A Tale of Two States: Iraq and the IS

Still photo from IS propaganda video

Oil map of Iraq

On December 9th, it will be six months since the Islamic State
(formerly the Islamic State of Iraq and Greater Syria or ISIS) stormed into northern Iraq and seized a large swath of land including Iraq's third largest city, Mosul.  A small force of 800-1000 IS fighters routed two divisions of the Iraqi army and captured much of their sophisticated weaponry supplied b y the United States.

Although this rampage caught the Obama administration and Western  media by surprise, it should not have.  Earlier this year, ISIS seized large areas of Iraq's largest province, al-Anbar Province, including the main city of Falluja.Further, there was much intelligence suggesting that IS was planning a major offensive in the north.  However, the government of former prime minister, Nuri al-Maliki ignored repeated warnings that IS presented a serious threat.  The Obama administration "hands off" Iraq policy facilitated Maliki's brazen sectarian and cavalier policies for which it is now paying the price.

Much has happened since last June.  IS still controls Mosul, and much of northwestern Iraq as well as northeast Syria. It is also firmly ensconced in much of al-Anbar Province. Iraq's sectarian and would-be authoritarian leader, Nuri al-Maliki, was replaced as prime minister by Dr. Haydar al-Abadi, but only after intense internal and external political pressure.  Meanwhile, US and its coalition allies regularly bomb IS targets in Iraq and Syria while Iraqi army and Kurdish Peshmerga troops seek to regain territory lost to the terrorist organization.

In Syria, a heroic battle pits outmatched Syria Kurdish YPG and (female) YPJ forces against a ferocious IS attack against the town of Kobani along the Turkish-Syrian border.  Fearful of a restive and growing Kurdish population in the eastern portion of the country, the Turkish government of President Rajib Tayyep Erdogan has largely prevented reinforcements from reaching the beleaguered Kurdish forces.  Indeed, Turkish forces gaze at the battle from their positions several hundred yards across the border from Kobani.

What do these events tell us about the viability of the Iraqi state and the long-term durability of the "caliphate" proclaimed  by the Islamic state?  Will Iraq fracture along sectarian lines and become, as some have already claimed, a "failed state"?  Will the Kurds form their own state?  If so, what territory would it encompass?  Finally, can IS continue to absorb daily bombings by the US and coalition forces that continue to grow as more nations commit to this effort?

To answer these questions, we need first to step back from the ideological focus that has dominated the vast majority of Western analysis of IS.  It is true that Abu Bakr al-Baghdadi has declared himself "Caliph Ibrahim," and that IS claims to have imposed "true Shari'a" law. Nevertheless, IS' power does not derive from its "Islamic" quality, but from its extensive illicit and illegal economic activity.  Ransoms derived from kidnappings, extortion, bank robberies, taxation and oil smuggling have provided IS with a lucrative flow of income.  Oil smuggling alone is said to yield profits of $1-2 million per day.

IS'  power also derives from the military skills of  numerous officers who formerly served in Iraq's elite Republican and Special Republican Guard units under Saddam Husayn.  Drawn from tribes in Iraq's so-called  Sunni Arab triangle, many of these officers fought in the Iran-Iraq and 1991 Gulf Wars and possess sophisticated military skills.  Resentful of losing their military positions, and angered by what they see as Shi'i marginalization of Iraq's Sunni Arab populace, many have been drawn to radical groups.  In the case of IS, they also receive lucrative economic benefits.

A third sources of power resides in the tribal network that IS has recruited to distribute the oil it extracts from wells that it seized in Syria.  This oil is sold to Turkish smugglers at discounted prices. It also refines oil into gasoline through small mobile refineries which it then it sells in areas udner its control, again at discounted prices.  The tribes that are allied with IS are not drawn to its ideology but to the revenues that they make from oil sales.

Beyond former Ba'thists and tribes, IS also recruits large numbers of Muslims from the greater Middle East, Europe, and even North America and Australia. It is estimated that more than a 1000 recruits cross the porous Turkish-Syrian border to join IS each month. Many youth who join the movement are economically and socially marginalized and see joining IS as providing them with a sense of community and economic stability.

How has IS progressed since it proclaimed its "caliphate"?  By any objective measure, it has performed quite well.  While air attacks have destroyed much of its its oil extracting and refining capacity, its strategy of dispersing troops into small units and hiding weapons in houses and mosques has limited the effectiveness of such attacks.  Indeed, only 35% of coalition airstrikes hit their intended targets in Syria and only 5% in Iraq, as coalition forces pay special attention to limiting civilian casualties, thereby increasing support for IS.

Reports from Raqqa, the unofficial IS capital, and from Mosul and other areas under IS control indicate considerable discontent at its rule.  Offsetting this is the positive reaction of many Syrians (much less so Iraqis) that IS has at least brought stability to their region and administers these areas in a non-corrupt manner, e.g., its rules, governing taxation are seen as consistent and fair .

