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Iraqi Prime Minister steps down as state is fracturing

Vast swathes of Iraqi territory are under Islamist insurgent control, the chasm between the Kurds and Baghdad has widened again, and the country's divisive prime minister has stepped down. Kirk Sowell explains how Iraq has reached the brink

Iraqi Prime Minister Nuri al-Maliki, head of government since 2006, announced he was stepping down on 14 August after it had become clear that he had lost the support of the remainder of the Shia political class, as well as the country's senior clerical leadership. He is handing power to prime minister-designate Hayder al-Abadi, a fellow member of the Shia Islamist Dawa Party, at a time when the country's future as a united state is threatened. A renewed Sunni insurgency has overrun most Sunni Arab-populated areas in the west and north of the country, the security services are in a shambles, and a conflict with the autonomous Kurdish region in the north over its independent oil exports through Turkey has led to a financial as well as territorial breach. Just as Iraq stood perched on the edge of an abyss in May 2006 in the midst of a bloody civil war along sectarian lines, Maliki seems to be delivering the country to his successor in the much the same state he received it. 

To understand how the country got to this state, and the obstacles it faces in getting out of it, it is necessary to start with efforts by the country's Sunni Arab population to reset their place in modern Iraq. Sunnies dominated Iraq under the Baathist regime in power to 2003. Even Sunnis who reject violence tend to hold excessively high expectations of the power they can wield in a state in which they are just a quarter of the population. 

Some have reacted to this by pushing for an autonomous region within Iraq, as the Kurds have. This article traces the impact of this failure to renegotiate the national compact  and how this led to the second Sunni insurgency, which in a sense began in December 2013 and continues now. 

This article also traces the breakdown in negotiations between Baghdad and the Kurdish region over budget and oil export issues and suggests the new government could struggle to find an acceptable compromise. Nonetheless, while the Arab-Kurd issue is exigent for budgetary reasons, Iraqi Kurdistan will eventually become an independent state. The new government's handling of the Sunni insurgency will determine the more consequential long-term issue of Arab Iraq's ability to hold together.

This contrasts dramatically from 2010, when the country held its previous parliamentary elections. At that time, US American troops were winding down their presence and the country's armed Sunni insurgency was beaten down to the point of bare survival. Since then, the situation has deteriorated. Whereas 2010's elections saw voting patterns moving toward a national, non-sectarian basis, the April 2014 election was more polarising, taking place at a time when a new Sunni insurgency was at an upswing. 

Responsibility

Much blame for this reversal lies at the feet of Maliki, for whom holding onto power took priority over building the institutions of state in the fledgling democracy, including having professional army. But part of the reason for the dissolution of Iraq's tenuous political consensus lies in the uncompromising demands of Sunni leaders, and also the inevitable return of history to northern Iraq, where the Kurdistan region is slowly but surely moving toward independence. With a new prime minister-designate from Maliki's own party, Hayder al-Abadi, set to form a new government with familiar factions and faces, the task of restoring Iraqi state unity is a tall one indeed.

What we may call Iraq's second Sunni insurgency has been germinating since before American forces left the country in full in December 2011. The first Sunni insurgency had ended in defeat by 2008, and the 2009 provincial elections brought some hope for reconciliation as Sunni Arabs, having boycotted the first provincials in 2005, participated in large numbers. 

This brought representative government to the Sunni-majority provinces, and in the 2010 parliamentary elections most Sunni factions united into the Iraqiya coalition, winning  91 out of 325 seats, just two more than Maliki's bloc.But Iraqiya was a collection of Sunni Islamists, largely former Baathist secular Sunnis, Arabists and nationalists, and former Baathist secular Shia. The Shia Islamist blocs, Maliki's State of Law Coalition (SLC) and the Iran-backed Iraqi National Alliance (INA), had obtained 89 and 70 seats respectively, slightly increasing their share of parliament, and so they merged into an all-Shia National Alliance to ensure a Shia Islamist would form the new government. 

Another consequence of 2010, clearer in retrospect than at the time, is a deal Maliki made with Iran to get re-elected. His re-election depended on the merger, and Iranian pressure on the Sadrists and the Badr Organisation, two powerful Shia organisations, to back him. 

A deal with the Sadrists indeed clinched his nomination, and Badr broke with the Iranian-founded but now independent Islamic Supreme Council of Iraq (ISCI) over its support for Maliki. As well as taking Badr into the SLC afterwards, Maliki also began cultivating the Iran-backed militia Asaib Ahl al-Haq (AAH), a Sadrist splinter group. Sunnis would come to blame militias and militia-infiltrated security services for killings and kidnappings of Sunnis, and this played a major role in giving the new Sunni insurgency momentum. 

In late 2011, Sunni leaders tried another gambit, the formation of Sunni autonomous regions. First Salah al-Din and then Diyala voted to begin the legal process, and Maliki reacted by suppressing the Diyala effort by force - imposing martial law without parliamentary approval - and threatening to do so in Salah al-Din. While the autonomy effort was partially driven by complaints of illegal arrests and militia killings, it was also driven by a sense among Sunnis of not having a proper place within the Iraqi state. 

