Category: Politics

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Politics

Airstrikes Strengthen Iranian Backed PMU Groups to Weaken Iraqi Government

On September 14, 2019, Iraq’s Ministry of Defense Spokesperson Brigadier Tahseen al-Khafaji, issued a public announcement to state that all weapons of government backed Pubic Mobilization Units (PMU), mostly Shiite armed groups, are stored in the ministry’s warehouses. The statement came after PMU’s bases and arsenals faced mysterious airstrikes in four locations inside Iraq in the past two months, and various sources accused Israeli drones of conducting the attacks. This is how Iraqi government is trying to prevent the PMF from embroiling Iraq to a regional conflict that Iraqi leaders are keen to stay away from it. So far, the airstrikes and the whole regional conflict seem to strengthen the Iranian backed PMU groups at expense of Iraqi government. This article is trying to show how internal dynamics in Israel and within PMU played out to weaken Iraqi government and strengthen Iranian backed PMU groups that are willing to take a side in the Iran’s regional conflicts.
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The airstrikes, not surprisingly, divided PMU leaderships reactions. Deputy Commander of Iraqi Government’s PMU Commission Abu Mahdi al-Muhandis rushed to accuse US forces in Iraq of cooperating with the “Israelis’ attacks”. He also called on to defend PMU bases by the weapons available for them. Nevertheless, consistent with the Iraq’s formal response, chairman of the PMU Commission in Iraq Faleh al-Fayyad stated that the Muhandis’s statement does not represent views of the Iraqi government, nor the PMU. Again, beyond Iraq’s formal leadership, later on 22nd August a leading Shia Cleric Ayatollah Kazem Husseini Haeri issued a public religious Fatwa to forbid the presence of US troops and advisers in Iraq. Haeri, an Iranian citizen based in Qum and followed by many Iraqis, stated, “I declare from the position of religious responsibility that the presence of any Americans military force in Iraq is forbidden under any title: military training, advice or the rationale of fighting terrorism. This is what I have confirmed to you before, and today I have confirmed it again in clear words.”

Omer Kadhim
Omer Kadhim

is political Since student and intern researcher at ICPAR.

Author

Iraqi Institutions and PMU Influence

PMU branches such as Badr, Asay’b Ahlulhaq, Kataib Al-Huzb Allah, and Saraya Tali’a Al Khurasani publically swore their allegiance to Iran. They recruited more than 150 thousand volunteers to defeat ISIS, but with the end of the ISIS war, they formed a political bloc to participate in the 2018 elections i.e. Fatih Alliance which won 48 out of 329 seats. This upgraded their position from mere militias into a major political force within the Iraqi political arena. Currently they have large stakes in Iraqi government; they are second largest bloc in parliament, and salaries equal to formal Iraqi security forces. They also benefit much of the corrupt illegal an underground business that are conducted by conventional militias in Iraq, especially in liberated areas taken back from ISIS. They function as a separate government within the Iraqi Government, and they spread their influence to delegitimize the Iraqi institutions step by step.  
In the formal level, the Iraqi Government wants to avoid becoming a part of any conflicts caused by PMUs, so it started integrating them within the Iraqi army and under the control of the PM. However, in reality, Iraqi Government is weak and unable to control them, and now they are in between two bitter choices. Either fully dissolve the PMU forces, which is impossible, as PMU is the main bloc, which formed the government, or totally separate the Iraqi institutions from PMU, which will set the biggest question about the legitimacy and control of the Iraqi Government over the country and its security. Currently, the situation is choosing the third option, which is a mixture of attempting to control the PMU forces and dissolving them within Iraqi armed forces. This will risk Iraq’s involvement in the case of any regional conflict. Iraq’s major officials are desperately trying to manage the situation, and they are without any real choices to control the PMU forces nor the regional powers. PM Adil Abdul Mahdi, President Barham Salih, and the Parliament Speaker Mohammed al-Halbousi held a meeting after the attacks to ensure that Iraq’s formal institutions are in charge of any necessary measures needed in order to handle the attacks on PMU bases, insisting on keeping all military decisions under control of PM Abdul Mahdi. It was a clear sign to assure that Iraqi government would not be responsible for any reckless retaliation from the PMU forces. 
All these conflicting stances show Iraq’s vulnerability amid the heated regional tensions, while the ongoing situation will continue to weaken the Iraqi institutions and the government legitimacy and control over the Iraqi affairs. Any direct conflict between Iran and Saudi Arabia will drag Iraq in to the heart of the confrontations. News outlets closed to Saudi Arabia reported that drones attacked Aramco oil facilities came from Iraq and not Yemen, as it was claimed from the beginning. However, top Iraqi officials denied their country’s territories have been used to attack the Saudi’s oil installations. 
Iraqi Government is trying to avoid involving into any regional conflict and take the same distance from all sides. However, its lack of control over some of the PMUs, which are supporting Iran in its regional conflicts, will not make Iraq just a part of the regional conflict, but it will create opportunity to consider Iraq as a target for proxy conflicts. While the periodic attacks such as those coming from Israel are expected to continue, that will continue to consolidate positions of the Iranian backed PMU groups while weakening the Iraqi Government more and more through time. 
Besides, the airstrikes destroyed weapons and missiles that are quite replaceable by Iran and its proxies. They have not reduced their combat capacity that mostly depends on military manpower rather than new military technology.  They only changed the Iranian backed groups to national heroes and embarrass the Iraq’s government officials and moderate national Shiite leaders who want to keep Iraq away from Iranian sponsored regional conflicts. The extreme elements of the PMU will succeed in controlling and directing the upcoming events because they will capitalize on Iraq’s sovereignty, which has been attacked, and sectarian language, which is still very effective within the majority of the Iraqis. 

Tracing Israeli Airstrikes in Iraq 

On June 7, 1981, Israel launched the Opera Operation, an air strike with a squadron of F15 and F16 fighter jets, targeting an Iraq’s nuclear reactor and completely destroyed it. The Iraq’s nuclear program ended with the operation, and Israel had no incentive to invest in a military conflict with a country that they do not share borderline with it. Later, Saddam Hussein’s regime never posed any real threat to Israel. Iraq drowned itself in costly regional wars, from the eight-years Iran-Iraq war, to the invasion of Kuwait, and then the 2003 US invasion of Iraq, which ended the regime. The 2003 regime transformation permanently changed the calculus of Israeli-Iraqi relations. Although post-invasion Iraqi government did not rush to normalize relations with Israel, yet the modified government regime of Iraq’s post 2003 was more conciliatory with the acceptance of Israel as a fait accompli and possibly considering the eventual establishment of relations with it.
The long military silence in Israel-Iraq relations came to an abrupt end in the past two months when the Likud government, led by Benjamin Netanyahu, targeted the PMU’s bases in Iraq. The start was on July 19 when an explosion targeted a PMU’s base in Salah al-Din province, north of Baghdad. Later, on August 12th, another explosion destroyed a PMU’s arsenal near the Saqr Military Base south of Baghdad. Last but not least, explosions hit a weapons storage facility near Balad Air Base, 80 km north of Baghdad. Officials say that it’s been used by Iran to move weapons to Syria.

Likud’s History Policy in Attacking Iraq

Israel’s Likud party has a long history in externalizing its crises by attacking Iraq. At the beginning of 1981, Likud Prime Minister Menachem Begin knew that he would face a very difficult battle to retain his position during the elections, scheduled for mid-year. In fact, Likud’s expectation to win the election was very low. After the June elections, with the expected fierce competition from the Labor Alliance led by Shimon Peres and Yitzhak Rabin, the ruling Likud was suffering from widespread internal strife, corruption allegations, and international pressure over the ongoing skirmishes of Israeli planes on Lebanon at the time. This internal Israeli dynamic could be a perfect setting for the 1981 airstrike. Likewise, similar internal crises are affecting current Likud leader Benjamin Netanyahu’s decisions and incentives to widen his country’s war with Iranian proxies to reach Iraq. 
Although Israel has not publicly claimed responsibility for the recent attacks, Netanyahu, like Begin, did not mind taking some credits for the recent operations, especially as he finds himself caught with corruption charges few weeks before crucial elections. This was particularly evident in the way Netanyahu responded when asked if Israel could strike Iranian targets in Iraq. He gave his security services the green light “to take any action necessary to thwart Iran’s plans. It will not grant Tehran immunity anywhere,” He said. If Netanyahu’s indirect remarks left some doubt, the leaks of US officials who spoke to the Wall Street Journal clearly showed Israel’s responsibility for the July 19 attacks in Salah al-Din.
Netanyahu sees Iran and its proxies as the greatest threat to Israel’s existence, which is not unrealistic taking into account the active role Iranian backed groups in the region play against Israel. Wars and Arab Spring upheavals devastated political structure of several Israeli neighbors and turned them into dysfunctional systems that can not protect their own sovereignty and security. This situation also made it much easier for Iran and its proxies to confront Israel regionally on many fronts. In the past two years, Israel has conducted more than 200 attacks against Iran and its proxies in Syria, Lebanon, and Iraq, countries that have formed a geographical barrier to prevent a direct war between Tehran and Tel Aviv in recent decades.

Risking the Iraq’s Relative Stability Ends with a Lose-Lose Game 

Iraq is quite affected by the Iran’s regional conflicts with Israel, the US, and Saudi Arabia. Its shared borders, culture, religious believes, and weak institutions have put it in the weakest position of all the regional tensions. When deputy commander of the PMU Commission Abu Mahdi al-Muhandis, on September 5th, 2019 issued an order to establish PMU’ “air forces” in response to the recent airstrikes, powerful Iraqi Shiite cleric and politician Muqtada al-Sadr tweeted that it was an announcement to “the end of Iraqi government.” Al-Sadr, who is the founder of the largest block in Iraqi parliament Saairun Alliance, started his tweet by “Farewell my country,” and he expressed his concerns over undermining Iraqi government’s authorities. “This is a change from a state ruled by law to the state of chaos,” as he said.
The concerns are related to existing systematic approach, which will weaken Iraqi army and formal security forces, while using state resources to strengthen PMUs and turn them into a second version of the Iranian Revolutionary Guards (IRGC). Iraqi military sources revealed that the PMU had submitted a request to the Joint Operations Command to establish their own air force under the pretext that the Iraqi Army’s air defenses did not protect its arsenals and bases from the recent airstrikes.
Prior to this order, the Iranian backed PMU organizations accused leader of Anbar’s Commander of Operations Major General Mahmoud al-Falahi of communicating with foreign parties and providing coordinates of the Iraqi Hezbollah bases’ locations. Even though the accusation was officially rejected by the Iraq’s defense ministry, Al-Falahi was removed from his position in a step that was described “to be a trial to please the militias” and a blow to the Iraq’s defense military. Two months later, Col. Brigade Naser Al Ghannam was appointed as the commander of operations in Anbar, which was considered as a victory of the militias. 
The Israeli airstrikes and the Iranian backed PMU groups’ responses have achieved nothing except undermining of Iraq’s government, army, and security institutions. This is a perfect lose-lose game for both, the US and Iraq, which have invested a lot to help Iraq’s army and security forces overcome their challenges during ISIS war. 
Take into account still active ISIS’ insurgency in various Iraqi areas, the Israel-Iran conflicts further threaten regional political and security arrangements. Iraq has not recovered from its war against ISIS, so using it by either Iran or its enemies will backfire and end up with terrible consequences that may again destabilize the whole region, like what happened in 2014, when the fall of Mosul strengthened ISIS to the level of challenging the entire international community. 
The Iranian regional conflicts, which have invited the Israeli airstrikes, so far just sidelined Iraqi government and its legit leadership and commander of security and armed forces in dealing with the Israeli air strikes and any outside threats. Iraq’s instability directly affects Iranians’ security and economic interests. Moreover, it is going to increase the risk of growing ISIS insurgency, which will again cost lives of thousands PMU volunteers. Nobody can benefit destabilizing Iraq as much as ISIS and its remained insurgents. 
Both the United States and Iran should understand the fact that everyone will lose what has been achieved in fighting ISIS and stepping towards stable Iraq if they will not control their confrontations and limit their interventions in Iraq. The US administration can prevent the Israeli attacks and push them to fight the Iranian proxies outside of Iraq. Iranians, of course, can control their proxies in Iraq and get them to obey the Iraqi government. The both sides will lose more than what they might win in turning Iraq into battle field for their endless regional conflicts.

