A UAE’s list of “terrorist organizations” provokes outrage by Iraq’s Shia ruling coalition, writes Salah Nasrawi
Every time Iraqi Shia armed groups are accused of abuses against Sunnis, the country’s Shia ruling elite come to their defense. They even express indignation for calling them militias and insist that they are para-military forces which function as back-up to the security forces under the government’s guise.
But last week’s Iraqi Shia leadership’s reaction to the United Arab Emirates’ move to include some of these militias in its new terrorism list was so furious that it had almost provoked a diplomatic tussle. Vise President and former Nuri Al-Maliki accused the UAE of supporting terrorism while some Shia leaders accused it of being sectarian. Protesters in several Shia cities demanded that the oil-rich state make an apology.
The controversy started on 15 November when the UAE blacklisted 83 organisations as terrorists in line with a law it has issued to combat “terrorism crimes.” The measure is also part of the Gulf state’s continued crackdown on Islamic–oriented groups deemed to be a threat to its security. Though the list includes IS, Al-Nusra and other jihadist groups, others are well known Sunni Muslim organizations active in politics or charity.
At least one UAE group, Al-Islah, that the authorities say is part of the Muslim Brotherhood is included in the list.
The UAE move has satisfied a promise by its government to crackdown on Islamist political groups in co-ordination with other countries in the region like Egypt and Saudi Arabia which also consider groups like the Muslim Brotherhood as terrorist organizations.
In August, the UAE passed a law which defined a wide range of activities as terrorism crimes. Under the law people charged with crimes, such attempts on the life of head of the UAE president and rulers of other emirates or their families or endangering their freedoms of their safety will be sentenced with death by hanging.
But the law imposes harsh punishments on other “terrorism crimes”, including attending meetings by people deemed be terrorists. For example, those who “declare publically their hostility” to the state or to the regime, or show “disloyalty to the leadership” are punished by ten years in jail.
UAE officials did not comment on Iraq’s Shia groups’ reactions but its State Minister for Foreign Affairs Anwar Mohammed Gargash said organizations on the list can appeal to his country’s courts to revoke the decision if they can provide enough evidence that they are not involved in terrorist activities.
While it remains unclear how the UAE’s measures will affect foreign organzaitions, the move can still carry political and moral weight. Groups which have been included on similar lists in the past suffered from negative publicity even after they were removed from the lists. Terrorism branding may also have political ramifications, such as condemning the political and ideological goals of the communities the groups represent.
This explains the immediate strong reaction to the news of the inclusion of Shia militias, such as Asaib Al-Haq, Kataab Hozbollah and the Badr Organisation in the UAE’s list. These groups have joined the so-called the “Popular Mobilization”, or Shia fighters who answered a call by Iraq’s most senior Shia cleric Ayatollah Ali Sistani to arms after the Islamic State (IS) terror group captured Sunni towns in a June major offensive.
“We condemn these false accusations,” said a statement by the leadership of the Iraqi National Alliance after an emergency meeting chaired by its head Foreign Minister Ibrahim Al-Jaafari and attended by Prime Minister Haider Al-Abadi and other Shia leaders.
The sharp-worded statement also slammed the UAE’s move as “hostile” to the Iraqi people and “a clear support to terrorism and the criminal forces.” “It is like throwing a rescue rope to IS while it is breathing its last,” the Shia leaders said, demanding that the UAE revoke its decision.
Iraq’s government, which has been reaching out to Sunni neighbours whose relations with Baghdad were strained in the years of former Prime Minister Nuri Al-Maliki’s rule, did not react immediately to the UAE’s decision. Still, the Shia Alliance’s statement seems to be purposeful and reflective of Iraq’s Shia ruling elite.
There is a big controversy in Iraq over the Shia militias. Sunnis have accused them of committing atrocities while carrying out retaliatory attacks. Last week Sunni Vice-President Osama Al-Nujiafi told senior Shia politician and leader of the Iraqi Supreme Islamic Council Ammar Al-Hakim that the government should “put a halt on violations by irresponsible groups” against Sunnis.
