Can Iraq Reform Itself Amid Chaos?

For more than three months, Mustafa Al-Kadhimi’s transitional government has ruled Iraq. As the ongoing sanitary crisis is only getting worse, budget deficit is widening due to low oil prices while Iraqi’s living conditions are going from bad to worse. As tensions between Iran and the United States persist, urgently needed reforms seem out of reach even though the survival of millions of Iraqis depends on it.

21 July 2020. — Mustafa Al-Kadhimi on official visit in Iran
Iranian presidency/AFP

Mustafa Al-Kadhimi promised it. He would lead the country beyond the crisis, reinforce the foundations of the nation, tackle corruption while keeping good relations with the different allies of Iraq. His many appearances on social media feeds during his trips in hospitals, public institutions custom offices or even at the Hashed al-Shaabi headquarters all indicate that the Prime Minister wishes to distinguish himself from his predecessors. As an example of his uprightness, he even staged a phone call to his brother during which he warned him about trying to profit from his political network.

Hoping to reassure the demonstrators that took the streets to initiate a political revolution and to demand an end to corruption among the ruling class, he kept his word and set up a special commission to identify those responsible for the violence during the demonstrations and to compensate the families of the victims. Quite uncompromising regarding state violence and police impunity, he ordered the arrest and trial of the policemen that killed several demonstrators in recent events. In the same fashion, several officers that mistreated Iraqis who had broken the confinement rules were severely disciplined.

Regarding administrative and economic reforms, the immense task ahead of the government is also considered a top priority. The technocratic Ministry of finance Ali Al-Allawi is working hard to present image of dedication and professionalism. But this Harvard-educated economist who taught in Oxford lacks experience regarding the subtleties of local power structures which could undermine his reform efforts: “Mr. Allawi has great academic competences, but he doesn’t understand the realities of local politics and the informal rules existing among its actors,” described Ahmad Al-Hajj Rashid, member of Iraqi Parliament from the Komal party and former head of the economic commission of parliament. Indeed, it seems distance from ground realities already doomed several reform initiatives in the last decades in Iraq.1

On a political level, Mustafa Al-Kadhimi has the same weakness. He doesn’t have any party base to support his push for reforms. Although a new coalition has formed in parliament to support him called Iraqiyoun, it only counts about fifty MPs out of the 329. Room for manoeuvre is thus quite narrow for the Prime Minister. This coalition is even compromising to him due to the fact that it includes many veteran politicians (Amar Al-Hakim, Hanan Al-Fatlawi…) notorious for their sectarian rhetoric and even suspicions of corruption in some cases. Their objective is more opportunistic and to have the upper hand if Al-Kadhimi would succeed in future elections. They would then be in a position to outlive the changing balance of power if for instance, the Sadrist movement al-Sairun or the pro-Iranian Fatah coalition would start to wane.

The impossible balance of budget

In terms of reforms, economy is still the top priority for the transitional government. In the end of May, the parliament approved an 8 billion US dollars loan in order to fund the public servants’ salaries. Currently, the State’s income is severely limited by oil market prices below 40 US dollars. “The state is confronting a major economic crisis. It needs 6 billion US dollars per months to support its expenditures, yet, it only receives three,” described Mr. Al-Hajj Rashid.

In order to compensate this deficit, several measures have been taken. Al-Kadhimi chose to reassess the list of State employees to fight the issue of “ghost jobs.”He also started replacing around six thousand high-ranking servants who are particularly implicated in corruption. For example, former head of National Security and chief of Hashed Al-Shaabi militias Faleh Al-Fayad was replaced by Abdul Ghani Al-Asadi, a general praised by the protesters of October’s demonstrations.2

Nonetheless, this “cleansing” is obstructed by a sharp resistance from the political figures who fear losing their privileges. “It will be difficult for Al-Kadhimi to broker a political compromise that would thoroughly tackle the Iraqi patronage network,” assessed Nancy Ezzedine a Middle East conflicts expert working for the Clingendael institute. The corrupt Iraqi elite might thus unite against the Prime Minister’s reform efforts.

The touchy issue of Iraqi border customs has been another top priority for the government recently. “Iraqi customs should provide nearly 10 billion dollars every year. Yet, the State doesn’t even get a billion annually from it,” explained Ahmad Al-Hajj. The Prime Minister started sacking several figures in charge such as the head of customs in Basrah and of the port of Umm Qasr who was fired alongside his henchmen. His replacement is a strong message sent toward the mafia-like establishment peculating the State at all levels. Similarly, several custom offices at the Syrian and Iranian borders previously controlled by militias and mafias were taken over by newly State-appointed servants in order to enforce his decisions, the Prime Minister mostly relies on the powerful Counter Terrorism Service (CTS).

Despite all initiatives, the financial balance of Iraq will probably in red for the many months, if not years to come: “Globally, the government’s measures are positive, but they are insufficient. There are many efforts to restructure public spending, reduce state budget and salaries unaccounted-for while supporting public loans in an attempt to stimulate the economy. Mr. Allawi also started negotiating with the World Bank and the International Monetary Fund to obtain new loans as well as an international assistance to support reforming the government. But all of this won’t be enough to put an end to the structural crisis,” summarised Mrs Ezzedine.

