Regional

Iraq’s ability to rebuild faces a triple threat

Even if the government’s coffers were flush with oil money, endemic corruption would make it difficult for ordinary Iraqis to benefit.

On a sandy bank where the Euphrates river marks the outskirts of Baghdad, a chunk of metal bridge sits tantalisingly close to hundreds of displaced families camped in tents on the opposite bank, where war-torn Anbar province begins. Local officials say they ran out of money before they could reach the other side.

The bridge to nowhere at Bzeibiz is an apt symbol of the times: Iraq’s economy is failing and political squabbling has stalled efforts to fix it. Foreign governments, sceptical at Baghdad’s efforts to curb corruption, are only slowly forking out cash.

“What future can I see? All I see is catastrophe,” says 29-year-old Adel Ashour, who fled the Isis-controlled town of Hit, and lives with his relatives inside two dusty plastic tents. “I know people in my condition who go to Isis. A man would destroy his country and kill to feed his family.”

As the battle to force out Isis rages on, 3.3m displaced people like Mr Ashour are at the intersection of the multiple threats Iraq faces. Humanitarian and security crises will become even harder to manage as Baghdad runs out of cash.

It is not just a problem for Iraq. Western governments are also struggling to weaken a jihadist force now targeting Europe and to stem the flow of refugees crossing the Mediterranean. “Addressing this is now recognised as part of what needs to be done to protect the gains made militarily. It’s that bad,” says Lise Grande, the UN’s humanitarian co-ordinator for Iraq.

Iraq’s economic woes have been exacerbated by plummeting oil prices. Oil makes up 90 per cent of the country’s revenues and falling prices have slashed its monthly cash flows to around $2.5bn – not even enough to fund $4bn in government salaries and pensions.

Fearing the collapse of one of the Middle East’s largest economies, the World Bank last year pledged $1.2bn to Iraq, well short of the $9bn-$10bn the country is seeking from foreign governments. But even that figure does not take account of the vast cost of Iraq’s reconstruction. Many government officials refuse to calculate reconstruction as part of the economic crisis, counting on foreign governments to help out.

But it is unclear how much help will come. Germany, which pledged €500m ($550m) is still haggling with officials over how to disburse the money, a process that will take months. A European diplomat said Washington was leaning on other European states to offer more. “But we aren’t the ones who messed this place up,” he says, referring to the US occupation of Iraq in 2003, which many see as the cause of its current instability.

Ms Grande says reconstruction costs are “incalculable” until a formal assessment is done. Iraqi officials say it will be tens of billions.

Dhiaa al-Douri, an MP from Salahuddin province, estimates at least four districts in his governorate need around $10bn each to be rebuilt. Swathes of territory have been almost razed in the fight to dislodge Isis, which at its peak held a third of the country. “Under Isis, Iraq went back hundreds of years, and the economy has become dysfunctional in every aspect,” he says.

The World Bank gave $350m for authorities to use on local reconstruction projects, mostly for basics like water, electricity and roads. The money distributed is still sitting in government ministries.

Anbar officials say lack of funds has stopped them finishing the bridge, preventing humanitarian aid reaching those in need. Instead, small cars packed with bags of rice shudder their way across the old Bzeibiz pontoon bridge.

Corruption is always a worry in Iraq, a country ranked 161/168 in Transparency International’s global index. According to Adnan al-Janabi, who recently sat on parliament’s finance committee, around $113bn went missing between 2006-14. “Really this is the disease – not lack of revenues,” he said. “Poverty is increasing despite the fact we have had almost $1tn in income since 2003.”

Since Isis blitzed across Iraq in 2014, Mr Janabi estimates unemployment has risen to 50 per cent, and perhaps 80 per cent in areas occupied by the militants.

Prime Minister Haider al-Abadi is aiming to make headway on the financial reforms demanded by the IMF in return for a Stand-By Agreement of $15bn over three years.

Last week, Mr Abadi proposed a new technocrat cabinet as the first step towards curbing the patronage system that parcels out posts based on sect and party. But it is unclear whether the plan will be backed by parliament. So far, the premier has only managed to cut public salaries by 3 per cent, and to raise fees on the health service and education – a move that will disproportionately hit the poor.

The prime minister’s economic adviser, Saleh Mudher, says the solution is to stop the government being Iraq’s “major employer”, providing jobs for 8m people. “It has become like people’s life insurance,” he says.

The government recently provided $6bn in soft loans to try to stimulate local businesses.

But critics like Mr Janabi say the effort is pointless if corruption is ignored. “Politicians don’t like it, but it’s time,” he says. “Nobody can tell me we don’t have the money when we are wasting it elsewhere.”

 
A version of this article appeared in the print edition of The Daily Star on April 04, 2016, on page 16.

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