Conflict Alerts # 138, 5 August 2020
In the news
Thousands of people have returned to the streets across multiple cities in Iraq to voice their anger against government mismanagement of the economy, its financial incompetence and demanded an end to foreign interference in domestic politics. Barely two months into office, Iraq's Prime Minister Mustafa al-Kadhimi is facing the dual challenge of renewed anti-government protests and a collapsing economy.
Security forces fired tear gas into the crowds that resulted in the deaths of three people prompting the PM to order an investigation. Earlier protests in October- that ebbed following the pandemic- had forced the then Iraqi Prime Minister Adel Abdel Mahdi to resign.
Issues at large
First, the Iraqi economy has been plagued by graft and financial mismanagement for decades. According to Transparency International, about $450 billion in public funds are disappearing into dubious accounts of businessmen and political elites since 2004. Securing convictions based on authentic evidence in cases of corruption is a complicated task as various ministries function like independent branches of the government and dislike unsolicited directives from the PM's office.
As a rentier economy, Iraqi state revenues have reduced by half due to a global drop in oil prices. The finance minister had previously expressed 'shock' at the dearth of liquidity. For a country needing 10-15 trillion USD in its emergency accounts, Iraq has only about two trillion USD as the economy is projected to shrink by 10 per cent this year. Iraq spends five billion every month in salaries to public workers and government employees. Additionally, the State pays for the welfare of a million recipients, 4.5 million workers and 2.5 million retirees. With a population projected to reach 50 million in a decade and a young demographic, Iraq will have to cater to 700,000 jobs per year in the future. An anticipated financial reform package will likely increase access to aid from international financial institutions, cut over-reliance on oil revenues and boost incomes from non-oil sectors. Some experts warn that unless urgent reforms are implemented, the Iraqi economy will reach dangerous and 'irreversible' lows.
Second, the protestors are also quite clearly against the reduction of Iraq into a client state. The Iranians have been steadily appropriating power in Iraq since 2003. However, since the induction of the PMF, Iran has significantly increased in military and political clout. It is no surprise then that PM Kadhimi's first official visit since taking office was to Tehran. Members aligned to the PMF backed the second most seats in the 2018 legislative elections next only to Muktada al-Sadr's Sairoon alliance. Despite having issues with accountability and transparency, $2.1 billion from the Iraqi state budget was allocated to the group in 2019. The Intercept's Iran Cables earlier this year detailed how many members of the Iraqi Parliament are beholden to Iran-having forged these friendships when they were in opposition against Saddam Hussein. The report also quite ambiguously defines the relationship between former PM Adel Abdel Mahdi and Iran as a 'special' one when he was Iraq's oil minister in 2014. Iranian patronage and political interference have made an Iranian coup of an Iraqi parliament quite a possibility.
Iraq is famous for its fragile political coalitions and endemic corruption. Public trust and confidence in government are very low. There was almost no accountability for the 550 dead and 300,000 injured by the Mahdi government. And even though the current Iraqi PM lacks broad-based support, the priority should be addressing public demands and making amends. Just clamping down on demonstrations doesn't solve structural problems; it only reinforces the message of the protests and increases the resilience of the protestors.