The sectarian and ethnic dimensions of Iraq, alongside the ramifications of the ill-fated U.S occupation of the country to protect Western oil interests are very useful reference points to explaining persistent conflict in Iraq. However, like terrorism, ethnic and sectarian factors are frequently overstated at the expense of other factors driving war in Iraq. Understanding the war economy, long-established in Iraq since the Iran-Iraq War (1980-1988), and the country's critical trading routes will give businesses and policymakers important answers in analysing risks and opportunities in Iraq and its neighbouring countries.
The regional importance of these trade routes combined with the impact of the 2003 Iraq War (catalysed by the inadvertent revolution and sectarianisation of Iraqi politics initiated by U.S coalition forces and its Iraqi clients) has limited the ability of central government to impose control over national sovereignty and borders. As such, the struggle to control these highways will inhibit future governments, a familiar development seen in Afghanistan, Libya, Yemen, Somalia, Pakistan and Syria. The Iraqi Civil War in post-Saddam Iraq only strengthened these economic and political trends and is also in-part owed to the dire mismanagement of the Iraqi economy by the former Ba'athist regime in the 1980s and 1990s which included:
The decline of oil production during the Iran-Iraq war
The disastrous implementation of economic liberalisation (infitah) between 1986-1988 which aimed for mass-privatisation to drive agricultural reform.
Economic liberalisation resulted in the collapse of the public sector and the state bureaucracy to manage economic regulation.
The erosion of state agency (politically, militarily and economically) catalysed a reassertion of patronage, informal networks, and localised neo-tribal politics and economics.
Foreign debt of $80 billion to fund eight years of war with Iran predominantly owed to the Gulf States.
U.S bombing during the First Gulf War (1990-1991) destroyed critical infrastructure
UN sanctions, following Saddam's invasion of Kuwait, froze Iraqi banks' foreign assets, crippled the value of the dinar (killing an estimated 500,000 people) and destroyed development projects and healthcare.
The failure of the successive White House administrations' to deliver socio-economic reform following the deposition of Saddam (2003 - 2011).
Transnational tribal POLITICAL econoMY:
The ISIS insurgency, the Kurdish uprisings and the wider Iraqi and Syrian civil wars, to some extent, has been fuelled by historical and current transnational tribal and sectarian ties and economics lying beneath the artificial borders of Syria, Turkey, Jordan, Saudi Arabia and Iraq and the artificial colonial territory drawn out for many of these countries by the Western powers during the First World War. The collapse of traditional state structures and authority following the Arab revolutions and Iraq War has catalysed their resurgence and encouraged the decentralisation of political and economic administration.
Like other militias, warlords and tribes across post-Saddam Iraq, Abu Bakr al-Baghdadi (current leader of ISIS) coopted and carved out his own area of economic interest in Iraqi borderlands where drug trafficking, oil smuggling, human organ trafficking, female sex trafficking and child slaves has been rife for years. Since 2003, these informal underground economies have flourished.
Decentralisation of Iraq AND PERPETUAL CONFLICT
Iraq's central government is effectively hostage to diverse and clashing external regional, national and local interests and events including Jordan, Syria, Saudi Arabia, Iran, Turkey and aspiring Kurdistan. Global forces have also heavily influenced Iraq's politics and economy with Western states determined to safeguard oil access to American, European and Asian markets through economic warfare and military action for decades.
Historically, the Syrian-Iraqi border served as a key point through which Bashar al-Assad funnelled foreign fighters, arms and financial aid to fight the U.S occupation.
When the Syrian War spilled over into Iraq in 2013-2014, Sunni insurgent and Shiite militias frequently extorted or received bribes from truck drivers to allow the transport of the goods. The consequences is usually death, imprisonment or the denial of access to other parts of the country.
The 2016-2017 Mosul Offensive will lead to conflict between Iranian and Iraqi-sponsored Shiite militias, Kurds, Turkish government and the Iraqi government in Baghdad over the territorial sovereignty of Iraq and who controls Route 1.
