Earlier this month, Iraq signed a memorandum of understanding with the United Nations to establish a fund for reconstruction and recovery. The agreement will allow an estimated $30 billion in international aid to be channelled into the country, and marks the latest stage of Baghdad’s attempts to emerge from decades of bloodshed and instability.
But if Iraq really wants to move towards a progressive and prosperous future, it has a litany of problems yet to solve. The country’s 40 years of torment, at the hands of first Saddam Hussein and then the Islamic State, have left a legacy of endemic corruption and political instability which still needs to be untangled. Iraq is infinitely more secure than it was just a couple of years ago, but that’s only the start of the rebuilding job.
The will is certainly there. The government in Baghdad is pushing a new refinery investment model to unlock the potential of its oilfields, yet at the same time announced measures to build a more diversified, high-tech economy. The government has even signed agreements with two of its old military foes, Iran and Kuwait, to facilitate cross-border trade and secure vital funds for reconstruction.
Corruption remains a major scourge
But the benefits of these ambitious policies may take a while to realize. It’s only been two years since Isis terrorists controlled a third of Iraqi territory. The country’s infrastructure has sustained major damage, not just from Isis but also from Saddam’s regime, which was as infamous for its rampant kleptocracy as for its human rights abuses. Under Saddam’s 24-year dictatorship, his cronies siphoned billions of dollars at the public’s expense, snaring lucrative oil contracts and forcing foreign companies to hand over substantial ‘gifts’ for the privilege of doing business.
Across the country, vast fortunes are still missing. Iraq’s anti-corruption commission claims to have recovered over $1 billion in stolen funds during the first half of 2019, yet this haul is just a drop in the ocean compared to the $250 billion which has been siphoned since 2004. Arrest warrants continue to be issued against government officials in their hundreds, illustrating how deeply embedded graft remains in the Iraqi public service.
Meanwhile, even now Iraq is ranked 171 of 190 countries on the World Bank’s Doing Business report and it remains near the bottom of Transparency International’s Corruption Perceptions Index. Foreign investors still complain that key decisions take an age, snarled up in the country’s labyrinthine bureaucracy— a problem which has even been cited by Iraq’s own planning minister.
Even in Iraqi Kurdistan, spared much of the conflict which ravaged the rest of the country, corruption and arbitrary red tape keep tying up foreign investors. Just take the case of telecommunications firm Korek. In 2011, an international consortium of French telecoms giant Orange and Kuwaiti logistics firm Agility joined forces to acquire a 44% stake in Korek and have since invested an estimated $1 billion in the telecom company.
Iraq’s national regulator first declared the consortium’s contract invalid, then seized its stake and handed it over to a group of local investors including Sirwan Barzani, Korek’s managing director—not to mention the cousin of Kurdistan’s president. Korek’s international investors have now taken legal action, including claims through the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) which are set to go to tribunal following a July ruling.
In addition to arguing that their property was illegally expropriated, they have alleged that Sirwan Barzani, among others, concluded dodgy deals worth millions of dollars and enriched themselves with secret loan agreements. Given how frequently the Barzani family is accused of graft and nepotism by both Kurdish and international observers, the charges shouldn’t come as much surprise.
This ubiquitous culture of graft is delaying the rebuilding work the country critically needs. The problem is most evident in Mosul, the former stronghold of the Islamic State. Recaptured over two years ago, the city should be emerging as a beacon of the new Iraq, yet dozens of buildings wrecked by Isis have not even been demolished yet, let alone rebuilt.
The reconstruction has notably been thwarted by the venality of the former local governor, Nawfel Akoub, who issued dozens of dubious contracts and allowed millions to be appropriated by his allies. Akoub is now believed to be hiding in Kurdistan, along with estimated $10 million.
The spectre of extremism
The danger of this slow recovery is the risk that stagnating conditions could birth a new wave of extremist violence. Pockets of Isis fighters continue to launch hit-and-run attacks against government installations. As the U.S. military reported this month, Isis remains a major threat. Some reports even suggest the group is getting stronger, feeding on the huge refugee populations which have yet to be rehoused.
To make things even more complicated, many of the militias created to fight Isis have yet to stand down. These militias may have enjoyed government backing when they were leading the fight against terror, but they often have little affinity with the Iraqi state. Many of the units which rose up at the behest of Ayatollah Ali al-Sistani remain loyal to Iran rather than Baghdad; they have even seized control of infrastructure such as local energy plants. In an attempt to wrest back some authority, Iraq’s prime minister Adel Abdul Mahdi has ordered one vast coalition, the Popular Mobilisation Units, to fold into the regular army or be treated as outlaws. The request has yet to be heeded.
Iraq hopes these problems are no more than bumps in the road—that the ongoing problems of graft and disunity can eventually be beaten. Having repelled Isis, Baghdad might argue that anything is possible. But, as some commentators have remarked, relative freedom from war and terrorism in recent months has allowed the Iraqi people to shift their focus towards their country’s deeper, structural problems. And, despite all the domestic and international goodwill, those problems remain in abundance.
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