How the Federal Reserve Finances Shi’ite Militias in Iraq
On July 25 the U.S. (and Spanish) soldiers withdrew from the Iraqi Basmaya base, south of the capital, and handed it over to their Iraqi counterparts. Just one day prior militants launched four rockets at the base, though no casualties were reported—the U.S. and Spanish troops at Basmaya had been training the Iraqi military to help them defeat ISIS; the Americans and their allies re-positioned themselves in Baghdad and at the Ain al-Asad Airbase in the country’s western desert.
The impression of many in the West is that, following the defeat of the Islamic “caliphate,” the persecution of religious minorities, especially Christians and Yazidis, has ceased. As I discovered when I visited the Nineveh sector—the war torn region of Mosul and its surrounding villages—nearly two years ago, this is something that is very far from reality. The persecutions, in fact, have taken on a new form; for example, former ISIS members have taken on key positions in local government, and the Iranian-backed Shi’ite militias that control the cities and villages where Christians and other religious minorities live continue to add to their burdens.
This political vacuum has impeded many honest and legitimate Iraqis, with clear and objective initiatives, from key government positions in order to freely operate so as to make a change that can establish a permanent secure and stable country.
The militias and other political Islamists, such as the cleric Muqtada al-Sadr have been aided and abetted by a new Iraqi political class whose sole ethic is self-enrichment. Over the years, this cross-sectarian cabal has mastered scams at every level: routine checkpoint shakedowns, bank fraud, embezzling from the government payroll. Adel Abdul Mahdi, who served as Prime Minister of Iraq from October 2018 until May 2020, had been hailed as a potential reformer when he assumed his office. It was expected that he would have subordinated the militias. However, with a cabinet that included people with ties to some of the worst graft schemes afflicting the country, the Shi’ite militias outmaneuvered him and continue to dictate terms in their fiefdoms, breeding even more corruption.
As Robert F. Worth of The New York Times stated last week in his article, Inside the Iraqi Kleptocracy, the aforementioned corruption is in part due to the U.S. government. After the U.S. toppled Saddam Hussein’s Baathist autocracy in 2003, it paved the way to a kleptocracy—a government or state in which those in power exploit national resources and steal; rule by a thief or thieves— in which “literally everything is for sale.”
As reported, the Federal Reserve of New York, where the Iraqi government has an account, ships hefty sums of dollars—at least $10 billion a year in hard currency from the country’s oil sales. The monies are then ostensibly auctioned off to Iraqi banks, which are supposed to then lend them out. Instead, the auction acts as a banquet for thieves and fraudsters, who have even created fake banks in order to launder money. This has also kept ordinary transparent businesses from developing since they were left without access to the loans.
This embezzlement is not just limited to the financial system. The root of the problem is Iraq’s parliament, which, after every election, allows the winning parties to divvy up an ever-expanding number of civil service jobs. This is the linchpin of the graft: powerful positions are filled with cronies who then enable contract corruption and kickbacks, greased by pilfered dollars and enforced by militias—the U.S. (Deep State) government has a long history of abetting kleptocrats who were on the “right side” of one geopolitical rivalry or another. At the same time, in a most hypocritical manner, Washington inflicts punishing sanctions on two countries—Iran and Syria—with which Iraq shares notoriously permeable borders.
As Worth goes on to say, The Trump administration may have shocked Iraq’s militias with the surprise assassination in January of Iranian General Qassim Suleimani, yet Iranian proxies like Hezbollah appear to not be disturbed. They know President Trump has little stomach for a war, especially in the Covid-19 era of soaring deficits. Their greatest priority is maintaining an Iraqi system in which they can continue exploiting their own people with the aid of U.S. taxpayers.
This is not to say that the political arena under Saddam Hussein was the embodiment for the body politic in the Middle East. In any case, after the invasion of 2003, American officers began handing out bricks of $100 bills in an attempt to make friends and jump-start the economy. This ill-contrived scheme drew opportunists, including returning Iraqi exiles who were seeking big government contracts. As billions of dollars went unaccounted for, thievery increased, especially after the oil boom of 2008, thanks to a network of oligarchs empowered by then-Prime Minister Nuri Kamal al-Maliki.
When ISIS surged in mid-2014, the Iraqi forces that rose to defend it were officially 350,000 strong, much larger than the attacking jihadi brigades. In reality, the army had been eviscerated by “ghost soldier” kickback schemes, with commanders pocketing hundreds, even thousands, of salaries. These practices destroyed morale inside the army and fed popular anger among civilians in Mosul, who became more receptive to ISIS than they otherwise might have been. A recent survey of people in the Mosul region, led by the Harvard Humanitarian Initiative, found that they saw corruption as a chief cause of the emergence of ISIS.
Senior editor of The American Conservative Matt Purple explains that whenever the U.S. is behind the toppling of a dictator it suffers from a failure of imagination. American officials are unable to grasp the disastrous consequences that tend to be worse than what was already in place, whether a crooked regime in Iraq or a failed state in Libya—Moammar Gaddafi may have been brutal, but at least the electricity worked and you could withdraw money from the bank. The end result is an entrapment of America in a series of abstract causes and effects, believing that such operations will favor freedom and freedom will translate into a democratic and stable government—the reality, as can be judged by history or current events, is just the opposite.
The present White House administration, like the previous Bush and Obama administrations, seems to be indifferent in clamping down on its kleptocrat pawns in Iraq—this would change if enough Americans protest against having their taxes aid Islamists. Thus far any sort of endeavor taken to fight the political and financial corruption in Iraq has been greeted with sense of cynicism by Iraqis. This does not mean, however, despite a near-impossible crusade that it cannot be eventually eradicated.
Mario Alexis Portella is a priest of the Cathedral of Santa Maria del Fiore and Chancellor of the Archdiocese of Florence, Italy. He has a doctorate in canon law and civil law from the Pontifical Lateran University in Rome; he also holds a M. A. in Medieval History from Fordham University, as well as a B.A. in Government & Politics from St. John’s University. He is also author of Islam: Religion of Peace? – The Violation of Natural Rights and Western Cover-Up.