The UN human rights agency and international rights groups have accused the Shia militias of gross violations, including abducting and murdering Sunnis in retaliation for attacks by IS. Amnesty International has said that the militias, which are armed and supported by the Iraqi government, face complete impunity for their actions.
The government of Prime Minister A-Abadi has vowed to rein in the Shia militias. On Friday Minister of Interior Mohammad Salim Al-Ghaban denied any connection between “these factions and kidnapping or blackmailing of citizens.” Shia leader Muqtada Al-Sadr, however, acknowledged violations by “some” of these militias though he distanced his Sadrist Movement from atrocities.
“Those who terrorize people and aggress on them and their properties unlawfully don’t belong to us. The majority are infiltrators who belong to enemies and abhorrent militias,” he said in a statement.
Iraq’s Shia militias were created after the US invasion in 2003 to fill security vacuum and encounter increasing attacks on Shia neighborhouds and towns by extremist Sunni insurgents. Some of them, such as the Mahdi Army and Asaib Ahl Al-Haq, joined major armed confrontation against the US troops.
The issue of the Shia militias, however, has become very contentious after the IS advance and its seizure of nearly one third of Iraq’s territories. The Iranian-backed Shia militias are reported to have played a key role in halting IS’s onslaught, protecting the capital Baghdad and key Shia shrines and retaking key towns from the terror group.
In recent months the Iraqi government has been talking about integrating the Shia militias into the security forces. It is already paying their salaries and providing them with weapons. Many of the militias are wielding enormous influence in Shia neighborhouds. They are also represented in the parliament and the government and play an increasing role in Iraq’s polity.
Many questions now surround the UAE’s decision to include the Iraqi Shia militias in its terrorism black list. While the UAE has not explained why the Iraqi Shia militias are on its list of terrorist organizations, the simmering sectarian crisis in Iraq has cast a shadow on its move. Many Iraqi Shia feel that they are being targeted by the Arab Sunni world as Iraq’s sectarian tensions have reached a fever pitch.
One precondition made by the US-led coalition to help Iraq combating IS is for a political process that allows for the various communities of Iraq to come back together. A centeral piece of the strategy, pushed by the coalition, which includes the UAE and several other Arab countries, to defeat IS, is to create a mainly Sunni national guard force to police Sunni-dominated provinces.
The Shia political groups which dominate the government have been reluctant to endorse the creation of such an autonomous force for fear that it will be infiltrated by Saddam Hussein’s loyalists and other Sunni insurgents who might turn against the government once they are left operating independently.
As a counter proposal, the Shia groups want to incorporate the Shia militias into the national guard which should also be put under the prime minister’s command. Some Shia lawmakers say that if a bill to set up the guard will come to the parliament they will insist that Kurdish Peshmergas forces should also be part of the new guard units, a move Kurds have vehemently rejected.
Hence comes the furry of the Iraq Shia leaders for the inclusion of several Iraqi Shia armed groups in the UAE terrorism list. With ethno-sectarian tensions continue, Iraq’s communal factions are expected to rely more heavily on their armed groups as their traditional insurance policy. This trend is expected to continue until an all inclusive security system is established and a political solution for Iraq’s sectarian crisis is found.
By branding their armed groups terrorists, Iraqi Shia will feel that there is a deliberate attempt by some Sunni Arab governments to mix what they perceive as their legitimate self- defense against terrorism with the brutal violence which is driven by ideological appeal sought by the IS.
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The article in Al-Ahram Weekly November 27 issue was sent to print before UAE’s foreign minister’s visit to Baghdad a day earlier.