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Politics

A Mathematical Calculation Raised Concerns Over Iraq’s Electoral Democracy

On July 22, 2019, the Iraqi Parliament ratified the First Amendment for the 2018 Provincial Election Law, Article (12). The amendment dramatically makes it harder to get seats in the provincial councils, which caused great concerns for small political parties and NOGs, as they see the amendment as a way to prevent small political parties from getting any seats in the upcoming provincial elections.
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By changing the Sainte-Laguë quotient for distributing seats from (1.3) to (1.9), the required votes for winning a seat in provincial councils were hiked. New regulations will be in favor of major political entities and hurt the small parties and independent candidates. For instance, those who managed to get 1 seat in the 2013 provincial council elections will not be able to win the same seat by the same number of votes. In addition, when the number of the votes is not enough to win a seat, the votes will be distributed over the winning political parties. Therefore, this does not just marginalize smaller parties in the elections, but uses their votes in the benefit of the bigger parties.

Mohammed Hussein
Mohammed Hussein

is policy director and political-economy analyst at ICPAR. He holds a master’s degree in specialized economic analysis: Economics of Public Policy, from the Barcelona Graduate School of Economics.

Author

The Sainte-Laguë method was adopted, for the first time, in 2013 Provincial Council Elections. Based on this method; first, all the casted ballots are tallied and then the parties lined up based on the votes they won from the highest to the lowest. After that, the parties’ votes will be divided by Sainte-Laguë quotient, which is 1.9, 3, 5, and 7, for this election. Then, the parties with the highest votes after the division will get all the seats. The method does not make the number of any party’s won seats reflect the percentage votes it got, but allocate seats on the outcome of the division of the original number of the votes. According to the new Iraq’s electoral Sainte-Laguë method, the division starts from 1.9, which makes it hard for the small parties to acquire because the higher the Sainte-Laguë quotient is, the less chance the small parties have to win any seats. 
With the current amendment, higher number of votes are required to be counted as a winner, meaning getting the first seat. The change from 1.3 and 1.9 quotients is the way to monopolize the elections for certain political parties. The pronounced concerns show that some small political parties and independent candidates will be out of the provincial councils by the 2020 elections.

The Threat to Democracy

Iraq’s weak and questionable democracy face some shocks with each election. Weak law-enforcement institutions and false created political chaos have always threatened Iraq’s democracy despite the fact that five previous prime ministers and two presidents have been changed based on election results since 2003. The Economist Intelligence Unit’s Democracy Index measures state of democracy in 167 countries. As the following graph shows, Iraq’s scores between 2006 and 2017 has never reached 5 (out of 10), which is lower than half of the required scores to be a full democracy. 
Figure 1.: Economist Intelligence Unit’s Democracy Index for Iraq

Concerned by the law-amendments, 20 Iraqi NGOs issued a public announcement to condemn the legislation process that led to the First Amendment for the 2018 Provincial Election Law, Article (12). They stated that the amendment is limiting opportunity of small political parties and independent politicians to get into provincial councils. “We express our rising concerns over increasing the equation of counting votes to (1.9). We believe that this amendment is unfair and hinders the process of real representation of voters because it leads to an unjust competition between those who will try to participate in elections. It will limit capacity of small political forces and independent persons to reach provincial councils.” The NGOs stated.

The existing draft of the law is concentrating the current ruling parties’ influences in the local governments in all Iraq’s provinces, according to the NGOs, which were expressing their concern over Iraq’s electoral democracy. They also asked the Iraqi Parliament not to approve the amended draft and bring back the quotient to distribute the votes at least to (1.3). 
Changing the quotient from (1.3) to (1.9) will reduce much of the Iraq’s political diversity and keep the major political parties in charge of both provincial and national governments. There will be elections but no change in political landscape. “The amendment means that the upcoming elections will bring back the existing political parties who have failed in the past 15 years,” said Ali Sahib, The Executive Director of Information Center for Research & Development (one of the NGO’s issued the public announcement).
 The amendment does not leave enough space for new ideas and new people to enter the political race and, “It drives Iraq’s political process backwards and makes the provincial councils again a place for the major political blocs that are supported by regional countries rather than a place for all the political entities that represent Iraq’s diversity,” according to Aram Jamal, director of Kurdish Institute for Elections.  
However, increasing the quotient of counting votes might not be that evil take-into considering the chaos Iraqi Parliament has experienced since 2005, according to Mariwan Marouf, employee of Iraqi High Electoral Commission’s office in Sulaymaniyah. He believes that for national elections, it is important to have only major political parties that can represent at least several provinces not just a province or a small specific area; but, for the provincial councils the quotient for distributing the seat should be lowered in a way that it allows small political parties to enter the councils. 
“I think it is a good idea to put an adequate threshold for entering Iraqi Parliament. It is not good to have too many small political parties in parliament with few seats and just representing one province. Then, they will start shifting sides between the major parliamentarian blocks. However, for the provincial councils, the issue is different. Small political parties should have chances to get in these councils and show their performances. This is where they should start and show what they can do.” Marouf added.

Instable Electoral Laws

The amended election law is one-year-old. It was drafted and approved last year and never tested. However, the majority supported by large political parties rushed to amend it. The tendency to draft or amend the election-laws raises many questions and concerns as Iraq’s elections always face high fraud possibility. Since multiple media, NGOs, and government officials reported high-level frauds in the 2018 parliamentarian elections, the recent amendment also concerned many, presenting yet another level of political despair among small political parties, which eventually harm the political process in the country.  
Before each single election, election laws are amended in Iraq, which has become a trend. “The major political parties and blocs have managed to exploit amendments and laws for their interests,” according to Aram Jamal, whose institution has observed Iraq’s elections since late 2000s. Many mainstream critics have accused the existing ruling parties for tailoring the election law based on their interest. Ibrahim al-Smed’i, activist and lawyer, on his Twitter account stated, “Everywhere on this planet, there has been stable election-laws and political parties adopt their lists and alliances according to that, but in Iraq there is always a new law for each election. The laws are also tailored based on ruling parties’ measures. Ultimately, turnout will be low and the election results infested with fraud. Here, the democracy is just a big lie by which the corrupt guys share power and make the country more corrupt.” 
Election laws are actually political arrangements within legal framework, based on preserving the democratic nature of the country. However, the political parties that approve these types of amendments are not democracy-oriented. They are trying to use the law for extending their oppressive majority rule, according to Jamal. 
Similar to the other Middle Eastern countries, elections in Iraq usually lead to a majority that is not committed to universal democratic values. “This majority changes and amends election laws based on their interests. I noticed this oppressive majority willingness in the last election law amendment even in Kurdistan Parliament. I think it is very necessary to prevent an oppressive majority from manipulating election laws in order to extend their tenure in both Iraqi and Kurdistan parliaments,” Jamal said.
Iraq’s elections have suffered huge amount of fraud, intimidations, and ruling parties’ games with voters-registers. Indeed, last parliamentarian elections (May 2018) raised many questions about the purpose and meaning of elections if the current ruling elite can determine the results prior to the Election Day. Therefore, the election brutally showed the limitations of Iraq’s democracy and raised concern for regression towards an oligarchic rule depending on election fraud and oppressive majoritarian rule.

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Politics

KRG’s Challenges to Return to Its Pre-Crisis Investment Level

Kurdistan Region of Iraq (KRI) was the most affected part of Iraq by the recent financial crisis, caused by federal budget cuts, oil price-crush and ISIS-War. The recent revenue sharing agreement between KRI and Federal Government of Iraq (FGI) relieved some of the financial pressures. However, the region is still too far from returning to its pre-crisis investment-level and resume its halted projects.

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Hundreds of local investors went bankrupt due to their delayed payments by the Kurdistan Regional Government (KRG). The KRI, as well as the rest of Iraq, has never been an attractive place for foreign investors except for some international oil companies.

KRG’s Prime Minister Masrur Barzani and Deputy Prime Minister Qubad Talabani have insisted on encouraging both local and international companies to invest in the region. They have highlighted the KRG’s new cabinet’s policies to attract foreign investments, hopping to diversify the region’s economy and decrease its dependency on oil by making the KRG’s administration and regulations more business friendly. The KRG’s 2006 Investment Law is business friendly and actually designed to attract foreign investments. It guarantees free lands for investment projects and exempt foreign companies from taxes and tariffs.

Rebin Fatah
Rebin Fatah

is oil and gas expert in ICPAR. His research focus is on Iraq’s oil and gas sector, and he has published two books on the same industry. He holds BA from Salahadin University-Erbil.

Author

Foreign investors also enjoy all the rights as locals. Unintendedly, the local investors manipulated the law to invest in non-productive projects such as real estate projects, to gain fast profits while the foreign investors’ concerns were not addressed fully and eventually the market was too risky for any major investment. 
When the financial crisis hit KRI in 2014, KRG seized all the companies’ and contractors’ payments and capitals in local banks in order to fund the public-sector salaries. In addition, months before ISIS- war, the FGI cut off the region’s national budget share due to oil disputes between Erbil and Baghdad. Since then, the KRG has paid back $300 million to the contractors. The payback could help resuming some of the halted investment projects, but it is not enough. In 2014, 3,300 investment projects (worth $4 billion) were paused due to the crisis. So far, only 300 projects have been completed, or close to be completed.    
About three thousand unfinished investment projects are still waiting to be financed by the KRG. The KRG has focused on paying back the international oil companies’ debts since they are the key revenue generators, but this is not the case with the local companies even though they are creating most of the jobs in the region’s private sector. It has paid back more than $3.10 billion to the international oil companies but only dedicated $ 300 million to the locals. 

Unbalanced Investment

From August 2006 until March 2019, the KRG has given licensees to 893 investment projects in sectors such as real estate, industry, communication, banking, health, tourism, transportation, and agriculture. Fifty-three project-licenses were canceled due to legal reasons and violation of the contracts. Local and foreigner investors have conducted the rest. Lack of proper investment policy led to unbalancing growth in which real-estate sector dramatically boomed while industrial, education, and health sectors stayed underinvested. The KRG’s officials were welcoming any investment project regardless of its sector, geographical location, and its volume, hoping to improve the region’s under-developed economy and infrastructure. 
Lack of proper planning and clear economic policy made most of the investors overcrowd the real estate sector because this is where they could make big profits in a short time spin. The role of the KRG’s relevant institutions was limited with issuing licenses. They have played no role in distributing investment projects based on geographical and demographical necessities. Therefore, most of the projects were centered in the urban centers like Erbil, Sulaymaniyah, and Dohuk.
Besides, in many real estate projects, the end-users (ordinary people who bought housing units) were exploited. In some projects, they paid for the houses and flats before the project started. In many cases, the investors used clients’ payments to complete the project, but many times, they did not finish the projects on time. Prices of the housing units are also very high taking into account the region’s cheap labor and free lands provided for the projects. For instance, a housing unit in Empire World in Erbil costed the buyers $250,000, and now it is about $1.5 million.  The buyers pay mostly for the desirable land and location of these projects, which was originally provided to these companies for free. Many people paid for housing units in Dashti Bahasht (Paradise Plain) and Floria City in Erbil, but the investors took their money and left the housing projects uncompleted.   
The politically linked construction companies have monopolized Kurdistan’s real estate sector, which led to emerging many billionaires out of blue and without having work experiences and record. They needed just a license for their investment project, so buyers provided the required capital for it. 
Due to all the problems and exploitations, from 2012 until 2014 the KRG reduced the number of licenses for the real estate projects, so investors shifted to industrial sector. 216 industrial projects were permitted vs 168 housing projects. The 2014 financial crisis made the KRG start issuing licenses to real estate projects again. 
Additionally, the KRG gave licenses to 150 tourism projects, 144 trading projects. Some key sectors stayed underinvested like education (28 projects), health (50 projects), and agriculture (29 projects). The following table mapping investment projects based on their sectors and locations. 

