Once a term exlcusively used for iraqis, it is more hilariously applied to people from the middle east as a whole. The ignorance of such a statement compounding its comedic effect.
It can also be used to describe Iraqi people that look like various types of spiders, or, inversely, spiders that look like iraqi people
see also Iraqnidphobia: a fear of spiders that resemble middle eastern people, or, a fear of middle eastern people that resemble spiders.
jesus but fucking christ batman! that spider looks like a god damn Iraqi! It has got to be some kind of Iraq-nid.
frantic lady (speaking with pest control): these huge spiders have been living in my basement for the past 2 weeks. They wont leave and it smells like 40 wet golden retrievers shitting on a bunch of dead skunks down there now!
Pest control: those aren't spiders lady those are Iraqis. Iraqnids to be precise.
Lady: What can I do to get rid of them?
pest control: make a cd of current top 40 shitty pop music and play it on repeat until the threat of insanity forces them to leave.
Lady: you're my hero. hows about you play with my butt a little while now?