Note how ISIS, formerly known as Al-Qa'ida in Iraq, expanded rapidly with limited forces following it seizure of key cities along Route 1 including:
Mosul - 10 June, 2014
Bayji - 11 June, 2014
Tikrit - 11 June, 2014
The influence of Turkey and Syria politics and economics, including Gulf States' meddling, is clearly seen along Route 1 during the Syrian War according to the United States' Defence Intelligence Agency in 2012:
1B. THE SALAFIST,- THE MUSLIM BROTHERHOOD, AND AQI [AL-QA'IDA IN IRAQ] ARE THE MAJOR FORCES DRIVING THE INSURGENCY (AGAINST ASSAD) IN SYRIA.
1C. THE WEST, GULF COUNTRIES, AND TURKEY SUPPORT THE OPPOSITION; WHILE RUSSIA. CHINA, AND IRAN SUPPORT THE (ASSAD) REGIME.
D. AQI, THROUGH THE SPOKESMAN OF THE ISLAMIC STATE OF IRAQ, ABU MUHAMMAD AL-ADNANI...IS CALLING ON THE SUNNIS IN IRAQ, ESPECIALLY THE TRIBES IN THE BORDER REGIONS (BETWEEN IRAQ AND SYRIA ) TO WAGE WAR...
7B. OPPOSITION FORCES ARE TRYING TO CONTROL THE EASTERN AREAS OF SYRIA (HASAKA AND DER ZOER) ADJACENT TO THE WESTERN PROVINCES (MOSUL AND ANBAR), IN ADDITION TO NEIGHBOURING TURKISH BORDERS. WESTERN COUNTRIES, THE GULF STATES, AND TURKEY ARE SUPPORTING THESE EFFORTS.
E. AQI CONSIDERS THE SUNNI ISSUE IN IRAQ TO BE FATEFULLY CONNECTED TO THE SUNNI ARAB AND MUSLIMS...
8. THE EFFECTS ON IRAQ:
8B. OPPOSITION FORCES WILL...USE IRAQI TERRITORY AS A SAFE HAVEN FOR ITS FORCES TAKING ADVANTAGE OF THE SYMPATHY OF THE IRAQI BORDER POPULATION...
8C. IF THE SITUATION UNRAVELS THERE IS A POSSIBILITY OF ESTABLISHING A DECLARED OR UNDECLARED SALAFIST PRINCIPALITY (CALIPHATE) IN EASTERN SYRIA (HASAKA AND DER ZOR), AND THIS IS EXACTLY WHAT THE SUPPORTING POWERS (THE WEST, TURKEY AND THE GULF STATES) TO THE OPPOSITION WANT, IN ORDER TO ISOLATE THE SYRIAN REGIME.
D. THE DETERIORATION OF THE SITUATION HAS DIRE CONSEQUENCES ON THE IRAQI SITUATION AND ARE AS FOLLOWS:
Route 1, where smuggler networks have a been long-established , were utilised by Turkey, ISIS and Syria for the smuggling of cheap oil and armaments, basic foodstuffs, antiquities, luxury goods and profiting from informal black market trade. The Turkish government, politically and economically, were at odds with the Iraqi and Syrian governments and an independent Kurdistan, particular the decision of Baghdad and Damascus to sign a deal with Tehran after nudges by Moscow (all of whom are the regime's key allies in the civil war) which rejected the Turkish-Qatari pipeline proposal.
Turning a blind-eye to foreign fighters crossing the border, allowing the establishment of ISIS's caliphate to encourage the destabilisation of Iraq and Syria while flooding the proposed pipeline route (which cut across Iran, Iraq and Syria) and Route 1 with ultra-violent jihadists was Istanbul's snub to Moscow. However, following the souring of relations between Turkey and Western powers after the military coup in Turkey, Vladimir Putin has brought Tayipp Erdogan under his wing, as exemplified by several meeting between top government officials and the signing of a new gas deal.
