Can Iraq Survive the "Perfect Storm"?

An Iraqi citizen being tested for Covid-19

Iraq faces a series of inter-related crises which haven’t been seen since the 1991 Gulf War and the March 1991 uprising (al-Intifada) which almost toppled Saddam Husayn’s Ba'thist regime. I refer to this crisis as a “perfect storm” because of the combination of severe shocks facing Iraq’s economy and body politic. With pressing health, economic and political problems confronting Iraq’s Federal Government and the KRG, what are Iraq’s prospects for being able to address this crisis and prevent widespread economic and political instability?

Iraq's announces new Covid-19 cases

The Covid-19 pandemic has stretched the capacity of an outdated, corrupt and inadequately funded national health care system.  The pandemic has resulted in a world-wide drop in the price of oil. Corruption in Iraq has intensified as Iran’s proxies – politicians and militias – have created a parallel or grey market economy which neither the Federal Government nor the KRG has been able to control. Poverty rates are climbing, not only workers and farmers but for middle class families, all of whom find it difficult to make ends meet. 

With Iraq dependent of 95% of its government revenues from oil sales, the collapse of oil prices has created a huge budget deficit.  Currently hovering around $40, a barrel of oil’s price must remain at $60 or above for Iraqi to meet its budgetary needs.  The recent rejection of al-Kadhimi’s budget by the Council of Deputies (Iraq’s parliament), which seeks to draw upon central bank reserves to cover part of the deficit, points to the problems facing the government in meeting its fiscal responsibilities, especially the salaries of the large salaried bureaucracy and those “ghost employees” who are paid regularly but fail to contribute any social benefit.

New Contract Signals Serious Development of Iraq's Huge Nasiriyah Oil Field

Since October 2019, a large youth protest movement (the October Revolution or Thawrat Tishreen) has been demanding an end of government corruption and early fair and free elections.  Despite the demonstrations’ overwhelmingly peaceful nature, over 1000 youth protestors have been killed and as many as 25000 injured by pro-Iranian militias and the so-called “Blue Hats” of the Sadrist Movement.  Many other activists have been kidnapped and tortured. 

Iraq's Thawrat Tishreen demonstrations in Oct. 2019

The government of Prime Minister Mustafa al-Kadhimi has condemned these attacks and tried to quell them.  However, it has been largely ineffective in providing security for the youth protestors. Some police officials have been replaced, e.g., in the southern city of Basra, but the militias’ ability to attack demonstrators continues unabated.

Basra activist, Reham Yacoub, murdered by pro-Iran militia, Aug. 2020

The power of Iran’s proxy militias and their supporters within the Iraqi government, especially former prime minister, Nuri al-Maliki, and Hadi al-'Amiri, the leader of the Badr Organization and its militia, do Iran’s bidding.  As many Iraqis have pointed out, it is no exaggeration to argue that al-Maliki runs a “deep state” on behalf of Iran and promotes its political economic interests in Iraq, at the expense of Iraq’s citizenry.

Part of the problem of aggressively confronting the crises which Iraq currently confronts is that it isn’t a sovereign state.  Prime Minister al-Kadhimi has attempted to reign in corruption at Iraq’s border crossings with Iran, eliminate militia control of Baghdad International Airport and the many illicit financial benefits such control bestows, and assert control over the Ministry of the Interior and other security forces which have failed to protect the Thawrat Tishreen’s peaceful demonstrations.  

In addition, Iraq is facing a threat which has received relatively limited attention to date. In the north central provinces, whose population is primarily Sunni Arab, the Daiish is working hard to reestablish itself.  Working in small cells, Da'ish terrorist have attacked oil refineries, police stations, and army patrols as well as destroying infrastructure and burning fields of crops.  

Lt.Gen. Gen. 'Abd al-Wahhab al-Sa'adi, Counter Terrorism Services commander

Iraq’s Counter-Terrorism Services, under the able leadership of Lt. General 'Abd al-Wahhab al-Sa'adi, have been working with US and Coalition forces to prevent the Da'ish from achieving their objectives.  Nevertheless, the areas in which the terrorists are active, including the city of Mosul, find many local residents displaced from their homes as a result of the 2017 struggle to defeat the Da'ish. 

al-Falluja residents, Anbar Province, displaced by war against the Da'ish

An estimated 4.5 million Iraqis were displaced during the struggle to regain the city of Mosul, and the additional territory the Da'ish had occupied in north central Iraq and along the Syrian-Iraqi border. The Federal Government’s curtailed revenues, resulting from oil price declines, undermine its efforts to implement reconstruction of homes, schools, hospitals and other infrastructure. Thus, these areas could become fertile ground for terrorist recruitment, especially of youth, in the future.