Autonomy

The Sunni protest movement, which began in Anbar province in December 2012 and ran for a year, was in part a second effort to achieve the autonomy demand. There was an opening for compromise, and Shia clerical authorities urged Maliki to meet "legitimate" protester demands. Some Sunni demands were unachievable - protest groups which were fronts for insurgent groups demanded abolition of the constitution, and even some non-violent groups demanded unrealistic representation in the state, mistakenly viewing Sunnis as the country's demographic majority. But others, related to illegal arrests and detention, exclusion from employment through de-Baathification (the exclusion of members of Saddam Hussein's Baath party from holding any official position) and the like, were achievable, and Maliki, working with Sunni ministers, proposed reform measures.

Ultimately the reform legislation failed, with a bill to reform de-Baathification drawing especially strong opposition from the Sadrists. But reform was also sabotaged by Sunni protest leaders who rejected any deals negotiated by Sunni ministers in the government and insisted only they could negotiate on behalf of Sunnis. 

The deal ultimately collapsed, Maliki lost seats in provincial elections that April after attempting to compromise, and a massacre of over 40 unarmed protesters in Huwija, Kirkuk just after the elections helped radicalize more moderate elements. Maliki eventually tired of the protests and on 30 December 2013 ordered the forced closure of the symbolic centre of the protest movement near Ramadi, Anbar's provincial capital, imposing martial law on the city. This helped unleash a new insurgency.

These were the roots of Iraq's second Sunni insurgency, which initially focused on Anbar. The jihadist group called the Islamic State of Iraqi and al-Sham (Isis), now called the Islamic State (IS), was conducting a campaign of assassination, intimidation and extortion in the northwest province of Ninawa in order to take control from the ground up. 

The extortion racket helped supplement IS revenue from its oil smuggling in its base in eastern Syria, to which both Anbar and Ninawa are adjacent. IS overrunning Ninawa's provincial capital of Mosul on 10 June widened the war. 

Maliki's raid against the Ramadi protest site was an inept election stunt; parliamentary elections were to be held on 30 April 2014, and the site's speakers, though not terrorists as Maliki would claim, were controversial and highly offensive to Maliki's Shia base. Maliki's miscalculation lay in his inability to focus on fighting groups that truly posed a threat. 

Through December, military operations against the jihadists had broad public support, including from Sunni political and tribal leaders. By targeting a key protest site, Maliki empowered those pushing to renew the 2003-07 insurgency. And so Maliki won, with the help of an effective propaganda campaign, a clear plurality in the 30 April polls (Maliki's SLC won 95 seats, increasing that to 102 through post-election mergers, far more than the second-place Sadrists with 34).  But he left the country divided and weak in the face of the recent terrorist surge. 

Fractures elsewhere have worsened things. The chasm now existing between Baghdad and the Kurdistan Regional Government (KRG) may be traced to the breakdown of negotiations over a national oil law in February 2007 and the Kurds' subsequent decision to begin signing contracts with independent oil companies. Baghdad never recognised the contracts, relying on a provision in the constitution that Iraq's oil and gas "are the property of all Iraqis" to argue that only the entity elected by all of Iraq could sign energy contracts. 

Working together

The most pertinent provision, Article 112, contains vague direction to the federal government, regions and provinces to "work together to form policies to oil and gas wealth". Both Baghdad and Erbil claimed exclusive authority over energy contracts, and to this point the judiciary has yet to rule directly on the correct interpretation. 

The two levels of government coexisted after this for six years under a de facto system in which Baghdad continued to send the KRG a proportional share of the budget even while refusing to recognise the contacts, which also resulted in the KRG not exporting oil and thus not contributing to the federal budget. Then in March 2013 Maliki and his centralist allies - namely Sadrists and deputy prime minister Salih al-Mutlak's Dialogue Front - passed the budget with a narrow majority over ardent Kurdish objections. What made the new budget different was the provision of a legal basis to cut off budget payments to Erbil. Although the KRG would argue the cut-off, which took place the following January, was unconstitutional, it never challenged the statute in court. 

The budget's passage led to a Kurdish boycott of the government that settled into an uneasy political standoff, until on 27 November 2013 Kurdistan president Masud Barzani signed several key energy deals during a trip to Turkey - both a potential market for Kurdish oil and a transit route for putative exports through the Mediterranean port of Ceyhan. On 12 December the KRG finally began its first pipeline exports. Baghdad responded by cutting off budget payments the following month and initiating legal actions against potential buyers of KRG oil. That they were pipeline exports is significant because of the Iraq-Turkey Pipeline Treaty. 

This treaty, says Baghdad, barred uses of the pipeline, which carries Iraqi oil to Ceyhan, without its approval. There have long been relatively modest amounts of oil trucked to both Turkey and Iran justified as barter agreements - which some Arab Iraqi politicians have condemned as "smuggling", but against which Baghdad has never taken action. 

Baghdad opposition to the deals was further stirred by the fact that they provided for Turkey to collect the revenue in a state-affiliated bank and then return the money to Iraq with an 83%/17% breakdown. While the annual budget nominally grants the KRG 17% of federal funds,  Baghdad has always withdrawn so-called "sovereign expenses" for ministries that serve all of Iraq (defence, foreign affairs, and so on). In practice this has left Erbil getting only about 11%. So the Turkey deal would have given the KRG more money, and put a portion of Iraq's finances in Turkish hands. 

