In the Iraqi context, corruption’s most pernicious effects arise from the penetration of vested interests throughout the machinery of state. Key problems include the politically driven expansion of public sector payrolls and widespread fraud in relation to government contracts.
How corruption has been understood
Corruption in Iraq is often understood as an individual crime motivated by personal greed and a propensity to break the law for self-enrichment. Most of those who have criticized or sought to campaign against corruption have focused on personal motivations for illicit wealth accumulation.
However, the political corruption that has been at the centre of the post-2003 political system has become far more consequential to the coherence of the state and its everyday functioning. This systemic corruption is carried out and sanctioned at an elite level. It involves a collective, not individual, decision to use unfair access to state resources for the benefit of the whole ruling class. According to Transparency International’s definition, political corruption is a ‘[m]anipulation of policies, institutions and rules of procedure in the allocation of resources and financing by political decision makers, who abuse their position to sustain their power, status and wealth’. Politically sanctioned corruption has bound Iraq’s post-2003 leadership together in a rough and ready unity.
International actors bear their own responsibility for the growth and prevalence of such corruption after 2003. The CPA played a central role in setting up the framework in which politically sanctioned corruption was able to thrive. The ill-thought-out use of cash to fund reconstruction, the desire for quick results no matter what the longer-term consequences, and very poor accounting procedures drove a rapid increase in abuses of the system during this period. This is one of the myriad negative legacies left by the occupation authorities.
Systemic corruption is carried out and sanctioned at an elite level. It involves a collective, not individual, decision to use unfair access to state resources for the benefit of the whole ruling class.
Nearly two decades after the invasion and occupation, the overall extent of the resources taken out of the state’s coffers through politically sanctioned corruption is hard to estimate. Ahmed Chalabi estimated in 2014, while head of the finance committee in the Iraqi parliament, that the country had lost $551 billion from corruption during the two Maliki premierships. In the run-up to the 2018 national elections, Iraq’s Parliamentary Transparency Commission estimated that at least $320 billion in government funds had disappeared over the previous 15 years. Ali Allawi, at the end of his first term as finance minister (2005–06), estimated that corruption diverted between 25 and 30 per cent of the government’s budget to the ruling political parties. In 2020, in his second stint as finance minister, he estimated that between $100 billion and $300 billion was held overseas by Iraqis, noting that ‘the large majority of these assets are illegitimately acquired’. A senior official with responsibility for a major service industry has estimated that his ministry alone had lost $80 billion due to politically sanctioned corruption. However, for political reasons there has never been a forensic or transparent investigation into the exact financial costs of politically sanctioned corruption in Iraq.
These various estimates of the extent of government corruption were echoed in interviews conducted by the authors in Baghdad between 2018 and 2021. During a confidential interview, one senior official estimated from his own direct experience of running a ministry that as much as a quarter of that ministry’s budget was spent on tendering for fraudulent contracts. He then said that another quarter of the budget was wasted on payroll corruption in respect of political appointees, government employees who draw a regular wage but never turn up for work, and ‘ghost workers’ (fictitious persons on behalf of whom the political parties claim salary budgets).
Such theft certainly funds personal enrichment, tying members of the ruling elite together and creating a community of complicity and guilt. But it also funds party political operating budgets, providing parties with the money needed to build electoral constituencies and compete for power. The systemic nature of this corruption is indicated by the fact that major corruption scandals have, at different times, touched nearly every ministry in every administration since the formation of the IGC in 2003.
Public sector payroll expansion
A key by-product of this structural corruption has been a rapid expansion of the public sector payroll. From 2005 onwards, parties that performed well in elections went on to appoint ministers who would then control the budgets and payrolls of the corresponding ministries until the next election. Each party used this power to employ family, party members and followers. In a labour market dominated by civil service and military employment, with demand for jobs far exceeding supply, the easiest way to secure state employment was to join or pledge allegiance to one of the dominant political parties, or to bribe a lower-level functionary. This process drove the sustained expansion in government employment.