Baghdad has embarked on a spending spree in an effort to cement the gains from an improving security situation, but regional turmoil continues to make life hard
Prime Minister Adil Abdel-Mahdi on 1 July moved to assert his authority over the country’s many semi-autonomous militias, known as the Hashd Al-Shaabi (Popular Mobilisation Units or PMUs), issuing executiveorder no.37 stating that they be integrated into the national armed forces by the end of the month, continuing a process begun by his predecessor Haider Al-Abadi.
With a foreign policy that seeks to balance out his proxy-warring neighbours and plans to take greater control of infrastructure and other developments, PM Adil Abdul-Mahdi is working to overcome his government’s lacklustre start in office, while four important portfolios remain to be filled and political rivals bicker
European diplomats fear that the hardline attitude of leading players in Washington will push Baghdad closer to Tehran, rather than further away
Iran’s influential position in Iraq was on clear display in mid-March, during a three-day visit by President Hassan Rouhani designed to highlight the strong ties between the two countries in the face of United States sanctions on Iran. Iranian security forces have been a vital component of Iraq’s successful battle against Islamic State forces in recent years and Baghdad could now return the favour by providing an outlet for Iranian trade at a time when the Islamic Republic’s economy is struggling to cope with Washington’s reinvigorated trade embargo.
The United States Department of Justice (DOJ) is investigating allegations of bribery involving Iraqi government officials, a US contractor and a Kuwaiti-based but Iraqi-owned subcontractor linked to former prime minister Nouri Al-Maliki. The corruption claims – which first emerged in filings to the US Securities and Exchange Commission in late 2018 by Caliburn International – centre around Balad Air Base, where Caliburn subsidiary Sallyport Global Services has won a series of large contracts in recent years.
With the unconfirmed death of Abu Bakr al-Baghdadi, leader of the jihadist group Islamic State in Iraq and Syria (Isis), and the collapse of the group’s presence in the city of Mosul, Iraq can now start to look forward to a future without Isis.
However unpalatable to the international community and despite what its critics says, ISIS does indeed look very much like a state, but is it on the path to becoming another failed state?
Just what to call the fundamentalist group that controls a large swathe of territory across Iraq and Syria has been a thorny issue over the past few years. ISIS, ISIL, Daesh and Islamic State are all used in what can be a confusing and very political mix of Arabic and English terms.
The UK Prime Minister David Cameron recently railed against the British media using the term Islamic State in an interview on the BBC in late June, suggesting it was both offensive to most Muslims and lent an unwarranted legitimacy to the terrorist group. In the Middle East, the group’s opponents often take a similar line. The veteran Saudi diplomat Prince Turki bin Faisal al Saud says he doesn’t like to use the organisation’s Arabic acronym Daesh, but instead prefers the similar sounding Faesh, which means obscene.
“They’re definitely not a state, they’re definitely not Islamic and they don’t control Iraq and Syria,” he told an audience at the Chatham House think-tank in March. “So Fahesh is a much better word for them and I wish the media here, particularly the Arab media, would use that word instead of continuing to give them what that they so obviously want to get, which is recognition as being a state and as being Islamic.”
Yet the unfortunate truth for Prince Turki, Cameron and others is that, in most ways you can think of, Islamic State looks very much like a state. It has its own territory, along with a flag, an army and a police force. There are ranks of administrators who run public services and impose taxes on the local population. It also trades with neighbouring countries, albeit via the black market.
Indeed, it is arguably in a better situation that some of the more widely-recognised states dotted around the region, like the rump administration of Bashar al Assad in Damascus, or the self-imploding Libya or Yemen.
Palestinian-born, UK-based writer and journalist Abdel Bari Atwan, author of Islamic State: The Digital Caliphate, suggests that people should accept the reality. “It is a state, a sovereign state,” he says. “They have a state which is bigger than Britain. They impose taxes on them, they have a cabinet, they have administration, institutions, you name it, they’ve got everything other states have.”
