Iraq’s Financial Crisis Amid War on ISIS
Professor Sabah Al Nasseri says the ruling elite in Iraq may get more than they bargained for by inviting the IMF and the World Bank to assist in its financial woes
SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I’m Sharmini Peries coming to you from Baltimore.
Last week the Iraqi prime minister Haider al-Abadi made his first official visit to the U.S. in order to meet with some of the real brokers of global power. Abadi met with leaders of the IMF, World Bank, and CEOs of the oil industry including that of ExxonMobil in an attempt to find cash and business necessary to make up the billion-dollar budget shortfall due to the recent dive in oil prices. The results appear to be rather fruitful. The state will get $200 million of aid from President Obama. Citigroup and Deutsche Bank will help issue a $5 billion debt, and the Iraqi foreign minister also recently said that the nation is expecting around $700 million from the IMF.
However, these offers of financial assistance rarely come without some kind of conditionality. Joining us now is Sabah Alnasseri. He’s professor of political science at York University in Toronto, and he’s also the chair of the graduate program this year. So Sabah, thank you so much for joining us. I know your time is very tight when you’re chair of the program.
SABAH ALNASSERI, PROF. MIDDLE EAST POLITICS, YORK UNIV.: Good to be with you, Sharmini.
PERIES: So Sabah, I’m assuming that much of the money that the Prime Minister is seeking from international finance will go towards the budget shortfall. Some billion dollars of a shortfall it’s experiencing. But funding construction and being in the midst of a war, and dealing with the huge humanitarian crisis is big enough. But what do you expect as far as the terms and conditionality of what Iraqi government will have to deal with as a result of receiving this kind of assistance from the international community?
ALNASSERI: Right. Remember Sharmini, we discussed this at the end of January. We discussed the 20% deficit of the Iraqi budget. We discussed the government attempts to cover this deficit by raising taxes or customs revenues, et cetera. And we talked about these problems and why they will not work. And even when the Iraqi government at that time calculated the price for the oil from $70 to $54 was really wishful thinking, because we know it’s way less than $54.
So the problems were there already, and they were intensified by the recent development, as you said, the war against the Islamic State, the formation of the so-called popular mobilization, mobilization forces, or the Shiite militias. The displacement of some, between 2 and 2.3 million people because of this conflict. So it’s created a huge problem beside the problems that Abadi already has due to corruption within the state institution. So there’s a, as I said, a systematic plunder and robbery taking place that’s [using] Iraq, and the lack of any sovereign or development fund which could have been useful at this time of crisis in Iraq compared to other countries. Intensify again they have the problem in Iraq.
So the visit of Abadi was mainly due to two reasons. One was financial, as you’ve mentioned. And the other one is of course military in nature. So the problem is there’s a mix of these two topics. When Iraq gets loan from IMF, one of the conditionality that shouldn’t be used in, let’s say for war purposes. But that’s exactly where some of the money will go. So you will see the contradictions here, and the [long] policies, and how then the United States, the IMF and the World Bank probably close one or two eyes on how Iraq will spend this money. So this will create new problems, not less problems.
PERIES: Now, in much of the cases such as Ukraine, for example, some observers see the IMF as a means of bringing states into the sphere, into the influence of Western-controlled financial institutions for the benefit of private investors. Do you think that the consequence of the conditions that would be applied towards Iraq in this case will have the same kind of influence at the end of the day?
ALNASSERI: Right. I mean, these international institutions, [incompr.] power. They are not really powerful and influential unless they are invited. So the problem is, start in Iraq. Iraq’s under the govern–and the previous government of course, or let’s say since 2003, the ruling class in Iraq attempt to join the WTO. So the World Trade Organization. In order to do that they have to go through the IMF and the World Bank, et cetera. And that means they want to privatize the Iraqi economy, open it up for international investor, mostly big corporations, creating so-called market economy. So that’s the economic objective of the ruling class in Iraq.
