In Iraq, Corruption Impedes Potential Growth and Stability

Popular demonstrations have rocked many Iraqi districts since July 8. Protestors have decried the delicate social conditions under which the majority of Iraqis live.

Popular demonstrations have rocked many Iraqi districts since July 8. Protestors have decried the delicate social conditions under which the majority of Iraqis live.

The immediate demands are to counter unemployment and the lack of some basic social services like electricity and clean water. Iraq is an oil-rich country that has nonetheless suffered instability, organized violence, political divisions, and — significantly — extremely high levels of corruption.

Almost all Iraqis, from the ordinary man in the street to the head of state, agree that corruption is predominant in the country. When Prime Minister Haider al-Abbadi announced the victory over ISIS, he stated that the next battle would be against corruption, describing the latter as a more dangerous threat than terrorism itself. He promised that Iraqis would be victorious in the war against corruption in just the same way they had been in the war against IS.

Local and international media outlets are full of reports that Iraq scored high in the international corruption index, drawing a gloomy image for the future of its economic growth and political stability. Transparency International (TI) placed Iraq among the most corrupt countries in the world, ranking 169th out of 180. TI stated that “corruption remains endemic in the Arab states while assaults on freedom of expression, press freedoms and civil society continue to escalate.”

In the 15 years since the U.S. invasion of Iraq and the establishment of the post-Saddam government, an estimated $320 billion have been stolen from the state’s coffers, according to the Parliamentary Commission of Transparency. This number is over three times the estimated amount needed to reconstruct Iraq’s war-devastated infrastructure.

“Everybody is corrupt, from the top of society to the bottom; everyone, including me,” said Hisham al-Jabouri, an anti-corruption leader and member of a parliamentary committee for protecting public monies. As response to a question asking whether there were possible solutions for corruption in Iraq, his words speak for themselves.  “At least I am honest about it,” al-Jabouri said, “I was offered $5 million by someone to stop investigating him. I took it, and continued prosecuting him anyway.”

Saddam Hussein’s regime had been ruling an ethnically and religiously divided society with an iron fist. When the regime fell, it gave rise to more sectarian division and violence. The first post-Saddam government was formed on the basis of sectarian representation more than on the independent will of individual citizens. The top government positions have been occupied by partisans of various sects, rather than being assigned in terms of merit.

The Iraqi budget is weighed down by wages it pays for public servants who shirk their duties. The country’s departments are full of “ghost employees” who seldom or never show up in the workplace but nonetheless get their salaries paid, half of which is a bribe for those in command. In 2014, al-Abbadi’s government revealed around 50,000 ghost employees within the ranks of the military forces. This, perhaps, sheds some light on the fact why Mosul fell easily to a force of 2,000 ISIS militants, and substantiates accusations that many soldiers abandoned their posts and showed less resistance to ISIS.

The World Bank reported that, in Iraq, “[T]he dramatic rise in clientelistic hiring since 2003 has contributed to a ballooning of public sector employment and of the wage bill.”

Nepotism and bribery in employment lead to an unprecedented expansion of the number of public sector employees, which meant more spending by the state. The World Bank estimates that expenditure on wages and salaries have increased by 940 percent from 2014 to 2016, representing 18 percent of GDP.

In theory, Iraq could be a rich country, considering the natural resources with which it is bestowed. It is the second largest oil producer in OPEC, with 4.3 million barrels of oil pumped every day, and the fifth largest in the globe in terms of crude oil reserves. Unlike some other oil-rich countries, Iraq is also bestowed with agricultural potentials. Prior to the discovery of oil, Iraq has long been an agricultural country with irrigable land. In the 1950s, it produced half of the world’s supply of dates. The greatest blow to the sector took place in 1980s during the Iran-Iraq war, when Saddam Hussein forced the recruitment of farmers into the army. Since, agriculture has contributed little to the country’s GDP.

Agriculture in Iraq, like other non-oil sectors, suffered from the lack of interest by the government, political unrest, and the pervasiveness of corruption. This makes the Iraqi budget nearly totally dependent on oil export revenue; oil accounts for 90 percent of the country’s export revenue.

Corruption is a real impediment in the way of development and economic growth. Investors look with suspicion and even fear at the possibility of investment in present-day Iraq.

“Basra was once viewed as Iraq’s Venice. Dubai has only coasts and sand, whereas there are coasts, Shatt al-Arab [River], sweet water, oil, harbors, agriculture, ancient history, and rich culture in Basra. Despite this, these two cities are incomparable when you look at them,” said Yaseen Taha, a Kurdish journalist and researcher in Iraqi affairs.

In 2015, the government formed the anti-corruption Commission of Integrity. The Commission succeeded in recovering assets worth $30 million of embezzled public money. In 2017, the amount recovered increased considerably, to $110 million. This was an encouraging step forward.

But, despite these efforts, some Iraqis still express doubt about the government’s capability and intention to fight corruption. “The government has no credibility,” said Safwat A. Razaq, a middle-class businessman. “Wherever you go, they ask you for a bribe,” he added.

People are already in a clear state of desperation. Protests are expected to expand to other regions and involve wider social strata. As a country with a young demographic base and rich in oil and other natural resources, Iraq has the potential to become a prosperous country if it puts an end to corruption. If it does not end corruption, Iraq could suffer further social and political instability, hampered economic growth and, perhaps, even intensifying extremism and the revival of ISIS groups.