Iraq gives green light to economic reform aimed at ending corruption

Corruption is becoming an endemic problem in Iraq's political sphere. Decades of mismanagement and squandering of the country's public resources have provoked protests from a population suffering from a scarcity of resources and an economic crisis sweeping the region. According to Transparency International's 2020 Corruption Perceptions Index, Iraq ranks 160 out of 180 countries, making it one of the most corrupt countries in the world.

Mohammed Al-Hakim, the Iraqi prime minister's own senior adviser on economic reform, has said that the Iraqi system has been deteriorating for 50 years since the time of Saddam Hussein. "Government employees, from the bottom to the top of Iraqi governance, are involved in systematic corruption," Al-Hakim said. 

Similarly, Iraqi President Barham Saleh, by introducing a bill to combat the scourge of corruption, revealed that 150 million petrodollars had been embezzled since the fall of Saddam Hussein in 2003. "Government and international statistics and data estimate Iraq's financial oil revenues since 2003 at about $1 trillion," Saleh said during a televised speech on combating financial and administrative corruption.

"These illegal funds," he added, "were enough to put the country in a better place." "Iraqi politicians have managed to take $60 billion out of the country in 18 years, especially to Lebanon," the Iraqi president said. For Saleh as well as al-Hakim, the violence and terrorism that rock the country are closely linked to corruption. 

Endemic corruption and the deep crisis in the Asian country were the driving forces behind the demonstrations that shook the country from October 2019 to June 2020. Volatile oil prices and the impact of the pandemic have amplified Iraq's economic problems, reversing two years of steady recovery. Iraq's GDP registered a sharp contraction of 10.4% in 2020. Growth was hampered by falling global oil demand and Iraq's adherence to OPEC+ production cuts.

Iraq's non-oil economy has also contracted by 9%, with religious tourism and service sectors suffering the most from COVID-19-enforced blockages. But weak domestic demand and cheaper imported goods have kept inflationary pressures low, with headline inflation only rising to 0.6% in 2020. As a result, the country has experienced the largest contraction of its economy since 2003.

Against this backdrop of economic crisis and corruption that is already translating to all layers of society, Iraqi Prime Minister Mustafa al-Kazemi has announced that administrative and executive mechanisms are underway to move forward with his economic reform programme. Al-Kazemi stressed that the government is working to create an environment conducive to the implementation of the "White Paper for Economic Reform", a reform aimed at tackling "the rampant corruption in the country".

In the same vein, the Iraqi prime minister stressed that the government "strongly aspires to restore the country's economy and that this plan would rebuild the Iraqi economy in a proper way, achieving sustainable development for the country". This reform plan aims to provide a solution to the chronic crisis of economic management, aggravated by the country's complete dependence on oil and lack of diversification of revenue sources.

The implementation phase of the "White Paper for Economic Reform", which sets out a clear roadmap for reforming the Iraqi economy, began in February and included "establishing governance, supervision, monitoring and evaluation mechanisms to ensure that the reform process is effectively administered and managed", according to the government.