And they need, of course, the assist of the United States in that, and the World Bank and the IMF. So we can see that even these institutions, with their conditionalities and all the atrocities they committed in the name of these conditionalities, they are not really influential unless there is a class, a ruling class, and this case in Iraq, whose economic objective is precisely to transform Iraq into a, as I said, a market economy and privatized zone for international corporations. And that’s the biggest problem.
PERIES: Now, it’s not like Iraq has been absent of that. The international corporations have been historically very much a part of the Iraqi oil production and oil industry. How is this particular appeal to get money from Western institutions–like, I see Greece in a great deal of trouble having received money from the Troika. I’m wondering whether this is what we can look ahead to, as far as Iraq is concerned.
ALNASSERI: You mean the effect of these policies on the Iraqi economy?
ALNASSERI: Well, as I said, the problem is–or let’s say, let me put it this way. Two problems. The one is, as I say, the objective interest of this ruling class in Iraq. The other one is of course, if you look at Iraq carefully you will see there’s also a conflict within the ruling class in Iraq, namely between the central government, mostly Arab, and Kurdistan. And again, because like I say, the Kurdish ruling class has different objective. The Kurdish ruling class want to privatize and open up the economy, Kurdistan. But they are restricted by the Iraqi’s laws and central government. So you have also a conflict between these two administration on how actually to privatize Iraq, to open up the economy and to attract foreign investment of corporations.
You can see there’s a competition on how they try to attract the international capital by offering a lot of facilities and simple access to the economy, et cetera. So again, any international investment–and face it, not only security problems in Iraq, but also contradictory administrative, economic, legal issues within the country. So I’m not sure how the government of Abadi would attract all these international investments in Iraq under such circumstances. It’s almost impossible.
PERIES: Now, the Kurdish leader was also in Washington a few weeks ago, also trying to curry favor with the United States, and wants to see themselves allied with the United States. Whereas the Iraqi government is also under the influence of and allied with the Iranians to some extent. How is this getting played out on the ground?
ALNASSERI: Well again here you can see in relation to the United States and Iran, both, actually. Not only the Iraqi government but also in Kurdistan. Kurdish politicians also can operate with Iran, and they get support from Iran, be it military or financial, et cetera. So they are in a way using this maneuver to maximize their, whatever interest on the ground. So as I said, it’s not like Kurdistan is against the influence of Iran in Iraq, they’re contrary to the Iraqi government. It’s not like that.
Precisely because neither the Kurds nor the Arabs are homogeneous groups. They have different political forces with different factions behind them pursuing different agendas. So even here there are some conflict and contradiction among both communities. And again, the United States, Iran–or sorry, the [incompr.] for that matter with Turkey, utilizes all this conflict and contradiction to pursue their own agenda in Iraq. You have an exclusive mix, in a way.
PERIES: Right. And another peculiar thing that I noted was that when the Prime Minister was here in Washington then in New York, he actually condemned the Saudi attacks on Yemen and the fight against the Houthis that are going on in Yemen. Now, that was a bizarre statement given that he was actually here to meet with Obama. What did you make of that?
ALNASSERI: Well, two things. The first one, let me start with this. I was perplexed by President Obama’s statement that since the majority in Iraq and Iran are Shiite, then it’s understandable that Iran had and will have political influence and so on in Iraq. I was perplexed for many reasons, because President Obama reduced the Iraqi population to merely a sect, the Shiite sects. All the complexity of the identity of the people are displaced, in a way.
And the second thing. He makes the sectarian issue as if it is the most important, as if it’s the most dominant. And through this sectarianization of the conflict displaces the real issues, the geopolitical, the economic issues, and so on.
So the influence of Iran in Iraq, or the U.S. in Iraq or Saudi Arabia in Iraq, et cetera, is not about Sunni or Shiite. We are talking about geopolitics, economy, territory, and so on. Territorial gains. So I was really perplexed, because according to this scenario one would argue then the Vatican should have, must have some kind of political influence in Ireland, for both are Catholic, or something. I mean, it’s a kind of deja vu of the medieval ages.
