Iraq’s internal problems hindering fight against ISIS
Low oil prices, domestic strife over corruption and ongoing terrorist bombings are dominating Iraq’s domestic scene and hindering its fight against the Islamic State (ISIS). Although the United States has been generously subsidising Iraq’s military effort against ISIS and trying to shore up the country’s economy, no domestic rebound is likely to occur until oil prices rise and the regime gets serious about corruption.
While Prime Minister Haider al- Abadi gets high marks in foreign circles for trying to be a good leader, his standing in Iraq is a different story.
Some of this can be blamed on matters outside of his control. The drop in the price of crude has severely hurt the economy, as oil accounts for about 90% of government revenues. If oil prices remain as low as they are, the budget deficit could reach as high as $50 billion this year.
Government expenditures remain high because of the large public sector workforce, a legacy of Iraq’s socialist past and more recent policies of doling out government jobs to political allies. About 7 million Iraqis are on the government payroll.
Abadi has tried to deal with this crisis by cutting government salaries by 3% and instituting fees on a number of services, but this has made the public even angrier because of the widespread perception that much of government’s revenue is lost to corruption.
As one young Iraqi told a Western journalist recently: “This is a rich country, and it’s the poor that are being asked to take the burden for the mistakes of the corrupt government.”
Over the summer, large demonstrations broke out in Baghdad because of electricity shortages, but they soon morphed into protests against corruption. In response, the Iraqi parliament voted for a package of reforms put forward by Abadi aimed at stamping out corruption. But there was no appreciable change.
In the past few weeks, there have been new protests over corruption, led by Shia cleric Muqtadr al-Sadr, who has been effective in mobilising his supporters from time to time when he disagrees with government policy or when he wants to score political points.
In response, Abadi has pledged he will appoint a government of technocrats, as opposed to members of political factions, because the latter are seen as part of the corruption problem, that is, the practice of “taking care” of one’s political allies. Thus far, however, such a technocratic cabinet has not materialised.
The government is so sensitive about the corruption issue that it recently brought defamation charges against the editor of an Iraqi independent news site who reported on kickbacks from mobile phone companies to a telecommunications regulatory official.
If these problems were not enough, Iraq also has to cope with 3.3 million internally displaced refugees from the ISIS advance in 2014 and earlier conflicts, and rebuild heavily damaged cities that have been liberated from ISIS control such as Ramadi and Tikrit.
To help deal with these economic crises, Iraqi officials in December 2015 negotiated a $1.2 billion loan from the World Bank to help offset the drop in the price of oil and large military expenditures that have been incurred in the fight against ISIS. Iraq is also seeking another loan from the International Monetary Fund. (It received a $1.24 billion emergency loan from the fund in 2015.) As for the United States, most of its new aid since 2014 has gone to fight ISIS. In fiscal year 2015, for example, it spent $1.5 billion on the Iraqi “Train and Equip Fund”, $1.2 billion on the regular Iraqi military, $350 million for the Kurdish peshmerga forces and $24 million for Sunni tribal security forces.
In its fiscal year 2017 budget request, however, President Barack Obama’s administration seems to have recognised that Iraq’s economic and social problems are serious matters that need to be addressed. Of the total $1.8 billion for Iraq, $333 million is for economic assistance to “support good governance and transparent use of public resources”.
In addition, the US has offered Iraq a $2.7 billion loan for military expenses.
Sensing this public discontent, ISIS has unleashed a spate of suicide bombings in Baghdad and in other areas under the government’s control. ISIS not only hopes to keep Iraqi security forces busy dealing with these attacks — delaying an offensive to try to take Mosul — but also to exacerbate public sentiments of the government not taking care of people’s needs, including security.
To turn things around, the Abadi government not only needs strong political will to stem corruption and the expensive system of patronage, but also tightening of world oil supplies that will drive up prices and revenues. It is not clear whether either will emerge anytime soon.