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Corruption and Illicit Trade are Ravaging Iraq’s Borders

As Iraq continues to experience sociopolitical strife and economic struggles, there remains a growing urgency to secure its borders against the illicit trade that continues to harm the state.  A recent AFP report paints a disturbing picture of the extent to which non-state actors have taken control of Iraq’s ports of entry, most notably along its 1,000-mile border with Iran. Facilitated by corruption, a weak customs apparatus, and criminal patronage networks, mafia-like syndicates have diverted billions of dollars from a cash-strapped Iraqi government, thus furthering their economic influence throughout the country. Baghdad’s weakening grip on its borders also risks exacerbating the myriad social, economic, and security challenges already facing this perennially fragile state.

Ungoverned Borders

A mix of recent history and decades-old customs procedures explain Iraq’s lack of control over its ports of entry. After a bloody counterinsurgency that began in 2014 and continues to this day, the Iraqi government gradually succeeded, with the help of international forces and local militias, in regaining control over large swathes of land seized by the Islamic State in Iraq and the Levant (ISIL). Non-state actors like the Popular Mobilization Forces (PMF) and its many sub-groups nevertheless took advantage of the chaos to consolidate power across Iraq and, aided by Iran’s Revolutionary Guard Corps (IRGC), along the five border crossings on the Iran-Iraq border.

According to AFP, the cartels maintain a presence around the entire country but are particularly active at the Mandali border crossing and Umm Qasr, Iraq’s main seaport and primary entry point for imports. A similar situation exists along the border with Syria and within the country’s northern Kurdistan region. Closed from 2011 until September 2019 due to the Syrian conflict, Iraq’s Boukamal-Qaim border crossing served as a key smuggling point between the two countries. Following the border’s reopening, PMF forces established informal control and imposed import taxes on licit and illicit goods, including narcotics and oil shipments.

The PMF and other non-state actors employ a range of criminal and fraudulent practices to circumvent border guards and customs protocol. These include false trade invoicing, whereby importers misrepresent or undervalue products to pay less import duties, and encouraging officials to turn a blind eye to mandatory inspections of goods – corrupt individuals, of course, enrich themselves by taking a commission. Bribery and extortion are also commonplace. PMF forces regularly threaten the families of port workers who don’t fall in line with their criminal activities, including the Mukhalles, middlemen employed by the state to oversee import and export activities. Bribing and extorting Mukhalles and other customs officials removes practically all official barriers to criminal actors’ operations, allowing them to forge documents, hold up shipments, and smuggle contraband with near impunity.

Iraq’s shadow border officials also benefit from a weak and outdated customs service that has changed little since the Saddam era. According to World Bank data, border and documentary compliance is a long and drawn-out process that incurs far greater costs than in other parts of the Middle East and North Africa. Duplicitous businesses and traders often pay well for opportunities to bypass bureaucratic obstacles. Customs staff also form part of a largely inefficient public sector which, thanks to COVID-19 and the global collapse in oil prices, the state currently struggles to pay.

Threats to Stability

The social and economic consequences of the Iraqi state’s failure to administer its borders are felt across the entire country. Illicit activities at ports of entry also reflect Iraq’s broader problem with corruption, with the country ranking 160 out of 180 on Transparency International’s Corruption Perception Index. Underpinning this is a culture of competition between rival political blocs, most of whom are divided along sectarian lines. Bribes, back-handers, and various forms of pressure are regularly used to elicit concessions that benefit one bloc, often to the detriment of the wider population.

From the corridors of power to far-flung borders, corruption deprives Baghdad of financial resources for its already-stretched public services. For example, the state allocated just 2.9% of its 2019 budget to healthcare, considerably less than Iraq’s poorer neighbors. Cross-border trafficking is undoubtedly the main cause of one of Iraq’s most pressing health challenges. Thanks to the syndicates, the country’s borders remain well and truly open for smugglers of narcotics and illicit substances. The situation is particularly acute along the southernmost border with Iran, a major trafficking route for crystal meth that is thought to account for 60% of Iraq’s drug trade.

