2005 April 05 Tuesday
Corruption Seen As Bigger Threat Than Insurgency In Iraq

Transparency International, in their new Global Corruption Report 2005, argues that reconstruction in Iraq faces serious corruption problems.

“Funds being poured into rebuilding countries such as Iraq must be safeguarded against corruption,” Eigen said today. “Transparency must also be the watchword as donors pledge massive sums for reconstruction in the countries affected by the Asian tsunami,” he added. The Global Corruption Report 2005, with a foreword by Francis Fukuyama, includes a special focus on construction and post-conflict reconstruction, and highlights the urgent need for governments to ensure transparency in public spending and for multinational companies to stop bribing at home and abroad.

“The unfolding scandal surrounding the UN sponsored oil-for-food programme in Iraq highlights the urgent need for strict conflict-of-interest rules and transparent and open bidding processes,” said Eigen. As Reinoud Leenders and Justin Alexander write in the GCR 2005, much of the anticipated expenditure on building and procurement in Iraq has not yet been spent. “If urgent steps are not taken,” they write, Iraq “will become the biggest corruption scandal in history”.

Iraqi politics is in large part a fight over the oil money.

"I can see all sorts of levels of corruption in Iraq," says report contributor Reinoud Leenders, "starting from petty officials asking for bribes to process a passport, way up to contractors delivering shoddy work and the kind of high-level corruption involving ministers and high officials handing out contracts to their friends and clients."

The recent elections may help, he adds, but already he notes a tendency for political bargaining indicative of "dividing up the cake of state resources."

Of course! Whoever controls Iraq's government controls the second largest oil reserves in the world. These officials will become less constrained in their mad grabs for money once the US presence winds down. Whichever faction comes out on top gets the spoils.

Most of the money the US has allocated for Iraq rebuilding has not been spent yet.

Willis and other critics worry that with just $4.1 billion of the $18.7 billion spent so far, the U.S. legal stance will open the door to much more fraud in the future.


Grassley adds that if the government decides the False Claims Act doesn't apply to Iraq, "any recovery for fraud, waste and abuse of taxpayer dollars ... would be prohibited."

The biggest problem with insufficient oversight in the handling of the US aid money is that the graft and corruption in its spending helps to reinforce the culture of corruption.

Baghdad, Iraq -- "Haramia," or "thieves," is the new name given to local contractors who receive money to fix up schools, then allegedly do such a poor job that they can put most of the money in their pockets, those on a Sadr City advisory committee say.

Ministry of Education officials acknowledge problems but say they're doing everything they can to combat them.

In one case, contractors actually stole light fixtures from the school instead of painting, replacing doors, or doing anything else called for in fix-up plans, said a school teacher who declined to be named. At another school, a man who would identify himself only as Mohammed said contractors threatened him and the principal with death if they did not sign a paper saying shoddy work had been done adequately.

The StrategyPage writers think Bush Administration ambitions in Iraq are more likely to be undermined by corruption than by the insurgents.

When Saddam and his Baath Party were overthrown in 2003, it quickly became apparent that there were not enough trained (and experienced) Shia Arab and Kurdish bureaucrats to run the whole country. So Sunni Arab officials were brought back in. And then the thieving began. Billions of dollars went missing. There were Shia Arab and Kurdish thieves as well, but they were not as experienced, or as ruthless, as the Sunni Arab officials. Case in point is the use of Sunni Arab gangs as hit men, to eliminate honest officials who are trying to crack down on corruption.

Another problem is family relationships. Family ties are important in Iraq, and the families tend to be large and expansive. A Sunni Arab police commander might easily have a cousin working for a terrorist group, and another who’s a banker in Europe or Egypt. The police commander can use these connections to get a corruption investigator murdered, and to get stolen money out of the country and laundered in a foreign bank. There are at least a few thousand Sunni Arabs involved in corruption in a big way (many more in smaller ways), and several billion dollars, at least, that have been stolen so far. Do the math. How do you think people are paying for all those new luxury cars and mansions? The crooks are smart. They spread the money around in the family. That buys protection, and places to hide when the going gets very rough.

StrategyPage does not think Iraq is by any means assured to turn out well.

A happy ending is not assured. If enough Iraqis do not step up for honest government, the country will end up with another Saddam.

Some Iraqis who know Saddam was bad think things were better under Saddam.

But most Iraqis say they can live with gas lines and power outages if they can be assured of safety.

"Yes, some new things are available now, mobile phones, satellite TV, new cars. But the thing that we lost is more valuable," says Basim Majid, the manager of an electronics store. "We are in the middle of chaos and there is no way back. I hope they use force to spread security."

Bassam Henna, who is unemployed, is discouraged. "Frankly, the time of Saddam was better in general," he says. "Not Saddam himself, with all his faults and all his mistakes, but in general, that time was better than now. If we are missing him, imagine what the situation is like."