Climate change is adversely affecting Iraq.  As was evident this past summer when temperatures reached close to 130 degrees in Baghdad and elsewhere, Iraq lacks the ability to provide electricity to its population.  Further, the intense heat has harmed the cultivation and harvesting of crops. If we add to this problem the reduced water supply coming from Turkey and Iran through the Euphrates and Tigris rivers, Iraq faces a dangerous climate change induced crisis affecting its population and agricultural production.

Climate Change and Migration - the MENA Regions' next Big Challenge?ttps://castlereagh.net/climate-change-and-migration-the-next-big-challenge-for-mena/

Basra, Iraq’s second largest city, not only suffers from intense heat and lack of electricity, which leads to anti-government demonstrations each summer, but also suffers from a lack of potable water.  In fact, the water supplied to the city’s residents is not even suitable for bathing.  Lack of adequate municipal sewerage facilities adds to Basra’s woes and threatens its residents’ health. 

Solving Iraq's Electricity Crisis

All these crises interact to produce what can be called the “perfect storm.”  Reduced oil revenues severely constrain the Iraqi government, whether in Baghdad or Erbil, from paying government employee salaries and investing in projects designed to promote economic growth and improve the nation’s outdated infrastructure.  The massive corruption and nepotism which plagues the Baghdad and Erbil governments results in the waste of huge amounts of public funds which could be spent to improves Iraqis’ standard of living.  

Iran’s control of proxy militias, such as the Badr, Kata’ib Hizballah, al-Nujaha’ and several others, has created a state within a state. These militias benefit Iran’s economy and the militia members, but robs Iraq of huge amounts of revenue through illicit commercial transactions over which it has no control.  Through attacks on the US Embassy and other diplomatic facilities in Baghdad, the militias also hinder Iraq’s effort to crush the Dacish because such attacks have led members of the US led coalition to withdraw their troops from Iraq. 

Iraq’s underfunded health care system also costs the state because it lacks the necessary ability to engage in testing and contact tracing which would help curb the spread of the Covid-19 virus.  The greater the number of Iraqis who are infected as a result of inadequate health care services, the more people are removed from the workforce, further undermining the economy (not to speak of the suffering caused to those who become ill and to their families).

Lack of adequate electricity increases mortality rates among the elderly, the sick and young children.  In addition to the needless suffering that is causes to those who can’t find shelter from intense heat, the state incurs additional medical costs which could have been avoided.

Climate change is hurting Iraq's agriculture

State funds are also negatively affected by declining supplies of water for agriculture and the harm to crops by intense summer heat.  When domestic agricultural production is negatively affected, precious hard currency must be spent on importing food to make up for these losses.

What is to be done?  I would suggest that we divide state action into short and long-term policies.  The short-term policies need to focus on meeting immediate shortfalls in the Iraqi budget while the long-term policies need to address the issues which the Covid-19 pandemic and the collapse of oil prices have laid bare to the Iraqi populace and those outside Iraq.

First, it is critical that Iraq’s current government retain close ties to the United States and the European Union.  The US and the EU possess the clout to have the International Monetary Fund (IMF) provide Iraq with a loan which will cover its immediate revenue needs.

Second, Iraq should try and exploit the contacts that Prime Minister Mustafa al-Kadhimi has made with Saudi Arabia in establishing a joint investment initiative.  One way this collaboration could benefit Iraq is from a large Saudi investment in Iraq’s agrarian sector.  Such an investment would provide Iraq with much needed funds to improve agricultural production and the Saudis with greater food security.

iraq approves loans from Saudi Arabia, China/

Third, the al-Kadhimi government needs to more aggressively pursue its efforts to reign in corruption.  Despite replacing some officials at border crossings and removing police officials, e.g., in Basra where youth have been treated especially brutally by militias, there needs to be a coordinated national effort with televised and social media communications from a wide variety of officials who are respected who ask the Iraqi people for their help in reigning in corruption.

PM Mustafa al-Kadhimi meeting with KRG PM Masrour Barzani in Erbil, Aug 2020

Fourth, now is an opportune moment for Baghdad and Erbil to put aside their differences to come together to confront the “perfect storm” which adversely affects Arab Iraq and the KRG. If the two sides could agree upon a program to seriously confront corruption, that in itself would provide a large amount of desperately needed revenues.  Increased coordination between the Counter Terrorism Services and the Pesh Merga would also allow more effective prosecution of the campaign to rid Iraq once and for all of the Da'ish terrorists.

