Introduction
Iraq’s public sector has shown formidable resistance to reform. Despite support from the international community, successive government attempts to improve governance and sustainable development have been ineffective.1
Understanding why these efforts have failed is crucial to achieving sustained improvements in the performance of future Iraqi governments. Following months of widespread popular demonstrations against the ruling elite, multiple failures to choose a new prime minister, and US–Iran tensions playing out on Iraqi territory, the country has been rocked by two developments beyond its control: the oil price crash and the coronavirus pandemic. The implications of this twin shock for Iraq’s public sector are deeply troubling as so many livelihoods depend on it. The vast growth in public employment since 2003 means that salaries and pensions now represent over 45 per cent of total government spending. The decline in oil revenues will severely restrict the government’s ability to cover these monthly obligations without spiralling into massive debt and economic ruin.2 To avoid this, successive governments will need to adhere to a clear and decisive strategy while addressing the most basic demands of ordinary Iraqis – including the provision of jobs and essential services – and tackling rampant corruption that inhibits investment in Iraq’s infrastructure.
The intended goal of this paper is to help guide policymakers, international financial institutions and development agencies in their design and implementation of public sector reform programmes in Iraq. It is worth emphasizing that Iraq’s predicament is by no means exceptional, and this paper uses specific and relevant experiences from other countries to illustrate how to overcome obstacles to reform.
Drawing on a series of discussions with practitioners experienced in reform efforts in Iraq,3 this paper begins by outlining a set of assumptions about the limitations of reform in the country. These assumptions are based on the successes and failures of past reform efforts, while taking into account the prevailing political climate and the country’s institutional capacity.
Most notable of these assumptions is that an overhaul of the entire system is unrealistic. Instead, an incremental approach is more likely to yield significant results. To date, public sector reform in Iraq has largely been aspirational – setting ambitious and unachievable goals with little consideration of the vested interests that stifle reform or the broader political-economy dynamics. Ultimately, this paper suggests two self-reinforcing courses of action to stimulate public sector reform: establishing a data analytics unit and a policy delivery unit at the centre of government to enhance the policymaking and implementation process; and introducing performance-based standards for public employees to boost productivity.
1 It is difficult to estimate the total cost to date of public sector reform initiatives in Iraq. For instance, by the end of 2012, the US had spent $4.2 billion on the Economic Support Fund for Iraq, which included nearly $930 million on programmes directly related to strengthening governance and capacity-building. See, Special Inspector General for Iraq Reconstruction (SIGIR) (2013), Learning from Iraq: A Final Report from the Special Inspector General for Iraq Reconstruction, Washington DC: SIGIR, https://www.globalsecurity.org/military/library/report/2013/sigir-learning-from-iraq.pdf (accessed 17 May 2020). In addition, multiple UN agencies established the Iraq-Public Sector Modernization (I-PSM) programme, which consisted of two phases: Phase I (2010–12) had a budget of $13.6 million, and phase II (2013–19) had a budget of $24 million. See, Salovan, M. (2019), Iraq Public Sector Modernisation Programme: Draft Evaluation Report, New York: UNDP, https://erc.undp.org/evaluation/documents/download/15412 (accessed 6 May 2020). International assistance has focused on a key aspect of public-sector reform, namely public financial management (PFM). In 2009, the World Bank launched an $18 million PFM reform programme for Iraq that ended in 2013 with very modest results. It then embarked on a $41.5 million PFM modernization initiative in 2017 that was coupled with an $18.1 million technical assistance programme in 2018, in partnership with the EU. See, Al-Mawlawi, A. (2018), Designing a Successful Approach to Public Financial Management Reform in Iraq, Baghdad: Al-Bayan Center, http://www.bayancenter.org/en/wp-content/uploads/2018/10/8788789899.pdf (accessed 6 May 2020).
2 Al-Mawlawi, A. (2019), Public Payroll Expansion in Iraq: Causes and Consequences, LSE Middle East Centre Report, London: London School of Economics, http://eprints.lse.ac.uk/102576/1/Al_Mawlawi_public_payroll_expansion_in_Iraq_published.pdf (accessed 6 May 2020).
3 Including discussions at a roundtable meeting hosted by Chatham House in November 2019.