Jordan is a key country former vice-president Dick Cheney (see above video) omitted from wanting a economic and political "piece" of Iraq.
The "Sunni Triangle" exists along Route 10. This "Triangle" served as a major flashpoint in the confrontation between U.S forces and the Iraqi Sunni insurgency.
According to Charles Moore, "the most important country in political economy, to the Sunni insurgency (responsible for the vast majority of American casualties) is Jordan."
During the Iran-Iraq war, Jordan and Iraq established several trade agreements.
These agreements were predominantly based on political patronage and underlying tribal and familial ties.
Inevitably, to off-set financial and political crisis, "the economic and political rationales that linked the Jordanian transportation labor (lower income, rural workers), the Amman-based exporters and the Sunni importers in Iraq also overlapped with tribal and religious sympathies."
The U.S invasion critically threatened the "Sunni Triangle" interests (with strong ties to Saddam's regime) and therefore threatened Jordan's political patrons and clients.
The mismanagement of Route 10 courted violence against Americans and Al-Qa'ida. Former leader of ISIS, Abu Musab al-Zarqawi and his predecessor Abu Omar al-Baghdadi, who had successfully carved out a mini-state following an alliance of strategic convenience with Sunni tribes to fight the U.S occupation, paid the price when they attempted to exert control over portions of the road from Baghdad to the capital of Jordan Amman, Highway 10. The complaints by Sunni tribal leaders that such actions undercut the ability of the Albu Risha tribe to raise revenue by taxing or extorting traders and travellers was met by a wave of retaliatory killings by Al-Qa'ida in Iraq. The killings by Al-Qaida in Iraq gave tribal groups two incentives to bury the jihādists. The first was political revenge as they slaughtered their tribal leaders and the second was economic.
Zarqawi and Omar al-Baghdadi tried to claim too much influence on traditional trade routes with Jordan which were managed by "rural insurgent groups (which) protected and managed the trade routes through internal agreements and with the cooperation" of their Jordanian and Iraqi counterparts located in Amman. AQI (now ISIS) violated those internal and attempted to dictate those internal agreements. Members of Al-Qa'ida were murdered, Zarqawi was sold out to US forces and Jordanian intelligence by the Sunnis and killed in 2005 and AQI was weakened by the "Sunni Awakening" assisted by General Petraeus' Surge.
Equally, note how ISIS achieved its first notable victory (according to Western media outlets) over the Iraqi government after it captured.
Fallujah - 3 January, 2014
Ramadi - 16 October, 2014
Both Fallujah and Ramadi are "strategically located on Highway 10...home to many people who have strong links with tribal kin across the border in Jordan and Saudi Arabia." During the occupation of Iraq, Saudi Arabia monarchy would have staunchly opposed the democratic project of the Bush administration. According to the Combating Terrorism Centre at Point in December 2007 analysis of 700 records of foreign fighters who entered Iraq during the Iraqi insurgency against the U.S occupation, 41% were from Saudi Arabia while Jordan was the backbone of economic power of the insurgency.
Furthermore Hilary Clinton wrote in 2009 that private donors are a key source of funding for Al-Qa'ida and neo-Salafi/Wahabbist movements according to leaked U.S diplomatic cables: “It has been an ongoing challenge to persuade Saudi officials to treat terrorist financing emanating from Saudi Arabia as a strategic priority…Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide”. Five years later and two months after Baghdadi's declaration of a caliphate in Mosul, Clinton wrote in an email:
"While this military/para-military operation is moving forward, we need to use our diplomatic and more traditional intelligence assets to bring pressure on the government of Qatar and Saudi Arabia, which are providing clandestine financial and logistical support to ISIS and other radical Sunni groups in the region."
