valley from Hezbollah.”

Knights said the actual financial impact on Kataib Hezbollah of the Jurf al-Sakhar crackdown could be less spectacular than expected, with the militia having other sources of revenue.

Analysts say that dismantling the smuggling networks is part of a wider project to bring weapons under the control of the state.

After some Iran-linked militias missed a deadline to disarm this year, PM al-Zaidi now appears to be using economic pressure to weaken these armed groups without directly confronting them.

Security and strategic expert Saif Raad told Al Jazeera that the anticorruption campaign in Jurf al-Sakhar is essentially a message from the PM that no group is above the law.

“This duality is over. Part of what happened now is that the Iraqi people knew these factions and knew why they hold onto weapons, and I believe this is a victory achieved by the government without a single drop of Iraqi blood,” Raad said.

“Jurf al-Sakhar has been around for, let’s say, more than ten years; for ten years no prime minister was able to enter this area.”

Averting armed conflict

A central focus of the government’s strategy is executing this crackdown without igniting a potentially explosive ‘Shia-on-Shia’ armed conflict.

The militia network which emerged following the US-led invasion of Iraq – and was emboldened during the campaign against ISIL – includes groups with widely divergent political and religious views. Some are closely aligned to Iran and accused of being proxies of Tehran, while others are closer to the federal government.

In a bid to prevent violence, Al-Zaidi reportedly cooperated with leaders of the Popular Mobilisation Forces (PMF), particularly with the Badr Organisation, before initiating the arrests and dismissals in Jurf al-Sakhar, Raad said.

Fadel Abu Ragheef, an Iraqi political analyst, told Al Jazeera that leveraging Hadi al-Amiri, leader of the Badr Organisation, was essential to neutralising the threat from the militias.

“The Badr Organisation is considered the largest combat force within the Popular Mobilisation Forces, so the process of focusing on this issue… is a fundamental part of strengthening the state project,” Raad observed.

“[The campaign] is a major shift in the process of strengthening the state and state institutions and making the Popular Mobilisation Forces an active and large part in controlling these groups [militias outside government control].”

Political analyst Ali Fadhlallah said that due to the structural nature of Iraq’s political and religious leadership, an internal war between the Shia factions was never likely to break out, particularly due to the influence Grand Ayatollah Ali al-Sistani.

“The Shia component has very many large and positive factors that serve as a brake for any clash that is supposed to happen,” Fadhlallah said.

“The presence of the rational religious authority, which has always controlled the rhythm of the political process at dangerous crossroads, definitely has a very large role and it is monitoring the events… the issue of a [Shia-Shia] clash is unlikely, even in the most difficult and miserable circumstances.”