During the last few decades, a critical scarcity of water has occurred in the Middle East due to climate change and the mismanagement of water resources. The situation is complicated by the absence of an effective legislative framework at the local level as well as by the incapability and disrepute of the local water authorities. Most Iraqi citizens depend on the surface waters of the Tigris and Euphrates rivers, which have their sources in upstream neighbouring countries. Water crises concerning the shared waters urgently require a solution at the international level. Unfortunately, Iraq has faced several wars in a row (1980–2003), which has prevented the country from establishing its institutions. The rapid increase in the population of the transboundary countries on the Tigris and Euphrates rivers, and the high demands on agriculture, are accelerating water exploitation. In this paper, the present state of water management in Iraq from the viewpoint of the legislative framework, water balance, and transboundary issues will be discussed, with special attention to Kurdistan. Many legislative documents have been established or amended by the Iraqi and Kurdistan parliaments since 2003. In 2015, the Kurdistan Government Ministry of Agriculture and Water Resources, in cooperation with the EU, issued a guide for environmental legislation related to all environmental components such as air, water, and soil. The recommendations on actions needed in the water management in Kurdistan will be presented; they are inspired by the Water Framework Directive (WFD) (2000/60/EC) implemented in EU member states.