Looking at locations of the projects, a clear unfair distribution can be noticed. Erbil (The capital city of the region) had 148 projects more than Sulaymaniyah, while they are not that different in term of resources and population. This is just a reflection of the policy that aimed to prosper the capital-city at expense of the other areas. The number of the projects tells how unbalancing the distribution is. Counting the value of the projects also tells more about the unfair distribution. Out of $50 billion worth investments, Dohuk got $ 6.4 billion and Sulaymaniyah $14.99 billion, while Erbil got $27.75 billion. The following graph shows the investment distribution over all three provinces of KRI.

The table shows how the KRI lacks a proper economic policy and growth vision. It also illustrates how unfriendly and unattractive Kurdistan is for foreign investment that comprises only 12.17% of all investment projects. 

Reluctant Foreign Investors and Bankrupted Locals 

The 2014 financial crisis, caused by ISIS war, international oil price crash, and the Erbil-Bagdad disputes, forced the KRG to take some measures. It withdrew all the investors’ money in the banks and stopped giving them any advanced payment for their projects. These measures dramatically decreased investment projects and only few companies stayed to keep working and complete their projects. Many investors went bankrupt and closed their companies. “Of 1200 companies in Sulaymaniyah, 500 of them went bankrupt.  The others are going to be bankrupted if the situation does not change,” said Miran Kamil, spokesperson of Kurdistan Contractors’ Union, Sulaymaniyah Branch.
The puzzle behind this quickly bankrupting is not just the financial crisis. It is actually laid behind the companies’ weak structure and lack of assets. Many of these companies had no noticeable assets, proper capitals, and required human resources. They were living depending on legal gaps in the KRG’s investment laws and benefiting the opportunities created by ruling parties’ patronage networks. Most of the real estate and construction companies used to get free lands from the KRG and prepayments from buyers then start working on their projects. They basically, had nothing except project licenses. The financial crisis made most of the region’s citizens lose big portions of their incomes as the KRG lost its revenues due to the above-mentioned crisis and its disputes with FGI, which cut off its 17% share of national budget.
Similarly, the crisis pushed away foreign investors from the region, which had already lacked foreign investment. The data from the KRG’s Board of Investment shows that only 44 investment projects (out of 840) were financed internationally. In the same time, both national and international investors financed 29 out of 840. The rest are local. 

The heavy governmental dependency of the local investors made the financial crisis terribly affect the region’s economy. The KRG’s market did not see any internationally financed projects during 2017, until 2019, according to data of the Kurdistan’s Board of Investment.
Several factors made Kurdistan unattractive for foreign investors such as lack of a clear economic vision by the region’s leadership, endemic corruption, heavy bureaucratic routines, and politically linked companies’ monopoly. In addition, political and security instability also followed the 2014 ISIS war and escalated tension between the KRG and FGI. The Kurdistan’s petroleum-dependent economy is also concerning because of the economic problem called Dutch Disease (the issue of highly developing the region’s oil sector while neglecting the other sectors and leaving them underdeveloped).
Moreover, the KRG’s business friendly investment law has not created a legal frame to protect national products from cheap Iranian, Turkish, and Chinese products. According to Sherwan Hadi, expert on international trade laws, without this legal frame no local or international investors dare to invest in big industrial projects. He said, “It is not enough just to have the investment law, but the Kurdistan Region, similar to Federal Iraq, needs a law to protect national products.” Otherwise, no investor will be attracted to most of the KRG’s sectors, especially industrial projects that are expected to create more jobs.  

The Aftermath of the 2014 Financial Crisis

During 2017 and 2018, the KRG gave licenses to only 85 investment projects (worth $846 Million), while in 2012 and 2013 it gave licenses to 239 investment projects (worth $16.876 billion). A simple calculation for these numbers shows that the bulk of investment decreased by 90% in Kurdistan in the two periods, before and after the 2014 crises.
The recent Baghdad-Erbil revenue sharing deal brought some hopes to the Kurdistan’s economy. The Iraqi government started to pay 453 billion IQD the KRG’s monthly transfer (named as salaries of civil servants in the 2019 budget law) by early 2018. The KRG has so far paid back more than $6 billion of its debt. However, the Kurdistan’s economy is still too far to return to the pre-crisis situation. The Baghdad-Erbil governments have not reached a sustainable agreement on their revenue sharing disagreements, and oil disputes. Therefore, it is hard to believe the KRG will return to its pre-crisis (2013) level of investment soon.

Privatization as a Final Bet 

The financial crisis has pushed the KRG to privatize some of its service sectors. The privatization policy has included electricity, education, and health sectors. The fields are expected to be profitable for investors. Public services in these sectors are quite inadequate, so it has created an excuse for the region’s leaders to privatize them. They already allowed private enterprises to invest in schools, hospitals, and electricity sector. Lack of adequate services in these sectors usually trigger protests in almost all the cities and towns of Kurdistan. 
The KRG’s Ministry of Electricity, which has 1.507 clients, has privatized some of the services like distributing power and some power plants. While the KRG does not dedicate adequate amount of its executive budget for health and education sectors, it has given licenses to dozens private universities, hospitals, and schools in the past two years. Now, Kurdistan’s private sector has 310 schools, 19 universities, 14 community colleges, and 52 hospitals. 
The privatization process does not go as easy and smoothly as the KRG’s leaders expect. It might trigger some unrests and protests as it increases public grievances. The KRG’ main policy is directed towards providing a good and profitable market for the private sector projects, but it neglects the public-sector institutions like schools, universities, and hospitals. What makes people purchase private services (in places like hospitals and universities) is not the quality of their services. They are actually forced to do so either by not having option in public universities and hospitals or driven by the terribly low quality of the public hospitals and universities. For instance, the public universities have overcrowded classes, outdated teaching systems, while the private ones are relatively better. 
Likewise, the public hospitals are quite understaffed and poorly equipped. Some surgeries can’t be done in public hospitals. In some cases, patients have to wait months in line to get his/her turn for a surgery. They also do not provide patients with enough medicine and force them to purchase it in private pharmacies. In private hospitals, all these services could be purchased in a standard time but in very expensive prices. 
The poor services in public sector have raised many questions on the KRG’s polices to destruct people form the public-sector schools and hospitals to push them towards the private ones. The policy is aimed to make private investments in health and education sectors more profitable and lower the cost of the service provision in these sectors. Even in the public hospitals, some services like cleaning are given to private companies. The privatization policies and trends are in line with the recommendations of International Monetary Fund and World Bank to reduce public expenditures and promote private sector enterprises. However, the KRG’s privatization is not well planned to help the region’s economy and promote investment in its key sectors. 
More than 70% of the KRG’s revenues has been spent as executive budget and civil servant salaries. This policy is not sustainable, and the KRG can’t keep affording it if it will not revive the job creator sectors. Thus, the KRG needs a clear strategy to attract local and international investors to its agriculture, industrial, and tourist sectors not just its oil and natural gas fields. It has to promote investment in sectors that generate employment; in Kurdistan, no sector can be better than industrial, agricultural, and tourism for the job-creation purposes. 

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Politics

In Iraq, Corruption and Terrorism Feed Each Other

In his last released video message, leader of the so called Islamic State of Iraq and Syria (ISIS) Abu-Bakr Al-Baghdadi appeared with three men. One of them had a semi-hidden pistol in his belt, which is a Croatian HS 2000 pistol sold to Iraqi police forces. The pistol, which is not important in the scenery of the video message, could tell a lot about the linkage between ISIS and corruption in Iraqi army and security institutions. Regardless of how weak the ISIS’ insurgents are nowadays, there are mutual interests between the insurgents and some corrupt military and security officials in Iraq. As corruption feeds ISIS insurgents, ISIS also provides many benefits to the officials.

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The ISIS’ corruption-benefits are not limited to their arms, ammunition, and logistic supports that are paid for from Iraq’s defense budget; it is actually much more complicated as corruption was one of the three key reasons to the organization’s Mosul conquest, which empowered it to pose direct threats to several regional countries. 
Now, the ISIS insurgent operations are an excuse for wasting huge amount of defense budget, while they are quite weak, desperate, and paralyzed in some rural areas like Qara Chukh in Nineveh, Pallkana in Tuz-Khurmatu, Nada Plain in eastern Diyala, and Mtebija in Salah Adin.

Mohammed Hussein
Mohammed Hussein

is policy director and political-economy analyst at ICPAR. He holds a master’s degree in specialized economic analysis: Economics of Public Policy, from the Barcelona Graduate School of Economics.

Author

 Corruption, which has cost Iraq more than $785.86 billion since 2003, is among the top concerning factors to keep ISIS’ insurgents survive. It is also expected to give birth to similar radical armed groups. What underpins this concern is not the devastating effect of corruption on the service institutions and downgrading quality of governance, but its endemic effect on security and military forces that are supposed to protect Iraq.
Up to the ISIS war in 2014, the bulk of corruption in Iraqi army and security forces was dangerously big. According to a report published by Transparency International, army officers and leaders in Mosul were selling ammunition and spare parts of their armored vehicles. They were used to sell food items provided for soldiers. Plus, military ranks and positons were also sellable among the patronage networks who were surrounding top army commanders and Iraqi prime minister office; a battalion command allegedly was purchased at $10,000 and a division command in $1 million as an investment to make more money. The endemic corruption still works, but in different levels and various ways. 

Corruption and Terrorism Strengthen Each Other 

The Transparency International’s report pointed out ISIS benefits from corruption as the following: 
– The organization’s propaganda campaign against top government officials’ grand corruption.
– Reacting to sectarian policies and acts by Iraqi federal leaders, ISIS presented itself as a savior for Arab Sunni community to fuel the country’s sectarian division farther. 
– Describing the West and their Middle Eastern allies as complicit in corruption, and finally showing ISIS as provider of security, justice and welfare.