Monthly Archives: November 2014
Iraq’s fishy business
Iraq’s fishy business
A mysterious Russian plane landing in Baghdad airport prompts questions of illicit oil-for-weapons deals with IS, writes Salah Nasrawi
The news came first from a Jordan-based television channel owned by an Iraqi Kurdish tycoon and well known for his dubious business. A Russian cargo plane landed at Baghdad airport on 2 November with some tons of weapons on board after it was denied permission to land in Suleimaniya International Airport in the autonomous Kurdistan Region, Al-Tagheir TV reported.
The delivery of weapons and ammunition to a country in a state of war shouldn’t have made headlines except that the story surrounding the plane started growing more mysterious after the Baghdad government distanced itself from the shipment.
The stunning reports must have also raised concern with the US administration which is leading an international coalition to support Iraq in the war against the barbaric Islamic State (IS) terror group which has seized one third of Iraq’s territories.
Details about the plane and its cargo gradually began emerging highlighting suspicions that the weapons on board may have been on their way to IS.
According to accounts given by Kurdistan’s media, the Russian plane was approaching Suleimaniya when it was denied permission to land in the city’s international airport which is under the control of the Patriotic Union of Kurdistan, one of the two main parties in the region.
Kurdish media outlet Awene quoted Head Manager of Suleimaniya International Airport Tahir Abdullah as saying the airport refused to grant permission for landing because it had no prior knowledge of the plane’s arrival. Awene quoted a PUK official as saying the plane was carrying 44 tons of weapons, including anti-tank rockets, guns and night vision equipment.
Basnews, another Kurdish outlet quoted Atta Sarawi, a local Kurdish official, as saying the plane was expected to land in Suleimaniya airport. “There was coordination in this regard but there were communication problems with Baghdad. So, the plane continued its flight to Baghdad,” Sarawi said. A translated version of Basnews story appeared on the Arabic news outlet Elaf on 12 November quoted Sarawi as saying the weapons on the plane were sent to the “Kurdistan Region.”
On 15 November Basnews came with another story on its website saying the weapons “might have been sent to a senior Kurdistan Democratic Party official.” It quoted “unofficial” sources as saying that the pilot of the Russian “military plane” which started its journey from the Czech Republic told Turkish air traffic controllers in Adana, southeast Turkey, that the plane’s cargo was mainly a cigarettes shipment bound to Iraq.
In Baghdad, Iraqi government officials kept their mouths shut about the plane and its dangerous goods until the news finally came out setting off a flurry of speculative reports. The Ministry of Transport, which is responsible for civil aviation, said permission for landing at the capital airport was granted after the pilot informed the tower that the plane was running out of fuel.
“The decision to grant the plane permission to land came in line with Chicago Agreement on International Civil Aviation in order to avoid a risk of falling,” said the ministry in a statement on 15 November. It said the pilot was instructed to land on a runway in the airport used by the army. The plane then parked in an area under the Ministry of Defense’s control and weapons were seized, the ministry said.
Both the centeral government and the Kurdistan Region’s authority said they are conducting an investigation into the case. Neither Moscow nor Prague, however, reacted to the news. Also, the US military which is participating in defending the Baghdad airport and participate in air control of the Iraqi airspace made no mention of the incident.
Yet, in another version of the story widely circulated on social networks and TV programmes, the weapons in the plane were sent to a prominent Suleimaniya-based Kurdish businessman who is closely connected to the PUK, which is headed by Iraq’s former President Jalal Talabani.
According to these reports the businessman, who is known to be a hugely rich man who has made his fortune in illicit deals and contracts, is also accused of conducting trade with the IS terror group. A well-known Iraqi analyst told the Baghdadiya television this week that the Kurdish businessman was also responsible for supplying IS with at least one shipment of pick-up vehicles now used by the militants in fight against Iraqi soldiers and the Kurdish forces, known as the Peshmergas.
Another Iraqi television network, Al-Sharqiya reported on its website that “several officials in a big a Kurdish-owned mobile company, their sons and a middleman who are close to one of the main (Kurdish) parties are suspects” in the plane case.