And that is very dangerous in this situation where you have, again back to your question, another conflict, which is articulated as if it is sectarian conflict, in Yemen between the Houthi and the government in Yemen. Here the [fact] of this conflict, just like in Syria, is lived and experienced in Iraq. And Iraqi politician parties, media, et cetera, they look at the conflict in Yemen from the Iraqi perspective. So you have the Sunni representative condemning the Houthis and supporting the coalition because they think this is Iran behind the Houthis, and Iran gaining influence just like in Iraq and Syria and Lebanon, now again in Yemen. Whereas you have the Shiite politicians and parties, et cetera, as supporting the Houthis against the coalition and condemning the intervention and Saudi Arabia and other coalition partners as intervention in internal affairs of Yemen. So it’s dividing the Iraqi communities and creating another field of conflict, which is also again, adds to the sectarian fire, as I said, fuel.
So what we see, and we discussed this many times on The Real News, since 2011, since the Iraq revolution, was pretty successful at the beginning with popular demands. We see the militarization and sectarianization of politics in the Arab [inaud.]. First in Libya then in Syria then in Iraq, now you have it in Yemen.
So we can put all this in a bigger picture, which is the interest of the international power. By the way, not only the U.S., but also France, UK. Regional powers like Turkey, Iran, Saudi Arabia in the region. The best way to stabilize–and Israel, of course. Stabilize their allies, and stabilize the conservative regime, is by the militarization, sectarianization of politics, in which all these regional powers are involved.
PERIES: Sabah, one cannot leave the issue of what’s going on in both Syria and Iraq and the fight against the IS and the huge humanitarian crisis that’s now being created in the region. Give us some sense of what’s happening now and how that issue is being dealt with.
ALNASSERI: Yeah. I mean, again, what takes me aback is the presentation of the conflict as if the Islamic State militias are the only, the absolutely–what we don’t talk about is the atrocities of the Shiite militias. The so-called popular mobilization forces are really Shiite militia. The most prominent of them, the most effective are led, commanded, and instructed by Iran. So you have here a dangerous development that maybe goes beyond just the conflict between Islamic State and Shiite militia and threaten the whole state, and especially in security [operations] if the Shiite militia becomes very powerful.
The second thing is we have, as I said, 2.3 million displaced Iraqi because of this recent conflict, beside the other 2 millions we had already displaced by the U.S. occupation, et cetera. And you can see it lately when the Iraqi army, and mostly the Shiite militias, the so-called, you know, popular mobilization formed when they attacked Tikrit and Baiji, and now in Ramadi you have 100,000 of families in Al-Anbar province displaced and fleeing from the conflict zone. It’s a humanitarian disaster created by this conflict and by the strike. The [inaud.] strike of the coalition against the Islamic State. And that’s where [setting up] the Shiite militia.
So nobody here is clean. As Jesus once said, if any one of you is without sin, so throw the first stone. Nobody is without sin in this scenario. All are involved, all hands are full of blood. And that’s the biggest tragedy, that the civil population in Iraq, be them Shiite, Sunni, Kurds, Turkmen, Yazidis, Christian, are paying the price for these adventurous policies.
And the most tragic thing, I was reading the other day, the absolute majority of the Iraqi youth in the whole country, not only in the South, but over in the North, the only thing they think about is to leave the country. To migrate. Because they don’t feel safe, they have no employment, no prospective–or most of them when they graduate, they end up just on the streets. So it’s not only humanitarian disaster. It’s a historical disaster.
PERIES: Sabah, each of the topics you’ve discussed today with us is a segment of its own and I hope you can join us in the near future to unpack them.
ALNASSERI: It would be my pleasure, Sharmini.
PERIES: And thank you for joining us on The Real News Network.
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.