Iraq’s new prime minister: What lies ahead (Part 2)

During his first month in office, Mustafa Al-Kadhimi has laid out a bold agenda on Iraq’s economy and security. But he must keep Iran-backed militias at bay, while managing the future presence of U.S. troops and the lingering threat of the Islamic State.

An illustration of Mustafa Al-Kadhimi using a rope to keep a truck, labeled with an Iraqi flag, from falling off a cliff.
Mustafa Al-Kadhimi has secured Iraq’s top job, but his prize is hard to envy: a storm of economic, social, and political forces, all conspiring against his success. To have any chance, he must make clear progress, and fast. © GIS

In a nutshell

  • Mustafa Al-Kadhimi has laid out an ambitious agenda 
  • He has promised reforms and made overtures to Gulf powers
  • Several challenges loom large, especially Iran

This report is the second in a two-part series on Iraq’s new prime minister from GIS Expert Professor Dr. Amatzia Baram. The first part, which published yesterday, focused on his rise to power and his consolidation of control over the security services. 

After an unlikely rise to Iraq’s highest office in May, Mustafa Al-Kadhimi has already laid out some ambitious policies on governance reform, domestic security  and regional affairs. But how successful he will be in implementing them is another question. If the new prime minister can demonstrate some early signs of success and fend off threats both domestic and foreign, he may have a prayer.

Reform agenda

On the political-economic level, Prime Minister Al-Kadhimi has made a few remarkable steps. First, he promised to place a heavy emphasis on boosting employment for the young generation. This was his way of indicating to the young protesters that he is taking their interests to heart. No less than 35 percent of Iraqis under the age of 25 are unemployed. This problem is exacerbated by some 150,000 students who could not graduate on time because of the demonstrations and later the coronavirus pandemic. It is important to remember that some 60 percent of all 40 million Iraqis are under 25 years of age.

On the wider political level, he instructed the Supreme Judicial Council to lift the immunity of a few parliamentarians accused of gross corruption (no names have been provided). This served as a warning to all politicians and officials to beware. The new military commanders also made it very clear that anyone who tries to get a promotion through bribery will from now on be immediately arrested and prosecuted.

On the international level, the first visit of a cabinet minister abroad was not to Tehran, as was the case in the previous government. Instead, Minister of Finance Ali Allawi visited Saudi Arabia and Kuwait on May 24. His request was to increase Saudi investments in Iraq to keep up with those from Iran and Turkey. The Saudis promised an immediate $3 billion loan to pay salaries, and to provide enough electricity in the summer to surpass Iranian supply. In Kuwait, Mr. Allawi asked to postpone the annual compensation payment for the 1990-1991 Iraqi occupation of Kuwait. Both countries agreed to allow Iraq to produce more oil than allowed by its OPEC quota.

The prime minister needs to acquire a monopoly on military power in the country.

Iran, quite worried, demanded its own pound of flesh. It immediately sent its energy minister to Baghdad, and along with Quds Force Commander Esmail Ghaani. The two neighbors signed a two-year agreement for Iranian electricity supply to Iraq, including an upfront payment of $400 million. This is a major Iraqi concession that may complicate relations with the United States. Mr. Al-Kadhimi insisted on a symbolic Iranian concession. While until now, the Quds Force commander has entered Iraq freely, this time the Iranian visitors were forced to ask for Iraqi visas. Another Iranian concession was Mr. Ghaani’s call for the Iraqi militias to behave responsibly (although Mr. Al-Kadhimi may have reciprocated, by promising not to impose his militia reforms immediately and unilaterally).

Medium-term challenges

The new prime minister’s first priority must be his personal security. An Iraqi prime minister is exposed to Iranian assassins, likely from one of the pro-Iranian militias. His first security operation, therefore – even before he manages to fully impose his authority on them – must be to totally remove the militias from the cities, beginning with Baghdad. Their place must be taken by the military and Ministry of the Interior units fully under the control of Mr. Al-Kadhimi and his supporters.

