Iraq spent more than $700 billion oil wealth since 2005

The equivalent of $227 billion in public funds in Iraq has gone missing through shell companies.
Tuesday 31/07/2018
An Iraqi worker operates valves in Nihran Bin Omar field north of Basra, last year. (AP)
An Iraqi worker operates valves in Nihran Bin Omar field north of Basra, last year. (AP)

LONDON - Iraq has raised more than $700 billion from oil since 2005, but almost the entire amount has been spent, the central bank announced Tuesday.

“Between 2005 and 2017, the finance ministry has taken in $706.23 billion dollars in foreign exchange” from oil, it said in a statement.

“A total of $703.11 billion, or 99.5 percent of the amount, has been spent,” it said.

Since Prime Minister Haider al-Abadi declared victory over the Islamic State (ISIS) group last December, marking an end to decades of conflict in Iraq, social grievances have boiled over in a series of protests.

After erupting in the oil-rich southern province of Basra on July 8, unrest has quickly spread to several cities, as people have vented their anger over unemployment, high prices, power cuts and a lack of usable water.

Fourteen people have been killed in clashes between security forces and demonstrators, frustrated over the lack of basic services in what has been ranked one of the world’s most corrupt countries.

According to parliament the equivalent of $227 billion in public funds in Iraq has gone missing through shell companies.

Iraq — the second-largest oil producer within the OPEC cartel — sits on some of the world’s largest crude reserves, with the oil sector accounting for 89 percent of the state budget.

Electricity minister sacked after weeks of protest

Abadi on Sunday sacked his minister of electricity after three weeks of protests against corruption and chronic power cuts.

A statement from Abadi’s office said the premier sacked Qassem al-Fahdawi — whose departure was demanded by protesters — “because of the deterioration in the electricity sector”.

On Sunday, protesters held sit-ins outside the governor’s headquarters in Basra and Samawa, in neighbouring Muthana province, AFP correspondents said.

Hours-long electricity cuts are a source of deep discontent among Iraqis, especially during the scorching summer months when demand for air conditioning surges as temperatures soar past 50 degrees Celsius (120 Fahrenheit).

Since the ouster of Saddam Hussein in 2003, Iraq has allocated some $40 billion (35 billion euros) in state funds to rebuild its power network and meet the needs of a 38-million-strong population, official figures show.

But much of that has been syphoned off by politicians and businessmen in a country listed by Transparency International as the world’s 12th-most corrupt.

A government official told AFP on Sunday that Abadi had also ordered investigations launched into fake contracts.

Fahdawi commended the premier’s call for investigations and called on ministry staff to cooperate with the probes, one of his advisers said.

Political analyst Hisham al-Hashemi did not expect Fahdawi’s sacking to appease the protest movement. For that to happen, he said, “the managers of all ministries should be put on trial”.

Since 2003, more than 5,000 so-called “phantom contracts” have been signed in the public sector, according to Iraq’s parliament. During the same period, $228 billion has gone up in smoke due to shell companies, it says.

A lawyer, Tareq al-Maamuri, recently lodged a complaint against Fahdawi and his ministry for failing to provide electricity.

He also demanded prosecutions over alleged “embezzlement of public funds”.

Since Saddam’s toppling in 2003, successive electricity ministers have been sacked over corruption or forced to quit in the face of angry protests.

One of them fled abroad after he was accused of embezzling $500 million.

In 2010, one of Fahdawi’s predecessors, Karim Wahid, resigned after a wave of protests across central and southern Iraq against draconian power rationing.

Power shortages have forced Iraqis to buy electricity from private entrepreneurs who run generators visible on street corners across the country.

Despite the shortages, electricity consumption has risen since 2003 as Iraqis make more use of household electronic equipment including computers and mobile phones.

Officials say the expensive war against ISIS and a slump in world crude prices have emptied state coffers of the funds desperately needed to rebuild infrastructure.

They also blame Iraqis who they say are not paying their utility bills.

Fahdawi’s sacking comes amid political tensions as Iraq awaits the results of a partial recount of May 12 elections, while political factions jostle to cobble together a coalition.

Five local election officials sacked on corruption charges

Abadi sacked five local election officials on Saturday on charges of corruption during the May 12 parliamentary election, a spokesman for the Independent High Elections Commission (IHEC) said.

The move comes as Iraq conducts a manual recount of the ballots – a move likely to speed up the ratification of the final result and the formation of a new government.

Abadi had appointed a special committee to investigate claims of vote-rigging in several regions, and on Saturday he approved its recommendation to dismiss local election chiefs in Kirkuk, Anbar and Salahuddin, Judge Laith Jabr Hamza said in a statement.

Those in charge of overseas election offices in Turkey and Jordan were also dismissed.

“The decision to sack the officials was approved by the prime minister after they committed violations, manipulation and financial corruption,” said Judge Laith Jabr.

The announcement comes the day after Iraq’s top Shia cleric Grand Ayatollah Ali al-Sistani urged for government action to fight corruption.

Vote-rigging allegations centered on the city of Kirkuk, although there have been reports of irregularities in multiple provinces.

Opposition politicians have claimed that the tabulation system in electronic voting machines that were used for the first time during the election were not secure enough from tampering.

In response to the claims, the outgoing parliament in June ordered a nationwide manual recount of the votes.

The law also called for IHEC’s leadership to be replaced by a panel of judges. 

HRW urges probes into ‘rampant’ use of torture in Iraq

Human Rights Watch called on Tuesday for investigations into the “rampant” use of torture against people arrested on suspicion of belonging to ISIS.

“Torture is rampant in Iraq’s justice system, yet judges lack instructions for responding to torture allegations,” the watchdog’s deputy Middle East director, Lama Fakih, said.

“Defendants, including ISIS suspects, won’t be able to get a fair trial so long as the security forces can freely torture people into confessing,” she added.

Around 20,000 people were arrested in the three-year battle by Iraqi forces to drive out ISIS, which had seized swathes of western and northern Iraq in 2014.

HRW found that in 22 of the 30 cases it reviewed in Baghdad, judges had refused to consider allegations of torture.

In several cases, judges ordered forensic medical examinations and found signs of torture, “but did not necessarily order a retrial or investigation and prosecution of the abusive officers”, the group said.

Iraq’s constitution outlaws “all forms of physical and psychological torture and inhuman treatment”.

HRW called on judicial authorities to “investigate all credible allegations of torture and the security forces responsible”.

Iraq’s Supreme Judicial Council should issue guidelines on the steps judges are obliged to take when allegations of torture in custody arise.

The human rights group said parliament should also pass an anti-torture law, requiring judges to order a medical examination of any detainee alleging torture within 24 hours after being notified.

“When judges convict based on coerced confessions and disregard allegations of torture, they are sending a message to the security forces that torture is a valid investigative tool,” Fakih said.

“The Iraqi government needs to do much more to ensure that criminal investigations are genuine and impartial, and that officers who torture detainees are appropriately prosecuted.”

(The Arab Weekly staff and news agencies)