Tasking: I'd like following questions answered

The constitution ratified on 15 October 2005 offers few unqualified rights to Iraqis, and instead leaves the interpretation of vaguely-defined human rights provisions to future national and regional parliaments to decide. Under the draft constitution, multi-province regional governments such as the Kurdistan Regional Government (KRG) can choose to wield greater legal and executive powers than the federal government. The potential for parallel national and regional systems could allow the regions to opt-in or opt-out of much national policy based on their interests. This presents a risk of conflicts between the human rights of Iraqis (particularly Iraqi women) and the strictures of sharia (Islamic law) and tribal custom. The Supreme Federal Court (the members of which require a cross-sectarian two-thirds majority to be elected by parliament) will theoretically mediate in disputes between federal and regional governments.

The basic human rights of Iraqis are also threatened by other aspects of the Iraqi political environment. Throughout the country, the chaotic security situation encourages abuses of human rights in the course of counter-insurgency operations and by government security forces acting on militia instructions in local power plays. In the KRG zone, there are growing concerns about authoritarian measures undertaken against civil society advocates who have sought to develop new political parties that might compete with the KDP and PUK. During KRG parliamentary elections in July 2009, Nashirwan Mustafa defected from the PUK to spearhead a new Kurdish opposition party, which won 25 seats in the KRG's 111-seat parliament. The emergence of an opposition group to rival the KDP and PUK political monopoly suggests that greater political freedom and plurality is taking hold in the KRG.

Economy            TOP

The 9 October 2003 joint UN/World Bank Needs Assessment estimated that a majority of working Iraqis are employed in the non-taxable informal economy and this has probably not changed in the intervening years. With porous borders, embryonic import regulation, skyrocketing demand for foreign goods and subsidised fuels, Iraq is a thoroughfare for non-taxable incoming consumer goods and outgoing fuels.

Iraq will remain overly dependent on oil revenues for the foreseeable future. Oil exports have traditionally represented about 95 per cent of foreign exchange earnings, leaving Iraq vulnerable to year-on-year budgeting instability and chronic revenue shortfalls during extended periods of depressed oil prices. Non-oil GDP is growing slowly, not least due to the poor performance of the state-dominated manufacturing sector. Iraq's service sectors are likely to be the fastest growing elements of the newly opened non-oil economy. Telecommunications, motor vehicles, consumer goods, hotels, security and construction are likely to account for the majority of non-oil sector growth.

The risk of a collapse of the formal economy or major financial institutions is very low, despite reports from the International Monetary Fund (IMF) that Iraq urgently needs to increase investment (particularly in the oil industry) and carry out structural reforms aimed at reducing inflation (which has felt the pressure of key commodity shortages). Balance of trade moved into a comfortable surplus by 2007 and Iraq now has an estimated USD50 billion in various UN-administered escrow accounts in New York. Iraq's economic recovery is arguably less dependent on foreign aid than was considered to be the case in the 2003-2005 timeframe. International aid (excluding US aid) is not a critical factor in Iraq's reconstruction. The issue for Iraq is not a lack of money, but an inability to spend it fast enough in a manner that generates sustainable economic development and growth.

In terms of foreign debt, USD74.1 billion of Iraq's overall USD120.2 billion foreign debt has been forgiven. The Paris Club cancelled USD42.3 billion, including Russia's USD12 billion. A number of non-Paris Club members have cancelled a total of USD8.2 billion on Paris Club terms. A total of USD16 billion has been cancelled by commercial creditors, also on Paris Club terms. Iraq owes USD56.6 billion to USD79.9 billion of remaining debt, including USD7.6 billion of outstanding Paris Club debt, USD32.4 billion to USD55.4 billion of Gulf Co-operation Council (GCC) debt, and USD15.9 billion to USD16.2 billion of other non-Paris Club debt.

Labour

Iraq's labour market is stable and includes significant spare capacity to cope with future economic expansion. CIA data suggests that Iraq's working-age population is 14.8 million. Not every Iraqi of working age is seeking employment. Some men are outside the labour force (for instance students and the disabled), and a lower proportion of women have traditionally sought work outside the home. The potential labour force is therefore probably in the range of eight million. Taking into account government employment, aid-generated jobs and private sector or informal economy employment, unemployment in Iraq is unlikely to be higher than 25 to 30 per cent of this eight million total. Underemployment is an equally serious problem, with large numbers of Iraqis employed in unnecessary government sector jobs, working part-time, or claiming salary but failing to show up for work.

