Final answer:
Iraq is a Federal State due to its complex ethnic and religious composition, with significant populations of Shia Arabs, Sunni Arabs, and Kurds. To accommodate the various groups, Iraq has a federal structure, allowing regions like the Kurdish north to have some self-governance, distinct from the central Arab-dominated government.
Step-by-step explanation:
Iraq is a multi-ethnic and multi-religious state, featuring significant populations of Shia Arabs, Sunni Arabs, and Kurds, who are predominantly Sunni but ethnically distinct from Arabs. Given these complexities, Iraq operates as a federal state to accommodate the different groups and allow for a degree of self-governance. This federal structure aims to balance power among the various ethnic and religious groups, with the Kurdish region in the north having its own regional government, separate from the Arab-dominated central government.
Furthermore, the nation's political landscape has been marked by conflict, particularly between Shia and Sunni factions seeking control. Under Saddam Hussein's rule, Iraq was a secular state led by the Sunni-dominated Ba'ath Party, although the majority of its population are Shia Arabs. After Hussein's removal, efforts to create a more inclusive government structure led to the current federal system.
This analysis considers various aspects of Iraq's social, political, and religious divisions to conclude that Iraq is best described as a Federal State (Option 1).