Corruption at the border inevitably stymies Iraq’s economic growth potential, with analysts estimating that smuggling and other illicit activities deprive the state of between three to four billion USD in lost revenue. Inefficiencies at ports of entry have also played a key role in degrading Iraq’s logistics sector. According to the World Bank’s 2018 Logistics Performance Index, Iraq ranks 147 out of 160 countries assessed, and even worse in the sub-category for customs efficiency (153). Delays, price distortions, and anti-competitive behavior resulting from corruption and customs fraud also translate into higher consumer prices for imported goods. This is particularly concerning for a country dependent on imports for around half of its food supplies.

Such loose state control over Iraq’s ports of entry also allows for the smuggling of items that pose a threat to national and regional security. Lucrative trafficking opportunities are often synonymous with illegal firearms, and Iraq is no exception. Armed clashes between drug gangs and law enforcement are common, with Basra Governorate experiencing its fair share of violence. Further north, the PKK remains accused of channeling money from drugs and other smuggling activities into its armed struggle against a plethora of regional actors, most notably Turkey. On August 12, 2020, Ankara launched a drone strike against a PKK meeting in the Bradost area of Kurdish Iraq. Two Iraqi border guards were among the casualties. To the west, weak border controls at the Boukamal-Qaim crossing have allowed Iran to smuggle materiel into Syria, expanding the number of illicit arms and dual-use goods already circulating in the conflict-stricken region.

Outlook

Iraqi Prime Minister Mostafa Al-Kadhimi’s efforts to reestablish state control over the country’s borders by focusing initially on the Mandali crossing and Umm Qasr have so far garnered some encouraging results. According to Omar al-Waili, Director of the Iraqi Border Ports Commission, the state achieved a modest $60 million increase in customs revenues in 2020. The firing of corrupt officials, deploying additional security forces, and increasing inspections at border crossings have all contributed to this improvement. If Iraq is to make serious inroads into its multibillion-dollar customs black hole, it must continue this action with intensity.

Last September, Al-Kadhimi launched an ambitious campaign to crack down on the illegal possession of firearms by armed groups and actors outside state control. Backed by Iraq’s supreme religious leader Ayatollah Ali al-Sistani, former Prime Minister Nouri al-Maliki, and tribal chiefs, the initiative primarily focused on the country’s southern provinces and around Baghdad. Despite some notable successes, concerns were raised over the decision to focus on the seizure of heavy weapons. In doing so, Al-Kadhimi effectively signaled that it remained “business as usual” for traffickers of small arms.

Iraq’s efforts to regain control of its borders also need to be balanced against numerous economic, security, and social challenges. The anti-government protests that began in 2019 call for the dismantling of the post-2003 political structure, an end to systemic corruption, and a better quality of life for Iraqis from all ethnic, political, and sectarian backgrounds. In this respect, borders serve as more than a source of revenue or point of access; they also engender a sense of identity and national belonging. Enhancing transparency and improving how the country runs its borders must remain a key priority for the Iraqi government, coalition forces, and international organizations like the United Nations and World Customs Organization. Without full state control, opportunities for corrupt actors, malign external influence, and even a resurgence of ISIL will abound.

Adam Dempsey is a UK-based advisor to Gulf State Analytics, a geopolitical risk consultancy based in Washington D.C.

Brett Sudetic is a Washington D.C.-based national security consultant and an advisor to Gulf State Analytics.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Brett Sudetic is an advisor with Gulf State Analytics. As a management consultant, he has advised government ministries and state-owned enterprises in the Gulf region on strategic planning, program management, supply chain, and industrial policy implementation. Brett has lived and/or worked in Saudi Arabia, Qatar, Morocco, Lebanon, Japan, Belgium, and the United States, as well as brief engagements in Turkey and the United Arab Emirates. He is fluent in Arabic and proficient in Persian-Farsi. Adam Dempsey is a senior analyst with InStrat and advisor at Gulf State Analytics. Currently based in the UK, he was previously director of media and external communication for Slovakia’s GLOBSEC, head of editorial content for ETH Zurich’s International Relations and Security Network (ISN) and a research coordinator at the UK Defence Forum. Dempsey’s research focuses on a broad range of defense and security issues. He has previously written for Fair Observer, Inside Arabia, International Policy Digest, LobeLog, Defence Viewpoints, Defence and Security Systems International, and Defense Industry Daily.


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