Iraq, one of the most important oil-producing countries in the world, is going through a difficult economic crisis. Employees do not receive their salaries, the local currency is collapsing, and the citizen lives in darkness for long periods as a result of the almost continuous blackout.
Economists believe that the scourge of corruption, the absence of accountability, the smuggling of funds outside the country, the absence of accountability, and the government’s inability to recover it, are the main causes of the economic decline. While other economists add other reasons, including neglect and organized internal chaos, stressing that the expansion of government jobs worsens the economic situation in the country.
Iraq has been suffering from a suffocating financial crisis since the beginning of February of last year, following the collapse of oil prices and the repercussions of the emerging Corona virus pandemic, which increased the street demands to open corruption files and recover Iraq’s looted funds.
As a result, Mustafa Al-Kazemi the Iraqi Prime Minister, directed late last year to form a permanent committee to investigate corruption cases. Al-Kazemi also instructed CTS forces to implement decisions issued by investigative judges or specialized courts related to corruption cases. Despite the passage of several months since the start of the committee’s work and the arrest of dozens of Iraqi officials on charges of corruption and money smuggling, this did not save the economy heading for collapse, analysts say.
Smuggled money exceeds the country’s budget for two years
Politicians and parliamentarians frequently talk about the existence of massive corruption that has caused a great waste of state funds and smuggling large quantities out of Iraq since the US occupation in 2003, estimated at hundreds of billions of dollars. Although some politicians assert that there is irrefutable evidence of corruption cases and deals, they often avoid mentioning the explicit names of those involved.
The Integrity Committee in the Iraqi Parliament had estimated at the beginning of this year the volume of money smuggled outside the country at about 350 trillion dinars. This number exceeds the country’s budget for more than two years.
“The sums smuggled out of the country were through fake receipts, and many of the commissions paid for the purpose of smuggling were obtained by some officials,” according to Taha Al-Defahi, a member of the Integrity committee.
Omar Mashhadani, an economist, confirms that the sums smuggled out of Iraq are sufficient to build a complete state from scratch, as they are not unusual numbers, and indicate a political and economic disaster, whose effects may appear in the coming years
Mashhadani affirms that all the concerned authorities that were formed to combat corruption and prosecute it, such as the Integrity Commission, the Financial Control Bureau, and the Integrity Committee in the House of Representatives, will not be able to confront the “mafias” of corruption. This is due to the association of large political figures and influential parties in money smuggling operations, and the establishment of organized mafias that operate comfortably, sometimes by ignoring the state apparatus from them, and at other times with protecting militia weapons. The correlation of corruption operations in Iraq with suspicions of coordination with regional countries makes it not easy to eliminate it.
According to Mashhadani, the best mechanisms for dealing with smuggled money are to address Interpol and activate Iraqi judicial decisions issued against the accused. In addition to communicating with the governments in which the accused reside, and confiscating everything they owned after assuming positions in Iraq. But this requires the availability of political will in Iraq to pursue this file.
It is noteworthy that Rahim Al-Darraji the former member of the Finance Committee in the Iraqi Parliament estimated the value of the looted funds in Iraq, about 450 billion dollars.
Government jobs to please the militias
Khaled al-Samarrai, a former researcher at the Institute for Regional Studies, explains the economic crisis in Iraq due to the sharp increase in the number of government employees. Al-Samarrai indicates that during the last ten years, Iraq has witnessed a doubling of the number of employees, because each government has resorted to buying the loyalty of the factions by granting exceptions in government appointments.
Al-Samarrai adds that with the increase in spending on government salaries, spending on important sectors that strengthen the country’s economy, and the infrastructure. Al-Samarrai confirms that a large percentage of government employees are members of Iraqi factions and receive salaries from regional bodies without commitment to implementing projects or tasks, and they are just names on paper in Iraqi government institutions.
This reinforced the spread of unemployment among graduates, which constituted another crisis that exacerbates the severity of the economic crisis. Annually, about 700 thousand young people join the labor market, but due to the monopoly of job opportunities for the loyalists of the factions and political parties, Iraqi graduates fell into a cycle of poverty, as Al-Samarrai sees.
Early this year, the American New York Times published a report explaining the economic and financial crisis in Iraq. The report stated that the salaries of employees and retirees in the public sector cost the Iraqi government 5 million dollars a month, while oil export revenues do not exceed 3.5 billion dollars only.
The report considered the problem of expanding employment in the government, one of the roots of the economic problem in Iraq, as governments exploit oil revenues to win the satisfaction of political factions, by distributing ministerial portfolios to them. In turn, the political factions employ many citizens, which has created a great glut in government employees. Since 2004 the size of the staff has nearly tripled. Economists estimate that more than 40% of Iraqi employment depends on government salaries and contracts