Conspiracy theories abound that the same entrepreneur runs investment portfolios of Kurdish parties and have business relations with top officials in Kurdistan and the Baghdad cenetral government.
The shadowy role of businessmen in Iraq has grown since the US invasion in 2003. Many of these businessmen were involved in scams in the US reconstruction projects following the invasion and before that in the UN-led oil-for-food scheme during Saddam Hussein’s era. Billions of dollars are believed to have been skimmed in the two programmes and went mostly into the pockets of these businessmen and corrupt politicians.
Since it is hard to confirm these reports, eyes are now turned toward the Iraqi authorities and the KRG to unveil the secrecy surrounding the plane, who was ordering the shipment and which is its final destination. The allegations are so serious that prompted Kurdish Prime Minister Nechervan Barzani to tell reporters that “it is considered high treason.”
The disclosure comes at a time when Baghdad’s authorities and the Kurdish government are gridlocked over oil, budget and weapons delivery to the Peshmergas. The Obama administration has been putting pressure on both sides to resolve their disputes and work together to fight the Islamic State terror group.
The Baghdad government suspended allotments of Kurdistan in the state budget, including the Peshmergas salaries after its government started exporting oil produced in their region independently. Under an interim deal the central government agreed last week to will pay $500 million to the KRG, from the state budget while the Kurds will let the Iraqi government receive 150,000 bpd of the oil produced by the Kurds.
On Saturday, Hawal, a Kurdish news outlet, said the Peshmergas are refusing to take part in the fight against IS unless their full salaries are resumed. It quoted Dleir Mustafa, Deputy Head of the Peshmerags Committee at the KGR parliament, as saying that another precondition for the Peshmergas to fight IS is to allow weapons delivery direct and not through the Baghdad government.
Since IS captured Mosul and several other key Sunni-populated cities in June, reports emerged of Kurdish oil traders smuggling oil from IS controlled areas in Iraq and Syria into neighbouring as far as Afghanistan. According to Western intelligence reports the smuggled oil is sometimes sold for a price as low as US $20 per barrel.
The US Treasury Department estimates that IS takes in millions of dollars a month from oil sales. Other estimates range between US$274,000 to three US$ million a day. Trafficking might have been cut down by US-led coalition air strikes on oil production and refinery targets in IS territory.
Last week KRG Interior Minister Karim Sinjari disclosed that Kurdish security forces have captured 11 individuals charged with smuggling oil with IS and for investigation. Turkish officials have denied or downplayed reports about smuggling IS’s oil through Turkey.
Hawal, the Kurdish news service, reported last week that large amounts of money are being transferred through the Kurdish controlled areas to towns taken by IS. It quoted Nouzad Barzanchi, head of the Security Department in Kirkuk as saying transactions are being made to people in Mosul and Shirqat which are under IS control. Baghdad media have reported that several bureaus in the capital are being investigated for transactions made to Jordan, the United Arab Emirates and France which the Iraqi intelligence believes went to beneficiaries connected with IS.
Some of the money which is being transferred through licensed exchange bureaus are believed to be payments for other smuggled goods such as wheat, barley and cattle confiscated from farmers and raisers.
Corruption in Iraq has been endemic since the US invasion nearly twelve years ago. Iraqi state officials have been acting as enablers for corrupt deals in a number of ways involving a range of businesses. In many cases there have been reports of corrupt professionals and army officers who are selling arms or intelligence to IS and other terrorist groups which are later used in attacks against government offices or security forces.
Like many previous cases of corruption before we may not know the secret behind the Russian plane. Yet, the revelations of the oil-for-weapons deal have unveiled a trio of deeply corrupt politicians, terrorists and dubious businessmen who are not only losing the country’s significant proportions of its wealth, but they band together to destroy it.
