How Iraq’s Ruling Parties Took Control of the State and Its Resources

(London School of Economics and Political Science)

In March the London School of Economics and Political Science published an academic paper by Alexander Hamilton on the political economy of Iraq. He argued that Iraq’s ruling parties have emphasized short term planning that benefits themselves over investment and diversifying the economy. Their main priority has been to increase public sector jobs which were then distributed in patronage networks to maintain their political base.

This process began with the creation of the Iraqi Governing Council under the Coalition Provisional Authority. Part of their powers were to name ministers that gave them control of resources. Those parties then came to dominate the transitional government of Iyad Allawi and won the vast majority of seats in the 2005 elections. That gave them total control of all the ministries and government agencies as well as Iraq’s vast oil wealth. Those main parties were Dawa, the Islamic Supreme Council Islamic of Iraq, the Sadrists, the Kurdistan Democratic Party, the Patriotic Union of Kurdistan, and originally the Iraqi Islamic Party and Iraqiya. They presided over a gigantic expansion of government jobs from around 900,000 in 2003 to over 3 million by 2015. The percent of the budget going to public salaries went from 7% to 40% during that same period. The state is now the largest employer accounting for four of every 10 jobs in Iraq. At the same time the capital budget that goes to investment stagnated and eventually decreased from 18% of GDP in 2014 to 10% in 2018. This highlights the goal of the ruling parties to exploit the state for their own benefit while ignoring the needs of the populace and long term health of the country.

Current Expenditures pays for things like salaries, pensions, services. Capital Expenditures are for investment
(London School of Economics and and Political Science)

This also explains the failure of Baghdad to cope with its current economic crisis, the worst since 2003. The parties are unwilling to even make a marginal cut in salaries and pensions, let alone reduce public employees because it is how they rule the country. It’s also why talk about encouraging the private sector to provide more work are hollow words. The state has never seriously taken on this task because the elite are for maintaining the status quo which ensures their continued rule.

SOURCES

Hamilton, Alexander, “The political economy of economic policy in Iraq,” The London School of Economics and Political Science, March 2020

Al Mada, “Parliament rejects retirement deductions and criticizes the decision,” 6/10/20

Walt, Vivienne, “Iraqis take over Cabinet posts amid insecurity,” San Francisco Chronicle, 9/4/03