The real question is how long that will remain the case. If Islamic State is to have a future, then it will have to survive as an economic force as well as a political, military or religious one. If it cannot then it has little hope of lasting. From the current standpoint, its economic position looks rather more uncertain than its political or military positions.
“If indeed it is a state and has some sort of formal existence, well then it has all of the problems that any state or government or sovereign power would face and one of the critical ones is its financial model,” says David Butter, an associate fellow at Chatham House.
To date, the Islamic State has relied economically on a few major sources of income. Initially it had the ability to tap into the wealth of the states whose territory it was seizing. Civil servants in the parts of Iraq and Syria that it captured still received their salaries from their central governments and these could be taxed. It was also able to impose fees on truck drivers and others travelling through the areas it controlled.
It could also loot the vaults of banks in newly seized towns, the most prominent of which was Mosul which it captured in June 2014 and which provided more than $400 million by some estimates. But bank vaults can only be cleaned out once and the central governments in Baghdad and Damascus are now either unwilling or unable to keep paying a lot of the salaries in areas they don’t control.
Another important source of income has been oil and gas revenues. However, this is also likely to be a declining source of revenue, according to Butter. He estimates that the group was involved in production of up to 70,000 barrels a day of oil in mid-2014, but far less today.
“This trade I think has been severely disrupted since the coalition bombing [which began in September 2014],” he says. “A lot of the refineries have been hit, it’s become more difficult and the fields they’re operating do need maintenance. I suspect it’s going to be increasingly difficult for any sort of high-rated production to be maintained. Added to which, of course, the oil price has halved since October. So I don’t think that this oil bonanza is something that’s going to sustain them in the long term.”
Another source of income has come from the looting of ancient monuments and the sale of those artefacts on the black market. The scale of this trade is impossible to calculate, but it is clear from satellite imagery that illegal digging has been carried out on many sites on a grand scale. Not all of this will have been done by Islamic State – many refugees from Syria travel with small pieces on them as a store of wealth – but the group is certainly involved to some extent.
“The problem is there are hundreds, maybe thousands of illicit archaeological sites,” says Irina Bokova, director-general of the UN heritage body UNESCO. “They dig and then they sell. The scale is huge. I think nobody can say precisely [how big the problem is].”
If its domestic sources of income continue to decline, then Islamic State will need to raise more funds from outside its core territory. This already happens to some extent although, again, it is all but impossible to know how much money is flowing in and how effectively it is being used. Western law enforcement officials are trying to track the flow of funds coming from other countries within the Middle East as well as from Europe, Asia and elsewhere, but they do not have the ability to see what flows through grey market routes such as the hawala networks or one of the many alternative payment systems
The weaknesses of Islamic State’s position can probably only be alleviated in the longer term if it gains some sort of international recognition and is, as a consequence, is allowed to trade normally and establish a properly functioning economy. That helps to explain why politicians in the Gulf and in the West have been so vociferous in their criticism of terms like Islamic State and Daesh and the indirect legitimacy those words bestow. For now the group has no obvious allies that it can turn to for such recognition and without a move towards normality its long-term position looks extremely precarious.
While some might argue that it does not have enough of the ingredients to operate as a viable and sustainable state, it is nevertheless presenting itself as a state and trying to organize itself as a state.
What is without question is the damage – even at this nascent stage – it is able to wreak upon regional safety and security and the certain knowledge this will increase and continue unless and until its empire-building is brought to an end.
The nature of war is changing in the Middle East and North Africa, and the death toll is increasing day by day. Published in MEED, 1 June 2015
In the first 24 hours after taking control of the Syrian city of Palmyra in May, forces from the jihadist group Islamic State in Iraq and Syria (Isis) executed at least 17 people, according to the Syrian Observatory for Human Rights (SOHR). Several hundred more have been killed since.
Further east, at around the same time as Palmyra fell, the group was carrying out mass executions in the Deir al-Zor province, including one man named as Ibrajim al-Shridah, who was killed by a rocket-propelled grenade fired by an Albanian recruit.