Iraq’s widespread corruption still delivers more benefits to ISIS by pushing aggrieved and marginalized people in rural areas to support ISIS’ insurgent operations. It can polarize political and social environments in which radical groups can be attractive for its comprehensive idealistic solutions to the marginalized communities. When Nuri al-Maliki’s government cracked down on Arab Sunni activists and politicians after 2011, a similar environment opened the door of Mosul to about 1200 ISIS militants to occupy one-third of Iraqi territory and defeat more than 30,000 members of Iraqi army and security personals.
Likewise, ISIS and other armed groups also feed corruption in Iraq’s defense and security institutions. They play the role of “acceptable excuse” for wasting huge amount of resources and public fund under the pretext of operational budgets. For instance, in Pallkana Mountain, (located between Kirkuk, Salah Adin, and Sulaymaniyah provinces) about 50 ISIS’ insurgents have been operating. Iraq’s army and Kurdish Peshmarga forces have launched dozens clear up operations to push them out in the area, but they are still there. The insurgent militants are used as a big excuse for some officials to benefit Iraq’s defense expenditures. Many politically linked companies, military leaders, and sometimes, low ranked officers benefit from these operations, according to Said Ali, one of the local leaders of Public Mobilization Units (PMU).
Plus, the endemic corruption diminishes trust in security institutions in instable areas. In villages southeast of Kirkuk, ISIS’ insurgents sometimes show up to ask for food items and basic logistic supports. The people, who were forced to help ISIS’ insurgents, were afraid to call the security institutions and inform them about the existence of insurgents, fearing from ISIS’ retaliation. As a result, more than seven villages have been abandoned in the district of Tawuq. The farmers fled their homes not because there were no enough security forces to protect them, but because they did not trust the security institutions to cooperate with them against the insurgents, according to Samin Hassan, one of the farmers who fled his village to the city of Kirkuk.

Corruption Dangers in Defense and Security Institutions 

More than any other sector, security and defense institutions are vulnerable to corruption. What makes corruption to be so devastating here is the secrecy and confidentiality associated with this sector. The secrecy prevents revealing corrupt acts until they turn up as a disastrous failure, like what happened in Mosul on June 10, 2014. After driving out ISIS in Mosul, it was reported that former ISIS militants buy ID-cards of some PMU forces to pass security checkpoints and guarantee their mobility all over the country. 
Corruption can feed the ongoing ISIS’ insurgents, as well as other radical extremist groups, by weakening counterterrorism capacity of the security institutions. This problem was one of the major reasons that led Iraqi army and security forces flee their positions when ISIS attacks started in June 2014; when Iraqi forces in Mosul found themselves with no ammunition, enough food, and spare wheel for their vehicles in the wake of ISIS attacks.  
Moreover, the same corruption gives golden opportunity to ISIS’ insurgents, or any other radical armed groups, to expand its network and grow financially. ISIS, similar to previews Al-Qaida linked groups, has always tried to use state institutions and their resources through its networks and sleeper cells. The weaknesses of security institutions let ISIS’ insurgents to generate a stable income through variety of criminal activities like kidnapping, forced donation, and taxing businesses and farmers.
There have been many reports about how Iraqi soldiers sell their arms and ammunition in black markets to cover for their life-expenses. ISIS insurgents and any likeminded organizations have access to the black markets and money to buy the undersold arms and ammunition. 

Ghost Employees

The most common corruption phenomenon in Iraqi army and security institutions is presence of ghost employees. It means having people enrolled on public budget and receiving their salaries but don’t actually work. For instance, in June 8, 2014 General Fadhel Jawwad Ali, was sent to lead Iraqi army’s second division and prevent the fall of Mosul; he found out “Checkpoints lightly manned, vehicles that did not work and one unit that should have 500 men only staffed by 71.” 
To show how the ghost employees are affecting the Iraqi army, the CPI’s article shows, “The armed forces division which on paper counted about 25,000, was in reality at best 10,000-strong. One of the brigades, supposedly comprising 2,500 men, turned out to have been 500 strong when it mattered.” The differences between these numbers explain how ghost employees can destroy Iraq’s defense capacity. The number of ghost employees was decreased somehow during the Haidar al-Abbadi’s cabinet, but it is still one of the key corruption contamination in defense and security institutions.
Furthermore, the reported corruption and ghost employees deeply downgrades morale and loyalties of soldiers and security personals. It affects their passionate and enthusiasm. “When you see millions of dinars go wasted for phantom operations. In the end of the month, some people show up to receive their salaries next to me while they have never served and never worked with us. I feel like I was stupid when I was fighting with great enthusiasm against Da’esh [ISIS”,] said federal police officer who accepted to be quoted on condition of anonymity since he is not allowed to speak to media. 

An Empirical Evidence 

Existing literature on terrorism and violent armed groups shows a strong correlation between corruption and radical armed groups i.e. “Terrorism”. In the Iraqi context, there is some data to prove it. Data sets of World Bank Group and Corruption Perceptions Index (CPI) clearly highlights this correlation. Comparing the World Bank’s data on internally displaced persons (IDPs) because of armed groups’ conflicts and the Iraq’s CPI’s corruption score fairly visualizes this correlation. The World Bank Group’s data gives the number of the IDPs (as a proxy for terrorism), and the CPI ranks 176 countries on a scale from 100 (the least corrupt countries) to 0 (the most corrupt ones).

The data shows how the Iraq’s corruption score decreases as the number of violence-driven IDPs increase and vice versa. For instance, in 2010 Iraq’s CPI score improved from 15 to 18 meanwhile the number of IDPs decreased from 280,000 to 260,000 and to 210,000 in the following year (2012). Likewise, as the Iraq’s CPI score decreased from 18 to 16 in 2013, the number of the IDPs hiked to 327, 6000 from 210,000. The pattern is clearly showing the strong correlation between corruption and radical armed groups’ conflicts.
Reshaping the Iraqi security forces 
– Iraq’s security and defense institutions need to design specific anti-corruption measures into its bureaucratic procedures, aiming to reduce corruption opportunity and promote resilience against any corrupt acts.
– No room should be left to any independent operations for Iraq’s state backed militias like PMU and Arab Sunni majority Tribal Mobilization Units. All the armed groups should be abided with Iraqi laws; defense-ministry’s plans, and operate in coordination with the regular army forces. 
– No government backed armed groups and neither units of Iraqi army should intervene in any national or domestic political campaigns, civilian issues, and security arrangements of the cities and towns. Their duty must be to stay outside of politics and administration issues of cities and urban areas.
– Government backed militias, as well as other armed and security units, must be prevented from intervening in government institutions and political activities according to Iraq’s constitution.  
– Iraqi Federal government needs to construct a basic e-government program, in coordination with a strong leadership scheme, to clear up defense and security institutions from corrupt personals and officials. 
– The previous sectarian conflicts and partisan policies downgraded quality of many security institutions and army units. The current government needs to introduce strong counter corruption polices and measures to make sure that all promotions and hiring are based on qualifications of the candidates not on their ethno-religious identities or political connections.

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Politics

Najmadin Karim’s View About Kirkuk’s Long and Challenging Road

The city of Kirkuk was safe from Islamic State of Iraq and Syria (ISIS) contagious expansion in 2014; however, the ethnic and political tensions within the province may cost as being controlled by ISIS in the long run. Controlling and protecting the province from ISIS by Peshmarga Forces belong to autonomous Kurdistan Region of Iraq (KRI) added layers to the already complicated situation in Kirkuk.

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Hemn Awrahim & Rebin FatahRebin Fatah is oil and gas expert in ICPAR. His research focus is on Iraq’s oil and gas sector, and he has published two books on the same industry. He holds BA from Salahadin University-Erbil. Hemn Awrahim is political and economic analyst in ICPAR. He is regular contributor for Inside Iraqi Politics. He has BA, major in international studies and minor in economics, from The American University of Iraq-Sulaimani.

Iraqi Army request to return to Kirkuk and later drove out the Kurdish forces in Oct 2017, farther exacerbated ethnic and security tensions. With the divided community in the province, KRI’s internal division has prevented activating Kirkuk’s Provincial Council, in which Kurdish Brotherhood List has 26 members (out of 41). Plus, Baghdad and Erbil’s tit-for-tat relation has left little hope for a bright future for the province.  

Hemn Awrahim & Rebin Fatah
Hemn Awrahim & Rebin Fatah

Rebin Fatah is oil and gas expert in ICPAR. His research focus is on Iraq’s oil and gas sector, and he has published two books on the same industry. He holds BA from Salahadin University-Erbil. Hemn Awrahim is political and economic analyst in ICPAR. He is regular contributor for Inside Iraqi Politics. He has BA, major in international studies and minor in economics, from The American University of Iraq-Sulaimani

Author

In order to shed light on the Kirkuk’s current situation, Hemn Awrahim and Rebin Fatah, ICPAR’ researchers, interviewed Dr. Najmadin Karim, former Kirkuk governor. Dr. Karim was removed from his duty in a legally controversial act on October 16th, 2017 after the return of Iraq’s armed forces to the province. 
During Dr. Karim’s tenure, from March 2011 to October 2017, service provision improved in Kirkuk and many infrastructural projects were accomplished, benefiting the Petro-dollar money allocated to Kirkuk. During 2014 Iraqi Parliamentary Election, he was the head of the Patriotic Union of Kurdistan (PUK) list for the elections, and his party single handedly won half of the seats in the province which was the result of “serving all people regardless of their background,” as Karim said. Now, he believes transforming Kirkuk to a federal region could be the most acceptable solution.
On June 23rd 2019, the ICPAR’s researchers conducted the interview in Erbil.  

ICPAR: What do you see as a major difference between your time as governor and after October 2017? 

Dr. Najmadin Karim: During period of early 1960s until 2003, Baath Party implemented Arabization process in Kirkuk. During this process, they displaced thousands of Kurdish families, destroying their houses, or using them in process of replacement of Kurds with Arabs brought from places outside of Kirkuk. It also transferred several Kurdish majority districts from Kirkuk Province like Kalar, Kifri, Tuz-Khurmatu, and Chamchamal to the other provinces and added Arab majority Zab-District to Kirkuk (which was previously part of Nineveh) in the purpose of making the Arabs majority in Kirkuk. After 2003, the Arabization process was stopped, and up to 70% of the displaced Kurds returned to the province. In 2005 Provincial Elections, the Brotherhood List (including all major Kurdish political parties and their Arab and Turkmen allies) won 26 seats out of 41.
Prior to 2011, there was no adequate service provision in Kirkuk due to lake of cooperation between the former Kirkuk Governor and the Provincial Council. In 2011, I became the governor with support of major Kurdish political parties. I started cooperating with Arabs and Turkmens, aiming to provide services to all and in the whole province without discrimination. At the end of the day, everyone needs hospitals and their children need good schools. From 2011 to 2014 (when ISIS’ war started), we had been able to build or renovate 320 school buildings, building 1600 km of roads, and opened over 40 health centers and hospitals. Until October 2017, electricity provision in Kirkuk was much better than in the rest of Iraqi provinces. We have also accomplished many strategic and important projects to provide running water in the whole province. In April 2014, as a head of PUK list for Iraqi Parliamentary Election, benefiting from adequate service provision, I managed to win the majority of votes in Kirkuk. Many Arabs and Turkmens, for the first time, voted for a Kurdish candidate. The reason was very simple; my team was looking at everyone equally. The moment a government starts to discriminate against certain ethnic or religious groups; radical and fanatic groups will exploit the marginalized people and use them against the establishment. 
When ISIS occupied Salah Adin, Nineveh, and Hawija in southern Kirkuk, there was only one Peshmerga brigade to defend Kirkuk. With the rise of ISIS’ threats, the Kurdistan Regional Government (KRG) sent more forces to protect the city. Then Iraqi Federal government cut off Kirkuk’s budget. In early August 2014, ISIS occupied Makhmoor and posed direct threats to Kirkuk’s oil fields. The KRG’s forces controlled oil fields of Aavana and Bi Hassan. I mediated and helped both federal and regional governments reach a revenue-sharing deal. While there was no budget for Kirkuk, we pressured the KRG to sign an agreement to give Kirkuk $10 million/month. This money helped keeping public services, completing the unfinished projects, and paying back the contractors’ loans. 

ICPAR: How the decision to hold referendum in Kirkuk come to be?