Rhetoric in foreign affairs
Rhetoric in foreign affairs
Iraq’s ability to forge an effective foreign policy is once again in question, writes Salah Nasrawi
For much of the last 12 years, Iraq’s diplomacy in the post-Saddam Hussein era has been busy marketing the idea that a “New Iraq” was at peace with its neighbours and harboured no intentions of interfering in their internal affairs.
It was a message which former Kurdish foreign minister Hoshyar Zebari never got tired of taking around while Iraq was gripped in bloody violence that was fuelled in part by its neighbours’ meddling in its domestic affairs.
With a civil war raging, aided by widespread regional turmoil and its neighbours’ rivalry, a new Iraqi foreign minister is now adjusting this indecisive foreign policy into a narrative that Iraq and its neighbours are linked by geography and good neighbourliness whose amity has no end.
Putting Iraq’s past foreign policy blunders and new diplomatic niceties aside, however, the question now is whether such rhetoric is the right foreign policy approach for a country that faces existential challenges, or if is just a hands-off approach that reflects the inability to lay out a precise vision to respond to such threats.
Ever since he was named foreign minister in the national unity government of Shia Prime Minister Haidar Al-Abadi in September, Ibrahim Al-Jaafari has been trying to reach out to Iraq’s Sunni neighbours whose relations with Baghdad were strained in the years of former prime minister Nuri Al-Maliki’s rule.
To that end, Al-Jaafari has been pushing the idea of geographical proximity as a means of improving relations with Iraq’s immediate neighbourhood.
Many of Iraq’s Sunni neighbours had accused Al-Maliki of entertaining sectarian pressures by excluding Iraqi Sunnis from power, while Al-Maliki fired back by blaming them for fuelling the violence by supporting the Sunni insurgency.
Such accusations soured Iraq’s relations with most of its Sunni neighbours and reflected badly on Iraq’s ability to restore security.
Given that he is a self-proclaimed Shia advocate and a former leader of Al-Maliki’s Daawa Party, debate has intensified over the likely direction of the country’s foreign policy under al-Jaafari.
One of his main tasks is to find ways to persuade Iraq’s Sunni neighbours that Iraq’s foreign policy is not governed by his own beliefs or sectarian fixations, but is oriented to meeting the demands of the country’s needs.
Al-Jaafari’s success in leading the country’s diplomacy will be crucial in underpinning the broad international coalition’s fight against the Islamic State (IS), which has seized large chunks of territory in Iraq and declared an Islamic caliphate after a blitz in June.
But while reaching out through conciliatory gestures may help in fence-mending diplomacy, these can blur real foreign policy perspectives and send the wrong messages to the targeted parties. In Iraq and its neighbours’ case, both sides need more tempered diplomacy, not fruitless rhetoric.
During his first tour of neighbouring countries, Al-Jaafari visited Kuwait and Turkey this month, carrying his soft-style diplomacy to them and seeking their backing for Iraq’s new government.
His message was that Iraq and its neighbours should rely on geographical affinities to overcome their differences and reconcile their sometimes conflicting interests.
In Ankara, Al-Jaafari did not stop preaching his notion of “geographical closeness” to the media after each meeting with Turkish leaders. “We are determined to keep relations with Turkey strategic and sustainable like our geography,” he told reporters after talks with his Turkish counterpart Mevlut Cavusoglu.
To underline his idea of geographical solidarity, Al-Jaafari, who is known for his flowery language, said that Turkey should work together with Iraq through “mutual interests and solid strategies” to “make our societies and our interests adapted to the respect for this reality”.
The reality, however, is that Turkey nailed its strategic interests to a larger role in regional politics long ago, and it is not likely to be outmaneuvered now by Al-Jaafari’s diplomatic niceties.
There also seemed to be an insufficient response to the deep rifts between Baghdad and Ankara over a host of domestic and regional issues and the turmoil on their borders.
In Kuwait, Al-Jaafari added a historical dimension to his geography-based approach in foreign policy. Again, his logic was oversimplified because it ignored Kuwait’s growing fears of Iraq’s ruinous war and the latter’s potentially devastating impact on the tiny emirate.