Environment            TOP

Natural degradation

Iraq faces a range of environmental problems. In the sphere of water management, the key risk is the adverse downstream impact of large dams in the upper Tigris and Euphrates basin, necessitating agreements with upstream riparian Turkey. Other water-related concerns include reversing two decades of deliberate drainage of the Mesopotamian marshes by the Baathist government, severe contamination of surface water by sewage and other waste, inadequately maintained and war-damaged water distribution network, and land salinisation and waterlogging due to unsustainable irrigation practices and poor maintenance, as well as potential contamination of ground water by oil spills. Iraq faces a high risk of desertification exacerbated by unsustainable agricultural practices, overgrazing, and land degradation from military movements and use of munitions. The Shatt al-Arab waterway requires considerable environmental rehabilitation.

In the sphere of waste management, Iraq is threatened by absent or poorly functioning systems for the collection, treatment and disposal of all types of waste, exacerbated by the ongoing conflict and the impact of sanctions. Iraq faces long-term health and environmental risks from uncontained domestic landfills and hazardous industrial waste (especially from the oil industry), as well as from large quantities of military waste (unexploded ordnance, destroyed vehicles and packaging). Iraq's oil industry needs to incorporate environmental controls into its operations for the first time to prevent widespread oil contamination of surface water and ground water.

Separatism            TOP

Iraq should not be characterised as a state on the verge of secessionist break-up, but rather as a thoroughly devolved state that is seeking a formula that can draw its various communities back together again. Far from being a centrifugal instrument that will pull Iraq apart, federalism may generate the gravity that allows Iraq's disparate communities to remain together during these tense post-Saddam years. Developed largely by the Shia and Kurdish blocs, the draft constitution proposes a very strong form of federalism to paper over many of the fundamental issues that could not be agreed upon by these two factions. The result is a constitution that makes it possible (but difficult) to form other regional governments similar to the semi-autonomous three-province KRG, an arrangement that has effectively removed the impetus for the Kurdish people of northern Iraq to seek formal secession. Each of these regional governments can choose to wield greater legal and executive powers than the federal government.

Organised Crime            TOP

Iraq's banking system is sufficiently underdeveloped and inefficient that it is not widely used by Iraqis and the number of banks remains small, reducing the ability of criminal transactions to sink into the anonymous mass of banking activity. Banking reforms are unlikely to alter this state in the near-term, particularly bearing in mind the slow development of the formal economy and foreign investment. Iraq will remain a cash economy, with long-distance movement of cash taking place either by physically moving cash using couriers, or through hawala money transfer systems. The hawala system is particularly busy in Iraq, due to the superior service offered in comparison to the formal banking system (a 0.05 per cent fee and instantaneous transfer at hawala, versus three per cent fee and 10-day transfers at banks) and due to the large number of Iraqi businesses with satellite offices in safer business hubs like Jordan. With larger hawala agencies handling between USD1 million and USD3 million a day, and leaving little by way of a paper trail, the system could be effectively used by insurgents and criminals. Hawala dealers recognise that their ability to 'know the customer' is very limited, at least with regard to the very large numbers of smaller transactions into which insurgents and terrorists would merge.

Trafficking            TOP

Arms

Iraq has the potential to become a major arms trafficking point of origin. The weapons and explosives proliferation risk posed by post-Baathist Iraq is rooted in the massive militarisation of the country's industrial base during the Saddam era. In an effort to build long-term independence from external suppliers and to develop an arms export industry, Iraq spent USD14.2 billion, or 29.4 per cent of its imports, on the development of its military industries in the years 1982-1989. By 1990, Iraq emerged from the Iran-Iraq War with 40 per cent of Iraqi industrial workers employed in the country's military industries. By 1987, Iraq was largely self-sufficient in the production of small-arms ammunition, rocket-propelled grenades (RPG), mortar and artillery shells and aircraft bombs.

Fear of ammunition shortages during wartime also led the Saddam-era military to widely disperse its munitions throughout the country at likely defensive positions during the 1990s. This policy was taken to extremes before and during Operation Iraqi Freedom, witnessing the distribution of an estimated 650,000 to one million tonnes of weapons and explosives throughout the country. In addition to Iraq's well-known arms depots (some of which covered over a hundred square kilometres), over 10,000 forward ammunition supply points were created in schools, hospitals, mosques, fields and warehouses. Finally, an unknown number of small dispersed weapons caches were sewn throughout the Euphrates and Tigris river valleys along likely coalition routes of advance and throughout the Sunni triangle. Iraq Survey Group findings indicate that statistically the vast majority of arms caches are small stores consisting of less than a tonne of small arms, RPGs, artillery shells and landmines.

