Isobel Coleman

Democracy in Development

Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world.

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Corruption and Mismanagement in Iraq

by Isobel Coleman
March 6, 2013

A U.S. and an Iraqi soldier raise the Iraqi national flag during the handover ceremony of a military camp to the Iraqi army in Baghdad's Gazaliya district on January 1, 2009 (Basim Shati/Courtesy Reuters). A U.S. and an Iraqi soldier raise the Iraqi national flag during the handover ceremony of a military camp to the Iraqi army in Baghdad's Gazaliya district on January 1, 2009 (Basim Shati/Courtesy Reuters).

With the ten year mark of the 2003 Iraq war on the horizon, a new report from the Office of the Special Inspector General for Iraq Reconstruction (SIGIR) is a must-read. Learning from Iraq: A Final Report from the Special Inspector General for Iraq Reconstruction expands on the organization’s mandate to figure out, in the words of the inspector general, “what happened to the billions of dollars expended to rebuild that country?”

The section on corruption is particularly galling. Corruption was a debilitating force in Saddam Hussein’s Iraq, and despite significant U.S.-led anti-corruption efforts, it remains a major problem today, the report argues. Indeed, the report notes that the “magnitude of graft” grew from 2003 onward, and that “between 2004 and 2007, corruption’s costs were estimated at $18 billion.” One audit suggested that as a result of money laundering occurring around the Central Bank of Iraq’s currency auctions, some $40 billion might be flowing out of the country each year.

To be sure, reconstruction efforts in Iraq had some anticorruption components. By September 2012, the U.S. had spent more than a billion dollars on rule-of-law initiatives, with five percent of funds (or about $60 million) going explicitly to anticorruption initiatives. However, when it comes to corruption, “apparently little changed between 2003 and 2012.” Given the magnitude of the problem, and the understanding that unrestrained corruption would corrode trust and confidence in the Iraqi government, the report suggests that not enough was done to tackle this problem. But it is also hard to see how more anticorruption funding would have made a difference in the absence of deep changes in governance at the top. The U.S-established Commission on Public Integrity (CPI), for example, was responsible for investigating corrupt Iraqi government officials. Within eighteen months of its establishment, the CPI had pursued over five hundred cases; however, they were only able to achieve an 8 percent conviction rate in the years between 2004 and 2007, and tragically, thirty-one of its staff were assassinated in that time period. Currently, the CPI has little influence—and no wonder.

While the incidence of corruption in the government of Iraq is an ongoing—and staggering—challenge, the SIGIR report also provides depressing examples about the extent of U.S. corruption and mismanagement, particularly in operations involving contractors. The report summarizes SIGIR’s work inspecting U.S. construction projects: 40 percent of the 116 in-progress and 54 finished projects that SIGIR evaluated (worth almost $2.1 billion) had “major deficiencies.” In a portion of the report that contains interviews with top Iraqi leaders, Adnan al-Asadi, the acting minister of the interior, points to the following problems: the practice of paying contractors/subcontractors far more than the project’s value; the Iraqi and U.S. governments’ failures to coordinate with one another; and “tolerance of rampant corruption that occurred on both the Iraq and U.S. sides.” According to al-Asadi, the U.S. wasted some $200 million out of more than $1 billion it spent on a police program that was far larger than the Iraqi government wanted. Other examples are equally eye-popping.

SIGIR inspector general Stuart Bowen writes that “ultimately, we estimate that the Iraq program wasted at least $8 billion” out of a total $60 billion spent on reconstruction. Perhaps waste of 10 to 15 percent is the cost of doing business in a war-torn, insecure environment. However, it would be more bearable if only we–not to mention the Iraqis–had more to show for all the blood and treasure spent.

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