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Iraq: Under Worse Management


Seif Abdel Sadeh’s eyes lolled as his brother tipped a cup of orange juice to his swollen lips. As he lifted his arm to push his brother’s hand away, he grimaced, agitating the charred skin on his face, causing still more pain. The day before, Seif, 18, was walking to his Sadr City high school when a bomb strapped to a motorcycle exploded. It shattered his left leg and sent so much shrapnel into his right leg that it had to be removed. The bomb that hit Seif that morning, and another that went off minutes later, killed a dozen Iraqis, mostly day laborers waiting to pick up work at a busy intersection on the road that connects Sadr City, a suburb of Baghdad, to the downtown expressway.

Seif’s family huddled around his hospital bed. “We lived in fear of this happening to one of our kids,” Seif’s father, Abdel Sadeh, said, fingering a set of worry beads. His eyes welled up. “Who benefits from attacking innocent people?” He saw the blasts as bad omens: “These attacks are proof that the political parties are going to start tearing this country apart now.”

By some statistical measures, Iraq today is safer and more stable than it has been in nearly a decade. In 2011, fewer than 1,500 Iraqi civilians were killed by bombs, sniper ambushes, and other “enemy attacks,” according to the Brookings Institute Iraq index, the lowest figure since the fall of Saddam Hussein. Business owners say they’re freer than ever to travel, borrow from international creditors, and transfer money abroad. A visitor to Baghdad can take heart in the signs of postwar normalcy: the shouts of young men watching soccer in the cafés, the laughter of children tromping off to school.

Iraq, however, is far from stable. The wave of violence that has rocked the country since the last U.S. troops rolled back across the border into Kuwait on Dec. 18 began with a dozen coordinated attacks in Baghdad on Dec. 22 that killed upwards of 60 people; then there were the Jan. 5 bombings in Kadhimiya and Sadr City and another attack on a bus full of Shiite pilgrims the same day, near the holy city of Karbala. All 30 passengers died. Fifty-three more pilgrims were killed near Basra on Jan. 14, and 10 died in attacks on a police station in Ramadi the next day. Add the victims of drive-by shootings and bombings at military and police checkpoints from Fallujah to Mosul, and the total number of dead in the month since the withdrawal tops 250.

The end of the U.S. military’s long, bloody adventure in Iraq signals the start of a new, highly uncertain chapter in the country’s development. In the scenario conjured by optimistic U.S. and Iraqi officials, an Iraq free of tyranny, terrorism, and foreign occupation will transform itself into a modern and open economy in the heart of the Arab world. That vision recedes a bit more every day as sectarian tensions reemerge, corruption hinders development, and the country’s political leadership moves against its opponents and flirts with autocracy. Iraqis are reluctant to ask aloud if the most recent attacks represent the deadly half-life of war, or, as Abdel Sadeh and many others I spoke to during four weeks in December and January say they fear, another meltdown.

Officially, Iraq is under new management and open for business. At a Dec. 12 U.S. Chamber of Commerce luncheon in Washington, Prime Minister Nouri al-Maliki took the stage to extol the new Iraq. “Politics is an opening for the economy, and security is an opening for politics and the economy, and the economy is an opening for politics and security simultaneously because there is a connection between them,” he said. “When any component of this triple system gets better, it will affect the whole system and the whole equation.” His convoluted point might have been lost in translation or hard to follow, but his overall message wasn’t: Security is improving, the political process is moving, the economy is picking up, all three are feeding on one another in a virtuous cycle—the time to invest is now.

The U.S. executives on hand were a tough sell: Of 1,351 foreign companies registered in Iraq, fewer than 20 are from the U.S., the Iraqi Trade Minister said in his remarks right after al-Maliki. He chided American companies for failing to compete more vigorously for Iraqi government contracts. “U.S. companies shouldn’t be afraid,” the minister said. “In the south especially, it’s much safer now than it was before.”

Security remains an undeniable challenge, and it’s only the most obvious one. Iraq’s government has fallen way behind on its contracts, noted an Iraqi oil sector contractor named Samer Shamil who attended the luncheon. “The Iraqi government has owed us $5 million for more than two years for work we did with South Oil, and when they don’t pay us, we can’t pay our foreign suppliers and creditors. It damages our credibility,” he said. Al Shamsh Group, Shamil’s company, provides logistics and foreign-made drilling equipment to South Oil, one of Iraq’s national oil companies. His entire business is tied up with the Iraq government. “If you’re ExxonMobil (XOM), you’re working as a politician now, not as a businessman,” he said. “These big foreign companies are willing to lose money for 10 years before they make money. But for smaller Iraqi businesses like us, we can’t afford to carry this burden anymore.”

