By Patrick Martin
Key Take-away: PM Abadi faces resistance over how to address Iraq’s debilitating
financial situation caused by a sharp drop in oil prices. The 2016 federal
budget is a hotly-contested piece of legislation, as it allocates funding for
government ministries. PM Abadi and the Council of Ministers (CoM) approved a
draft budget on October 19 and submitted it to the Council of Representatives
(CoR) for approval. The CoR will begin reading the budget after the CoR Finance
Committee reviews it, a process that does not have a set timeline. PM Abadi and
his opponents, including Iranian-backed Iraqi Shi’a militias, are at odds with
how much of the budget should go to the militias within the “Popular
Mobilization,” whose allocation decreased from the 2015 budget. Iranian proxy
militias are thus demanding that PM Abadi increase the share for the “Popular
Mobilization.” PM Abadi also introduced a new salary scale to reduce
expenditures and increase the pay of the poorest government employees. This has
led to a backlash against PM Abadi’s reform agenda, including from his most
powerful supporter, Grand Ayatollah Ali al-Sistani, and from PM Abadi’s primary
political opponent, Vice President Nouri al-Maliki. The final salary scale will
likely be heavily modified from its current form and less effective in reducing
expenditures. PM Abadi’s opponents will
use his unpopular measures to obstruct his reform agenda. Maliki in particular
will exploit discontent among political blocs with the reform agenda in order
to undermine PM Abadi’s authority and bolster his own prominence and profile, and has begun assembling a still-small coalition with potential to vote no-confidence in PM Abadi.
PM
Abadi’s political opponents consider PM Abadi’s current strategy to address
Iraq’s financial crisis unacceptable. Iranian-backed Iraqi Shi’a militias and
supporters of Vice President Nouri al-Maliki oppose the proposed allocation of
funding to the “Popular Mobilization” in the federal budget, whose full text
has not been released. However, Finance Minister Hoshyar Zebari stated that “20 percent” of the budget
pertains to defense. This includes funding allocated to the both the Iraqi
Security Forces (ISF) and the militias in the “Popular Mobilization.” Early
reports indicate that the budget allocates less funding to the “Popular Mobilization”
than the 2015 budget. This number will be significantly less than what notable
militia figures requested by up to a third. Kata’ib al-Imam Ali, a powerful
Iranian-backed Iraqi Shi’a militia, claimed that the budget allocated only 2.16
trillion. Iraqi dinars as opposed to the 6 trillion. Iraqi dinars in the 2015
budget, or more than 5bn. USD. The figures are likely incorrect, as more
reliable reporting puts the “Popular Mobilization” budget allocation for 2015
at 1 billion. USD. Nevertheless, the complaint demonstrates the degree to which
the proxy militias and the Iraqi government disagree over the appropriate size
of the money allocated for the “Popular Mobilization.” In particular, prominent
Iranian proxy militia leader and designated terrorist Abu Mahdi al-Muhandis openly
criticized the budget and pinned the
blame on
PM Abadi. Muhandis insisted that he repeatedly told PM Abadi about the need to
increase “Popular Mobilization” funding. An increase in “Popular Mobilization”
funding would give the “Popular Mobilization” greater capabilities and heighten
their profile at the expense of the ISF.
The
decrease in funding for the “Popular Mobilization” comes as part of
government-wide austerity measures stemming from Iraq’s acute financial crisis.
The figures for the 2016 budget are based upon the price and
production of oil, which the budget identifies as 45 USD per barrel. The budget also projects an increase in oil
production from 3 million barrels per day (bpd) to 3.6 million bpd. The
projected oil price is dramatically less than the basis figure for the 2015 budget, which assumed
that the price of oil was 80 USD per barrel. This was unrealistic, as Brent
crude prices dropped under 50 USD by the time the 2015 budget passed in January 2015. The smaller
budget is technically inadequate, as there is still projected to be a deficit of 21 billion.
and 25 billion. USD. The anti-ISIS fight demands so many resources that some
ministries have lost significant funding. Muhammad Sahib al-Darraji, the
Industry and Minerals minister, complained that his ministry did not receive any funding for 2016 and that he
had abstained from the CoM vote on the budget. Al-Darraji is a member of
al-Ahrar bloc, which supports PM Abadi’s reform agenda. Other al-Ahrar bloc
members did not appear to have abstained from voting.