A feeling of triumphalism has swept over the ranks of some Iraq war advocates in the wake of reduced insurgent attacks in Iraq and the protests in Beirut to remove Syrian troops from Lebanon. My own conservative sentiment remains that humans are not so easily improved and recall that most American attempts to bring democracy and rule of law to foreign lands have beeen failures. The reasons for the absence of democracy in so many Middle Eastern countries are very deeply rooted. Consanguineous cousin marriage is just one of them. There are still other causes for democracy to fail to take root.

Share |      By Randall Parker at 2005 April 05 02:01 AM  Mideast Iraq Corruption

PacRim Jim said at April 5, 2005 2:11 AM:

We Americans may succeed in making Iraq relatively democratic, but that is no guarantee that the Iraqi government will be relatively honest or even relatively friendly with us. However, it will make them relatively less likely to go to war with their neighbors.

Derek Copold said at April 5, 2005 12:43 PM:

Actually, insurgent attacks are picking up again. They were never defeated. They only went into another period of remission, which is quite common for this kind of fighting.

gcochran said at April 5, 2005 2:49 PM:

I would be really surpised if we ever succeed in making Iraq as democratic as Bismarckian Germany.

GUYK said at April 5, 2005 4:10 PM:

Oh, I don't know. The pundits who said that there could be no elections in Iraq were wrong. Looks like the country is weell on the way to establishing a new government-just may not be one the USA prefers but a new government never-the-less. I read some blogs that report some good news from Iraq such as men standing inline to join the police security forces a day after some eighty were murdered by a suicide bomber. There is a semblance of a free market now and it appears to be growing daily.

Corruption in government? What else is new? Latest reports from Canada indicate that a corrupt government there could be on its way out. Governments are made up of people and some people are corrupt. I suspect that the Iraqi government will be no more corrupt than most of the rest of the mid-east.

I spent a few years in Turkey. Graft is a way of life with government officials. If you want something from government be prepared to offer something in return. Maybe its a legacy from the old Ottaman empire. But, from what I hear from friends that have done business in Mexico it is not much different there. The point is that currupt government officials serve and ripoff the public everywhere, including the USA.

Stephen said at April 5, 2005 5:21 PM:

Corruption is really a western concept. The practice of paying a bribe for favourable treatment is endemic in the arab world. Not trying to pick on that region as bribery happens everywhere, for instance in darkest africa brand name cigarettes are a good medium of exchange (ie have half a packet in your pocket so that if some bored border guard is holding you up you can take a cig for yourself and politely offer one to the guard. If he starts talking about the brand and how hard it is to get locally you can generously give him the rest of the pack saying that your 'trying to quit' - soon enough he'll let you proceed.)

It even works the other way, on occasion after completing a government job in an oil rich country a person would wander up to me and hand me an envelope which inevitably contained a crisp US$100 dollar note (or if I was 'appreciated' enough, I might receive multiple notes with consecutive serial numbers). Though I suppose that is closer to tipping (ie after the contracted service had been provided) than bribery (ie baksheesh to facilitate something). People get quite offended if you try to decline it.

Bartelson said at April 5, 2005 6:20 PM:

There is no possibility of Democracy what so ever in Iraq. The best government we can hope for is something like Egypt or Jordan. While I supported the war against Saddam Hussien, every American soldier who has died since the fall of Saddam's statue has died in vain. To die for George Bushes's vainity is a hideously dismal reason to die.

GUYK said at April 6, 2005 3:53 AM:

Well, Bartelson, it is obvious that you are no fan of the Bush administration. Neither am I. But,I cannot accept that every soldier since taking Bagdad has died in vain. No, there probably willnot be a democracy in Iraq. I certainly hope not because if there is a democracy it will be a Islamic tyanny. But there is still a chance for a democratic republic and although there is arguing and bickering among the three major factions there has been some progress. Keep in mind that it was ten years from the Declaration of Independence to the constitutional convention in the USA. It took another year or so before the constitution was ratified and only then after amendments. The fact that the major factions are arguing and bickering is a good sign to me. That is what compromise is all about and the way a government becomes a government. Otherwise it is either tyanny or civil war.

Jack Strocchi said at April 6, 2005 5:48 PM:

Randall, Great summary. Love your work. I will have a good long think about what you have written, make sense of it and then try to add some value to this important debate.

Bob Badour said at April 6, 2005 8:45 PM:


Ironically, while the governing party in Canada is the Liberal party, bitter rivals of the corrupt regime actually control the party now. It would be kinda like if Clinton left a time bomb for whatever Democrat was most critical of himm that only blew up after the rival earned the nomination of the party.

Frankly, though, I would like to see the Liberals disintegrate like the Conservatives nearly did a decade ago. Sadly, I doubt it will happen.

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