Emerging Threats to Financial Security in Iraq
As Iraq enters 2021, the country is facing a deepening economic crisis fueled by the COVID-19 pandemic and plummeting oil prices. The situation is precarious, with widespread discontent among the population.
Economic Woes in Iraq
- Delays in public salary payments
- Central Bank of Iraq devalues the Iraqi dinar by 23%
- Proposed federal budget allocates nearly the same amount as last year’s, despite economic strain
The Impact on Security Ministries
Despite the economic crisis, the proposed federal budget allocates significant increases for security-related ministries:
- Ministry of Defense: 9.9% increase
- Ministry of Interior: 9.7% increase
- Counterterrorism Service (CTS): substantial boost
- Popular Mobilization Forces (PMF): substantial boost
The Rise of Paramilitary Groups
The PMF, a paramilitary group established in 2014 to combat ISIS, is poised to become an even more influential economic actor as Iraq’s economy teeters on the brink of collapse:
- Control over border areas and reconstruction sites allows for illicit markets and informal employment
- Ability to generate additional wealth through illicit activities
Economic Grievances and Violent Outcomes
Decades of research have shown that economic grievances can lead to violent outcomes, including civil war. In a country where 80% of surveyed Iraqis describe the economy as “bad” or “very bad”, the relationship between protesters and paramilitaries is fraught with tension:
- Civil society activists criticize the PMF for engaging in violence against protesters and intimidation tactics
- Everyday demonstrators are more concerned about securing employment and financial stability
The Federal Budget: A Concerning Allocation
The federal budget’s allocation of state wealth to entrenched elites at a time when average citizens are financially strained is particularly concerning:
- Some paramilitaries control border areas and reconstruction sites, allowing them to generate additional wealth from illicit markets and provide informal employment in moments of job scarcity
A Precarious Environment
As Iraq navigates this complex web of economic insecurity, clientelism, and electoral politics, concerns about the longevity of its paramilitary groups and their relationship to the state cannot be divorced from a discussion about the country’s economic future:
- The average citizen is vulnerable to predation from well-resourced political parties, particularly in moments of economic weakness
- Economic insecurity disempowers citizens, nurtures corruption, and erodes democracy - a perfect storm that threatens the stability and security of the state.