(MENAFN- MENAFN.COM)
For many Iraqis, there’s little doubt about what is to blame for the horrific hospital fire which killed at least 82 people and injured over a hundred others in late April. Endemic corruption has decimated the country’s infrastructure and sapped the national treasury for years, but its explosive manifestation at Ibn al-Khatib Hospital brought angry protestors out onto the streets in their thousands as they petitioned for the government to impose consequences on the guilty parties and stamp out corruption at its core.
It’s well over a year since widespread demonstrations – which incurred the deaths of over 600 citizens and caused life-changing injuries to tens of thousands more – precipitated a change in government, but sadly very little appears to have improved in the interim. Chronic cronyism and endemic embezzlement mean that the state is unable to provide the jobs, services and infrastructure that the Iraqi people need, while the perfidious nature of the country’s political and commercial landscape is an unignorable red flag to overseas investors. Indeed, that situation has only become more entrenched by an illogical ruling from the International Center for Settlement of Investment Disputes (ICSID), which has given foreign entrepreneurs little encouragement to part with the capital that Iraq so sorely needs in order to rebuild its crumbling economy.
Government seemingly powerless to prevent corruption
It isn’t just the common people who have identified graft as the root cause of the tragic blaze in Baghdad. Shortly after news of the incident broke, President Barham Salih took to social media to lay the blame at the door of “corruption and mismanagement”, while Prime Minister Mustafa Al-Kadhimi indicated that an investigation intended to “hold the negligible to account” would be launched. So far, three senior directors have been dismissed and the Health Minister suspended, though the Iraqi populace are calling for far further-reaching repercussions.
Their frustration is easy to understand. The tragic inferno is just the latest symptom of a long-running problem. It’s estimated that $300 billion has been lost to corruption since 2003, with over $100 billion of that sum disappearing at border crossings alone. Add to that an unhealthy reliance on oil revenues for 97% of the state’s budget, a disastrous year for the fossil fuel industry and a Covid-19 pandemic amongst the worst in the region, and it’s unsurprising that the Iraqi economy is on its knees. Poverty is at 32%, and unemployment is at 36% among young people. Crime rates are high, meanwhile, and energy shortages are frequent due to woefully-inadequate electricity infrastructure—a situation which leaves most Iraqis without power for over 15 hours a day.
Elsewhere, the fact that the civil service has tripled in size since 2004 and now employs over seven million people – accounting for over half of the budget – means that wages have gone unpaid, as well. Getting a job often requires bribery in the first place, but keeping it or even being paid for it are by no means guaranteed. While these sprawling problems make up a perfect storm for everyday Iraqis, corruption is the common denominator in all of them.
Korek case a serious setback for FDI
While the siphoning of state funds into the pockets of cronies, corrupt border officials and cartels is a direct consequence of corruption, the practice’s indirect outcomes are equally as damaging. The ubiquity of low-level graft in all sections of society has prompted Transparency International to name Iraq among the 20 most corrupt countries in the world, which has had an understandably chilling effect on external investment.
Recent developments have made Iraq’s investment landscape even less attractive. The World Bank’s ICSID was recently drafted in to resolve a dispute in which Kuwaiti logistics company Agility claimed that the Iraqi government had improperly expropriated its $380 million investment in Iraqi telecoms firm Korek. Despite evidence of deep-seated corruption in Iraq’s Communications and Media Commission (CMC), the ISCID panel chaired by Cavinder Bull alongside members Sean Murphy and John Beechey summarily dismissed the case on technicalities and ordered Agility to pay Korek over $5 million in court fees.
The Korek case is the fourth time that the ICSID have been asked to intervene in Iraq and third that the CMC has been accused of wrongdoing. No action has been taken on any of the previous occasions, leading Agility to call the ruling “fundamentally flawed”. The company critiqued the ISCID’s decision not to investigate corruption at the CMC, and said it painted a pessimistic picture of what foreign investors could expect should they choose to do business in Iraq in the future.
Tackling corruption must be priority number one
It’s disheartening when global bodies set up to prevent incidents of injustice end up entrenching the status quo – but it should not be ignored that the root of the problem lies in Iraqi soil. At a time when the country is facing a huge challenge to vaccinate its population and even keep its hospital equipment online, it needs significant financial support from the international community. It has continued to pursue that investment in the shape of three nuclear reactors subsidized by French, Russian and American funds, as well as securing landmark agreements with the UAE and Saudi Arabia to the tune of $3 billion apiece.
Those deals could provide the financial assistance that Iraq needs to navigate its way out of the pandemic, improve its flagging infrastructure and bolster its ailing economy. However, a Prime Minister who won his way to power on an anti-corruption platform must do everything he can to ensure those funds are used responsibly, while simultaneously encouraging more investment of a similar ilk by stamping out corruption wherever he encounters it. Failure to do so could see the country – and its long-suffering 40 million citizens – sink beneath the weight of its own malfeasance.
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