The brutality of the Syrian conflict is often shocking, but it is not only Isis forces who are guilty there. SOHR says 9,000 barrel bombs have been dropped from government helicopters on towns and cities across the country over the past seven months, killing rebel fighters and civilians without distinction.
The civil war in Syria is by far the deadliest conflict in the world, with an estimated 70,000 people losing their lives in 2014, according to data compiled by the London-based think-tank International Institute for Strategic Studies (IISS).
The second deadliest conflict is also in the Middle East, in Iraq, where 18,000 perished last year. Both figures mark a worryingly sharp rise from the year before. In 2013, some 49,000 people lost their lives in the Syrian war and a further 8,500 in Iraq.
The escalating death toll in these two countries is part of a global trend of conflicts getting more deadly. Around the world, the number of wars, insurgencies and other violent conflicts has actually been steadily declining over recent years, from 63 in 2008 to 42 last year, but what they have lost in number they have gained in ferocity. Total fatalities have risen from 56,000 in 2008 to 180,000 in 2014, says IISS.
The wars in Syria and Iraq account for almost half of the global total and mean the Middle East and North Africa (Mena) is today the world’s most dangerous region, with just over 101,000 deaths from eight conflicts last year. The next most dangerous regions are Latin America, where narcotics-led violence was largely responsible for the 30,500 deaths in 2014, and sub-Saharan Africa, where a dispiriting tapestry of ethnic, religious and political violence claimed more than 28,000 lives in seven countries.
In most parts of the Middle East, the situation has been getting worse rather than better. Last year was the deadliest in the Israeli-Palestinian dispute since the 1967 Six-Day War, for example. The Israeli assault on Gaza, called Operation Protective Edge, which began in June and lasted 50 days, resulted in well over 2,000 deaths.
The number of fatalities also rose in the Sinai Peninsula area of Egypt, where 900 people lost their lives in 2014; in Libya, where 3,000 people were killed; and in Yemen, where the death toll quadrupled to 4,000. Among the main areas of conflict in the region, it was only in the Darfur area of Sudan that the number of deaths declined, from 3,000 in 2013 to 2,500 last year.
The number of refugees and internally displaced people has also been rising as a result of these conflicts, with Syria again at the forefront of the problems. As of early May, the UN High Commissioner for Refugees estimates that there are 4 million registered Syrian refugees in Egypt, Iraq, Jordan, Lebanon and Turkey, as well as 6.5 million internally displaced people within Syria itself.
“It is civilian populations that continue to pay the price of conflicts, both in terms of short-term dislocation but also in respect of longer-term impacts resulting from the collapse of government services, in particular education and healthcare, and economic development opportunities foregone, blighting the prospects of future generations,” says Nigel Inkster, director of transnational threats and political risk at IISS.
There are some other important trends among these conflicts, beyond the merely depressing increase in the number of deaths and displaced people, which could have some far-reaching consequences for the region. Perhaps the most important is the changing nature of the jihadist groups fighting in these war zones and the strategies they are employing.
“Armed conflict has fundamentally changed the nature of jihadism, so that you now see jihadism as a state-building enterprise,” says Alia Brahimi, visiting research fellow at the University of Oxford in the UK. “I think that’s going to be the biggest impact on conflicts that are already going on.
“Jihadist space is geographically expanding, but also systematically deepening. Isis isn’t just exploiting chaos; it’s seeking to impose a long-term order, and that will have a significant effect on conflict.
“In order to compel local populations, you have to continually instill fear, so as a result we’ve seen ever more fanatical discourse, where mass casualty attacks against civilians are now presented as something self-evidently justified. This is a huge change from the days of [Osama] bin Laden.”
The strategy was clearly apparent in May, when Isis fighters captured Palmyra, but it has been going on for some time. SOHR estimates that the group now controls more than half of Syria.
“The capture of Palmyra is significant for several reasons,” says Matthew Henman, head of the terrorism and insurgency centre at IHS Jane’s, a UK research firm. “It further expands Isis’ territorial control, reinforcing its position as the single opposition group that controls the most territory in Syria. Palmyra is very strategically situated and can now be used as a launching pad for further territorial pushes towards Homs and Damascus.”
