Sudani’s Premiership Is Failing in the Iraqi Fight Against Corruption

When Mohammed Shia` al-Sudani became prime minister of Iraq in October 2022 after a year of impasse and political infighting, he made it a priority to combat endemic corruption in the country and help restore citizen trust in government institutions. But thus far, and twenty years after the US-led invasion, Iraq’s democracy remains dysfunctional under his leadership, subverted by a controversial power-sharing system that helped entrench a sectarian elite and reproduce corruption and inequality.

Sudani is backed by the Coordination Framework, a coalition of Shia parties that took control of parliament after the June 2022 resignation from parliament of the rival Sadrist bloc which had gained a higher number of seats than the Framework in the October 2021 elections. The Framework includes the Fateh Alliance of Iran-supported militias, the State of Law Coalition, the Hikma Party, and the Nasr Alliance. Indeed, the Framework cemented its control over decision-making at a time when Iraq under former Prime Minister Mustafa al-Kadhimi was repositioning itself to be a leading force in the region and strengthening ties with Egypt, Saudi Arabia, the UAE, and Turkey.

Pervasive corruption is arguably the greatest barrier to reform and to curbing Iran’s influence in Iraq.

Pervasive corruption is arguably the greatest barrier to reform and to curbing Iran’s influence in Iraq. Perceptions of corruption are high and Iraqis have lost faith in a leadership that has been unable to translate the country’s immense wealth into sustainable growth and prosperity for all. Anger over the deterioration of public services, growing unemployment, and insecurity came to a head in 2019 when massive youth-led protests brought down the government and forced early elections with the introduction of a new electoral law that helped independent groups gain seats in the parliament. (That law has since been overturned by the new parliament under Framework leadership). Although the combination of targeted violence against protesters and partial concessions eventually broke the protesters’ resolve, their demands continue to reverberate as many grievances by Iraqis remain unaddressed.

Efforts by international actors to support reform have consistently failed in part because they have been based on a misunderstanding of where power lies within the state system. The United States’ disengagement and lack of a strategic plan for Iraq has furthermore created a void that facilitates the entrenchment of corrupt and malign forces. For reformists to be empowered to push for meaningful change against those with a vested interest in maintaining the status quo, a greater degree of accountability needs to be integrated into the system. So, if the Sudani government is to tackle corruption and improve both public administration and service delivery, it must address the roots of this problem. The question is: does it have the will or capacity to do so?

Muhasasa: Iraq’s Main Challenge

Although it possesses vast oil wealth with the potential to benefit all its citizens, the Iraqi state is inefficient and kleptocratic, made by elites to launder oil revenues through a bloated public sector into patronage-based political parties that ensure that everyone in power gets a piece of the pie. At the root of Iraq’s pervasive corruption is ethno-sectarian power-sharing or muhasasa, the informal consociational system adopted in 2003 which prioritizes factional interest over technocratic competence. Muhasasa has enshrined a political culture that divides government power among party members who win elections and gives politicians the power to appoint hundreds of civil service personnel across ministries as part of cabinet formation negotiations. Ministries have been run as fiefdoms, staffed on the basis of political affiliation rather than aptitude. Patronage became especially pronounced with the surge of “special grade” positions for party loyalists: over 5,000 senior civil servant positions in government, 1,000 of which are party proxies whose function is to distribute public resources. As a result, ethno-sectarian political parties have infiltrated the state and coopted its bureaucracy.

Corruption is now rampant across all sectors in Iraq, but if there is one that typifies it, it is the electricity sector which faces perennial shortages because funds are routinely siphoned away from companies contracted to improve delivery. Despite the $81 billion that have been spent since 2005 to improve the sector, severe outages persist. Collusion also takes place to safeguard ministerial appointments that will procure certain contracts, ensuring that ensuing benefits go to the political party controlling the ministry—and the electricity ministry is one of the most sought after given its large budget. In the end, theft, in conjunction with a woefully-neglected, aging grid, largely contributes to the country’s inability to meet domestic electricity demand, as a result of which Iraq is largely dependent on gas imports from Iran for about 40% of its needs.

Iran’s Influence in Iraq

Iran has used the muhasasa system to embed itself inextricably in Iraqi politics, ensuring that those loyal to it remain in power. Key state ministries, like the prized Ministry of Interior, have been heavily infiltrated by pro-Iran militias leading to their tacit legitimization and institutionalization as autonomous actors, with a state budget to boot. The Popular Mobilization Forces, an umbrella group of some 60 pro-Iranian armed groups with ideological and practical ties to Iran, has the unusual status of state-sanctioned ancillary force with an annual budget of $2 billion which ensures its survival.

One important manifestation of the systemic corruption has been the expansion of Iraq’s public sector.

One important manifestation of the systemic corruption has been the expansion of Iraq’s public sector, a growth that has enabled Iran-backed Shia parties in particular to expand patronage. State payroll rose from 850,000 employees in 2003 to 6.6 million in 2019, including ghost employees; in 2020, Finance Minister Ali Allawi assessed that 300,000 out of some 4.5 million employees on government payroll were fictional. Many of these are paid militiamen who exist only on paper as part of party enrichment schemes.

Since its establishment in 2014 to help fight the so-called Islamic State, the PMF has been involved in legal and illegal practices, including the domination of markets and oversight of illegal crossings, mafia-like activities, and customs evasion and trafficking via smuggling networks run by its more militant entities. (About $10 billion in customs revenue are diverted and lost annually through Iraq’s border crossings.) And despite general public antipathy toward the paramilitary groups due to their strong-arm tactics, they have generated a degree of local buy-in given their dominance of job markets and business opportunities.