Final offer

Through mediation orchestrated by US diplomats, deputy prime minister Hussein al-Shahristani, who has oversight of Iraq's federal oil policy, made the Kurds what would be Baghdad's final offer in January 2014: Kurdish oil exports through Turkey would be allowed, but on Baghdad's terms; prices set at a global level, product sold through the federal State Oil Marketing Organisation (SOMO), and all revenues channeled through Development Fund for Iraq (DFI), which processes all Iraqi oil revenue. 

The KRG countered with a demand for a separate account at the DFI that only Erbil would control, and the Maliki government said no. Since January, Baghdad has only made partial payments (in mid-March) for January and February of $470 million, less than half of the $1,034,075,150 owed monthly. 

The KRG has tried to compensate, raising up to $4.2 billion through bonds, using future oil exports as collateral. Nonetheless, the lack of money from the federal government left the region under extreme financial strain - just as Kurdish-controlled areas came under forceful attack from IS for the first time in June. 

Meanwhile, parliament was unable to even pass the 2014 budget before its term expired due to a mixture of a Kurdish boycott of parliament and Sunni faction demands parliament first investigate alleged crimes by the government in Sunni areas. The next government would be left with a full plate. 

President Fuad Masum's appointment of senior Dawa Party parliamentarian Hayder al-Abadi as prime minister-designate on 11 August signalled the end of the eight-year Maliki era. Less clear is whether this signals a break with the past. Given the Shia Islamist majority in parliament, the prime minister would necessarily come from the Shia. And the 127-MP bloc of the Shia National Alliance which nominated Abadi involved splitting in half Maliki's SLC and adding to it the other Shia parties. The Shia base for the new coalition is as follows: Abadi, SLC, 38 seats; Shahristani, SLC, 12 seats, Sadrists, 34 seats; Islamic Supreme Council of Iraq, 31 seats; six seats each from former prime minister (and Shia bloc leader) Ibrahim al-Jaafari and the Fadhila Party.

The dynamics within the SLC were key due to its large plurality noted above. Shahristani's own Independents faction within the SLC won 25 or 26 seats, according a range of sources, compared with just 13 seats for Maliki's Dawa Party. 

There are two other key SLC factions, both tied to Iran - the Badr Organisation, 22 seats, and the Dawa Party-Iraq Organisation - with about 15, and then several small parties. With most MPs from the two Dawa branches standing with Maliki, it seems Shahristani donated some of his MPs to Abadi to give him a plurality. Shahristani's status as the kingmaker was illustrated by him standing immediately next to Abadi during the nomination ceremony, with Sadrist and ISCI representatives standing farther down despite having more seats.  

There is no reason to believe Abadi's nomination is going to make bridging the gap between Baghdad and Erbil easy, unless the Kurds are now willing to accept the settlement Shahristani offered them in January. As for Abadi himself, in his capacity as the SLC's most senior figure responsible for budget issues, he was quick to blame the KRG for the federal government's budget shortfall. On 15 December 2013, just after the exports started, Abadi said "the 2014 has a large deficit due to a real oil production problem, specifically the lack of production from Kirkuk and the Kurdistan region". In January, shortly after the cut-off, Abadi again cited the KRG's failure to "turn over revenues from oil exports" as being the core reason for Iraq's gaping budget deficit. While Abadi was never among those in Maliki's circle for making inflammatory anti-Kurdish statements, he also has no record of deviating whenever Maliki has chosen to take a hard line. Furthermore, the Sadrists and Fadhila have always backed centralist policies on budget and oil issues. 

A better tomorrow?

Nor is there much reason to be optimistic about Abadi's chances of bringing national reconciliation. Though he has a modest public demeanour and is described as affable in person, Abadi has no public reputation for pushing reform. Having been focused on finance he has not been directly involved in Shia-Sunni sectarian issues, but the components of his coalition - Sadrists, ISCI and Fadhila - include the parties who have blocked reform on de-Baathification. While media and diplomatic sources often describe the problems with Maliki's governance as relating to marginalisation of the Sunnis, this has only been true at very sensitive security positions, as Sunnis were proportionally represented in ministries during the past two governments. On the issues that truly stir Sunni anger, illegal arrests and detention, torture and prison conditions, and de-Baathification, Abadi has no track record and no announced programme. 

Abadi's budget experience may help in dealing with the exigency of negotiating a compromise to pass the budget, but regardless of the terms of that settlement, it will simply hold Iraq over for a few more years until Kurdistan's oil infrasture is sufficient to allow the Kurds the independent state which is now inevitable. More consequential for Iraq, and for regional stablity, is whether he can reunite Arab Iraq and create the viable political, security and legal institutions Maliki's rule left enfeebled.

The task is a tall one, assuming he successfully gains a confidence vote from parliament after assembling his coalition. And given the nature of his coalition, the truly hard work will begin after that. Iraq now faces a new political era with many old faces and problems.

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