Iraq’s crippled infrastructure compounds the cost of doing business. The $58 billion the U.S. spent on reconstruction ought to have built more than blast wall canyons, Shamil said. “It’s been nine years,” he said, “and they haven’t even figured out the electricity.” According to the Iraqi Transportation Ministry, the country needs 5,000 kilometers (3,100 miles) of rail, a complete overhaul of its highway system, new airports, and major improvements to the port at Umm Qasr before it can compete with its oil-rich neighbors. Munther Saiegh, Iraqi representative for Aqaba Container Terminal, says the infrastructure at Umm Qasr—Iraq’s only deepwater port, on the Persian Gulf near Basra—is so dilapidated that many ships re-route to Jordan’s Red Sea port and transport overland from there. Saiegh says ships also avoid Umm Qasr for another reason: Paying Jordanian taxes is cheaper than bribing Iraqi port officials.

Corruption lies at the heart of the electricity crisis, too. Zainab al-Saffar, an employee of the national Anti-Corruption Unit, says corruption at the Electricity Ministry has delayed construction of several approved power stations. “The corruption is in the contracts,” she says, adding that it involves officials at the highest level. For example, the previous head of the Electricity Ministry, Raad Shalal, was fired in August 2011 after it was discovered that his staff had signed $1.7 billion in contracts for new power plants with two nonexistent foreign companies. That’s 2 percent of Iraq’s gross domestic product; in American terms, that would be like one government agency trying to make off with $300 billion.

Meanwhile, millions of Iraqi households remain without electrical power for up to 20 hours a day. A coffee shop owner in the Kadhimiya bazaar—a bustling Baghdad market that surrounds one of Shia Islam’s holiest shrines—says he pays more than $400 each month for private, diesel-generated electricity, a full quarter of his revenue. CMX Caspian & Gulf Consultants, a London-based Middle East energy consulting firm, puts a dollar amount on the annual cost of unmet energy demand: $40 billion, half of Iraq’s GDP.

Merchants and farmers also continue to reel from the unintended consequences of privatization and opening Iraq’s borders to imports—dual economic “shock therapy” measures introduced by the Coalition Provisional Authority in 2003. The goal was to drag the country out of its decrepit state-controlled economy by triggering a kind of Wal-Mart effect, allowing Iraqis to stock up on a bonanza of cheap clothes and electronics while planting the seeds of a market economy. The actual effect looked more like what can happen when Wal-Mart Stores (WMT) comes to town: Local producers unable to make their margins struggled to survive.

The lack of border controls and effective tariff collection has spilled over to the agricultural sector, where farmers who were already dealing with decades of war damage and the decay of the Tigris and Euphrates irrigation systems now have to compete in their own markets against cheap imported grains and vegetables from Syria and Iran. Under the international sanctions imposed after the 1991 Persian Gulf War, agriculture accounted for roughly one-third of the Iraqi economy. Now the Fertile Crescent—the very birthplace of agriculture—imports four-fifths of its food. Peasant farmers who can no longer live off the land have flocked to places like Sadr City in Baghdad, where they join the unemployed young people and day laborers waiting for the opportunity to build a cinder-block wall or tile a government official’s kitchen.

 

Such jobs often involve deadly risks. On a raw, foggy morning in Sadr City a few days before the Jan. 5 bombings, Mustafa, a round-faced laborer in electric blue track pants and a white hoodie who gave only his first name, stood hoping for a minibus to pull up and offer him a job. He worried that sectarian violence might escalate again, but he needed work, even if it meant hanging out at dangerous crossroads. “The reason there’s no work is because of the fighting between the political parties,” he said. “Nobody wants to build new houses because they’re all saving their money just in case the fighting starts again.”

Mustafa once imagined he’d attend college, but he abandoned those dreams at age 15 when he left school to support his disabled father, his mother, and six younger siblings. That was six years ago, when the Americans were hiring scores of unskilled laborers to refurbish mosques and schools as part of their counterinsurgency strategy. American cash-for-work programs dried up when the “surge” ended in 2008, Mustafa says, and now things are so stagnant that sometimes he earns as little as 75,000 dinars a month—about $60. In his best months, he might make $200, a third of a policeman’s salary. “We find a way to manage it,” he shrugs. “We mostly eat vegetables, simple food. It’s cheaper than meat.”