The last sensitive matter regarding budget involves the share given to the Kurdish autonomous region (KRG). This issue was temporarily solved: “Even though the government is constitutionally obliged to provide 17% of its budget to the Kurdish region in exchange of its oil production, long-standing disagreements between the two actors have frozen the deal for many months. For six months this year, Kurdish public servants were not paid. Nothing indicates that the current understanding will last for long,”commented the MP of the Komal party, Mr. Al-Hajj Rashid. The relationship between the central government and the KRG have been difficult for years especially since Erbil unilaterally decided to export its oil from 2015 onward after seizing the Kirkuk oil fields from ISIS. The animosity between the federal and regional government further increased after Massud Barzani’s decision to set up an independence referendum back in September 2017.

Balancing the regional chessboard

Iraq’s reformist campaign cannot be analysed without taking into account the rivalry opposing Iran and the United States. In an effort to reduce Tehran’s influence in the country, Washington supported negotiations between Saudi Arabia and Baghdad in order to bolster the electric and gas production capacity of the country. The Iraq-United States strategic talk that are still taking place is another indicator of the White House’s desire to collaborate with Baghdad. “The US/Iraq dialogue is an American attempt to strengthen its delicate position in Iraq since the assassination of Qassem Soleimani and Abu Mahdi Al-Muhandis3 last January. Washington offers advisers and investments in exchange for a reduction of its military presence in Iraq, which will be redeployed in the other Gulf countries,” explains Nancy Ezzedine. But some Iraqi political actors also look at the dialogue as a tool for the US to perpetuate its presence in Iraq.

Al Kadhimi’s diplomatic campaign aims at keeping its neighbours and allies in good terms with Baghdad. In June, he visited Ayatollah Khamenei before flying to the White House last month. The visit of French president Macron to Baghdad last Wednesday is also an indicator that Iraq is attempting to reposition itself as a key player in the region and that Kadhimi’s policy is welcomed by the West. As a marker of the Prime Minister’s desire to start a new era of prosperity for his country, Macron and him discussed cooperation opportunities, mentioning projects to develop a metro network in Baghdad as well as a civil nuclear energy power plant in the country.

Meanwhile, different trajectories are noticeable among pro-Iranian actors. The Kataeb Hezbollah (KH) is keeping up with an inflexible and aggressive policy (assault on CTS headquarters, firing of rockets at American bases, alleged murder of armed group expert Hisham Al-Hashimi...) while more “pragmatic” groups of the Fatah coalition are giving up signals that they wish to collaborate with all Kadhimi’s government and foreign actors.

Nonetheless, the pro-Iran axis does not remain idle in front of the many attempts to mitigate its influence. In that sense, the recent operation by the SCT on a KH base reunited the Hashed Al-Shaabi. “Al-Kadhimi suffered a few setbacks following the arrest of Kataeb militia members who were suspected of preparing attacks on American bases in Iraq. Facing an open insurrection, the detainees were released without charges4, which speaks for the limits of power of the Prime Minister”, analysed Ben Robin-D’Cruz, associate researcher at the Middle East Center of the London School of Economics.

Moreover, resistance to reforms by a fraction of the pro-Iran axis as well as by some demonstrators could scare foreign investors away would it persist in maintaining a climate of instability in the country. This could undermine the economic development projects to come. “Finally, Kadhimi is, in theory, a transitional figure whose stated priority is preparing for early elections. Although these elections are unlikely to materialise on schedule, this nevertheless undercuts the PM’s ability to strike deals based on assurances that may have a short shelf life,” added Mr. Robin-D’Cruz.

In such conditions, all the good will in the world might not be enough to set such a faltering state back on tracks. Throughout the years, the highly inefficient Iraqi model of “consensus democracy” led to a generalised kleptocracy system. Hence it is highly probable that the political crisis will survive Al-Kadhimi’s mandate. Adding to this already critical situation, the rise in Coronavirus infections is becoming impossible to handle for Iraq’s decaying hospitals while severe water shortages in the Tigris Basin are set to worsen in years to come due to the filling of the Ilisu dam in Turkey.

1At least 40 billion dollars have been invested in reforming the Iraqi public sector between 2003 and 2020 by the United States, the European Union or the United Nations with very poor results. Cf Ali Al-Mawlawi’s report for the Chatham House: “Public Sector Reform in Iraq”, June 2020, p. 2, note 1.

2Just like Abdel Wahab Al-Saadi, the head of the Counter-Terrorism Service, Al-Asadi is seen as a patriot and hero of the war against ISIS.

3The former was the head of the Al-Qods, the external forces of the Iranian Revolutionary Guard Corps (IRGC) while the latter the head of the Iraqi militia’s umbrella organisation Hashed Al-Shaabi and head of the Kataeb Hezbollah brigade.

4A German hostage briefly captured in Baghdad was probably used to bargain for the liberation of the militiamen held by the CTS.