One
of PM Abadi’s mechanisms for reducing expenditures has been the second point of
contention, and has drawn the ire of the Iraqi street. The CoM passed a comprehensive reduction in salaries for government
employees in order to reduce
expenses as
a reform package separate from the federal budget on October 13. The reductions
affect a large number of Iraqis, as 40
percent of available jobs are provided by the government. This sparked a
large backlash from government employees across the country. Those employees at
the higher end of the salary scale, such as university professors and employees
holding higher degrees, viewed the cuts as unfair. Some of these higher-earning employees saw
their salaries reduced by nearly 20
percent.
University professors and employees subsequently staged protests or in some
cases gone on strike in Basra, Diwaniya, Muthanna, and Baghdad.
The
ensuing backlash is indicative of the first real loss of support from the Iraqi
street for PM Abadi. His reform program had otherwise enjoyed widespread
support, despite its vastly diminished momentum. Protests against the salary
scale have been sporadic and involved few participants thus far, in particular
because government employees with the smallest salaries actually received slight
pay increases. Salary reductions had also been under discussion for months. The
CoM reduced CoM salaries, including PM Abadi’s pay, in July 2015. CoR members later
followed suit with a 45 percent reduction in
August 2015. PM Abadi first announced the discussions of the new changes to the
salary scale on October 5. The
discussions involved consultations with the members of the CoM. PM Abadi pointed out that the CoM
passed the salary scale changes. The major political parties have
representation within the CoM, and thus had prior knowledge and input regarding
the shape of the salary scale changes.
PM
Abadi’s allies also rejected the salary scale changes. PM Abadi’s reform agenda
has benefited from the support of the SLA’s two main political rivals within
the Shi’a political sphere: the Islamic Supreme Council (ISCI) of Ammar
al-Hakim and Muqtada al-Sadr’s al-Ahrar bloc. ISCI has supported PM Abadi’s
reform agenda since August
7, and al-Ahrar since August
9. Their support was largely aimed at undermining the SLA and Maliki in
order to improve their own influence within Baghdad and southern
provincial governments. An ISCI
member stated on October 28 that ISCI did not support questioning PM
Abadi or ending his premiership. However, an al-Ahrar bloc member criticized
the salary scale changes as a “red line” and PM
Abadi’s reforms as too slow. The Sunni Etihad bloc also rejected the salary
scale and PM Abadi’s lack of consultation regarding the reforms, as did the Patriotic Union of Kurdistan (PUK). Major Shi’a, Sunni, and
Kurdish parties likely rejected the salary scale to protect themselves from
public backlash after initially agreeing to the changes. After all, the CoM has
senior representatives from the major political blocs, whose votes were
necessary for the reform package’s approval.
More
troublingly, Grand Ayatollah Ali al-Sistani’s representative, Abdul-Mahdi
al-Karbala’i, rejected the salary
scale changes on October 23 in a Friday sermon, calling reductions in the
salaries of university professors and educated employees “unfair.” Evidently, Sistani
and PM Abadi have not been in lockstep over the required changes to the salary
scale. The disagreement is curious as Karbala’i advocated a change to the
salary scale in September. Sistani’s
support is essential for PM Abadi’s political survival, and the disagreement
robs PM Abadi of any realistic chance to see the salary scale changes approved in
the CoR in their current form. If the Shi’a religious establishment weakens its
support for Abadi, his Shi’a political rivals will sense the opportunity to
compete with him for power and influence.
PM
Abadi’s political opponents have used the most recent reform package to attack
PM Abadi for what they view as his unilateral and non-consultative approach to
reforming government. Many of PM Abadi’s opponents had already rejected PM
Abadi’s October 20 decision to
dismiss CoM Secretary Mahdi al-Alaq, a Dawa Party member of the SLA and an acting appointee who had only held the position for two months. Iranian proxy groups
like Badr Organization and Kata’ib
Hezbollah, as well as prominent Maliki allies like CoR member Hanan
al-Fatlawi, were outraged when PM Abadi replaced
Alaq on October 20 with a candidate who
holds American citizenship who had previously had disagreements with pro-Maliki Dawa Party
members.
