Modernising Iraq’s economy requires getting rid of corruption
Fintech (financial technologies) and Iraq’s transition to a cashless society featured prominently in discussions, on stage and off.
The second week of April marked two anniversaries, each commemorated for a different reason. April 9 marked 16 years since Baghdad fell and Saddam Hussein’s statue was toppled. April 10 marked 10 years since Britain’s former trade envoy to Iraq, Baroness Emma Nicholson, founded the Iraq Britain Business Council, advancing investment and trade.
The air of optimism filling London’s Mansion House, where businessmen and politicians assembled, felt in stark contrast with the public mood in Iraq. Misery hangs heavily over a society in which unemployment rates are sky high and where the value of life is no longer respected. The weight of the fallout caused by the US-led invasion of 2003 is something Iraqis continue to endure.
In London, the slogan of the Iraq Britain Business Council (IBBC) — “Together We Build Iraq” — greeted guests at the venue.
British businesses were in strong attendance alongside Iraqi delegates led by Deputy Prime Minister and Finance Minister Fuad Hussein. There were representatives from the Iraqi Private Banks League, the Central Bank and more. The event drew major foreign players and sponsors from BP-Iraq and JP Morgan to oil giant Shell.
The conference set its sights on modernising Iraq’s economy. The aim, in the words of Iraqi Council of Ministers Secretary-General Mahdi al-Alak, was “to target the lifeblood of the economy” through sectors such as oil, energy, infrastructure and education. Alak emphasised the necessity of “coming down hard on corruption” before Iraq can turn its back on paper-operating procedures.
Fintech (financial technologies) and Iraq’s transition to a cashless society featured prominently in discussions, on stage and off. The success of fintech, however, depends heavily on the behaviour of the ruling political class.
Corruption has consistently stood in the way of effective governance and trade but those are barriers that speakers promised would be resolved to the benefit of both Britain and Iraq. The drive towards economic diversification was another promise that rests on the state’s commitment to fighting corruption so state revenues can be more evenly distributed beyond the oil and gas sector.
Although politics was strictly off the agenda, speakers commended Iraq’s security forces for defeating the Islamic State last October.
Endemic corruption, lawless militias, soaring birth deformities, abnormal cancer rates and dilapidated services, all major problems in the country, were nowhere to be seen on the agenda.
The economic consequences of conflict, which existing and preceding governments in Iraq have inherited, have proven profoundly challenging. The problem is exacerbated by corruption, which stunts domestic growth.
Iraq’s economic freedoms and the collapse of many of its productive state-owned enterprises, due to American-style reforms, have eroded many of the rights formerly enjoyed by local Iraqi businesses. Trade barriers in place that had protected them no longer exist.
Hussein praised the equal presence of Iraqis and Brits, barely mentioning the uneven relationship between his country and the United Kingdom. It is of critical importance to note that no regulatory framework determining trade rules, co-investments or healthy competition exists.
As wealthy British Iraqis are presented with invaluable opportunities to invest in their ancestral lands, at such events, one cannot erase from recent history the memory of the suffering of native businessmen and women in farming, psycho-social care or copper production — many of whom are unsupported by the state.
The head of one Iraq’s private banks said a rapid expansion of private banks, which he said stands at 74, has done little to strengthen the dinar or enhance domestic banking performances, compared with global standards.
“It just means that more people want a share of the pie,” said the owner of the Iraqi private bank, who did not wish to be identified.
“The sale and auction of the US dollar is another major problem,” the banker added, referring to a practice that Iraq uses to exchange the dollars Iraq receives in oil income to dinars through private banks. The practice is particularly harmful because it lacks transparency and invites unvetted actors. It has facilitated money laundering and weakened exchange rates. Still, the auctioning of the dollar is something the central bank has dogmatically defended.
The Iraqi street, whose concerns have been loudly voiced and whose anger has been seething for some time, was strategically kept out of the debate.
The course of the day fell in line with similar conferences, from Kuwait to Iraq, during which host countries proudly brag about the investment funds they wholeheartedly believe will help Iraq to fulfil its role in the global economy.
However promising the idea brought to IBBC’s roundtable this year, the question on the minds of concerned citizens is whether Iraq’s allies, international partners and friends will continue to turn a blind eye to the single greatest obstacle to economic prosperity and trade — corruption.