Iraq Situation Report – September 2016

A History of Violence and Instability

The United States officially withdrew its military from Iraq in 2011, but violence and political instability has continued unabated. The combination of the Arab Spring protests, the Syrian Civil War and the Islamic State have posed major problems for both the Iraqi government and its people. 

Human shields greeted as they cross the border into IraqIn 2012, violence grew and armed groups became empowered by the conflict in neighboring Syria. Sunni militant groups began attacking the Shiite population, hoping to undermine Prime Minister Nouri al-Maliki’s government. In 2014, the Islamic State took control of large parts of the country and several major cities, including Tikrit, Fallujah, and Mosul.

During August of 2014, the international community – including the United Nations, the United States, the European Union, and major Middle Eastern countries – called for new leadership in Iraq. On September 9, 2014, Haider al-Abadi became the new prime minister, creating a broad government that includes Sunnis, Shiites, and Kurds.

In April of this year, Prime Minister Abadi created waves when he formed a new cabinet and presented them to Parliament. While that is within his right as prime minister, the members of the cabinet do not represent Iraq’s major political parties and lack their support. The majority of Iraqis have been dissatisfied with the prime minister’s government and lack of reform, so perhaps this move was intended to show some ability to change and listen to the people. Although this is a relatively tame move for the prime minister, U.S. Secretary of State Kerry is wary of any disturbance to the norm in Iraq, as it could distract from the common enemy: ISIL.

The Islamic State

The main issue facing Prime Minister Abadi, and the international community, is the terrorist group, the Islamic State (IS), or the Islamic State in Iraq and the Levant (ISIL). Starting as an al-Qaeda splinter group, they are attempting to establish a society ruled by Sharia Law, grounded in eighth century Islam. The group is known for committing heinous acts of violence against people and carrying out public executions, making their expansion throughout Syria and Iraq a terrifying problem.

Starting in June 2014, the United States sent hundreds of troops back to Iraq to support Iraqi forces and protect the U.S. embassy. ISIL continued their campaign, destroying historical and holy sites and taking control of Syria’s largest oil field. In August 2014, President Obama authorized airstrikes against ISIL as the threat increased. In February 2015, President Obama asked Congress to formally authorize military force against ISIL. The group has continued its attacks, expanding beyond Iraq and Syria and taking credit for violence in France, Tunisia, Kuwait, Turkey, and Egypt.

Iraqi forces and Shiite militias (known as the Popular Mobilization Forces) have had the most success against ISIL, beginning in October 2015 with seizing control of an oil refinery in Baiji, a town near Baghdad on the way to Mosul that had been under ISIL control. Although the refinery was heavily damaged, this win was a strategic step in a part of the country that had been completely ruled by ISIL. Nearly a year later on August 25th, Iraqi forces have taken control over a small town near Mosul, the country’s second largest city and one of the last remaining strongholds for ISIL. The armed forces are now clearing the town of unexploded ordnance and booby traps, with plans to launch a full-scale attack on Mosul in the next few months.

Health Infrastructure Non-Existent

Providing health services and treating disease has proven to be an increasing problem in Iraq. In August of this year, the World Health Organization and other international aid agencies have had to pull health resources from Iraq due to funding constraints. WHO said “more than 184 centers serving refugees and other people displaced by violence in Iraq have suspended their operations.” This is particularly devastating as the centers were the only health care providers in many regions of the country.

On top of the closure of health centers, water systems have broken down and there are insufficient levels of chlorine to provide clean water. The Ministry of Health of Iraq and WHO declared a cholera outbreak in west Baghdad and south central regions of the country. Almost 2,000 people are suspected to have cholera, but the Ministry of Health and WHO are attempting to keep the outbreak under control.

Beyond the extreme threat of IS and health issues, the Iraqi people have begun to protest due to chronic power shortages, increasing unemployment, and obvious corruption in the government. At the end of August, Prime Minister Abadi has attempted to respond to the people, firing corrupt members of his cabinet and abolishing other positions. Fixing corruption and creating a strong government would be a great step forward, but many other issues threaten the future of the country.

Continued Violence and Instability Choke Growth Aspirations

Many Iraqis probably do not remember a time when there was true peace. Experts claim that over 1.2 million civilians could be displaced by the upcoming battle for Mosul -- and that’s on top of Iraq’s existing internal displacement problem, with over 3.4 million people fleeing in the past two years. At the moment, the biggest health crisis in the country is making sure displaced persons in camps are receiving health care.

Beyond displacement, Iraqis are dealing with weekly attacks from the Islamic State or attempting to live under their control. In July of this year, ISIL detonated a massive truck filled with explosives near a market, right at the end of Ramadan. The bombing was the highest loss of life in one day since the invasion of Iraq in 2003, killing over 250 people and injuring hundreds in Baghdad. It is possible that ISIL carried out the attack in retaliation, as it occurred only a week after Iraqi forces recaptured Falluja.

Even the SMALL Amount of Economic Growth is LONG Gone

The economy continues to be a sore spot for Iraq, with the extreme dip in oil prices and the fight against ISIL contributing to a sharp decline. Export revenues for oil have decreased by over $40 billion and, due to security concerns, the fiscal deficit was 14.5% of the GDP in 2015. The government needs to undertake more reforms and somehow stabilize the economy, but it does not seem like that will take priority any time soon. While the fight against ISIL is progressing positively, Iraq remains completely torn apart. Terrorist attacks are commonplace, millions are displaced and the country is in need of a strong leader.

Constant war and instability is taking its toll on the economy, which decreased by 2.7% last year. Before IS came onto the scene in 2013, foreign investment was only $2.9 billion – far below what Iraq needs to rebuild. Unemployment holds steady at 25% and over 40% of working age Iraqis are employed by the government, pointing to a very small business sector.

Clements Leaders Join the American Security Project to Discuss Iraq Crisis and Risk Management Strategies

On July 16, 2014, Smita Bhargava, Vice President of Programs and Special Risks, joined a panel of experts at the American Security Project to discuss the latest political developments in Iraq and how individuals and organizations can best protect themselves while operating in the region. Other experts joining Dante and Smita included Missy Ryan, journalist with Reuters News, MG Robert H. Scales (Ret.), former Commandant for the U.S. Army War College and Daniel Wagner, CEO of Country Risk Solutions. The speakers considered the threat that the Islamic State poses to businesses and their investments in Iraq, and how these businesses can manage the risks associated with operating in such a volatile, precarious area.

To find out more about safety and security for both international organizations and expats living abroad, check out the Iraq country risk assessment guide.

Call us today at +1.202.872.0060 or 800.872.0067 or e-mail request@clements.com to discuss solutions tailored to your organization's insurance needs.

Iraq Country Risk Assessment Guide