Dr. Najmadin Karim: At first, the referendum was supposed to be held just in KRG’s controlled areas not the disputed areas, but Patriotic Union of Kurdistan (PUK) insisted on having it in disputed areas, including Kirkuk. At the time, I was member of the PUK’s politburo, and I supported the idea of holding referendum in Kirkuk. Kirkuk’s Provincial Council also requested to have the referendum in the city. In the last week before the referendum, some people started arguing against the idea of holding referendum in Kirkuk fearing from not getting enough Yeas-votes and possible military conflicts. Nevertheless, as you saw, the referendum day was the safest day in the history of Kirkuk and majority of people who participated casted their Yes-votes.
I supported the referendum because the Iraqi Federal Government was not committed to the constitutional Article 140, which was supposed to resolve disputes over disputed areas. It was clear that the referendum was not to immediately declare an independent Kurdish state but to launch a new round of negotiations in order to see if it was possible to implement the constitutional article. After implementing the constitutional article, the KRG would consider a possibility to be federal or confederal region. If they would have not implemented the article, then Kurdistan leaders were to decide on the region’s determination in two years. The referendum aim was not to draw new borders of Kurdistan. The Article 140 is supposed to draw the borderline. We wanted to resolve these issues with other partners, including Baghdad, not unilaterally. 

ICPAR: How the referendum affected the events of October 2017?

Dr. Najmadin Karim: I would say that the referendum was not a major reason for what happened in October 2017. The Iraqi Government leaders and officials were determined to return to Kirkuk regardless of the referendum. In 2008, Nuri al-Maliki’s Government moved Iraqi army to attack Kahanqin and Qara Tapah. They also tried in 2012 by forming the Tigris Operations Command [a joint security operational body consisted of Iraq’s army, intelligence, and police forces], but we prevented them. They were trying to obstruct Peshamraga forces that digging a trench around Kirkuk to stop ISIS’ advances to the city.      

ICPAR: There were some tensions over the referendum and raising KRG’s flag in Kirkuk, do you think Iraq’s federal forces would have come back to Kirkuk forcefully and with tanks if there were no tensions? 

Dr. Najmadin Karim: First of all, there is nothing in Iraqi Constitution against raising Kurdistan’s flag in Kirkuk. Iraqi Turkmen Front filed a lawsuit against us for raising the flag in the Iraq’s federal court. The court did not rule in favor of it and stated that the flag-issue is something up to Kirkuk’s local government. Second, the October conflicts were inevitable since the Iraqi Federal Government wanted to come back to K1 military base in the city and take back the oil fields that were controlled by the KRG (Aavana and Bai Hassan). The KRG was not accepting this. Therefore, the conflict was inevitable. Even after liberating Mosul on 20th June 2017, the plan was to mobilize Iraqi forces to drive out ISIS in Al-Anbar, but they finally gathered all the forces around Kirkuk. Why? Because they had an agreement with some of PUK’s officials to withdraw Peshmerga forces when the conflict started. 

ICPAR: How do you see Kirkuk’s situation now?   

Dr. Najmadin Karim: Currently the situation is too bad. There is no supervision of the Kirkuk’s budget as the Provincial Council is not active. The Kirkuk’s Acting Governor Rakan Jboori has been using illegal methods to control the provincial budget, including faking signatures of some provincial council members. He presented a proposal to the Iraqi Government with a list of projects for all the province and only two of them are in the Kurdish areas, with only two small renovation projects, while the budget is 400 billion IQD. Moreover, there is no major infrastructure projects in the city and the level of the services is almost non-existent. The acting governor is basically wasting Kirkuk’s resources. In six months, he has spent over 1 billion IQD ($836,792) for food and hospitality-costs in his office. In addition, he is facing many corruption charges due to mismanaging budgets allocated for reconstructing projects in the post-ISIS areas in Southern Kirkuk. Out of 268 reconstruction projects he proposed, 168 were phantom projects [existing on paper and cost public fund, but never implemented].

ICPAR: What are the most urgent steps that need to be taken regarding the province and activation of the Constitutional Article 140?

Dr. Najmadin Karim: First, the current situation needs to be resolved and the city needs to be normalized. People from all components of the city should be included in the security and intelligence offices supported by Iraqi Government and the KRG in order to create a balance between them. Also, the Iraqi Army and Public Mobilization Units (PMU) have to leave the city or residential areas. They should focus on the insecure areas in the province which are threatened by ISIS. This will lead to the return of civilian rule in the province and allow the success of the upcoming elections.
 
ICPAR: What could be the long-term solution for Kirkuk?

Dr. Najmadin Karim: The Article 140 was supposed to provide a viable solution. The article was drafted 15 years ago, and now things have reversed as the process of Arabization has started again. To my understanding, the Iraqi government is weak, and I do not think it has enough power and courage to implement the article as it is. Still it is a part of constitution and as long as Iraq exists, we have to abide with it. However, as I said in 2016, either for short term or long term, it is better for Kirkuk to become a federal region. Now, Arabs and Turkmens would not agree with Kirkuk becoming a part of the KRG. Both Turkey and Iran have the same position. Moreover, the International Community and UN are not supporting this idea. The question is, should Kirkuk be under the Baghdad control and everything to be decided by them? They appointed a governor who is under scrutiny for corruption. Should Baghdad decide on all the aspects of the Kirkuk administration when they discriminate against Kurds and removed most of the Kurdish officials in the high government positions? During my time, there was no discrimination and everyone was included in order to make sure there is a balance within the Kirkuk ethnic groups and KRG and Baghdad. Now, everything is run by army while the army units should not be in the city according to the Iraqi Constitution. 

ICPAR: What is your future plan for the province?

Dr. Najmadin Karim: I am planning to form a coalition for the 2020 provincial elections; however, my plan depends on the Kirkuk situation. Fair elections can’t be held if the army and PMU are in the city and controlling everything. As for the planned coalition, we will talk to all the political parties and people of every ethnic group in the province. It will be a bloc for everyone and represent the whole province. We will make sure we include only people with good history and those who have not harmed any of the Kirkuk’s communities. I am sure there will be great people in the bloc, and all will serve the province and take it forward. 

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Politics

This Is How ISIS Insurgents Survive Financially

In December 2017, the Iraqi Army declared victory over the Islamic State of Iraq and Syria (ISIS); the US-backed Syrian Democratic Forces did so on March 23, 2019. However, this was not the end of ISIS, as it soon recast itself as an insurgency (not a state) and started operating in almost all the territories it had lost to Iraqi security forces.

Now, ISIS has several thousand active insurgents operating in rural villages in Iraq’s northern and central provinces, from Nineveh to Al-Anbar. The group’s capacity to reorganize and operate is based on a sophisticated financial system that generates revenue by conventional rebel armed groups’ mechanisms and also by new ways of forced donation and kidnapping.
When it was a functional state and controlled one-third of Iraq’s territory, ISIS had very basic and dysfunctional economy. It had poor infrastructure and no formal trade relations with neighboring cities or countries. It also had no legal protection for investments, property rights, or any sign of economic sustainability. It was acting as a criminal group with no financial future.

Hamed Al-Jboory
Hamed Al-Jboory

Is research fellow at ICPAR and covers armed groups’ conflicts in Iraqi provinces of Anabr, Slahadin, and Kirkuk.

Author

Although the insurgency’s financial system is quite modest and simple, it did allow ISIS to efficiently recruit Arab Sunnis given the 41.2 percentunemployment rate in their areas. The poor economy made ISIS’s financial resources more effective than the actual volume of money it can get. The high unemployment shows how low is the opportunity cost of joining ISIS in these areas today.


Kidnapping 

Kidnapping for ransom is one of ISIS’s most common methods of generating revenue. Mohammed, a retired army officer with two sons, used to drive oil tankers between Nineveh and Salahadin. Early this year, his sons were kidnapped by ISIS insurgents on the road between Makhmour to Kirkuk. After one month, the militants freed them for 40,000 USD ransom. 
The negotiations between the family and the ISIS insurgents were carefully done in an organized manner until the hostages were freed and the ransom was received. The careful communications and security measures the insurgents were able to employ during the negotiations, all over Nineveh and Salahadin, showed the group’s wide network and coordination. 
Similar kidnapping cases have been reported to Iraq’s National Security Services (NSS) almost every two days in the liberated areas, according to a high-ranking officer working in NSS who spoke on condition of anonymity.
The insurgents use mountainous areas like Makhol (in Salahadin), Hamrin (in Diyala and Kirkuk), Pallkana (in Tuz-Khurmatu), and Qara Chukh (in Nineveh). They also operate in Al-Anbar and the Jazeera Desert in Nineveh in addition to several river basins and marshlands close to population centers. In the cities, they operate as a covert network of small mobile groups, whereas in rural areas, they usually avoid direct confrontation with Iraqi security forces and use hit-and-run strategies.  

Forced Donation 

Forcing businesses to donate has been another main revenue generator for ISIS in Iraq since 2013. When businesses do not cooperate, they are targeted. On January 1, 2019, a group of ISIS insurgents raided a construction block factory in Khanaqin in Diyala Province, and destroyed the factory and its machinery. According to a local security official, this was a retaliation to punish the factory owner because he refused to donate.
Even in the past, forcing small and middle-sized businesses to donate money was a key revenue generator when ISIS was functioning as a state, or sometimes even before its founding as a state. It started in late 2013 in northern Salahadin, where the militants forced restaurant owners working on the Kirkuk-Baghdad highway in Tuz-Khurmatu to donate. 
Nowadays, the insurgents focus mostly on rural areas. They tax farmers based on their boats and farming projects, and they call it zakat (Islamic taxation). But in reality they do not tax people according to zakat procedures in Islamic Sharia (laws). For example, in the village of Albu-Jabr in southern Kirkuk, the militants forcefully seized flour from villagers. “They just randomly took as much as they could get in the late evening when they raided the village,” one of the residents told us under condition of anonymity. 

Sustainability

ISIS’s wealth is estimated to be between 50 and 300 million USD in cash. In Iraq, where the group has about 3000 active fighters, ransoms and forced donations allow them to expand and have a sustainable source of revenue to continue operations. The NSS officer estimated the organization’s monthly revenue as roughly 100,000 USD.
 About a quarter of this revenue is taken by the militants who generate the revenue, with the rest going to the organization.  
The revenue is limited, and they use the money to buy basic food items and low-level military ammunition like explosives and small weapons; however, the funds allow ISIS to stay active and expand its insurgency operations.
For Policy Makers
ISIS’s access to money is a serious threat to both the Iraqi and Kurdish governments. Disrupting the group’s financial system could be possible by employing some political, security, and economic measures. However, the governments’ inaction will allow the insurgents to revive or maybe create several versions of ISIS in the near future. 
To address this security concern, current security forces should be trained in counter-insurgency operations. Most of the Iraqi forces fighting the insurgents have not had any counter-insurgency training, especially Hashd Al-Shabi, Hashd Al-Ashayari, and Peshmerga forces. Therefore, they are not efficient in fighting the insurgents.
Moreover, the insurgents are mostly operating in the post-ISIS areas and disputed territories between Kurdistan and the Iraqi federal government. The economic situation in these areas is dire. The devastated economy, local people’s grievances, and lack of job opportunities make the Sunni Arab areas fertile grounds for insurgent groups.     
In 2014, many political and security issues were blamed for the emergence of ISIS, especially marginalizing Sunni Arabs. Allowing these issues to come up again will expose Iraq to major security problems in the near future.