In addition to these deliberately cached weapons, masses of military equipment and unexploded ordnance littered Iraq following the end of Operation Iraqi Freedom, either consisting of the wreckage of battles in the Basra-An Nasariyah and Samawah-Baghdad environs, or the large abandoned arsenals of the Iraqi corps that surrendered intact in the north, northeast and southeast of the country. By various accounts, there remain between 100,000 and 450,000 tonnes of armaments still unaccounted for within Iraq and while much of this will have been destroyed or rendered into scrap metals, vast quantities are still in existence. Armaments from Iraq have already begun to trickle out of the country, whether as complete weapons systems sold to Iran by Kurdish arms dealers or in the form of explosives and weaponry intercepted on the Saudi Arabian-Iraqi border bound for the kingdom.

Iraq was not assessed in the US Department of State's Trafficking in Persons Report 2008 and no other reliable estimate exists concerning the scale of human trafficking that transits the country. Nevertheless, it is widely recognised that Iraq is a country of origin for women and girls trafficked to Yemen, Syria, Jordan and Gulf states for the purposes of sexual and labour exploitation. Some Iraqi women and underage girls are reportedly trafficked from rural areas to cities within Iraq itself. There are likely to be hundreds of Iraqi women working in prostitution in Syria and Yemen. In Damascus, many women and girls are exploited in commercial sexual situations in nightclubs and other establishments in Iraqi-populated areas, with some living and working under coercive conditions.

Drug trafficking, although not new in Iraq, does appear to be growing in scale and complexity. Iraq already functioned as a transit route for drugs from central Asia even under the Baathist regime, with shipments from Iran and Turkey transiting westwards towards the Mediterranean or southward towards the Gulf Co-operation Council (GCC) states. Key elements of the Mukhabarat (now embedded in the resistance) were complicit in drug smuggling. In the post-Baathist context, almost tax-free imports resulting from economic stimulus measures have thrown open Iraq's borders to increased smuggling of illegal contraband.

According to the UN Office of Drugs Control (UNODC), drugs smuggling through Iraq now principally uses two routes. The northern route sees drugs enter through Iran and then move through Turkey, the Balkans and towards Western Europe. The second route runs from Iran to the southern Iraqi port of Umm Qasr, where it transits alongside illegally tapped oil and looted copper into the GCC states. Other drugs shipments move across the expansive and unguarded Saudi-Iraqi border. Another driver towards greater narcotics and contraband smuggling through Iraq has been the significant increase in Iranian pilgrims visiting Shiite shrines in Najaf and Karbala. This flow encouraged Iranian drug smugglers to begin using the pilgrim route as a transhipment artery. Since September 2003 a number of Iranian 'pilgrims' have been apprehended with consignments of drugs, principally hashish.

Oil

Oil smuggling and black-marketeering remains the most widespread form of revenue generation. These activities, businesses the former regime knew much about, will continue to be a money-spinner for private criminals and local militias as long as the administered system of pricing subsidies in Iraq means that Iraqis can illicitly acquire a tanker of oil for the equivalent of USD380 and sell it for USD4,800 in a neighbouring country. Iraq is estimated by the World Bank to be losing as much as USD8 billion per year as a result of oil theft. Efforts to contain oil smuggling - legislation, stricter punishment, better guarding of the oil facilities - are no substitute for real anti-corruption measures, metering of oil flow, and subsidy cuts to make export of stolen oil less lucrative.

Violent            TOP

There are few formal figures on violent crime in Iraq, but a number of informal indicators paint a picture of very low levels of personal safety. Despite the relative respite in violent attacks compared to 2006 and 2007, Iraqis remain far more cautious than they were before the US-led occupation, and even during its first years. When it is recalled that Iraqis routinely took evening strolls even during Western bombing raids in 1998 and 2003, the eerie stillness of nocturnal Iraq is a testament to public concern. Iraqis remain wary of unnecessary travel and many keep their children at home as protection against kidnappings. Under government rules, Iraqis are still allowed to keep one assault rifle, per household for personal defence, but many also carry concealed weapons when travelling.

In the Sunni triangle, Iraq's former Baathist groups operate much as they did under the old regime - as an enforcement network with a hand in any business operating in their area. Organised crime has affected Iraqi businesses, with many Baghdad vendors paying tribute to multiple protection rackets each day. Abduction and sexual assault were formalised tools of the Baathist security apparatus, and these forms of crime persist today, the latter presenting a pressing social concern that Iraq's developing security forces seem disinclined to address.