Thus far, the Iraqi army and Kuridsh Regional Government (KRG) forces have been unable to dislodge the IS.  Reports indicate that IS has even made progress in seizing more territory around the city of Ramadi in al-Anbar.  US and coalition airstrikes have blunted such progress, especially around Kobani, although there the prowess of outnumbered YPG/YPJ forces has been critical in preventing IS from overrunning the town and massacring its inhabitants.

Dr. Haydar al-Abadi has initiated important changes in the short time he has occupied the post of Prime Minister.  For example, he fired 36 officers who were Nuri al-Maliki loyalists and who were implicated in the disastrous defeat of the Iraqi army in Mosul in June 2014.  However, al-Abadi is fighting an entrenched and highly corrupt political system and it is unrealistic to expect him to be able to implement any dramatic changes anytime soon.  He will need to focus on a steady, incremental process of rooting out Maliki loyalists and seeking to change the behavior of powerful political actors in the Shi'i political elite who he must continue to depend upon as he moves forward with political and economic  reforms.

The Iraqi army is rife with corruption.  Many officers lack the necessary military skills associated with their rank, having been appointed for political reasons.  In light of a largely incompetent and uninspiring officer corps, conscripted troops have little incentive to develop loyalty to their units. Compared to the highly motivated IS forces, the lack of an esprit de corps among ISF troops constitutes a major impediment to its ability to retake areas seized by the Islamic State.

This need not be the case.  ISF Special Forces, known as the Golden Division, were in the forefront of units that retook the Mosul Dam on August 18, 2014.  Trained by US Special Forces, theses troops surpassed accompany Peshmerga units who followed them into battle.  In other words, the problem is not the fighting capability of Arab Iraqi troops but the officer corps and the political elite that is complicit in degrading the army through appointing officers according to political rather than military criteria.  Conversely, many competent  officers, especially Sunni Arabs and Kurds, were relieved of their posts by al-Maliki.

The only way that IS will be defeated is through major reforms of the Iraqi political system.  When visiting Iraq this past February and May, many Iraqis complained about the lack of government services, extensive corruption and nepotism and the poverty rate.  Officially put at 20%, many educated Iraqis indicated that it is closer to 30%.  While this may be an exaggeration, one Iraqi social scientists claim that 80% of the state budget is consumed by corruption, particularly through the clientalism that pervades the state bureaucracy.

The only reason any political change has come to Iraq, especially in its Arab areas, is due to the IS threat.  Most observers agree that, were it not for the massive defeat of Iraqi forces in Mosul and the north last June, al-Maliki would still  be prime minister today.  However, the IS threat was only the first wave to hit Iraq.  A much larger threat is now looming that will make IS control of Iraqi territory even more dangerous. This latter threat is the precipitous drop in the global price of oil.

Political economy has taken a backseat to ideology when analyzing the threat posed by IS.  Militarily, Iraq can probably survive IS in its present state given US air power and US military advisers helping to train the Iraqi army to fight more effectively.  Iraq cannot tolerate a substantial drop in the price of oil that provide over 95% of its foreign revenues.

Not only will Baghdad suffer immeasurable  but the KRG as well which has been already hurt by al-Maliki's decision to no longer pay KRG employee salaries as long as the Kurds seek to export oil without Baghdad's permission.  Given the IS threat to the Kirkuk-Ceyhan pipeline, and the KRG's position, like that of Baghdad becomes even more economically precarious.  Talk of an independent Iraqi Kurdish state has all but disappeared.

The combined thrat that the IS poses to Iraq, both Arab Iraq and the KRG, and the drop in oil prices which the IMF forecasts will lead to a 2.75% shrinkage in Iraq's GDP in 2015, the first decrease since 2003, will squeeze corruption and nepotism - the clientalist system - in both Baghdad and Arbil.  The system cannot be sustained once substantial oil revenues are removed.  As government services become even less accessible as a result of declining revenues, discontent - already very high due to poor government performance - will only increase.

Now is the time that Prime Minister al-Abadi and reformist elements in the KRG, such as the Gorran (Change) Party, should bring pressure to bear to enact structural change in the political system.  However, reformers are politically weak and face an uphill battle to enact such change.  They need support from outside the political system.

Here the Obama administration, the European Union, the International Monetary Fund, and the United Nations through its Special Representative to Iraq, Nicholay Mladenov, should take this opportunity place strong pressure on those who represent rearguard support for ex-prime minister al-Maliki and other corrupt political forces within the state apparatus to agree to structural change.  The argument that Iraq - both in its Arab and Kurdish regions - faces an existential threat should be hammered home to the Arab and Kurdish political class.

The price of not paying attention to this warning could mean the financial and political collapse of the country that would benefit no one, not even the practitioners of corruption within the Iraqi state.  If Iraq fails to redirect its declining resources from the sale of oil away from state corruption and towards real economic and social development and engage in political reforms, the only beneficiaries will be the Islamic State and other armed sectarian forces.