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Politics

A Head of Summer-protests, Basra Is Still Waiting for Viable Solutions

Last Friday, the General Secretary of Threshold of The Holy Husseiniya, a Shiite religious institution, assigned a committee of 35 tribal leaders to resolve one of the enduring tribal conflicts in Basra. The news, which is quite normal for Basrawi readers, is just one example of the lack of adequate law enforcement institutions in Basra, the economic capital of Iraq that produces more than 85% of the country’s exports.

When it comes to Basra’s dysfunctional governing institutions, there are two solutions that politicians envision to overcome the problems. One group (mostly local Basra leaders) frame their solution by forming an autonomous region in the boundary of their governorate. The other group, (mostly Iraqi federal leaders) blame widespread corruption in Basra’s institutions for most of the problems. The both groups truly describe what is going on, but none of them has showed a realistic approach to handle the issues.

Mohammed Hussein
Mohammed Hussein

is policy director and political-economy analyst at ICPAR. He holds a master’s degree in specialized economic analysis: Economics of Public Policy, from the Barcelona Graduate School of Economics.

Author

Regardless of whose solution is more, or less, viable, the both groups are driven by one crucial issue that is Iraq’s enduring institutional failure; basically, government and private sector failure. Institutions, in this term, mean political entities, laws, customs, and traditions that are supposed to organize individuals’ and firms’ activities. Usually, adequate institutions lead to growth and promote social and economic progress, and failed ones just hamper them.
In Basra, the institutional failures have reached to an unbearable point. It polarized Basra’s people along lines of two different choices; supporting or rejecting Basra’s regional government. The regionalist group is trying to address local people’s growing demands for services and functional institutions through establishing an autonomous region. While the other group has remained reluctant and still argues for solutions within the current political frames. The both groups’ announced goals are just attempts to get rid of the current institutional failures.
Moreover, there are also conflicting goals among regionalist people. The Basra’s political leaders are clearly seeking the current advantages, power, and government contracts they already have from the future regional government. For them, easy access to public fund is the main driver behind the region-formation campaign. While for the activists on the street, bypassing these politicians is the ultimate goal. Here, you can find so many people with different conflicting goals among those who lead Basra’s dynamics.
Iraqi Federal Government has changed its approaches towards Basra by increasing budget of service projects and hiring more people in state owned companies and institutions while it has not changed its fundamental polices and approaches. As usual, after each protest it appoints several hundred job-seekers and every year increases Basra’s share in the national budget, which has never been implemented totally. These approaches are like painkiller pills. They ease the problems today but never stopping it from coming up in the future.
Given the complexity of Basra crises, the Iraqi Government needs a comprehensive institutional reform and a realistic Problem-Driven Iterative Adaptation (PDIA). The PDIA based strategy allows finding local solutions for local issues to facilitate a step by step process that would make leaders and low-level officials learn from what they are doing. They can also adapt to the new solutions and challenges to build new skills and capacities which makes the institutions more functional.

In searching for a Viable Solution 

When national governments are failed or incompetent, usually people look for local alternatives to address key issues like service provision and individuals’ security. In many cases, this search for local alternative ends up with civil war, genocide campaigns, and devastating poverty, but it helped resolve problems in several countries. 
In Iraq, this local alternative is not acceptable except for the Kurdistan Regional Government (KRG), which emerged after decades of rebel armed struggles and several genocide campaigns that cost hundreds of thousands civilian Kurds’ lives. 
Before Basra, provincial councils in Arab Sunni majority provinces like Salahadin and Diyala attempted to form their autonomous federal regions in 2011 and 2012, but they faced Nuri al-Maliki’s government’s harsh rejection at the time. Now, the region formation demand is quite popular in Nineveh.
Last month, the head of Basra’s Provincial Council, Sabah al-Bazooni, in a press conference, stated that his council called on PM Adil Abdul-Mahdi to accept its formal request to form Basra Region, and subsequently to convey the formal request to Iraq’s High Electoral Commission (IHEC) to proceed with a referendum by which people of the Basra decide whether to form, or not, their autonomous region.  
Of 35 provincial council members, 22 voted for the region-forming request. They want to benefit the public budget allocated to their governorate and reduce corruption and waste the federal institutions have caused, stated Bazooni.  
Getting rid of the “repulsive centralism” of the federal government of Iraq (F.G,I) is the main factor that has driven Basra people to establish their autonomous region, hoping to form more efficient and functional institutions in their regional government, according to Bazooni.
Whether the Basra’s local alternative meets expectations of its people or disappoints them (depending on various factors), the institutional failure will stay as a key issue for now and future; and for the both Basra’s local and Iraq’s Federal governments. 
Since late 2000s, Mohammed al-Tai, independent ex-MP from Basra, alongside to other regionalist politicians, have tried to gather support for his dreamed Basra Region. The regionalism campaign reached its deadlock in 2014, when ISIS war started. 
Justifying his regionalist campaign, Al-Tai argued that for any decision regarding state funded projects in Basra, approval of several federal ministries is needed. The ministries are occupied by candidates of influential blocs in the Iraqi Parliament. They have given most of public-services-contracts to companies with closed ties to their political leaders. Basra regional government will reduce the Iraqi Government’s power and privileges over the richest part of the country. Therefore, it is expected that most of the influential blocs to stand against Basra-regionalist campaign. 
Explaining the heavy bureaucratic procedures that have prevented government funded projects, Al-Tai elaborated, “If there will be a decision to build a hospital in Basra, at least four ministries get involved. The Ministry of Finance will be involved in funding, the Ministry of Health by coming up with the proposal, The Ministry of Municipalities by allocating a piece of land, and the Ministry of Oil, which has controlled most of the Basra’s lands, by giving up its land.”
 All these bureaucratic procedures might delay the project for months and years and even later political parties will need bribes to let the project to be approved. The parties’ networks are occupying all the relevant ministries, so they can have final saying in any service project.
Although the federal government has challenged the regionalist demand under the pretext of outdating term of Basra’s Provincial Council, it can’t keep rejecting the demand, which is quite legal and supported by the Iraqi Constitutional, Article 119. 
The article states, “One or more governorates shall have the right to organize into a region based on a request to be voted on in a referendum submitted in one of the following two methods: First, a request by one-third of the council members of each governorate intending to form a region. Second, a request by one-tenth of the voters in each of the governorates intending to form a region.” 
The current regionalist figures can easily provide the legal pre-conditions to form Basra Region with the new Basra Provincial Council, probably in 2020 the region-formation request would come up again, and FGI will be obliged to proceed with the formal procedures to found the region.

Key Facts About Basra 

The governorate’s provincial capital city, Basra, is the only Iraqi port city and third largest city of the country.  The province contains 59 % of Iraq’s oil reserve, which is the fourth largest oil reserve in the world. It also produces more than 85% of current Iraqi exports.
Formally known as economic capital of Iraq, Basra suffers 12.2 percent of unemployment (12.0 men and 14.5 women). According to Iraq’s Central Statistical Organization’s (CSO) data, in 2014, total per capita income at market prices is 251,400 IQD ($210.63) in Basra, compared to 426,800 IQD ($357.58) in Baghdad. 

One of the neighborhoods of Basra. Photo Credit: Rebin Fatah

Several political parties, government backed militias, and heavily armed tribes have been involved in various disputes over Basra’s resources. Many of these entities have organized criminal gangs and involved in obvious criminal economic activities, from simple bribery to forced donations in ports and checkpoints. The tribes, sometimes, use advanced middle size weapons and machine guns in their armed conflicts.
As summer approaching, expected protests and uncertainty in Basra are also approaching due to dysfunctional governance and lack of drinking water and electricity. Iraqi Federal Government is not expected to address the governorate’s immediate needs given the current political instability and dare economic situation of the country.  
In response, PM Adil Abdul-Mahdi has put Hadi Amiri, head of Fath coalition and para military party Badr Organization, in charge of helping Basra’s local government to better handle the growing demands for providing the services. The step triggered wide critiques since Amri is just a political figure with no government-position. 

Bad Governance and Corruption 

Saddam Hussein and his Ba’ath Regime intentionally neglected Basra for more than two decades. Iran-Iraq war and first gulf war terribly damaged Basra’s environment, infrastructure, and social coherence to an unprecedented level. 
Following the 2003 regime change, the new political elite who have run the province under the banners of various Shiite Islamist parties, especially Islamic Dawa Party, constantly kept Basra neglected and impoverished as they were overwhelmed with accumulating rapid wealth, power struggle, and sectarian conflicts. Now the political landscape is more complicated as Badr Organization and Asaib Ahl Haq emerged as key rival parties to the conventional ruling parties like Islamic Da’wa Party, Sadrist Stream, Fadhila, the Islamic Supreme Council of Iraq, and The National Wisdom Movement (Hikma).
Similar to the ruling elites, Iraq’s bad management of waste water also contributed to the Basra’s environmental and economic destructions. In almost all the cities and towns of the country, disposal waste water is dumped into rivers. Swage-pipe is mixed with Tigris and Euphrates, or their tributaries, to take the waste water downstream to Basra. Therefore, the country’s 38 million population’s waste-water goes to Shatt Al-Arab, Basra. This is what explains the dangerous level of water pollution that sparked last summer’s protests in the province.
The water pollution seriously threatens lives of 2.5 million population of the province, and level of its contamination has increased by four folds in the past 10 years. “In the period between August 2018 to November 2018, up to 100,000 people were hospitalized due to water-related illnesses,” according to Environmental Justice Atlas. 

Raw sewage and untreated wastewater spewed into one of the rivers in Basra City. Photo Credit: Rebin Fatah

Local officials blame federal government institutions for the mismanagement, whispered corruption, and lack of public services. They always see “repulsive centralist federal institutions” as a reason for much of the Basra people’s grievances. While the same officials belong to the political parties and groups who have run Iraqi Federal Government since 2003. As nobody claims responsibility, Basrawi people are lost between populist blame-games.
One of the key, and legit, point anti-region campaigners have made is the fact that Basra Region would be found by the same politicians who have run the province since 2003. Therefore, they might not be able to come up with a better alternative to reduce environmental and economic damages they have caused. 
In the last years’ protests in Basra, people were asking for adequate service-provision and job opportunities. Nobody, in the regionalist, or Iraqi, campaigns, has explained how they can address the protestors’ demands. The protestors probably come back on streets again in the coming weeks, when summer-heat reaches its top and makes people terribly need drinking water and electricity.
Very few people expect any viable solution from the current Iraqi Government, but it is also not clear how the optimistic regionalist leaders are going to address the service-provision crisis.

Viability of the Autonomous Regions, From Kurdistan to Basra 

Following the first Gulf War in 1991, people of Basra upraised against Saddam Hussein Regime, which managed to suppress the uprising and take back all the 12 governorates that fell under control of rebel opposition groups in north and south of the country. The uprising led to forming Kurdistan Regional Government (KRG), thanks to the international support, mostly the US. Basra was retaken by the Ba’ath Regime, and it has never recovered the destructions the uprising and the first Gulf-War caused. 
The KRG evolved to a point were some scholars described it as the most prosperous part of Iraq, while the rest of the country was moving from bad dictatorial regime to a dysfunctional state overtaken by a sectarian elite that ended up with ISIS-war.
Currently, it is hard to prove that the KRG is doing better than the federal government in term of service provision, functional governing institutions, and human rights records. The region’s security is relatively better, thanks to homogeneity of its people, but it is hard to see any governing institutions working better than the federal ones. 
What differentiates Basra from Kurdistan is the fact that the regionalist leaders would not want to be independent from Iraq (At this moment). They want to have a regional government that can afford better services and more adequate management of its resources. While the majority of politicians in the KRG have not hide their dream of forming an independent Kurdistan. 
Basra is not landlocked, and economically it would be better off alone than staying with Iraq. The KRG is landlocked and surrounded by hostile aggressive neighbors, and its natural resources are not enough to become a self-sufficient independent state in near future. 
Similar to Kurdistan’s separatist move, Basra regionalist leaders might face reactions from Iraqi federal leaders and some neighboring countries, especially Iran, the most effective one.
Now, Kurds are working to improve the KRG’s economy and recover the recent financial crisis from Baghdad, where Basra leaders already have a strong voice. Both Kurdish and Basrawi political leaders are divided over power and resources.
In term of human rights-records, free speech, personal liberties, the KRG and Basra are not better than Baghdad. But the KRG’s economic performance looks better than Basra and Baghdad according to Iraq’s formal statistics. 
Total per capita income at market prices is 599,200 IQD ($502.2) in Erbil, while it is 426,800 IQD ($357.58) in Baghdad and 251,400 IQD ($210.63) in Basra. These numbers are taken from Iraqi CSO’s 2014 and it is accuracy could be easily doubted, but there is no better available figures. 

