The day before ISIS

Iraq’s problems were not born in 2003.

In a roundtable discussion hosted by the Middle East Institute on last Tuesday, Dr. Luay al-Khatteeb, founder and director of Iraq Energy Institute, made clear that current discussions in Washington about Iraq are lacking. The focus in DC think tanks on “the day after ISIS” neglects a century of mistreatment, mismanagement, and disregard.

Taking a longer vie, al-Khatteeb focused on the origins of Iraq’s present problems. Sectarianism has been a virulent force in Iraq since before the Ottomans; it didn’t suddenly appear in 2003. Al-Khatteeb points to the 12 successful coup d’états in Iraq’s recent history as a major source of instability in Iraqi politics. If Turkey’s week is any indicator, coups shake the foundation of a society to its core, and their reverberations continue to affect societies long after their conclusions.

The strong centralism that dominated Iraq for most of the 20^th century didn’t prepare Iraq’s political class or citizenry for federalism. According to al-Khatteeb, the Kurds had an 11-year head start; enjoying self-government for a decade before the fall of Saddam gave them a huge advantage going into the post-2003 political process.

Miscommunication about federalism in the establishment of the new Iraqi state is one of the major factors contributing to Iraq’s current governance failures. Many political participants came to the negotiating table talking about federalism, but were still grounded in the centralism of previous decades. Kurds adopted the language of federalism, but had independence in the back of their minds throughout the negotiations.

Because of this lack of meaningful consensus, Iraq never established functioning governing institutions. How then, did Iraq survive for 10 years ? Al-Khatteeb says sheer luck. Oil prices were high enough that the Iraqi government could muddle along without thinking of the future. People in government looked at oil money as a supermarket—taking as they pleased to finance any number of special projects. Currently there are 7 million Iraqis on government payroll. Those constantly expanding public salaries drained surpluses during high oil prices and are now dragging Iraq down into deeper deficits. In 2013, Iraqi foreign reserves were at 80 billion. Total is down to 40 billion today.

On the Kurdish question, al-Khatteeb predicts that the now dominant KDP would lose to the PUK and Goran alliances if an election was held today. They are clearly winning at the constituent level, and are negotiating with Baghdad to ask what’s in it for them to remain in the Iraqi state.

Right now, the answer is quite a bit. The KRG gets $100 billion per year from Baghdad. It also gets to keep somewhere around $40 billion in its own production, although exactly how much oil is produced and exported from Kurdish regions is not publicized. However, Kurdish production is dependent on Kirkuk, and Kurdish hold there is tenuous at best given the competing claims for the territory. Even still, oil production in the Kurdish area has fallen from 800,000 barrels to 550,000.

Everything comes back to government mismanagement. There are 1.4 million people on government payroll in Kurdish areas. The Iraqi federal government was encouraging governorates to hire as many people as possible, and threatened to withhold funds if hiring demands weren’t met. The salaries of government officials are criminally high, in al-Khatteeb’s mind. MPs make $20,000 monthly, each of their dozens of advisers each make $10,000, on top of the president and PM making $50,000 each month. If Iraq is going to overcome its centuries of neglect, they need to start paying some attention where it matters.