Iraq Crippled by Longstanding Financial Corruption, Can Govt Overcome this Problem?

As the oil prices keep plummeting, Iraq experiences the toughest economic conditions since the US invasion in 2003, due to falling oil incomes. Meanwhile, the Iraqi citizens are wondering that how the public revenue authorities have spent the billions of dollars of the past years’ oil incomes to compensate for the present day losses and prevent the budget shocks.

Should the oil prices keep low at the current level, certainly the Iraqi government will have troubles, in the next year, paying its employees’ salaries and accomplishing its constructional pledges.

Although Haider al-Abadi, the Iraqi Prime Minister has struggled to present an anti-corruption bill to the parliament in order to uproot the key corruption culprits from the body of the government and introduce a process of responsiveness to all the financial and administrative levels, the Vice President of Iraq Ayad Allawi has said that there was an organized corruption in the country and that no authority could tackle it.

On the other side, the Finance Minister of Iraq Hoshyar Zebari have been commissioned to find ways to curb the country’s deep budget deficit, a deficit that could spark civil demonstrations and riots. Zebari has maintained that Iraq was dependent to the oil incomes by 95 percent. The present financial conditions of the country have become even more critical than before. Fed up with borrowing money, the Iraqi government has no way but preparing the people for an array of financial measures and shifts including introducing value-added taxation system and other measures to which the Iraqi citizens are not accustomed.     

In fact, while the Iraqi government has targeted $45 per barrel oil sales, in the recent weeks the oil prices have plunged to $27 per barrel. The financial experts believe that the oil prices’ fall is not periodic, citing some structural issues as reasons for such a plunge. On the other hand, Iraq has the largest per capita for the number of the salaried people: 7 out of the 22 million population of Iraq are government employees. It is from this large figure that Hoshyar Zebari notes that the corruption in his country is systematically covert. The biggest part of this corruption is in the body of the army. That is why Zebari refers to “ghost troops”, saying that so far the government has paid nearly $500-600 million to army forces that have no physical existence at all.  Such instances are seen among the army officers. Also, in other cases the troops pay half of their salaries to their officers to keep them silent. Babaker Zebari, the former chief of staff of the Iraqi army, who retired last year, has noted that the biggest challenges the Iraqi army was dealing with were the fake troops and the major weapons tenders in which a large amount of fundings have disappeared. Nearly 30,000 ghost troops are existing within the Iraqi army and the salaries paid to them are actually paid to the corrupt army officers and perhaps one of the reasons behind fall of the city of Mosul to the terror group ISIS were these non-existent forces, the figures published by the Iraqi ministry of finance suggest.    

Additionally, there are more instances of corruption, the same report added. For example one billion dollars have been paid for purchasing fighter jets but they have never been delivered to the country. Moreover, the government has allocated a budget for construction of the department of justice building in Erbil but the building was never constructed. Furthermore, money has been paid for road buildings across the country, however, the projects never came to existence. Hoshyar Zebari blames the social factors for all these corruption cases, saying that in the country if a person has no capability of bribing or embezzling, he is considered a weak person.

Generally, in Iraq’s administrative system people use bribery for saving their backers and for making fortunes. It is for this reason that they make no efforts to stem the corruption and if one of the officials faces job troubles, he threatens the rest with revelations.

Actually, Haider al-Abadi has launched a reform plan since August 2015. He was expected to target the government corruption, however, in practice he has made no move to do away with corruption. At the first day of his premiership, al-Abadi said that he was to work towards three goals: Fighting corruption, protecting Iraq’s sovereignty and pushing ISIS terror group out of the country. But some Iraqi political forces have resisted the replacement of some ministers with the PM’s favored technocrats, and in fact his moves were actually disappointed efforts for reforms, and once he proceeds with them, he could face even deeper challenges.PM al-Abadi has only referred to some details of his re-organization plan, and at the same time he called on the parliament to show backing for him. On the other hand, any attempt to make changes in the cabinet could impact the highly sensitive balances of the parliament, which includes the Shiites, Sunnis, Kurds and other minorities.

Germany’s Group for Anti-corruption Lobbying in its last year’s list of 168 most corrupt countries has suggested that Iraq ranked eighth among the most corrupt states.

The economic troubles, and specifically financial corruption, in Iraq are actually influenced by two factors: The first factor is related to the weak economic infrastructures and non-existence of free and active market with links to the global markets. In fact, the Iraqi infrastructures have witnessed severe damages due to long-term, back-to-back wars as well as sanctions. Despite the fact that the private markets have seen a boom since 2003, they are still weak. The domestic markets have so far failed to connect to the global markets.

The second factor is has something to do with the Iraqi social and political conditions which are a legacy of a military dictatorship from 1959 to 2003. Furthermore, Baghdad has experienced the international sanctions after its 1990 invasion of Kuwait. Haider al-Abadi has recently said that along with battling terrorism they had to fight against lawbreakers at home. “The battle in which the white and black are not distinct from one another and the conditions cannot be improved overnight”, continued al-Abadi.

At the present time, the Iraqi incomes have been reduced to 15 percent of the last two years’ total incomes. Considering the financial crisis the Iraqi government is dealing with, could it rebuild the recaptured cities?

Generally, many of the experts believe that comprehensive solutions are hardly found for the countries which from one side are suffering from corruption and from another side are engaged in wars and disputes. With Sadrist Movement’s call for battling corruption, could the Iraq’s government to a degree beat this problem?



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