Iraq estimates that corruption is costing it 150 million petrodollars

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.

He sent a critical text in order to recover the public money missing in the embezzlement and to prosecute those responsible, President Saleh told journalists. He called on members of parliament to pass the law to combat the scourge of corruption "to stop this pervasive practice". Iraq, the world's third-largest oil exporter, is among the most corrupt countries in the world, according to Transparency International's index with the most money lost to waste and embezzlement.

"Government and international statistics and data estimate Iraq's financial oil revenues since 2003 at about $1 trillion," Saleh said in a televised speech on fighting financial and administrative corruption. "These illegal funds," he said, "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.

For his part, security and strategy expert Fadel Abu Ragheef notes that "this is certainly one of the best laws proposed by the executive since 2003." However, he questions whether it will be adopted, to which he answers himself, saying that "I doubt it, the parties to which the MPs belong will sabotage it. In public they will support it, but behind the scenes they will do everything to prevent its adoption because many politicians are involved," he told AFP.

The constitutionally limited powers of the head of state lead him to point out that "corruption is an obstacle to economic and social development, deprives citizens of opportunities and livelihoods and the country of essential services and infrastructure". He cited as an example the fact that "out of almost $1 trillion in oil revenues generated since 2003, about $150 billion has left the country". 

For President Saleh, "violence and terrorism are closely linked to the phenomenon of corruption". His draft law targets individuals who have held senior positions in the administration and public companies and their family members since 2004, with the aim of recovering assets acquired through corruption, whether they are in Iraq or abroad. All transactions over $500,000 will have to be examined, as well as bank accounts, especially those that have housed more than $1 million. In addition, all contracts or investments obtained through corruption will be cancelled.

The endemic corruption and deep crisis that the Asian country is experiencing was one of the drivers of 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 depressed global oil demand and Iraq's adherence to OPEC+ production cuts. Its non-oil economy has experienced a 9% contraction, with religious tourism and service sectors suffering the most from COVID-induced blockages. But weak domestic demand and cheaper imported goods have kept inflationary pressures low, and headline inflation only rose to 0.6% in 2020. As a result, the country has experienced the largest contraction of its economy since 2003.

Amid recovering oil prices, the fiscal deficit is expected to gradually decline from 5.5 per cent in 2021 to 0.6 per cent of GDP in 2023. The economic recovery and mass vaccination should gradually reverse the increase in poverty, which is projected to be 7-14 percentage points above the national poverty line. However, the impact that economic shocks have had on the population is already dominated by the poor and vulnerable and is most likely to result in greater inequality. A currency devaluation may push inflation to 8.5 per cent in 2021, due to Iraq's limited capacity for import substitution. This will put additional pressure on household welfare and could impede poverty reduction.