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Unformatted text preview: Reconstruction and Peacebuilding Under Extreme Adversity: The Problem of Pervasive Corruption in Iraq ROBERT E. LOONEY Indexes of corruption compiled by the World Bank and Transparency International suggest that Iraq is one of the world’s most corrupt countries. While corruption thrived under Saddam Hussein, it has worsened further in the post-Saddam era. Controlling and eradicat- ing Iraqi corruption has proved difficult owing to the fact that it is the product of an inter- related set of forces including: (a) the growth and dynamics of the shadow or informal economy; (b) the deterioration in social capital, and in particular the near absence of trust between the different regions, religious groups, tribes and even within local neigh- bourhoods; and (c) the evolving relationship between tribes, gangs and the insurgency. Any effort that attempts to control corruption without taking these factors into account will have little chance of success. Uncontrolled levels of corruption in Iraq are fuelling the country’s sectarian conflict and creating a political economy of violence. The political economy of this conflict is very much rooted in the alarming levels of corruption that we are dealing with. A lot of the money from many sectors of the economy is diverted to sustain the violence. Barham Salih, Iraqi Deputy Prime Minister 1 There are two major obstacles to Iraq’s economic recovery: the ongoing insur- gency and growing sectarian strife. Combating these problems has been further complicated by the large numbers of unemployed, easily available weaponry, a quickly widening gap between the rich and poor and a largely impotent govern- ment. Pervasive violence and a deteriorating economy have created a vicious circle that has further undermined the government’s ability to tackle the econo- my’s four basic problems: the security of the oil supply, the high levels of unem- ployment, deficiencies in infrastructure and the government’s failure to introduce much-needed economic reforms. In turn, these four problems have contributed to the development of a large underground economy reinforced by pervasive corrup- tion at all levels of government. In conflict countries, similar types of vicious circle are often set in motion through a process whereby negative developments are reinforced over time. These cycles will often continue in the same direction until an exogenous factor intervenes and stops or reverses the cycle. Research suggests that this is what is happening to the Iraqi economy in the post-Saddam period. 2 Any efforts to recon- struct and restore a functioning Iraqi economy will be constrained by the govern- ment’s ability to set in motion a virtuous circle of economic expansion and International Peacekeeping, Vol.15, No.3, June 2008, pp.424–440 ISSN 1353-3312 print / 1743-906X online DOI:10.1080 / 13533310802059032 # 2008 Taylor & Francis improved security. In turn, this means constructing a strategy that positively addresses a number of interrelated factors, including: (a) the growth and...
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