Halting Iraq’s economic decline

28 February 2012

Amid rising sectarian tensions, the new Iraqi government faces unprecedented social and economic issues. Could a planned national conference prove a panacea to the country’s many challenges?

In numbers

3 May: The date set for the trial of Vice-President Tareq al-Hashemi, wanted by Iraq authorities

325: The total number of seats within the Iraq parliament

Source: MEED

Just weeks after the withdrawal of US troops from Iraq, sectarian tensions and internal strife are once again threatening to destroy the country’s fragile political coalition.

In the midst of ongoing power cuts and water shortages affecting large areas of the country, President Jalal Talabani has called for a conference to be staged to help resolve these and other issues threatening Iraq’s long-term stability.

Corruption is not part of the system; it is the system. You have to pay the local government to get anything done

Local businessman

The conference offers some hope for Iraq during a period of serious political tensions. Just a day after the withdrawal of American troops on 18 December, Prime Minister Nouri al-Maliki issued an arrest warrant for Vice-President Tareq al-Hashemi, accusing him of funding terrorist activities, using confessions from his bodyguards as evidence. The weeks that followed were chaotic as violence surged throughout the country.

On 20 February, a panel of judges established by the Iraqi Supreme Judicial Council concluded that Al-Hashemi had been responsible for directing death squads responsible for 150 attacks over the past six years against Shia pilgrims, security forces and political opponents.

Politically motivated charges

Al-Hashemi maintains his stance as an innocent man and says the Judicial Council charges against him are politically motivated. He refuses to return to Baghdad from the northern region of Iraqi Kurdistan, fearing an unfair trial.

During a televised speech in Erbil, Al-Hashemi said: “I renew my determination to stand in a fair trial in an atmosphere that allows revealing the whole truth, away from any attempts of fraud, or deceit, or pressure.”

The panel’s results have been passed to the Supreme Court, which could charge Al-Hashemi with more crimes. The trial has been set for 3 May and, if Al-Hashemi refuses to return to Baghdad, it will go ahead without him.

Some have viewed the arrest warrant as an attempt by Al-Maliki to demonstrate his power. Members of the Sunni Iraqiya bloc responded by boycotting parliament and cabinet. Although the boycott has come to an end, tensions between the Sunni and Shia factions are still rife.

The Sunnis are said to be frustrated by their lack of sway in the decision-making process. In December, Deputy Prime Minister Saleh al-Mutlaq went as far as accusing Al-Maliki of being a dictator. Al-Maliki responded by calling for his resignation.

The prime minister arguably holds more power than ever. Al-Maliki has managed to increasingly centralise control and to position himself as the de facto interior and defence minister, as the roles remain unfilled.

“Al-Maliki has had the advantage of being in power for five years to utilise the networks of patronage he had available,” says Kristian Ulrichsen, a research fellow at the London School of Economics. “This has proven impossible to dislodge.”

The vagueness of the constitution has left so many issues unresolved, because it was intended as an interim document

Kristian Ulrichsen, London School of Economics

Despite winning fewer seats than his opponent, Iyad Allawi, Al-Maliki has managed to outmanoeuvre the Sunni bloc and strengthen his hold on power. The main hurdle in his way is the Kurdish faction that controls 51 of the 325 seats in parliament.

The Kurds have been providing a safe haven for Al-Hashemi and have so far refused to hand him over to Baghdad. They have now become comfortable as the kingmakers in the capital and are likely to use Al-Hashemi as a bargaining chip.

“They will use him [to obtain favourable] oil legislation or maybe [leverage in their dispute with Baghdad over the status of the oil-rich city of] Kirkuk, otherwise they have little use for him,” says a political adviser who asked not to be named.

Kurdish oil industry confidence

The Kurds are increasingly making a habit of ruffling feathers in Baghdad. In December, the Kurdistan Regional Government announced an oil deal with the world’s largest oil company, ExxonMobil.

“[The deal] shows the confidence among the Kurds that Baghdad can threaten them, but can’t really act upon it,” says Ulrichsen.

It may even set a precedent for Iraq’s other provinces. With more calls for decentralisation and federalism from local governments, Baghdad’s central government must work to maintain its hold on power.

“There are many differences of opinion between governorates and the central government, and there are also differences between the governorates. It is very difficult to work in this environment,” says a businessman who asked not to be named. “Corruption is not part of the system; it is the system. You have to pay the local government to get anything done and each councillor takes their share.”

