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Friday, November 17, 2006

Corruption ‘is fuelling Iraqi conflicts’

Corruption ‘is fuelling Iraqi conflicts’
By Steve Negus, Iraq Correspondent
Copyright The Financial Times Limited 2006
Published: November 16 2006 19:58 | Last updated: November 16 2006 19:58


Uncontrolled levels of corruption in Iraq are fuelling the country’s sectarian conflict and creating a “political economy” of violence, Iraq’s deputy prime minister Barham Salih has said.

Mr Salih, in an interview with the Financial Times, said his government intended to address the problem through commitments included in a new UN-sponsored initiative that would see Iraq’s government pledge specific administrative, economic, and political reforms in exchange for international assistance.

“The political economy of this conflict is very much rooted in the alarming levels of corruption that we’re dealing with,” Mr Salih said. “A lot of the money from many sectors of the economy is diverted to sustain the violence.”

Iraq is ranked as one of the worst countries in the world by the anti-corruption watchdog Transparency International. Militias and insurgent groups are suspected of using money taken from the billions of dollars generated by petroleum production in Iraq.

Militia infighting in much of the country is also reportedly sparked by quarrels over oil-smuggling and other sources of illegal income.

Both this corruption and the violence it feeds are targeted by the International Compact with Iraq, which the UN hopes to have formally adopted before the end of the year following the recent conclusion of preparatory meetings held by representatives from the US, European countries and Arab Gulf states as well as international institutions and lenders.

The compact was unveiled in the summer by the UN and the Iraqi government, with the goal of seeing Iraq commit itself to political and economic reforms in exchange for pledges of aid and other international support.

As the initiative took shape, heavy emphasis appears to have been placed on measures that would cut the skimming of oil revenues and other government funds to political parties, their associated militias, and insurgents.

Benchmarks suggested in the preparatory phases are largely aimed at introducing transparency to government income and spending through measures including the metering of oil installations and the establishment of a single regularly audited account for revenues from petroleum sales.

The compact would “change the politics and culture of aid”, Mr Salih said. “You don’t help unconditionally. You won’t be helping in order to [allow others to] steal money and maintain corruption.”

Mr Salih said Iraq would pursue reform for its own sake, but to make sure that success came as quickly as possible it would need help from the international community.

“We need debt relief, we need [to] eliminate the burden of reparations, we need economic assistance, we need financial instruments made available to Iraq in order to do many of the things we want to do, including the rehabilitation of Iraq’s economic infrastructure,” he said.

In addition to administrative measures, the compact would also commit Iraq to fiscal reforms including the phasing out of subsidies. Iraq may be offered more financial help, technical assistance, relief of a foreign debt estimated to run higher than $120bn, and possibly a waiver of war reparations related to its 1990 invasion of Kuwait.

The deputy prime minister also said Iraq’s political parties needed to deliver a “different level” of governance to retain the support of the public.

“We cannot accept this level of violence, we cannot accept and tolerate these levels of corruption, we cannot accept these levels of sectarian polarisation,” Mr Salih said.

“We need to send some very powerful and serious credible signals to Iraqis and the rest of the world that the political leadership in this country is serious about changing course.”

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