The PMF’s ability to exploit the state is inevitably tied to its might—and its ability to affect the political environment. After the defeat of the Islamic State, the PMF was able to increase its influence across Iraq’s political institutions. Since Sudani’s appointment, the organization has managed to ensconce itself even further in state and economic affairs and has become stronger than ever. Indeed, it can be considered a powerful force that can be used against Sudani’s opponents, with combat experience, geographic reach, and unprecedented access to resources, plus Iranian patronage.

Can Sudani’s Anti-Corruption Crusade Succeed?

Sudani initially sought to project unity in his leadership of an agenda that prioritizes anti-corruption, tackling unemployment, and improving public services. He declared corruption to be the “number one” challenge facing Iraq—and the public agrees. Perceptions of corruption have hardly changed: according to the Arab Barometer, 2022 poll findings echoed 2018’s: 93 percent of Iraqi citizens believe that corruption is widespread in national state agencies and institutions—only 32 percent believe that the government is fighting it. Iraqis’ confidence in their own government is lower than it was 15 years ago: in 2022, significantly more Iraqis said they did not have confidence in their national government (63 percent) than those who did (37 percent), a sign of persistent unaddressed grievances. But curbing corruption is easier said than done—and any such effort is doomed to fail within the current power configuration, especially given the questionable legitimacy of a government whose backers not only came second in the elections but are very much part of the political class that is fueling Iraq’s underlying corruption.

The country was shaken by the embezzlement of $2,5 billion in tax revenues in 2021 that involved high level government officials.

The country was shaken by the embezzlement of $2,5 billion in tax revenues in 2021 that involved high level government officials and highlights the difficulties of going after the corrupt, especially when they are the country’s power brokers, such as the Iran-backed Badr Organization. At the core of political power in this system are the parties and their patrons who have captured state institutions and perverted the function of public office, making any reform nearly impossible.

To address rampant corruption, Sudani re-established the Supreme Anti-Corruption Authority that has expansive powers and appointed former head of a secret intelligence unit, Abdul Karim Abd Fadel, to lead it. Sudani then went after key cabinet members and staffers close to former Prime Minister Kadhimi: arrest warrants were promptly issued in connection with the $2.5 billion embezzlement case against former Finance Minister Ali Alawi, the former prime minister’s political advisor, Mushrik Abbas, his personal secretary, Ahmad Nejati, and the head of the cabinet office, Raed Juhi, and their assets were also seized. Sudani also accused Kadhimi officials of currency smuggling, but that turned out to implicate his Coordination Framework affiliates, especially that the PMF in reality controls border crossings.

Meanwhile, Iraq’s parliament, now heavily dominated by the Framework, which holds 138 out of 329 seats, passed in March 2023 controversial amendments to the electoral law that returned Iraq to the “one governorate electoral district” arrangement. These amendments were made to articles that had enabled independent candidates and smaller parties to be elected in October 2022 causing the larger Shia parties to lose the majority in parliament. It is obvious that changing the electoral law will only ensconce Iran-friendly parties and limit the ability of independents to reach the legislature and ensure accountability for power brokers there and other state institutions. To be sure, the absence of independents in Iraq’s parliament only helps to limit the success of Sudani’s effort to fight corruption, even if he was fully committed to undertake it.

A Missed Opportunity for the United States

The thrust of US policy in Iraq has been less visionary and more operational—with a priority focus on the management of American assets, in this case the 2,500 troops still deployed in the country. Little attention has been given to the process of state-building instigated by the 2003 invasion, on account of which sectarianism and corruption have overwhelmed the state, rendering it dysfunctional and unable to respond to the aspirations or needs of its citizens. That is not to say that Iraqi leaders are not at fault for the prevailing dysfunction, the pervasive interference of foreign-backed militias, religious extremism, or insecurity—but these have been aggravated by the United States’ progressive disengagement in the last decade.

Despite Iraq’s strategic importance and the need to support stability in the country, the American role has been effectively downgraded.

Despite renewed attempts within US diplomatic circles to highlight Iraq’s strategic importance and the need to support stability and democracy there, the American role has been effectively downgraded to one of “advise, enable, and assist” with a focus on relationship-building, transfer of equipment and ammunition, and strengthening the capability of Iraqi forces. In all of this, the United States has neither the appetite nor a clear plan for Iraq’s future that will help it tackle its systemic governance challenges or reconstruction needs, or achieve sustained economic reform and long-term stability in the country. This absence of a clear American Iraq strategy has helped Iran-friendly forces and proxies to have more say in the country’s affairs.

The Coordination Framework today dominates Iraq’s executive, legislative, judiciary and security institutions, and has used the combination of political power and military might to suppress dissent and violently intimidate opponents. With the failure of the 2019 protests to make deep changes in the Iraqi body politic, the Shia, Iran-friendly state-building project is in the ascendant. Sudani’s appointment and policies today only help to increase the Framework’s clout and, by extension, Iran’s influence in the country.

The United States and the international community must also recognize the necessity of re-engaging by supporting political actors and reformists who are committed to building accountability within the Iraqi political system, while pushing back against hegemonic capture by Iran. This will pave the road for a democratic Iraq that is a solid, sovereign American ally. Ignoring this reality continues to empower illiberal actors and undercuts the possibility of any democratic progress in Iraq.

Featured image credit: Twitter/Mohammed Shia al-Sudani