Mustafa can’t marry, he says, so he’s cut off from the main path to adulthood in Iraq’s conservative culture. Before he could get married, he’d have to buy and furnish an apartment for his bride, stock the kitchen with plates and silverware, and save up enough to give his bride a customary gift of gold. All together, getting married requires the equivalent of $3,000. “There’s just no chance of it now,” he says. “I can only worry about taking care of my family.”

There are thousands more like Mustafa with their futures on hold. Iraq’s official unemployment rate stands at 15 percent, but according to estimates, it’s really closer to 26 percent (Iraq Knowledge Network) or 40 percent (World Bank). An additional third of the workforce is “underemployed”—defined as working fewer than 35 hours per week. And with 40 percent of Iraqis under 15, there is another wave of job seekers right behind them.

While sewage seeps from the gutters along streets where normal Iraqis walk, and former middle-class families burn their trash (there hasn’t been consistent trash collection since Saddam Hussein’s ouster), parliamentarians race through Baghdad in armored convoys and collect upwards of $22,000 per month in salaries and benefits. That’s why, Mustafa says, when he had his first chance to vote in the 2010 parliamentary elections, he went to the polling station and crossed out all the names on the ballot. “None of them deserved a vote,” he says. “They all just look out for themselves. If they call for new elections, I’ll do the same thing.” Of the swarms of Arab Spring youth he’s watched on television in Egypt and elsewhere, Mustafa says, “I wish I could be with them. Our situation is exactly the same.”

 

All of Iraq’s post-U.S. occupation challenges are set against mounting paranoia that the country’s current leader, al-Maliki, is consolidating and wielding his power like the Arab strongmen of old. Al-Maliki’s political life dates to the 1970s, when he got involved in the outlawed Dawa Party’s militant anti-government activities. In 1979 he fled Iraq after learning of government plans to execute him. Before al-Maliki returned to Iraq in 2003, he spent 24 years in exile in Tehran and Damascus, aiding efforts by Dawa Party rebels and the Iranian government to topple Saddam Hussein. Today, little remains of his reputation as a Shiite resistance hero. Ask Iraqis what they think of al-Maliki, and you’ll frequently get a one-word answer: dictator.

Older Iraqis say al-Maliki doesn’t have a fraction of Saddam’s power, but that he’s making the telltale moves: He is the de facto head of the Interior Ministry and the Defense Ministry, meaning all of Iraq’s 800,000 soldiers, policemen, and intelligence agents ultimately take orders from him; he’s using the security forces to round up potential adversaries by the hundreds and detain them; and he regularly co-opts the media to attack his enemies. Control over government jobs in the comatose economy provides the greatest source of power, so it’s disconcerting that Iraq’s largest political parties—al-Maliki’s own Dawa Party, the Sadrists, the Islamic Supreme Council of Iraq, the Iraqi Islamic Party—are sectarian to the core. Even more worrying is that they all have heavily armed militias, making a thin boundary between political crises and potential violence.

Al-Maliki invited a major political crisis on Dec. 19, less than 24 hours after the U.S. withdrawal, when he ordered the arrest of Vice-President Tariq al-Hashemi on charges of terrorism. Al-Hashemi is a leading member of the Iraqiya slate, a mostly Sunni parliamentary coalition that has been in the opposition since the 2010 elections. In those elections, Iraqiya won the largest share of seats but failed to form a governing coalition.

After nine months of wrangling, al-Maliki was able to put together a coalition, succeeding where Iraqiya failed and guaranteeing himself a second term as Prime Minister. Tensions have been high between al-Maliki and Iraqiya ever since, and 91 Iraqiya members of Parliament took his move against al-Hashemi as a direct attack on the Sunni and secular political establishment. In response, they walked out of Parliament on Dec. 20, swearing not to return until al-Hashemi was cleared. A subsequent attempt to replace Finance Minister Rafie al-Issawi, a Sunni Tikriti whose reputation among Iraqi politicians is remarkably untainted by charges of corruption, has only hardened their resolve.

The allegations against al-Hashemi are grave—namely, that he ran a Sunni hit squad in 2006 at the height of the sectarian war—but the timing and public nature of the case have roused suspicion that character assassination is al-Maliki’s true intent. The government hand-delivered video of al-Hashemi’s bodyguards confessing to a string of crimes to Iraq’s national television stations, a move legal experts claim is a direct violation of Iraqi law. Then al-Maliki appeared on television to announce al-Hashemi’s arrest order personally. (Al-Hashemi has denied the charges.) Iraqis who are old enough to remember heard a chilling echo of Saddam Hussein, who “exposed” as criminals those who opposed him.

