How Iraqi Kurds can resolve their financial crisis

Sunday, 01.24.2016, 17:07

4032 بینراوە

decade ago, I wrote an article for Lebanon’s Daily Star arguing that corruption was far more corrosive to the region than terrorism. The article struck a nerve in Iraqi Kurdistan, which was one of the examples I had addressed; it became the first time I was directly threatened for an article I had written.

The thesis, however, remains true: Terrorism might kill a handful of people in horrific ways and create human tragedy, but corruption impacts exponentially more people and can breed a cynicism toward government which can aid terror recruitment.


Today, despite the discovery, extraction, and sale of billions of dollars of oil as well as subsidization by Baghdad, the Kurdistan Regional Government (KRG) is at a moment of financial reckoning. It cannot make payroll. Its efforts to raise cash on international markets have failed. While the Iraqi central government has begun implementing austerity measures, Kurdistan has not found the political will to do likewise in any serious manner, and so hundreds of thousands go without salaries while the leadership of the region live large. Kurdish leader Masoud Barzani still makes more per month in official salary than President Barack Obama makes in a year.

Efforts to blame Baghdad for defaults also fall flat, especially given that Hoshyar Zebari, Iraq’s finance minister, is Barzani’s uncle, and Iraq’s Oil Minister Adil Abdul-Mahdi is a political rival to Iraqi Prime Minister Haider Abadi and more closely aligned with Barzani. Indeed, as far as the KRG is concerned, when it comes to protecting their financial interests, they’ve got the dream team in Baghdad.

It seems the KRG recognizes that it cannot now simply conduct business as usual. Yesterday, the theoretically independent Kurdish NRT television reported that authorities had seized $250 million from the wife of Ashti Hawrami, long the region’s oil minister. If true, that would be a start. Certainly, the amount of money reportedly seized suggests the type of conflict of interest — if not outright corruption — that has bred so much cynicism by Kurds toward their leadership.

The sad fact is that Hawrami’s wife appears to be relatively small potatoes in the context of alleged Kurdish corruption. Former Iraqi President Jalal Talabani’s wife Hero Ibrahim Ahmad (“Hero Khan”) is reputed by her Patriotic Union of Kurdistan (PUK) colleagues to be among the most corrupt figures in Kurdistan. Her tight control of PUK coffers has been one of the main precipitators of that political party’s slow-motion implosion. Likewise, Massoud Barzani, the Kurdish leader who petulantly refused to step down from the presidency at the end of his term, and his children have reportedly become billionaires during his quarter century of rule.

Kurdish officials say the decline in the price of oil has hampered their ability to meet their obligations. Iraqi officials note that there is a discrepancy in the amount of Kurdish oil exported through Turkey’s Ceyhan oil terminal and what the KRG declares it has exported. The difference, according to Iraqi, Iraqi Kurdish, and Turkish officials and analysts, represents the side-dealing between Barzani and Turkish President Recep Tayyip Erdoğan, revenue of which seems to have been siphoned off into personal rather than public accounts.

Kurdistan is important, but it is neither indispensable nor too big to fail. Whereas Saudi Arabia and Gulf emirates came to the aid of Egypt as President Abdel Fattah el-Sisi took power, Kurdish leaders cannot count on any outside power to bail them out. Even Turkey, which recently has underwritten Barzani, cannot pay the price given its own financial ills. Still, the KRG should be congratulated for beginning an era of financial accountability.

Let’s hope that the reported seizure of a quarter billion dollars is first true, and the start of new things to come. There can be no substitute for accountability. Kurds should receive money stolen from them and build Kurdistan as a shining example for others. They should embrace equality under the law regardless of political party or family name. The age where Kurdistan resembled George Orwell’s Animal Farm, a place where “all animals are created equal but some animals are more equal than others,” should end.

Michael Rubin is a former Pentagon official whose major research areas are the Middle East, Turkey, Iran and diplomacy. He is author of “Dancing with the Devil: The Perils of Engaging Rogue Regimes” (Encounter, 2014). He is a resident scholar at the American Enterprise Institute AEI. His major research area is the Middle East, with special focus on Iran, Iraq, Turkey, and Kurdish society.