Murder/assault

Homicide continues at very high levels. Before the fall of the Baathist regime, Iraqi records show that an average of 16 violent deaths (not including those killed by the regime) occurred each month, a very low figure compared to February 2004 figures, which showed 667 violent deaths per month, 372 of these from gunshot wounds. In mid-2006, this figure had risen to over 1,000 homicides per month in Baghdad alone. This is a return to the high levels seen during the first three post-war months, during which Baghdad became the murder capital of the world, with more fatalities than Rio de Janeiro. The homicide rate remained at this high level in 2008, driven by retaliatory sectarian and factional infighting.

Kidnapping and ransom is another serious problem. Iraqi police officers have noted that under Saddam Hussein, abductions made up one per cent of their cases, while the phenomenon currently accounts for 70 per cent of reported crime. Kidnapping groups have known modus operandi and their own prison facilities; their typical targets are children, but businessmen and their spouses are also targeted. Banks face an increased risk of heists in the militarised economy. The economy as a whole now suffers under other forms of extortion.

Long-term economic under-performance and widespread unemployment and underemployment since the early 1990s laid the foundations for deep-rooted criminality in Iraq. While the Baathist regime ruled, serious criminality was channelled through semi-official rackets. Iraq's security and intelligence personnel were directly or indirectly involved in almost all organised crime when the regime was in charge. With links as far afield as Yugoslavia, Bulgaria, Belarus and Ukraine, Iraq's intelligence services built the basis for what became a sophisticated transnational criminal network in parallel with its state functions. The Mukhabarat included an overseas investment panel, the Board for the Management of Projects, and the means of dealing with troublesome foreign partners: the Department of Assassinations, known as M-14. It monitored internal criminal networks and demanded a cut of their takings. These features of Baathist activity provide the basis for today's powerful organised crime factions in Iraq.

For over a decade before the war, almost all crime, both domestic and that involving transnational smuggling, was government-sanctioned and involved narrow fraternities of criminals. The new pattern of crime in Iraq has seen the emergence of a broadening criminal class. In addition to released criminals and former security personnel, high unemployment and inflation combine to create an ideal environment for corruption and the dangerous recourse to employment by criminal groups. The economy as a whole now suffers under other forms of extortion. Iraqis now receive incomes that are an order of magnitude better than their pre-war stipends and many businesses are now being taxed over a dozen times a day by 'mafia' groups, suggesting that they are amassing significant economic power bases.

Countermeasures            TOP

The Iraqi government and the Multi-National Force (MNF) recognise the central importance of reconstructing the Iraqi Police Service (IPS) as the first line of defence against crime and insurgency. Indeed, senior US government officials and soldiers initially referred to 2006 as "the year of the police" in Iraq, highlighting the central role expected of the IPS. Police forces will be the principal indigenous intelligence collection mechanism for the Iraqi government for years to come. US Federal Bureau of Investigation (FBI) agents and police advisors from many countries are already training the IPS in the fundamentals of policing (such as basic investigative skills) as well as more advanced capabilities in its Major Crimes Directorate. This includes divisions to deal with kidnappings, counterfeiting, organised crime and vice, and riot control and divisions that will eventually tackle counter-terrorist issues.

In anticipation of the slow development of a formal banking sector, Iraq has begun to put in place a legal framework to protect against financial crimes. The basis for such a beginning is in place following the establishment of Coalition Provisional Authority (CPA) orders 93 (Anti-Money-Laundering Act of 2004) and 94 (Banking Law 2004). Iraq will likely put in place an appropriate legal framework and push for membership of the Middle East and North African Financial Action Task Force. When banking reform is implemented by a constitutionally-elected government, the Central Bank of Iraq will play a more formal role in licensing and supervising bank management and removing managers and revoking licenses. In the meantime, questions remain about the administration, regulation and enforcement of anti-money-laundering measures. Iraq's Money-Laundering Reporting Office does not yet represent an effective financial intelligence unit.

International Relations            TOP

Iraq's foreign relations represent a Pandora's box of issues that have remained on hold until the establishment of a constitutionally elected government. Foremost among these will be Iraq's relations with Iran, involving aspects that range from the settlement of a formal peace accord to the development of a modus vivendi concerning Iranian influence in Iraq's Shia political factions and communities. Iraq will remain dependent on US military assistance and multinational aid and debt relief for a number of years.

Bilateral            TOP

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