This study aims to analyze the issue of the federal capital within the federal system from two interconnected perspectives: the size of parliamentary representation at the national and local levels and the extent to which it has local powers that enable it to manage its own affairs. Baghdad, the capital city, presents a problematic case because there is no specific law for the capital, despite the clear requirement stated in the 2005 Iraqi Constitution to enact one to regulate its authority. In addition, it has dual status of a federal capital and a governorate not organized in a region, which has created a gap between its parliamentary influence and its limited powers. To clarify the scope of this issue and propose practical solutions, this study compares Baghdad with three international models: Washington, D.C., which has an elected local government but limited national representation, Kuala Lumpur, which exemplifies complete centralization with considerable national representation but no elected local government, and Berlin, a region with representative governance and broad local powers. The study indicates that the Malaysia’s approach to organizing its capital is relatively effective for structuring Baghdad’s capital. Consequently, the study recommends amending Article 124 of the Iraqi Constitution of 2005 to grant Baghdad special federal status within its administrative boundaries, as initially outlined in the 2005 Constitution, under the direct oversight of the federal government while ensuring full parliamentary representation for its residents.