HIGHWAY 8 + HIGHWAY 6:
'Down Highway 8, the main Shiite militias and parties - under the nose of the U.S occupation - monopolistically carved up the economy in ways that resemble the practices of their Baathist predecessors...southern cities are overrun with goods coming over the border from Iran and re-exported from Gulf ports, primarily Dubai. Control over the transportation and lodging of Shiite pilgrim...Supreme Islamic Iraqi Council, Al-Da'wa and Sadrist elements can logically be assumed to be in the game as well...minor smugglers shuttle smaller amounts of goods across the Iranian border....As the pipelines for Turkey and the Gulf were turned back on (following the removal of Western sanctions during the 1990s)...truckers transporting...undercover to Syria and the Gulf...were out of a job. During the U.S occupation...Marshland oil smugglers amount to thousands of...pipeline attacks underscore the link between post-2003 acts of sabotage...a tactic for undermining the occupation (and)...to force government to import and distribute as much fuel as possible using thousands of tanker trucks...Oil employees trying to fix pipelines had sometimes been kidnapped and killed. Trucking companies and groups in the protection rackets were probably complicit. This is a business for people.'
The mass unemployment prompted by the U.S occupation, including the forced mass-unemployment of thousands of men in Saddam's military and powerful trucking industries made it inevitable that they would face militarised resistance from within and outside Iraq. These unemployed men filled the ranks of Shiite and Sunni insurgent groups. Economic motives were as powerful as sectarian and religious beliefs. The Obama administration's and the Iranians military current support and training of the Iraqi Security Forces (it must be remembered militia groups have successfully penetrated central government's police and military forces) will ensure Shiite political and economic power is protected, if not expanded.
Since the end of the U.S occupation, the Shiite-dominated government in central and south-eastern Iraq, whose Parliament recently legalised Shiite militia groups fighting against ISIS, is struggling to contain these smuggling operations and stem a flourishing drug trade. It also struggled to maintain control over Route 1 and Route 10 as insurgency against Baghdad gradually escalated as Sunni politicians and soldiers were excluded from governmental and military affairs under Nouri al-Maliki.
Drug trafficking has become a major issue since the collapse of control over its borders. Where there is demand, an inexhaustible demand as addiction rates in Iraq steadily rise, narco-traffic will eventually become a powerful form of political-economy. Since 1988, there have been escalating issues with prescription drugs like Benzhexol and Diazepam. In 2005, the Washington Post reported that "the flow of hashish and heroin from Iran and Afghanistan"had surged since the 2003 invasion of Iraq.
Since 2010, there have been reports that new drugs, including Tramadol (painkiller), methamphetamine (crystal meth), and Captagon are flooding Iraq to be used by civilians coping with years of war, unemployment and the difficulty of living in a society in a seemingly permanent state of instability. In 2010, The New York Times wrote a piece on the escalation of drug and alcohol abuse in the Iraqi military and security forces. Already weighed down by endemic corruption, military and police officials reported that 50 per cent of colleagues used drugs or drank on duty. A counterfeit drugs industry, estimated to be worth $1 billion a year, has also emerged as cheap, low-quality drugs from India and China have seeped into Iraq's underground economy, which has led to kidnap and murder as people fight for control of this lucrative enterprise. Iraq, like Afghanistan, is becoming paradise for prospective drug lords who will inevitably hold ties with militia groups and their local populations.
Decentralised Power Structures
Navigating post-Saddam Iraq and its current and future economic structure requires understanding the fundamentals of these highways and which faction (or nation) controls them at a given time and identifying who has vested interests in these formal and informal markets away from the capital. This carries reputational risks for foreign organisations and businesses if it seen to be choosing a tribe or faction on the ground when operating in a specific region of Iraq. The coalition forces made this critical mistake between 2003 - 2011 and the Americans became a tribe in themselves targeted by different militias and insurgents. Surveying and analysing these economic minefields, alongside the threat of insurgency, civil unrest and religious extremism, is essential to doing business in Iraq successfully.