Al-Jaafari has been sending out a similar message to Saudi Arabia. “We can’t change our geography,” he said in one of his recent statements about his plans to visit Riyadh. “We are bound with the kingdom by moral and materialistic ties,” he declared.
If all this is meant to be Iraq’s new vigorous diplomacy, it seems to be a very modest approach, if not poor salesmanship in conducting foreign policy with countries that have long been at loggerheads with Iraq over many bilateral and regional issues.
What Al-Jaafari’s diplomatic signalling seems to be ignoring is that since the fall of Saddam’s Sunni-dominated regime, Iraq’s neighbours’ concerns have stemmed largely from who is in a leadership position in Baghdad rather than from simple geopolitics.
The real cause of the worries of these neighbours, notably Saudi Arabia and Turkey, is the Iraqi Shias and their alliance with Iran.
As Iraq’s crisis is increasingly highlighting, there is a need for a new set of arrangements and structures that can deal with the regional issues that are now threatening the collapse of the post-World War I Middle East map. With this in mind, Al-Jaafari’s vision of geographical closeness seems to be nothing but diplomatic talking.
On the other hand, many Iraqis have expressed dismay at Al-Jaafari’s failure to speak out on more pressing issues with Iraq’s neighbours, like terrorists coming across their border or funds sent to IS and other radical groups. They believe that this negligence risks showing weakness by putting diplomatic niceties ahead of strategic concerns.
Indeed, many Iraqis were stunned to hear Al-Jaafari telling reporters in Kuwait that “we cannot judge a country because of one or two terrorist infiltrators.” In addition, some of Al-Jaafari’s statements about the US-led international coalition that is helping in fighting IS have also raised eyebrows.
Since he assumed office he has repeatedly said that the international coalition against IS was not Iraq’s idea. His other assertion has been that the coalition’s military operations should be limited to the airstrikes requested by the Baghdad government. He has also accepted that “Iran is a key player in Iraq.”
While these could be ideas that reflect the stance of the Shia-led government in Baghdad, they cannot amount to a national strategy. Some of the remarks seem to be in sharp contrast with Kurdish and Sunni demands for a larger role for the international coalition in the war, including by sending in combat troops.
Post-Saddam Iraq was born without a foreign policy, and Washington used its diplomatic and political leverage to urge foreign states to recognise the newly US-installed government in order to give it a sort of legitimacy and to reintegrate Iraq into the regional order.
Under Zebari, the Foreign Ministry had difficulties forging a unified national foreign policy as the country’s sectarian and ethnic communities remained split over state and nation building. Meanwhile, Al-Maliki tried to outmaneuver Zebari and put himself in charge of foreign policy.
The Kurdistan region in the north of Iraq established its own diplomatic representative offices abroad, and Zebari was accused of entertaining a Kurdish agenda. Communal leaders and politicians felt free to express opinions or try to influence the formation and execution of foreign policy, and foreign visits and meetings with foreign government officials by Shia and Sunni leaders were routine.
The divide had political, economic and security implications for Iraq’s neighbours and the broader Middle East. Many of the country’s neighbours poked their noses into Iraq’s affairs, and their interference took different forms, including by influencing the composition of the Iraqi leadership. The interference also raised questions about how Iraq’s diplomacy should respond to violations of sovereignty and independence.
There are no documents that provide first-hand knowledge of the basic principles of Iraq’s foreign relations or national security policies since the US-led invasion in 2003. Zebari, who spent nearly nine years in his post, ironed out a foreign policy approach which was largely intended to appease Iraq’s neighbours.
A statement posted on the Iraqi Ministry of Foreign Affairs’ Website outlines the goals of Iraq’s foreign policy as “actively and successfully working to protect Iraq’s security and promote stability and preserve the unity and harmony of society and strengthen the foundations of democracy within the framework of sovereignty, unity and equality among all citizens.”