Fifth, Iraq’s economy must become diversified if it is to escape the “oil curse.” It cannot depend on oil revenues to sustain it in the future, especially as the world moves away from the use of fossil fuels and surpluses of oil grow, further depressing prices.  Thus, the private sector must be given a more central role in Iraq’s economic development.  How might that occur.

First, the Federal Government must pass laws which eliminate much of the bureaucratic and regulatory impediments which hinder the formation of private enterprise.  Forming a commission comprised of government technocrats with business and financial expertise, and successful entrepreneurs, should formulate solutions to immediate issues which need to be addressed, such as impediments to forming new commercial, industrial and financial enterprises, as well as a 5 year roadmap to diversification.

Iraqi youth, especially women, need greater access to employment

Second, the Iraqi government - both Federal and KRG – need to mobilize a highly underused resources, namely Iraq’s youth, which constitute 70% of the population under the age of 30, namely 28 of Iraq’s 40 million population.  One effective measure would be to provide resources – technical and financial – to establish thousands of new youth social entrepreneurial ventures.

Youth could play a critical role in improving Iraq’s national health care system.  During numerous protests, Iraqi youth who support the Thawrat Tishreen have established rudimentary health care clinics in the city centers in which their demonstrations are taking place.  These clinics have provided important services, especially to the poor and needy.

Iraqi youth need more incubators like al-Mahatta (the Station) in Baghdad

To date, Iraqi youth, both in the south and the KRG, have successfully established a wide variety of social entrepreneurial ventures, including recycling companies which purchase recyclables from local residents, which cuts down on neighborhood refuse.  Other firms seek to recycle food waste and one venture has created a successful school in Baghdad’s Abu Ghrayb district. 

With the problems of Basra’s potable water crisis, the Federal Government could fund a youth-run venture to assure the elderly, ill and families with children of access to clean water. The Iraqi government could create, both in the south and the north, a joint National Public Health Corps comprised of physicians, medical technicians and large numbers of youth who could assist in delivering much needed medicines to the ill, elderly and needy. 

Youth who were part of a national Public Health Corps could also disseminate information to households, especially in poor neighborhoods and villages which provide information about public health and vaccinations. They could also conduct questionnaires to obtain information regarding the medical needs of these neighborhoods and then provide the information to the local hospital or clinic. 

In terms of its large youth demographic, Iraq possesses a large amount of human resources which hasn’t been effectively utilized. Youth in particular haven’t been given the opportunity contribute to Iraqi society to date. For example, there are many youth who have been trained as engineers and natural scientists (including a large cohort educated at Rutgers University, my own institution).

These activities would serve another function which is to train the youth working to improve health care so that they might themselves become physicians or medical technicians. could contribute to helping to revive and improve Iraq’s agricultural sector. Again, youth could engage in data collections which could assist the ministries of agriculture in the Baghdad and Erbil better address the needs of farmers. Iraqi youth in the south and the north could disseminate information to farmers on where to best purchase seeds and fertilizer. In effect, they would serve as Agricultural Extension Agents as exist in the US and other countries.

 Iraqi youth continue to suffer from a high unemployment rate

Iraqis love their sports organizations, especially their football teams. Football provides an excellent way to bring Iraqis of different ethnic, confessional and regional backgrounds together. Establishing a National Sports League to teach sports and offer youth the opportunity to meet each other constitutes a way to mobilize youth.

Iraq's national team with 2007 Asia Cup trophy

 As has been done in other MENA region countries, sports center provide opportunities to offer youth civic education. In Egypt, for example, youth who visit sports centers in poor neighborhoods of Cairo learn not only how to become more physically fit and skilled in specific sports, but are taught that Islam is a religion which doesn’t support extremism and violence. Thus, sports centers can serve as educational institutions and as vehicles to promote civic engagement.

In my recent posts, I have focused on youth as constituting an important component in Iraq’s efforts to confront the multiple crises it faces at the moment. As a large demographic, the Iraqi government ignores youth at its own peril. Youth alone can’t solve Iraq’s myriad problems but, as the “generation in waiting,” who will soon assume positions of responsibility in all aspects of public life and in a growing private sector, training them for their future roles is critical to Iraq’s ability to successfully navigate the “perfect storm” it currently faces.