Eradicating corruption in Iraq is the beginning, not the solution Corruption

As reported by the United States embassy in Iraq a few years ago, I surprised the US and Iraqi officials when I said that the US Federal Reserve should end the transfer of US banknotes due to Iraq’s oil sales and replace them in three years with a digital transfer. As surprising as it was at the time, it is now the case that 95 percent of money sent to Iraq is digital. This has certainly helped to bring Iraqi banks closer to international standards, but it had a more important purpose: to make corruption more difficult than simply giving someone a “shayeb”, Iraqi slang for $100.

But in Iraq, corruption is so widespread that there is no single solution to this, so the new Prime Minister Ali al-Zaidi. mass arrest of 47 officials, legislators and politicians Sunday must be the first step in a multi-year campaign if it is to make a significant difference in the lives of Iraqi civilians. The arrests appear to have been the result of an investigation by the Oil Ministry’s deputy for refining, Adnan al-Jumaili, and include about a dozen members whose immunity was lifted. After many years of working in Iraq and Iraq, it would not be surprising if the investigation revealed the connection between these politicians, their political supporters and the Ministry of Oil. Due to the power sharing in Iraq that has been in place since 2003, ministries are seen as money factories for whatever group or group “owns” them.

The US government, of course, has been aware of the corruption that has taken place in these institutions and has tried to combat it by supporting the creation of anti-corruption agencies, but many Iraqis see these institutions as places of corruption. “When investigators want bribes,” Iraqis tell me, “you know corruption is rampant.”

Recently, the US government has taken the most drastic step to limit the flow of dollars to the armed groups supported by Iran, whose actions reach deep into the Iraqi government and economy. When the Iraqi army, with the help of the international coalition led by the US, freed its territory from ISIL (ISIS) in 2017, the famous army that took up arms to fight the army began to turn their weapons to the United States. Rocket attacks against the embassy resumed years later, and attacks on US forces supporting the Iraqi security forces began.

The US has asked the Iraqi government to protect our workers as invited guests in their country, but the insurgents have become too powerful and too dangerous for the government to take action. The authorities sometimes reprimand criminals and ask for an investigation, or arrest two or three criminals every now and then, but they always refrain from taking action. As we often hear in Lebanon, which is fighting against Iranian-backed militias, Iraqi officials tell us that they do not want to enter a civil war. I realized the power of the armed forces in Iraq when people attacked the US embassy in early 2020. The Iraqi Counter Terrorism Service stood by the fighters and watched them attack the embassy for two straight days.

So with the right to influence the Iraqi government through the threat of weapons and knowing that Washington’s financial problems could reduce or eliminate their sources of funding, the military officials moved to the economy. At first, they operated as a Mafia group, extorting money from citizens by setting up checkpoints along the Kurdish border in northern Iraq, for example, and forcing “security” to be provided to small businesses. But when the terrorist-backed parties began to gain more control over the parliament and the government itself, they took over the profitable ministries and established, with government funds among other things, a large group called Muhandis General Company, which operates in almost every major sector of the economy. The company was named after Abu Mahdi al-Muhandis, a military commander who was killed along with Qassem Soleimani in a US strike on January 3, 2020.

Therefore, the US government should be concerned that some of the money transferred to Iraq due to its oil trade is flowing through ministries and companies controlled by the military in the hands of Iran. If al-Zaidi is trying to show that he has a problem with fighting corruption before his July visit to Washington, DC, this arrest may be a good first step, but it is symbolic at this point. Tackling the corruption inherent in the ethnosectarian power-sharing system — and the existence of political parties with state-backed militias that are more loyal to Tehran than to Baghdad — will be more difficult.

About half of Iraqis do not use banks. The reasons are not hard to find: In 2022, corrupt politicians and businessmen obtained $2.5bn from the account of the General Tax Authority at the state bank of al-Rafidain.

All this is very difficult for everyone, especially for the prime minister who needed the political support of the same criminals to get into office and has to prosecute them to stop corruption. I have no doubt that the US government and the banks will push for this for a number of reasons. The fewer dollars that stay in the hands of Iranians and terrorists who threaten US and Iraqi interests, the better. The more American businesses can trust that they can invest in Iraq without being hijacked, the better. And the more Iraqis who can rely on their banking system, the better it is for them and their finances.

The views expressed in this article are those of the author and do not reflect Al Jazeera’s editorial policy.