He needs to acquire an absolute monopoly on all military power in Iraq. Distancing the militias from the cities is essential to prevent terrorism against supportive civilians and institutions, and against the Green Zone. Mr. Al-Kadhimi must put an end to the militias’ storing Iranian medium-range missiles on Iraqi soil, let alone allowing Iran to deploy them within reach of Israel. Israel will not be able to tolerate it, and Mr. Al-Kadhimi’s policy is to keep Iraq out of others’ battles.

An American soldier stands behind Iraqi troops during the March, 2020 handover ceremony of the K1 Air Base near Kirkuk, Iraq.
The future presence of American troops in Iraq, subject to bilateral talks that began last week, weighs heavily on Prime Minister Al-Kadhimi’s prospects. In March, U.S. troops handed over the K1 air base near Kirkuk, in the country’s north. © dpa

In the long run, he must put an end to all the militias’ economic and political activities. General Soleimani’s plan was to turn the militias into a carbon copy of Lebanon’s Hezbollah and Iran’s IRGC. Both forces own a sizeable chunk of their countries’ economies, including foreign trade. The Iraqi pro-Iranian militias are on their way to achieving the same position. The militias and their overlord, Iran, will not like any of it, but the new prime minister cannot allow this process to continue.

Finally, ISIS is down but not out. It is in Iraq’s interest to keep the American military units in Iraq, because an American evacuation will necessarily mean more breathing space for ISIS. Mr. Al-Kadhimi would like to keep those forces, but will the pro-Iranian parties agree? He would also like to keep most of the militias in ISIS-land, namely the disputed territories in Iraq’s non-Kurdish north.

Another medium-term goal must be to uproot most of the corruption in the Iraqi political system. This is the only way that Mr. Al-Kadhimi can put an end to the protests and revive the economy. Even if only partially, as he has already begun to do, it will be necessary to change the nature of the state bureaucracy by increasing the share of professionals at the expense of political appointees. 

Likewise, Mr. Al-Kadhimi must return the legal system to its days of reasonable independence in the 2003-2006 era. He must also keep his promise to the Kurds to settle the disputes regarding the mutual financial commitments between Baghdad and Irbil, and settle the issue of the disputed territories.

To bring the Sunnis back into the fold and drive a wedge between them and ISIS, the new prime minister will need to substantially upgrade the reconstruction of the Sunni center-north. Likewise, to end the demonstrations that paralyzed Baghdad and the southern cities he will need to find an early solution to the four immediate problems in the south: potable water, electricity, health services and unemployment.

A primary obstacle is the Iranian stranglehold over the Iraqi economy.

There are other major economic problems, but they will take longer to solve. The main one is the Iranian stranglehold over the Iraqi economy. The Iraqi authorities are unable to impose import taxes on Iranian merchandise, mainly fruits and vegetables, medicines and other light industry products. Iraqi agriculture and light industries cannot compete. Due to incompetent planning and management, much of Iraq’s energy (both electricity and gas) comes from Iran. In the summer of 2018, the Iranians cut off their electricity supply to Basra, igniting the first wave of anti-government and anti-Iranian demonstrations. Iraq’s energy deficiency also creates heavy political dependence. If Saudi Arabia and Kuwait step in, this may alleviate the problem.

Furthermore, Iraq’s irrigation systems will need to move from open canals to the water-saving drip system. Many housing units are needed all over Iraq. Traditional homes are expensive and slow to build, but homes based on disused steel containers are both affordable, flexible and easy to build. Adequate schools, too, are in short supply. The list is long, and the main stumbling blocks are corruption, bad planning and management, and an acute shortage of financial resources.

The global damage of the coronavirus pandemic cannot yet be assessed – but the loss of oil revenues can be. Iraq entered the pandemic crisis with an annual gross domestic product (GDP) per capita income of around $6,000. This might seem a reasonable income for a developing country, but it should not impress given Iraq’s production of very large quantities of oil. The GDP per capita in Turkey, a country with no oil and gas, was at the same time around $9,000. 