Members
of the SLA aligned with VP Maliki wrote a letter to PM Abadi on October 27,
criticizing his lack of consultation with political parties on the reforms and
his “overriding” of the
constitution. The complaints over constitutionality were directed at his
attempts to eliminate the VP position that requires a constitutional amendment,
which ISW documented
in August
2015. The members collectively criticized the salary scale changes and PM
Abadi’s reform movement on a whole, and stated that they “withdrew their
mandate” from PM Abadi and that they were “no longer responsible” for PM
Abadi’s actions. This does not mean that Maliki’s allies are intending to
attempt to withdraw confidence from PM Abadi. An SLA member denied that the SLA
sought to withdraw confidence from PM Abadi, though prominent SLA members have openly
speculated about doing so. The Dawa Party political leadership also reaffirmed
support for
PM Abadi and the reform agenda on October 30. It would be extremely difficult
for Maliki to muster the support within the CoR to even attempt a no-confidence
vote. However, Maliki and his allies do not actually intend to pursue this
course of action right now. Instead, public threats of withdrawing mandates and
speculating about withdrawing confidence are threats aiming to discourage PM
Abadi from pursuing any additional reforms without including the SLA in the
decision-making process.
The
SLA letter was the strongest open criticism of the reform movement since PM
Abadi launched his first package on August 9. Maliki later openly opposed PM
Abadi in a television interview on October 30. Maliki did
not specifically mention the salary scale, but he stated that PM Abadi’s reform
packages had “no legal force.” He also
insisted that the Vice Presidency had not been abolished and that any move to
do so would be unconstitutional. The interview was a departure from Maliki’s
prior methods of attacking PM Abadi, which largely involved voicing discontent
through his allies in the SLA or through coordinated pro-Maliki social media. Maliki will
use the rise in vocal opposition to the salary scales to heighten his profile
and undermine PM Abadi’s ability to operate independent of Iranian influence
and the SLA leadership’s direction.
It
is highly unlikely that the salary scale will pass a vote in the CoR in its
current form considering the opposition from Sistani as well as both PM Abadi’s
supporters and opponents. The salary scale will most likely be modified, but
pay cuts in some form across the board may be unavoidable as Iraq’s economy
continues to falter. Nevertheless, PM Abadi’s opponents will use the highly
unpopular salary scale change as ammunition against him and his performance. In
particular, Maliki’s cohorts will continue attacking PM Abadi and obstructing
his reforms in the CoR. Their obstinacy forms only one component of a larger trend
involving Maliki’s attempts to undermine PM Abadi’s power and set conditions
for Maliki’s eventual return to power. This trend will intensify as Maliki attempts
to use opposition to the salary scale changes against PM Abadi. It is unlikely
that the CoR will attempt a no-confidence vote at this time. Nevertheless,
Maliki may be able to exploit the current resistance to PM Abadi’s reforms to
solidify opposition to additional reforms in the future. This may force PM
Abadi to consult with the SLA before submitting any additional proposals.
It
will be equally interesting to see what results from the 2016 federal budget.
Iranian proxy militias and their supporters within the CoR consistently
advocate for a massive increase in the budget share for the “Popular
Mobilization.” Realistically, any increase for the “Popular Mobilization” will
require a reduction in the budget allocations for the legitimate security
institutions within the ISF. This will result in friction between PM Abadi and
his opponents over access to resources. Reallocating resources from the ISF to
the “Popular Mobilization” will directly affect PM Abadi’s ability to exercise
independent command and control over the security forces by reducing the
capacity of the ISF and increasing that of the “Popular Mobilization.” This
course of action would result in increased capabilities for militias that are
susceptible to Iranian influence. PM Abadi and his opponents competing over
access to resources indicate that the budget will not pass the CoR in quick
fashion.
The
Iraqi state and government faces a grave challenge. The budget crisis makes the
status quo intractable, but Abadi is not sufficiently powerful to force changes
of this magnitude. In fact, the greatest challenges to his premiership come
from within his own political bloc.