How to Address the Growing Demand and Grievances?

Iraqi federal leaders have no time to waste in addressing the institutional and political problems that push some Basrawi leaders and activists towards their autonomous region. Without this kind of reform, spending public money would not improve service-provision proportionally as some federal leaders are expecting. So far, what Adil Abdul Mahdi’s cabinet has done to handle Basra’s crises by offering jobs in public sector and increasing funds for service provision is not different from what the previous cabinets did, and key issues have not been resolved. 
The federal institutions need to undergo serious institutional reforms under supervision of Iraqi Parliament, international partners like the World Bank and IMF, and some Iraqi NGOs and institutions that help bringing transparency or other counter corruption measures. The reforms should be designed in a way that strengthens governing institutions and reduce leverages of militias and political parties’ which operates like mafias. 
The needed reform should create better environment for the private sector growth. The federal government can’t create enough jobs for Basra people while population growth rate is 2.73, which is higher than 1.1 of Iran and 1.5 of Turkey. 
Such a serious reform can’t be implemented just in the way that PM Abdul-Mahdi’s plan laid out, which depends only on the human resources already working in the federal institutions. The plan needs to involve some local and international counter corruption institutions.
After the next provincial council election, the Iraqi government will not have an excuse to neglect the Basra people’s demand for creating an autonomous region under the pretext of outdated provincial council, so before running out of time the federal leaders have to address the issues that drove Basrawis to seek their own autonomous region.
Similar to Basra, Arab Sunni provinces are also suffering lack of public services, devastating level of corruption, and outlaw government backed militias. They will raise their region formation efforts soon after Basra. 
Improving horizontal accountability through parliament and judiciary would help reducing corruption in the both local and federal governments. There has to be a proper cooperation between local and federal efforts to fight the malignant corruption.
Besides, much of the federal government’s authorities can be decentralized in order to enable provincial governments to cope with the problems better. The decentralization should be in a way that decreases federal institutions’ heavy bureaucracy not create swamps for corrupt networks of political parties and militias.
This issue would not stay in the boundary of Basra. The region-formation demand is very popular in most of the Arab Sunni majority provinces such as Diyala, Salahadin, and Nineveh. Therefore, it has to be addressed in a federal level whether they meet the region-formation demand or reject it.
Nobody blames the current cabinet for the Basra’s crises, but it will be blamed for not introducing appropriate polices and plans to address them.

Categories
Politics

Governor Election Pushed Nineveh Towards More Polarization

On May 13th 2019, after weeks of tensions between major political parties, the Nineveh Provincial Council elected Mansur Maried as the new governor. The governor-election immediately sparked a national-level tension between key political leaders and further deepened the existing polarization.

Rival political groups leaders have accused each other of bribing members of the provincial council and buying their votes for certain candidates. They also started pressuring the Iraqi parliament to disband the Nineveh Council and sack the yesterday’s elected governor.
Contrary to what some politicians promised, the governor’s election just deepened the existing national and Nineveh-level divisions and political disputes. It is expected to open more doors for further disputes between multiple political parties and factions, but they are all grouped around the different axes to support and stand against the newly elected governor.
28 members of the Nineveh Provincial Council (out of 39) voted for Marid, and he replaced Nawfal Hamadi, who was dismissed with his deputies over the disastrous Mosul’s ferry-accident that killed more than140 people, mostly children and women. 

Diyar Barzanji
Diyar Barzanji

Is research fellow at ICPAR, and his research focus is on Iraqi politics and internal dynamics.

Author

The governor’s election took place in a chaotic situation that embroiled some protests into the hall where the voting process took place. During the election, some  members withdrew from the session. The withdrawn members had some quarrels with those who supported elected governor, and they invited protestors who were gathering outside of the provincial council office against Marid. 
In a press conference following the session, Nwradin Qablan, deputy president of Nineveh’s provincial council stated that Tahalf Al-Nineveh and Masud Barzani’s Kurdistan Democrat Party (KDP) elected Marid. The KDP also guaranteed the position of first deputy governor for its member Nawzad Rozjbayani in exchange for supporting Marid.

 Further Division 

The governor election divided all key Nineveh and Iraqi political actors, back to the same deep-rooted division that prevented forming Iraqi cabinet for several months when no faction form majority and come up with a prime-ministers candidate. Parliament speaker Mohammed al-Halhosi will ask for disbanding the Nineveh’s provincial council soon in the upcoming parliament session on Saturday.
Meanwhile, Muqtada al-Sadr, leader of major parliamentarian block Sairoon Coalition, from his Twitter account called on Iraq’s three presidencies, especially prime minister and the president of republic of Iraq to immediately end up the ongoing “suppression” that people of Mosul are suffering “due to the so called provincial council,” as he said.
He insisted, “The presidencies have to stop this joke, disband the council, send some trusts to the governorate’s administration and take it out of the ordeal until there will be a proper environment to form a new council.” 
Former PM Haidar al-Abbadi and several MPs have condemned the Nineveh Governor election. It seems they already determined to gather supports for the parliament speaker Halbosi’s efforts to disband the council and reject the newly elected governor.
In the other side, Fatih Coalition, the KDP, and some fractions of Arab Sunni political parties support Marid. Until the upcoming parliament session, when the destiny of the governor will be determined, many shifts are expected in positons of parliamentarian blocks and political leaders towards this issue. Therefore, it would not be easy to expect the number of MPs who support Marid’s election or stand against him. 
Despite the national polarization, Mihwar Coalition, to which parliament speaker belongs and led by key Arab Sunni leaders such as Usama al-Nujefi, Khamis Al-Khanjar, and Jamal al-Karboli, split into two rival groups, according to MP Mohammed Karboli, member of the coalition. On its side, the coalition dismissed the parliament speaker yesterday in a public announcement following the governor election.
In Kurdistan Region of Iraq (KRI), Patriotic Union of Kurdistan (PUK), second largest Kurdish block, also announced its stance against the governor election, while the KDP, the largest Kurdish bloc supports the governor. Small Kurdish blocks like Gorran, Kurdistan Islamic Union, The Islamic Group of Kurdistan, CJD, and New Generation (have 14 seats) have not announced their positions yet.

Legal Statues of the Election Process

Legitimacy of the Nineveh’s provincial council’s act to elect Marid is questionable by some law experts. Ahmad al-Tae, law expert from Mosul, believed that the provincial council’s election of Marid “is not valid legally.” He stated that the Iraqi parliament, which has higher authority than provincial councils, asked not to hold the session for electing the governor, but the Nineveh’s Council disobeyed. 
“Since the parliament asked to postpone the provincial session in order to investigate the corruption-allegations that were associated the governor election process. The Federal Court would ultimately rule on the governor’s election and cancel it,” Al-Tae further explained.
The upcoming parliamentarian session might determine the destiny of the council and the newly elected governor. However, it would not be easy to gather support for, or against, any decision regarding the Nineveh Provincial council taken into account the complexity on this issue.

Public Offices Are for Sale in Iraq

Most of the political figures who are involving in this rivalry over the position of the Nineveh-Governor accused one another of bribing the provincial council members, or buying their votes, in favor of certain candidates. 
These accusations pushed Iraqi Parliament to formally ask Nineveh provincial council to postpone the governor election until the federal court complete its investigations on the bribery allegations. However, the council did not wait and elected Marid.     
Selling or buying public offices is not limited on the Nineveh Province. There have been also several allegations about the same issue in Iraqi Parliament. MPs from various blocs talked about selling or buying positions for the head of parliament’s committees.
The way this illegal trade takes place is different from position to a position. For this governor-election, the political parties offered money to the provincial council members to vote for a certain candidates, according to some media reports.
 Local news outlet  Al-Hl reported from a local official, that some political figures paid 250,000 USD to each Nineveh’s provincial-council members who agreed to sell their votes; “they received half of the money ahead of the session to elect the governor, and they will receive the rest after the election would take place,” according to the report.
However, former Nineveh Governor Atheil al-Nujefi, who was Governor when ISIS invaded the province in 2014, in his Twitter account stated, “Several million dollars plus the positon of Kirkuk Governor is the price of Nineveh Governor,” referring to “shady deals” some politicians managed to broker in the last moment.

Implications of the Governor-Election

How all these disputes affect Iraq and Nineveh is not a difficult question for Iraqis who are familiar with this kind of power-struggle. In the national level, Iraqi parliament will get overwhelmed for weeks with this new layer of political rivalry, which is not supposed to surpass Nineveh’s border. But this is nothing compared to what is expected in Mosul and other towns of Nineveh, which are still too far from recovering the ISIS-war destruction.
In the Nineveh level, this division will further widen the gap between ordinary people and the governing elites. Local Nineveh people perceive Marid as a PMF’s governor, so the governor election would increase the level of their paranoia against the PMF forces, secured the province with other Iraqi forces.
The polarization will probably create some gaps for the ISIS’ insurgents who are actively operating in several places of the province. During the governor-election chess-game, it was reported that the insurgents were setting fire to some rural farmlands in Makhmour, southeast of Nineveh.
Federal government leaders, including PM Abdul Mahdi, President Barham Salah, and Parliament Speaker Halbosi are supposed to help defusing the tension between the rival groups in Nineveh and come up with a compromise solution, considering the Nineveh’s terrible need for security stability and public services. 
The federal leaders would be able to defuse the tension as long as they keep the same distance from all rival political factions. Otherwise, they just fuel the tension and further destabilize the province.

Categories
Economics Politics

Political Conflicts and Market Sensitivity in Iraqi Kurdistan

Structural economic instability in the Kurdistan Region of Iraq (KRI) continues to threaten the region’s long-term stability. Multiple flaws subject the region’s economy to fluctuations despite the current political harmony within the KRI and its improving relations with the federal government of Iraq (FOI). 

In addition, the KRI’s internal political instability can jeopardize the economy and reduce investors’ optimism. Given the post-referendum disputes between the major ruling parties, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), it is hard to believe investors will regain their pre-2014 optimism.

Hemn Mohammed Awrahim
Hemn Mohammed Awrahim

is political and economic analyst in ICPAR. He is regular contributor for Inside Iraqi Politics. He has BA, major in international studies and minor in economics, from The American University of Iraq-Sulaimani.