Al-Maliki’s campaign to “de-Baathify” Iraqi society is hurting Iraq’s development. Georgetown University’s Joseph Sassoon, author of The Iraqi Refugees: The New Crisis in the Middle East, says the campaign is a major factor keeping much-needed engineers, doctors, and other professionals from returning to help rebuild the country. Iraq’s middle class had already been depleted by the Iran-Iraq War and persecution and economic privation under Saddam’s regime, and the intensification of sectarian violence after the Samarra mosque bombing in 2006 was “the final straw,” Sassoon says.

In just one week in late October 2011, Iraqi security forces arrested more than 600 alleged Ba’athists in every region except the autonomous state of Kurdistan. (Al-Maliki justified the detentions by claiming that Libya’s transitional government had given him evidence of a Qaddafi-supported Ba’ath Party plot to overthrow the Iraqi government.) That same month the government seized control of the University of Tikrit, where 140 professors and administrators were fired. A leaked U.S. diplomatic cable from Feb. 28, 2010, meanwhile, revealed that al-Maliki replaced more than 100 supposed Ba’athists with Dawa Party cadres in senior commands at the National Information and Investigation Agency (NIIA), Iraq’s equivalent to the FBI.

Most crucially, says Abid al-Ajeeli, a Sunni parliamentarian from Tikrit, de-Ba’athification is inspiring calls for regional autonomy. Tikritis are fed up, al-Ajeeli says, “with a system in which the police can come and put someone in prison without an order from court. They don’t want their kids to be dismissed from jobs because their parents were in the Ba’ath Party or were working in intelligence or the army.” The October cull spurred a 20-0 vote in the Salahuddin Provincial Council in support of autonomy. Salahuddin is a majority Sunni province north of Baghdad that includes Tikrit, Saddam Hussein’s hometown, and Samarra. Supporters of autonomy say federalism—for which there are provisos in the Iraqi constitution—would guarantee that Sunni problems would be handled by Sunni police and Sunni judges, not by security forces infiltrated by the Shiite militias and judges loyal to al-Maliki.

“The people think there is no alternative, that there is no other way except federalism,” al-Ajeeli says. Personally, he believes federalism would only weaken Iraq as a whole and make each ethno-sectarian region—Kurdistan, the four majority Sunni provinces, and the Shiite southeast—more vulnerable to its respective neighbors. “But I feel I’m being forced,” he says, “and when my people tell me over and over again that they want this, I have to stand with them.”

In December, I raised these criticisms of al-Maliki with Maryam al-Rayes, a lawyer who is a close adviser to the Prime Minister. She says the Sunni uproar over the government’s attempt to arrest Vice-President al-Hashemi, who has since fled to Erbil, the capital of the autonomous Kurdish region, is all political and media spin. “I’m not just saying this because I am a spokesperson for the Prime Minister,” al-Rayes says, “but also because I am very close to the Iraqi street.” Surrounded by bodyguards in the garden of the elite Iraqi Hunting Club, with globular diamonds hanging from her fingers and gem-encased iPhones in each hand, her claim to having an ear to the ground is, at best, far-fetched. Nevertheless, she is insistent. “There can never be another government that lasts for 35 years anymore, because the government has to change every four years,” she says. She adds that if Iraqis are unhappy with al-Maliki and the Dawa Party, they are free to vote against them in the next round of elections. As to whether al-Maliki was using state organs to force his opponents out of government, she says, “If it’s better for Iraqiya to pull out of the government, then that’s what they’ll do, but it will be their decision.”

Al-Rayes is not concerned about the prospect of having a majority government without significant Sunni Arab representation in a country with a very recent history of brutal conflict between Shiite and Sunni militias. “Even if the government was formed by only one party—and it won’t be—it still wouldn’t stop the political process,” she says. “It would be the same as when Democrats or Republicans control all three branches of the American government. Nobody calls that a dictatorship.”