Yet, the document falls short of laying out a solid foreign policy strategy that meets key challenges such as terrorism and foreign interference in Iraq’s affairs. Part of Iraq’s foreign policy failures were due to mismanagement under Zebari, who critics blame for avoiding inter-agency coordination and turning the ministry into a nest of politically appointed diplomats and cronies.
Realising how dysfunctional the Foreign Ministry he had inherited had become, Al-Jaafari is widely expected to overhaul the diplomatic service and reorient the country’s foreign policy strategy.
Coming from outside the foreign service and lacking international-relations expertise, he needs to do a lot of work in redesigning and managing Iraq’s foreign policy not only to boost its regional and international standing, but also and most importantly to meet the country’s existential threats.
But first and foremost he should realise that diplomacy is not merely sound bites. It is instead the full range of practical measures, and public and private debate, that a state can employ to achieve its ends.
Where does Iraq’s money go?
The failure to pass a state budget has unveiled the full extent of Iraq’s empty coffers, writesSalah Nasrawi
The annual budget debate is an important tradition in parliamentary systems, a time when lawmakers discuss the government’s draft financial blueprint and the public is told about the nation’s financial status.
A budgetary crisis can trigger a standoff and may develop into a government shutdown in which the government temporarily suspends non-essential services until a budget is passed. The failure of the parliament to pass a budget can also spark the fall of the government.
Yet, in Iraq nothing of this sort has happened. Even as 2014 is coming to an end, the country still does not have a state budget for this year, and the government is operating on 2013 budget predictions despite lower oil prices and cuts in production.
The government has also not unveiled plans for the 2015 budget.
The scandalous failure to introduce a budget means that Iraq is entering another year without having an annual financial chart for the country or even a scenario for proposed revenues and spending.
Last week, the new Minister of Finance Hoshyar Zebari surprised the parliament by telling members that the government would not submit a budget, instead making a statement in which he provided figures on government revenues and expenditures.
In summarising the country’s financial status, Zebari told the parliament that the government’s revenues in 2014 had amounted to ID105 trillion, ID96 trillion from oil exports and the rest from non-oil income (the Iraqi Dinar = 0.00086 $).
As for expenditures, Zebari explained that the government had spent ID185 trillion, divided between ID103 trillion on its operational budget and the rest on investment.
While parliaments usually debate the government’s proposals and take action in choosing to increase or decrease spending on any of its programmes, Iraqi MPs were asked to endorse the aggregate figures given by the government without discussion.
Since the collapse of the regime of former Iraqi president Saddam Hussein in the US-led invasion in 2003, Iraq’s parliament has had difficulty passing annual budget bills in any regular order.
Squabbles over appropriations are routine, and last-minute deals usually come at the expense of a solid budget. Worse still, the government usually fails to introduce its final revenue and expenditure accounts for endorsement before passing a new budget.
Last year, the parliament was unable to pass a budget because of a dispute between the central government and the autonomous Kurdistan Region over independent oil exports from the enclave. The row resulted in cutting Kurdistan’s budget, creating a new fissure in relations between the Shia-led government in Baghdad and the Kurds.
The crisis allowed former Iraqi prime minister Nuri Al-Maliki to use budgetary advances and emergency provisions, circumventing the checks and balances enshrined in the country’s constitution to ensure limits imposed by the legislative branch.
Al-Maliki argued that he wanted to avert a government deadlock as a result of the freezing of funds while the country faced political instability and soaring violence. Critics, however, say that Al-Maliki did not only overreach himself in spending but also gave himself a free rein in using the state’s coffers.
Despite its huge oil revenues, Iraq’s economy is in a shambles due largely to mismanagement, poor public spending and rampant corruption. Some 70 per cent of the state budget goes to food and energy subsidies, funding an inflated bureaucracy and ramshackle armed forces that collapsed in the face of an onslaught by Islamic State (IS) forces in June.