Author

The KDP-PUK Open War 

Since October 2017, when the region’s ill-fated referendum created a strained relationship between the KDP and the PUK, the KRI has not been able to make any strategic decisions regarding its issues in Baghdad and with neighboring countries. The serious differences between the parties’ leadership have long hindered government formation talks in both Baghdad and Erbil.
What makes the ruling parties’ fractious relations disastrous for the KRI is their strict control over much of the region’s economy. Businesses need the blessing of at least one of them to function, and for this reason, their conflicts directly impede business more than normal political instability would. 
Until 2017, the PUK and the KDP had an agreement to share some sectors of the economy and avoid direct economic confrontation, but with the PUK’s current leaders, who are mostly young, insistent, and unpredictable, there is a great possibility of future conflict.
In the past, both parties took extra steps to obstruck each other’s businesses and targeted their politicaly linked companies; as happened with the establishment of Asia Cell and Korek Telecom. Asia Cell was not allowed to work in areas controlled by the KDP, and Korek Telecom was forbidden in areas controlled by the PUK. 
Currently, the PUK seems to be the loser in terms of availability of economic resources in its controlled areas. This can lead the PUK to seek a tighter grip on investments. It may pressure the KDP for concessions regarding some industries — especially oil, the foundation of the region’s economy. This can affect many businesses created and run by people and companies closed to the KDP, such as the Kar Groups. 
Likewise, the KDP might take similar measures to pressure business people with close ties to the PUK, and could possibly adversely affect basic services such as electricity. For instance, the majority of gas power plants and power stations are supplied by the gas fields in Sulaimani, where the PUK is the ruling party. Any further conflict between the parties could seriously affect the region’s economy in multiple areas.

Recovering Economy Amid Some Potential Threats 

Since the summer of 2018, political changes have helped local investors and produced some economic recovery. The KRG has paid back 100 million USD loans to local contractors, and has plans to pay back 100 million USD more. Improving Baghdad-Erbil relations have resulted in increasing the KRG’s monthly transfer from 317 trillion to almost 522 trillion IQD.  
Responding to the partial economic revival, real estate (the KRI’s key sector) has experienced some recovery. According to some business people’s estimations, prices have risen approximately 15 percent. These increases have resulted from optimistic news about the KRG’s agreement with Baghdad and the forming of the new cabinet.
However, in the last 15 years in the KRI, volatile politics between the KDP and the PUK have meant that a complicated crisis could quickly erupt that could negatively affect the whole economy. 
Furthermore, another conflict is on the horizon. The KRI’s economy heavily depends on oil revenues either from its independent oil sales or from the Iraqi budget. To receive its full national budget share, the KRG must hand over 250,000 bpd to the Iraqi federal government’s oil marketing company SOMO.
It seems that KRG leaders are not willing to contribute their oil to SOMO, and nothing guarantees the federal leaders’ flexibility and moderation in this regard if the political weather in Baghdad changes. Such an expected crisis could paralyze the region’s economy at any time.
Moreover, the decisions to export oil independently or to accept Baghdad’s offers have been made by KRI’s council of oil and gas, dominated by the KDP. If the PUK wants to assert its position as a valid power in the region, it needs to change this narrative. 
Following the KRG’s independent oil exports that resulted in a severe economic downturn, the PUK’s controlled zone faced social and civil unrest. The PUK has had to suffer the consequences of economic policies designed and led by the KDP. 
Continuing in this disadvantaged position might push PUK leaders to shift their attention toward Baghdad and away from Erbil as expected and discussed in some local Kurdish media. They may try to change the structure by moving a step closer to Baghdad and away from Erbil. This will not just call into question any KRI economic decisions, but potentially the very legitimacy of the KRG. 

Preventing a Zero-Sum Game 

The current PUK leadership might be considered adventurous and reckless, but actually they have been pushed to this position in reaction to their gradual marginalization by the KDP. 
To balance the KDP’s influence, the PUK might try to revive its leverage as a key political player in the region, despite the fact that the final election results played out in favor of the KDP.  
Lack of a solid agreement between the ruling parties creates mistrust in KRI politics. As a result, the market will face significant volatility in the near future; small conflicts can change the relationship of the two parties into a zero-sum game that will affect the future of the entire region.

Categories
Politics

Who Should Be Concerned about Iraq’s Low Female Labor Participation?

About twenty percent of Iraqi women between the ages of 16 and 64 are currently employed or seeking employment, according to 2017 World Bank data. This low female labor force participation (FLFP) hinders the country’s economic growth and exacerbates the ongoing gender discrimination that Iraqi women face.

Iraq’s FLFP, which is low compared to many other Middle Eastern countries, should be concerning for policy makers who care about the country’s economic challenges, gender-related issues, and politically reinforced clientelism labor market. Therefore, it is a challenging issue for political leaders, rights groups, and business people.  

Iraqi female workers have never played a proportionally sufficient role in the country’s economy, nor been included in its labor market. On the one hand, there are women suffering from lack of opportunities who have been excluded from the job market because of various social, and political factors; on the other hand, the country’s economy can’t create enough opportunities to take advantage of their skills. As a result, much of Iraq’s human resources are wasted.

Mohammed Hussein
Mohammed Hussein

is policy director and political-economy analyst at ICPAR. He holds a master’s degree in specialized economic analysis: Economics of Public Policy, from the Barcelona Graduate School of Economics.

Author

The Labor Issue through a Developing Economic Lens

The situation in Iraq is also found in several other developing economies. Similar to many middle- and low-income countries, women’s economic concerns in Iraq are still about within-families resource distribution, the right to inherit, and access to market activities or factors of production. However, in developed countries their concerns are mostly about gender wage-gap and job-promotions.
Scholars studying economic trends in developing countries have used a U-shaped hypothesis to analyze FLFP. This hypothesis describes the socio-economic phenomenon in which women workers undergo a three-stage transition by moving from rural areas and villages to urban areas and city centers. 
With modernization and development, women lost jobs in the farming sector as their households moved to urban areas. In the new urban economy, men found enough blue-collar jobs, but women could not, and their labor participation dramatically dropped. It took women time to attain the education required to acquire white-collar jobs in urban areas and ultimately raise their labor participation, according to the U-shaped scenario.
World Bank data shows how minor the role of women is in Iraq’s current labor market. The 20 percent FLFP corresponds to 75 percent of men’s labor force participation. 
Some social, tribal, and religious norms have contributed to this low FLFP in Iraq, and they basically obstruct Iraqi women from getting white collar jobs during the U-shaped transition. Some of the norms have been reinforced by political regimes before and after 2003. 
For example, in late 2017, the Wasit Provincial Council issued an order preventing women from working in all cafes and casinos. Even though the order was not supported by any constitutional legislation, no relevant government institutions tried to cancel it. 

The Role of Political Regimes

The International Labour Organization (ILO) and World Bank data showed great improvement in female labor participation between 1991 (9.6 %) and 2008 (19.2 %), about 10 percentage points improvement. However, from 2008 till 2017, the labor participation has not risen even one percentage point. 
There is no doubt Iraqi the political elite that followed the 2003 regime-change performed better than the previous ruling elites by having made some good efforts. However, the eight years of stagnation are worrying.  
What politicians and lawmakers do directly affects the quality and quantity of FLFP. Some historical facts and statistics demonstrate how important the role of political regimes is in the acceleration of FLFP in developing countries.
 In the 1950s, political regimes in Iraq and Egypt changed. The secular revolutionary regimes that replaced monarchies actually changed the economic and social dynamics of the U-shaped transition. In both countries, women’s labor participation increased in paid work, and access to education dramatically rose as the new regimes increased FLFP in the public sector — in educational institutions in particular.
The regimes overturned some social norms to the benefit of women. For instance, in the early 1980s, women held 55 percent of all Egyptian government jobs, which was the main sector in the country’s economy at the time. However, in Saudi Arabia, which has similar religious and ethnic characteristics, regime change did not happen, and women’s labor participation was discouraged by the Saudi conservative regime. Consequently, in 1990, FLFP was 14.5% in Saudi Arabia but 21.34%in Egypt. 
Nevertheless, FLFP cannot be raised only by certain types of political regimes. Favorable regimes can’t be helpful without normal economic growth, stability, and other factors of development. The data shows that regime change did not raise FLFP in Iraq, as it was just 8.12% in 1990.  

Effects of Economic Growth

Some empirical evidence shows that as household income rises, women’s labor participation decreases in poor and middle-income countries since many women work just out of economic necessity. But this is not the case in Iraq. The underlying long trend in Iraq’s economy might blur our understanding of the current situation. Some empirical evidences show that as household income rises, women labor participation decreases in poor and middle-income countries since many women work just out of economic necessity. But, this is not the case in Iraq. The underlying long trend in Iraq’s economy might blur our understanding of the current situation. 
Some empirical evidences show that as household income rises, women labor participation decreases in poor and middle-income countries since many women work just out of economic necessity. But, this is not the case in Iraq. The underlying long trend in Iraq’s economy might blur our understanding of the current situation. Some empirical evidences show that as household income rises, women labor participation decreases in poor and middle-income countries since many women work just out of economic necessity. But, this is not the case in Iraq. The underlying long trend in Iraq’s economy might blur our understanding of the current situation. 

Some empirical evidences show that as household income rises, women labor participation decreases in poor and middle-income countries since many women work just out of economic necessity. But, this is not the case in Iraq. The underlying long trend in Iraq’s economy might blur our understanding of the current situation. Some empirical evidences show that as household income rises, women labor participation decreases in poor and middle-income countries since many women work just out of economic necessity. But, this is not the case in Iraq. The underlying long trend in Iraq’s economy might blur our understanding of the current situation. Some empirical evidences show that as household income rises, women labor participation decreases in poor and middle-income countries since many women work just out of economic necessity. But, this is not the case in Iraq. The underlying long trend in Iraq’s economy might blur our understanding of the current situation. Some empirical evidences show that as household income rises, women labor participation decreases in poor and middle-income countries since many women work just out of economic necessity. But, this is not the case in Iraq. The underlying long trend in Iraq’s economy might blur our understanding of the current situation. Some empirical evidencesshow that as household income rises, women labor participation decreases in poor and middle-income countries since many women work just out of economic necessity. But, this is not the case in Iraq. The underlying long trend in Iraq’s economy might blur our understanding of the current situation. The ILO data shows that Iraqi women’s labor-force participation grew slowly between 2008 and 2018. Likewise, gross national income (GNI) also increased (but at a faster rate) in the same time. The figures show that Iraqi women entered the labor market while per capita GNI rose as the following graph demonstrates.


The data sets illustrate that gross national income (G.N.I) based on purchasing power parity increased from 12,360 USD in 2008 to 17,010 USD in 2017. 
In Iraq, contrary to some conventional economic theories, as GNI per capita grew, female labor participation did also. As income increased, more women moved from within-family unpaid work to paid employment. The positive-income effect is consistent with the U-shaped hypothesis. 

What Should Policy Makers Do? 

To overcome the lack of FLFP, the Iraqi government needs to act to remove social, political, and cultural barriers that discourage women from entering the labor market. It has to reform administrative and financial policies and come up with new regulations that encourage women’s work.
Neither sustainable development nor steady economic growth will be achieved without active and proportionally sufficient FLFP. Investing in Iraqi people to improve human capital is the key for any developmental projects in the country. 
It would not be realistic to expect that all obstacles that Iraq’s underdeveloped private and public sectors pose to female labors will easily be removed. However, there could be some special protecting regulations and laws to encourage women in workplaces and guarantee their basic rights. For instance, providing a safe work environment free of sexual harassment can encourage many women to enter the labor market.
A new survey, conducted mostly in Baghdad, shows that 42 percent of women workers have faced some sexual harassment in their workplace. This is one of the factors that usually discourages women from entering urban and rural labor markets. Here, government policies and regulations could play a crucial role. 
In addition, empowering programs such as vocational training, awareness raising, and small business-building could bring many Iraqi women into the labor market. And legal and institutional protection can create a friendly and encouraging environment for female laborers.