 

Outside the circles of power in Baghdad, the view is more bleak. Drawing on a Marlboro Ultra Light in a gazebo overlooking the Euphrates River north of Ramadi, Sheikh Ali Hatem Ali Suleiman—leader of the Dulaimis, Anbar’s most powerful tribe—says he also feels as if he’s forced to turn against Baghdad. Ramadi, an agricultural zone near Iraq’s western desert, saw brutal fighting between Al Qaeda-linked guerrillas and U.S. Marines. Starting in 2006, sheikhs such as Ali Suleiman raised armies of volunteers to reclaim and defend the area. The movement, which spread to Baghdad and parts of the south, became known as the Awakening. “I really hoped after 60 years of deterioration under the Ba’athists that we could work together,” Ali Suleiman says. “Now I know we can’t.”

Ali Suleiman, 40, was one of the earliest and most influential Awakening leaders. In 2009 he drove a wedge between himself and his fellow Anbari sheikhs when he threw his support to al-Maliki. But he broke with al-Maliki in the summer of 2010 after concluding that al-Maliki was only exploiting him as a token Sunni to make his coalition seem nonsectarian. Soon after, SWAT-style police commandos began traveling from Baghdad to detain alleged Anbari Ba’athists, including Ali Suleiman’s tribesmen.

Then, on Oct. 31, 2011, police raided Ali Suleiman’s residence in Baghdad and detained several of his bodyguards, an insult he took as an act of war. “It’s a game to try to get us to fight so they can use the army and the police against us,” Ali Suleiman says, claiming that al-Maliki is pursuing an Iranian-backed agenda to “destroy Anbari tribal society.” The sheikh vows that if the detentions continue, “We will fight them with our weapons until the very end.”

If it’s true that al-Maliki has dictatorial ambitions, he is almost certain to face heavy resistance. Smashing journalists’ cameras or cracking down on protests has only inspired more revolt in neighboring countries, and Iraqis show no fear whatsoever of criticizing him in public. And if he alienates enough power brokers in the oil-rich Shiite south and in the Sunni Arab provinces, they may question Baghdad’s relevance altogether and emulate Kurdistan. The autonomous northern region has its own President, Parliament, and security forces, and its regional government recently negotiated a contract for oil development north of Kirkuk with ExxonMobil without any involvement from Baghdad’s Oil Ministry.

Greater federalism, as Abid al-Ajeeli and others note, is not an outlandish outcome. Sunnis, Shiites, and Kurds are sharply divided even among themselves. It’s no small thing, for example, that millions of Shiites who follow the vehemently anti-American cleric Muqtada al-Sadr are largely opposed to al-Maliki, whom they have never forgiven for his 2008 offensive against the Mahdi Army in the southern city of Basra. That campaign, which claimed more than 400 dead on all sides, was the first major Iraqi military operation planned and carried out without American oversight. Shiites took note of the fact that al-Maliki’s first independent military action targeted them, not Al Qaeda. Worse, they condemned him for being both an American puppet and backed by Iran. Former Mahdi Army fighters say Sunnis aren’t the only ones getting swept up and detained by al-Maliki’s security forces—they claim they’re being hunted, too.

If anything unites Sunnis and Shiites, it’s the sense that none of the country’s political figures have the courage to transcend its divisions and build the kind of strong institutions the country needs to achieve stability. Veterans of the Mahdi Army and the Awakening movements complain that they’re being marginalized in the security forces—still the only game in town for many poor Iraqi youth. Thousands of men who volunteered to fight against Al Qaeda as part of the Awakening eventually came to depend on small salaries financed by the U.S., but those salaries mostly vanished during the American drawdown, and many Awakening members have not been able to transition to the official security forces.

Iraqis are overwhelmingly happy that the American troops are gone, and while many blame the U.S. for leaving such a mess behind, they realize their own leaders must now come through. Scant few expressed confidence they would. While many I spoke to wished they could be positive, they were far more anxious than optimistic.

Sheikh Issa Ibrahim Hassan, who lives on the outskirts of Baghdad and led an Awakening force of some 350 men in the fight against Al Qaeda, says he feels betrayed by the Americans and the Iraqi government alike because his forces are mostly rejected from the Iraqi army and police. Of the 350, only 30 continue to receive government salaries, and these men stand at neighborhood checkpoints, a job that pays less than $300 per month, half what the police earn. Sheikh Issa says the rest of his force got passed over for better-paying official jobs because they were Sunni. Sitting in his 40-foot-long reception hall, he holds up a coin given to him by an officer from the U.S. Army’s Third Infantry Division. “I’m proud of this coin,” he says, “but don’t you think that after everything I did to help my country, I deserve more than this?”

Woods is a Bloomberg Businessweek contributor.

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