Cutting ties with Baghdad would enable the provinces to maintain control over local projects and other reconstruction efforts.

“The constitution is drafted in such a way as to allow provinces to acquire some measure of self-government,” says Hussein Damirji, partner at US-based law firm Patton Boggs.

Al-Maliki’s attempts to prevent the breaking away of provinces could be ruled as unconstitutional, but the constitution itself is the root of many of the country’s political problems.

Facing pressure from US authorities, the country’s interim government rushed to put together a temporary constitution for the 2005 deadline. Its lack of clarity has fuelled the tensions and showcased the weaknesses of the coalition, while simultaneously enabling some of the country’s leaders to strengthen their hold on power.

“The vagueness of the constitution has left so many issues unresolved, because it was intended as an interim document,” says Ulrichsen. While the presidency is limited to two four-year terms, there is no limit for the premiership.

“Many thought the president, the highest office, would wield the most power, so it would be necessary to limit that, but there is nothing stopping Al-Maliki from running again for office,” says a source. While a date for the national conference has yet to be announced, President Talabani has begun procedures by holding talks with various parties.

“Nothing will change. We will probably see some shuffling around of cabinet, but there will be no new faces. There is no one to replace them,” says the political adviser.

If the situation does not improve, the population is unlikely to be sympathetic. While the Iraqiya bloc has returned to parliament and talks are being held, it is not being heralded as a step forward for Iraqi politics.

“It’s back to square one,” says Ulrichsen. “None of the structural issues have been dealt with. The situation is still very fragile and very tense.”

No stability in Iraq

Iraq has entered a violent cycle. Political disputes stemming from a weak-structured government frequently come to light to create a great deal of bickering, which increases the number of violent attacks on the street.

“The reality is there is no political stability in central government. This instability will affect all parts of Iraq and all involved in the political process are aware of that,” says Damirji.

Politicians remain determined to halt a return to the sectarian strife that plagued the country in 2005. Attempts to avert serious confrontation will probably hold Iraq together in a basic form. However, this strategy will only temporarily halt the slide unless fundamental issues are addressed.

Power-sharing, federalism and the Kurdish issue, particularly surrounding oil and gas legislation, will need to be debated and resolved at the national conference to maintain Iraq’s fledgling democracy.

“Things won’t get as bad as people fear, but they won’t improve substantially,” says Ulrichsen. “The democratic process is not so much about elections and votes, but about the transfer of power, and we question whether Al-Maliki would voluntary give up power.”

Security still the major issue affecting Iraq

Faltering domestic security remains one of the biggest obstacles to Iraq’s long-term development.

While violence across the country rose dramatically after the withdrawal of US troops on 18 December, the number of attacks appears to have stabilised over the past few weeks.

“It started off with conditions worse than those seen at the height of violence in 2005,” says John Drake, senior risk consultant at UK-based AKE Limited. “There has been an increase in mass-casualty suicides, but overall the day-to-day attacks have gone down since January.”

The slowdown in attacks could be attributed to problems elsewhere. “There are suggestions that Al-Qaeda is turning its attention to Syria and is currently engaged in money-making exercises,” says Drake.

Many expected the initial surge in violence as groups sought to capitalise on the security gap left by the withdrawals of US and UK troops.

A suicide bombing in Baghdad’s Green Zone in November highlighted the threats still posed by terrorist groups operating in the country.

Iraqi security forces have conducted several successful raids on suspected cells during the past two months, thwarting a number of planned attacks. But targeted shootings and bomb attacks that left 48 dead in Baghdad on 23 February demonstrate the vulnerability of the overall situation.

Suicide attacks have fallen to one a week across Iraq, mostly in urban areas in the centre of the country, or in Mosul in the north and Kirkuk in the south. The country’s weekly death toll from terrorist attacks ranges from 18 to 100, depending on the size of attacks.

The deteriorating political situation has fuelled violence as Shia and Sunni politicians head towards a political deadlock.

“When politicians talk and negotiate, there is less violence on the ground,” says Drake.

Terrorist attacks averaged 56 a week throughout 2011. A total of 1,716 explosives attacks took place, of which 78 where suicide bombings. So far this year, there have been 339 attacks, causing 488 deaths.

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