Iraq faces a “perfect storm” of challenges from plummeting oil prices to rising COVID-19 rates, President Barham Salih warned Monday, as it struggles to form a government after more than a year of delay while sitting at the epicenter of rising tensions between the U.S. and Iran.
Mr. Salih expressed hope that Prime Minister-designated Mustafa al-Kadhimi will be able to form a working government after two predecessors stepped aside in the face of violent protests last year.
But Mr. Salih’s overall message was clear: Nearly two decades after the U.S. invasion, Iraq faces the risk of a fresh security meltdown.
“We have a very dire economic crisis with the collapse of oil prices,” Mr. Salih said in a wide- ranging videoconference interview presented by the Asia Society Policy Institute Monday.
In oil-producing states like Iraq, he said, “the dependency on the state is huge but the ability of the state to deliver is also limited, especially in the context of declining oil revenues.”
Iraq’s government depends on oil revenues to fund more than 90 percent of its $100 billion budget. The current budget was based on a projection that global oil would stay at or above $56 per barrel through 2020.
With the global price at record lows and falling, government revenue expectations have been cut in half over the past month — just as the country struggles to respond to the coronavirus.
While official numbers suggest cases have leveled in recent days at about 1,600, skepticism is widespread amid a lack of testing and Iraq’s proximity to Iran, which has suffered one of the world’s biggest outbreaks.
After years of government infighting, meanwhile, Mr. Salih pointed Monday to “endemic” corruption in Baghdad, asserting that much-needed economic reforms in Iraq will never carry any real weight unless the corruption problem is addressed.
While the presidency in Iraq is largely symbolic — Mr. Salih holds little actual power over the government — it is a position of influence in that the president appoints the prime minister for the parliament’s consideration and has a position of rhetorical leadership. Iraq is still recovering from massive popular protests that brought Baghdad to its knees and forced the resignation of former Prime Minister Adel Abdul Mahdi late last year.
“Without combating corruption, you will not change the political economy of conflict in our [society],” the president said, pointing to wider consequences for what he described as “Western security.”
The current political economy in Iraq, Mr. Salih said, “allows extremists, including terrorists to flourish and keeps you back in this quagmire of…defeating an insurgency only to [have it] resurface again because this extremism thrives on joblessness and hopelessness of the youth and lack of opportunities and a sense of injustice.”
The U.S. and Iran
Tensions between the U.S. and Iran, both with substantial influence inside Iraq, aren’t helping.
Those tensions surged late last year amid a string of attacks by Iran-backed Shiite militias in Iraq against U.S. forces in the country — violence that was followed in early-January by a U.S. drone strike that killed Iranian military commander Qassem Soleimani while he was visiting Baghdad.
Iran responded with missiles salvos at two bases in Iraq housing American troops, including one in Mr. Salih’s Iraqi Kurdish homeland.
Iraq’s parliament, which American officials accuse of being increasingly undermined by Iranian government influence, demanded the pullout of some 5,000 U.S. troops in the country as part of the anti-Islamic State coalition.
Though many saw the bill as a protest gesture, President Trump threatened at the time to impose “big sanctions” on Iraq and asserted U.S. troops would not withdraw unless Baghdad compensated Washington for the potential loss of strategic bases in the country.
More recently, U.S. forces have pulled back from several military outposts around the country, including some that have come under attack by Iran-backed militias in recent months.
In his remarks Monday, Mr. Salih suggested Iraqi leaders are trying to threat a needle in their relations with both Tehran and Washington.
“Iran is an important neighbor,” he said. “We have 1,400 kilometers of borders with Iran and we simply cannot ignore Iran as a factor in both the national strategic policy of Iraq and the way we look at our neighborhood — not to mention other cultural and ethnic relations that bind the two neighboring nations.”
“My hope is that our neighbors, including Iran…will agree on one common theme, supporting a sovereign Iraqi state that truly represents the wishes and the will of the Iraqi people, because at the end of the day this is the only viable project.”
The same message goes for U.S.-Iraqi relations, he said, asserting that “Iraqis should decide their fate for themselves. No intervention and no dictation to Iraq. This will not work. Many have tried it and it has only led to weakening Iraq [and] undermining Iraq’s stability.”
The Trump administration is planning a U.S.-Iraq “strategic dialogue” in June, with the troop basing issue likely to be prominent.
“There is a decision in Iraqi parliament about withdrawal of American troops — foreign troops,” he said. “We need to sit down together and discuss in very candid and very direct way about the mission — about the process by which these forces are operating in Iraq.”
How to navigate the issue is among the more delicate challenges facing incoming Prime Minister al-Kadhimi, a man who is well versed in the political dynamics surrounding U.S.-Iran tensions in Baghdad given his recent service as Iraq’s intelligence chief.
Mr. al-Kadhimi was appointed on April 9 as Iraq’s third prime minister-designate in just over a month. Shiite political parties rallied around him after the candidacy of second appointee, Adnan al-Zurfi, faced resistance from powerful Iran-backed political parties in Baghdad and failed to present a government to parliament.
Several Iran-backed militia groups had also issued a joint statement accusing Mr. al-Zurfi of being an “American agent” and threatened lawmakers if they approved his proposed Cabinet, according to The Associated Press.
Mr. al-Kadhimi, who has headed of the Iraqi National Intelligence Service in June 2016 has a somewhat unusual political history — a vocal opponent of Saddam Hussein’s regime who lived in exile for a number of years — including Iran — while working as a journalist for a time. With ties to both Tehran and Washington, he will have 30 days under Iraq’s constitution to present a cabinet lineup to parliament’s approval.
Mr. Salih expressed optimism, saying Mr. al-Kadhimi “comes in with a lot of political support from within Iraq, from within the Shia community, within the Kurds and the Sunnis and people have high hopes that he will be able to convene his government before long.”
Iraq, Mr. Salih said, “has gone through a lot over the past few years. … We have been experiencing what I would consider to be the ultimate perfect storm.”
“Imagine, we are in the heart of the Islamic world, in the heart of the Middle East, …with declining oil prices, [an] economic crisis, now COVID-19, the dynamic between the United States, Iran and the Arab world — these are all happening at the same time.”