The budget has been hard hit by a displacement crisis triggered by the war against IS, and the government now spends some $500 million a month to feed and house some 1.75 million internal refugees. Additional amounts are being spent on constructing a new force in Sunni-dominated provinces to fight the IS terror group.
But Iraq’s budgetary problems are also more deep-rooted. For most of the past 12 years the government has been violating the budget rules by using loopholes in the constitution and the law.
Few data are available about how much money Iraq has been spending or earning. There are no accurate figures for oil exports, and it is widely believed that oil is being smuggled out in large quantities, sometimes under government officials’ noses.
In addition, the implementation rates of both the state’s operational and investment budgets are either lagging or low. Some departments have failed to spend even half of their annual budgets.
This dismal rate of implementation of the public budget, largely blamed on government inefficiency, reflects badly on development projects and economic growth.
With expectations that Iraq’s economy is likely to shrink by 2.7 per cent this year, the UN has warned of an economic downturn in the country influenced by pressure from rising security spending and the humanitarian crisis.
The government has promised to present a draft 2015 budget but has given no details so far. Estimates for government revenues have totalled ID139 trillion based on an oil price of $90 per barrel, and the head of the Iraqi parliament’s finance committee, Majda Al-Timimi, has predicted that the country’s budget deficit in the 2105 budget will be some $50 billion.
Zebari said the government hoped to cut this deficit by nearly half or more, suggesting drastic measures to cover the deficit and make up for lower oil prices and oil production.
Zebari, a Kurd who was a foreign minister in the former government and has no economic or financial background, has proposed that the government resort to loans and IMF special drawing rights, as well as to issuing bonds against the pension funds and assets of the two state-owned banks, the Rafidain Bank and the Al-Rashid Bank.
He has also suggested raising taxes, levies and customs. In addition, he has suggested that the Central Bank, which has $77 billion in foreign reserves, should lower its reserves to seven per cent instead of its current 15 per cent mark.
The aim, he said, was to raise ID21 trillion to help meet the country’s deficit. However, Zebari’s proposals have been largely dismissed by the government. While the Central Bank has ruled out any move to lower the reserves, an aide to Prime Minister Haidar Al-Abadi has categorically rejected the idea of foreign loans.
Experts have also warned that borrowing against the country’s reserves to cover the deficit will increase inflation and weaken the Iraqi Dinar.
As the budget bottleneck tightens, many experts believe that the government will have to impose austerity measures to cut spending and waste. While the government has said it will not cut salaries or pensions, other reductions in the lavish spending of oil money may increase unemployment and poverty, already sky-rocketing as a result of downbeat growth.
Iraq’s economy has been hard hit by decades of wars, international sanctions and inefficiency. Though the country has the fifth-largest proven crude oil reserves in the world, and is the second-largest producer of crude oil in OPEC, most of the oil revenues go to imports, mostly food and other basis commodities.
But Iraq’s current economic ills are largely due to the bad policies adopted by post-Saddam governments. Instead of rebuilding the economy and sustaining growth in basic sectors, these have relied heavily on oil revenues to bankroll the budget.
Though Iraq’s arable land is estimated at eight million hectares, or less than 15 per cent of the country’s total area, agriculture, which employs one third of the work force, accounts for less than four per cent of the country’s GDP.
The manufacturing, construction and water and electricity industries are in tatters and account for only eight per cent of the national wealth.
Government policies are mainly responsible for the decline in the country’s productive sectors. Corruption comes at the top of the reasons for the depletion of the country’s coffers. Last week debate in parliament revealed that large chunks of $500 million allocated to displaced people had gone into the pockets of corrupt officials.
Now Iraq’s economy is in disarray. While the fiscal crisis, lower oil prices, and violence caused by the war on IS will add more pressure to the government’s revenues, its overall economic performance will also remain detrimental to the country’s growth and progress.