At least 95 percent of the Iraqi government’s revenues depend on oil sales. For the 2020 budget, the price for a barrel of oil needed to be $55; by the end of May, it was around $35 per barrel. Production has also shrunk: in March it was 4.5 million barrels per day, and by April it was 3.4 million barrels a day. The budget will need adjustments, and accordingly will not suffice for the country’s most urgent needs. 

This means that Iraq will have to borrow heavily from the international financial market. That will be possible, based on the country’s huge oil reserves, but it will represent a heavy burden on Iraq’s economic future. Iraq’s oil industry, too, requires major investments in infrastructure, mainly new pipes and water injection technology. However, Mr. Al-Kadhimi cannot decide like his predecessors to spend very heavily on the development of oil resources. He will have to carefully calibrate his development investments, because the social pressures inside Iraq are now building up as the pandemic crisis is beginning to wane. His main dilemma will be setting priorities.

Chances of success

The new prime minister has strong opponents: when its crisis moment is over, Iran will try to unseat him. Meanwhile, Iran will make every effort to foil his plans or at least exact a very high price for any policy step it dislikes. Mr. Al-Kadhimi will have to walk a dangerous tightrope between the demonstrators and the political establishment, and between the U.S. and Iran. The discussions over the presence of the American soldiers in Iraq began on June 10. The American preference seems to be to stay, but this is uncertain. The Iranian interest is clearly to push the American troops out. Mr. Al-Kadhimi’s interest is to keep the troops, but will he be able to resist the Iranians? If the militias are not yet under his effective command, they will volunteer to do Iran’s bidding when ordered. But is Iran really interested in a government-militia confrontation in Iraq? Mr. Al-Kadhimi does have a degree of non-kinetic control, because it is mainly the Iraqi government that pays their salaries and provides weapons. However, stopping these payments could push them to desperation.  

Mr. Al-Kadhimi has a fighting chance, but he is living on borrowed time.

In the parliament, he is opposed by the pro-Iranian parties, mainly by the strong Fatah coalition. The Kurds are supportive, but if he fails to deliver, they will abandon him. Moqtada al-Sadr, leading Sairoon, the largest party in parliament, supports him for now, but he will easily change that position when Iran applies pressure. Parliamentary support therefore is unstable. On one hand, Mr. Al-Kadhimi was approved because he has no party of his own and as a result is not very threatening. At the same time, having no party of his own, he is walking a tightrope.

And yet he also has his allies. Grand Ayatollah al-Sistani and the marjaiya (religious leadership) of the holy cities are staunch supporters. He is secular, but they see him as an Iraqi patriot and never drunk with power, non-corrupt and an effective operator. Mr. al-Sistani has no military divisions: he and his colleagues have only four small militia units for self-defense. But when he demanded the exit of prime ministers Nouri al-Maliki (in 2014) and Haidar al-Abadi (in 2018) because he became convinced that they had failed, it was the straw that forced them to resign. 

Iraqi President Barham Salih is another ally. His authority is very limited, but he used it wisely to anoint Mr. Al-Kadhimi. The main Shia party supporting the prime minister is al-Hikmah (Wisdom), headed by the important Hakim clerical family from Najaf. Most Sunni parliamentarians will support him through thick and thin. The SATF, the best fighting division in the Iraqi army, is also on the prime minister’s side, but he will use it only in the most extreme case, if the militias try to topple him by force. Last but not least: the demonstrators are giving him a chance, but they are desperate and angry and may change their minds if they do not see early results.

All of this is inside Iraq and on the eastern border, but there is more: the U.S. is in complete support, as are most of the Gulf Arabs. This is meaningful; for example, the recent Saudi loan will give the prime minister a few months’ worth of resources.

Mr. Al-Kadhimi has a fighting chance, but he is living on borrowed time. He must show some progress soon and then quickly build on it. Only a visible, initial success can lead to further successes and ultimately survival. It now seems that his intention is to buy enough time to be able to go to new elections, and then resign. At the moment, his odds are about even – and given that all of his predecessors have failed miserably, that is not bad at all.

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