The Iraqi economy between corruption and politics

The Iraqi economy between corruption and politics

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Researcher Shatha Khalil *

Translated by : mudhaffar al-kusairi

In affirming the causes of the deteriorating situation with all its details in Iraq, and creating chaos professionally and maintaining its continuity, it is in short ((the strangest constitution)) in the world, placing countless mines, according to the confirmation of Iraqi and international professional laws, which caused a spiral of differences on which the political quotas have legalized the presence of these mines, the harvest of this democracy was bitter, with the fragmentation of people’s awareness and engagement with sectarianism, the unprecedented prevalence of corruption, and the birth of a nationwide militia community which has control over the state .

Iraq is witnessing massive protests and demonstrations against government corruption, the constitution, Iranian interference, corrupt religious parties and militias, as astronomical financial returns accrued by these parties for many years, at the expense of a poor people and institutions that began to crack and collapse, not to mention wasting the public money, in a country that possesses “the second largest reserves oil in the World ”, as the country was ranked 169th out of 180 on the corruption index according to Transparency International Organization , and the description of Iraq by Transparency International report and the prevalence of political, economic, and administrative corruption within its various institutions.

The organization’s reports also confirm that the volume of the looted money in the period after 2003 amounted to 300 billion dollars, and Iraqi sources add that about 350 billion dollars were wasted and stolen during the years 2003-2014 with fake projects and financial and administrative corruption in the country, in addition to the presence of five thousand projects that were not implemented because of poor planning, at a time when the country is going through an internal and external debt crisis, as corruption has exhausted the Iraqi economy despite all its material and human wealth.

The World Bank indicated that Iraq is ranked the second most country in the world to suffer from rampant corruption, in addition to the classifications that it is considered one of the most bad in terms of business and the weak investment environment, given the many problems in the legal and legislative structure and the fragility of the security situation, especially the past months.

The size of the growing corruption in Iraq created successive living and economic crises for citizens, and confused their country’s economy until it became among the worst in the world, although the country has the largest oil reserves in the world after Saudi Arabia, and Iraqi oil reserves represent about 10.7% of the total global reserve.

Iraqis are suffering from high unemployment, poor public services, and extreme poverty, whose ” official ” rates were in 2019, at 22.5%, while World Bank statistics indicate that poverty reaches 41.2% in areas liberated from ISIS, and 30% in Southern areas , 23% in the center, and 12.5% in the Kurdistan region. The World Bank added that 50% of children are poor in the southern governorates of Iraq.

The Iraqi economic and financial file, which successive Iraqi governments have sought since 2003, and gradually to destroy all pillars of the Iraqi economic, military, educational, and health state, and this is difficult to believe at all, but the numbers, statistics, documents, facts, and data on the ground demonstrate this in a manner that does not accept skepticism .

And the significant decline in Iraq’s industrial capabilities and in the aspects of energy saving and neglecting basic infrastructure played a major role in opening a wide door for Iran to develop its industrial and construction companies in an unprecedented way.

Iran’s role in destroying the country and plundering its wealth economically:
Iran enters as a basic partner in the Iraqi market with financial returns amounting to about thirty billion dollars annually, which is a sum earned from the export of its products to Iraq and from energy supplies and construction and investment contracts that it acquires through facilities and exceptions provided by those in the Iraqi government and their full loyalty to it – that is, Iran.

The economic expert, Salam Smaism, indicates that the significant decline in the material sector has made the Iraqi economy a rentier economy and exposed , meaning that it depends on one thing which is oil, and that it be exposed, that is, it covers all its needs through import and then it is exposed to external economies .

In the financial sector, Iranian and Iraqi reports indicate significant progress in the Iranian share at the expense of the Iraqi share, from the financial sector, as Iran now has about 11 banks operating in Iraq independently.

Iranian banks also bought a share of six other Iraqi banks, and the total money for the Iranians in those banks amounted to more than seventy billion dollars, which reflects an almost absolute Iranian domination over the Iraqi economy.

Laws do not serve the economy
The civil governor in Iraq in the second half of 2003, Paul Bremer, worked to destroy industry and agriculture by abolishing the customs tariff, and after pressing against this unfair measure towards the country’s right to collect customs and impose the economic policy that it deems appropriate to preserve its wealth and preserve its local industries, he imposed a formal fee of 5% for the reconstruction of Iraq, while the use of customs declarations that help statistical agencies in checking imports have ended, thus improving the degree of reliability of the statistics … Is this deliberate destruction of the Iraqi economy ?!
And it seems, there were two purposes of this procedure, except for the practical aspect of not controlling the border outlets, the control of some political parties and criminal mafias over many of the border outlets, and using them to enter goods without control and it costs the state treasury billions of dollars.

The border outlets adopt the old methods of payment, evaluation and primitive frameworks, and do not rely on modern technology electronic payment as most countries of the world do to preserve their wealth and protect the country.
Not to mention the forgery of official papers of many of the goods entering the country , for the purpose of tax evasion, as some reports stated that Iraq was losing $ 15,000 per minute due to corruption at the border crossing points.

The proper and efficient management of these outlets can achieve profits and revenues for the government treasury that may not be less than oil revenues.

This irresponsible policy led to the flow of goods to the Iraqi market without controls, which led to an accelerated collapse in the local industrial capabilities, which had been weakened a lot due to the ban on the import of spare parts for their machines and equipment.

Corruption has led to the failure to examine and control the goods and materials entering the country, to ensure their suitability and possibility of human use , and that they do not pose any risk to human health or security, nor to verify the quantity and quality of goods entering the Iraqi market, and to limit the dumping policy, which is to import large quantities of certain goods and with poor specifications, low price .

And far from setting the proper foundations for the import process, and making sure not to import any product that can be produced internally, in order to preserve local production, and to encourage the Iraqi industry.

This industrial debility led to the collapse of competitiveness, and the domination of imported goods on the markets, which led to the demobilization of large numbers of workers in the industry to join the regiments of the unemployed, or the lines of those seeking government jobs without real production in return.

This is what corruption produces in all its forms, not only economic or political, as the repercussions are significant on the environment and social life, and the main reason is the weakness of the state and the inadequacy of regulatory systems, the inability to assess risks in a correct way, weak governance systems and ethical standards, and the failure to activate accountability mechanisms, in the light of the decline of the standards of efficiency and integrity in selecting top-level employees, the prevalence of bribery phenomenon among companies to rid transactions such as import and export, etc., and the extent of accountability of corrupt officials affiliated and loyal to Iran ..

All these reasons and others are the most important factors in the country’s weakness, plundering its economy and destroying its society..What do Iraqis expect?

Economic Studies Unit
Rawabet Center for Research and Strategic Studies