The more ground Isis controls, the more income it can generate from its territory, particularly from oil resources. This is to some extent a zero-sum game, with the government suffering a fall in its income every time an oil well or gas pipeline changes hands.
“So many states [in the Mena region] are fraying at the seams because of insurgencies and civil wars,” says Valerie Marcel, an associate fellow at UK think-tank Chatham House. “What’s happening in Syria and Iraq is that a fledgling state, previously just a jihadist group, is now acting like a government and controlling oil production.”
This is not just an issue in Syria. The practice of groups taking and holding land is also clearly visible in Yemen, where Al-Qaeda in the Arabian Peninsula (AQAP) occupies a substantial patch of territory in the east of the country, and in Libya.
“The loss of the state monopoly over the control of oil installations, production and marketing further weakens the central state,” says Marcel.
“If you look at Libya, you’ve seen different groups battle it out for territory, but more significantly for control over oil production facilities and export terminals. The more that sub-national groups control the oil infrastructure, the more it gives them the possibility to enrich themselves, but it also undermines the central states’ capacity to take the revenues, pay civil servants and consolidate their own power. So it hastens the weakening of the state.”
In Iraq, meanwhile, Isis forces have consistently shown themselves to be a good match for the under-motivated national army and, as a result, the jihadists now hold vast swathes of territory covering much of the west of the country. It has only been a combination of airstrikes by the US-led coalition and the response of Shia militia organised by Iran that has held them back from even greater gains. Even so, Isis was able to capture the city of Ramadi, little more than 100 kilometres west of Baghdad, in May this year.
“What we have seen in Iraq is that the great blitz attack that Isis did last year has, broadly speaking, been contained by the coalition air strikes, but also just as importantly by the mass mobilisation of Shia militia,” says Ben Barry, senior fellow for land warfare at IISS.
“Quite clearly, the [recent events] in Ramadi demonstrate Isis still can counter-attack at the tactical and operational level and it can seize the initiative. It’s displaying tactics of quite a high order. My prediction is that this to-ing and fro-ing in the near future will continue.”
In the case of both Iraq and Syria, it is very hard to see how any side can win an outright military victory any time soon. As is the case in other conflicts such as Libya, Yemen and Palestine, a long-term political solution is needed if there is to be any hope of restoring stability, peace and prosperity. The prospects for diplomacy do not look promising at the moment, however. The Middle East looks set to remain a dangerous neighbourhood for many years to come.
Infrastructure is being put in place to lure more tourists to the region. Published in MEED, 19 May 2014
With its 6,000-year-old citadel rising up in the centre of the city, there is no doubt that Erbil can lay claim to a rich history. The site is the most significant indicator of the tourism potential of Kurdistan, but there are also ancient castles, minarets and monasteries dotted around the region, along with impressive mountain scenery and ski resorts.
Even so, it was probably a surprise for many when in late 2012 the Kurdish city was named Arab Tourism Capital for 2014, beating the likes of Beirut, Sharjah and the Saudi Arabian city of Taif, which had all been competing for the honour. The Kurdish region may well be far safer than the rest of Iraq, but it is still not an obvious holiday destination for most people.
The authorities in Erbil plan to hold at least 40 events throughout the year to try to convince more visitors to come. A number of these have already taken place, including a children’s festival in mid-January, a skiing and ice-skating event at the end of that month and an international car show in early March. Horse racing and sky-diving events are also on the calendar, as is an international film festival.
In a sense, Erbil is tapping into an ongoing trend. In the years before the city was handed the accolade of tourism capital, the Kurdistan region had seen a surge of visitors. From about 377,000 in 2007, the number of tourists increased almost six-fold to more than 2.2 million by 2012, according to the most recent statistics from the General Board of Tourism, part of the Kurdistan Regional Government (KRG).
The greatest proportion of visitors come from other regions of Iraq, lured by the relative safety as much as anything else. In 2012, two-thirds of all tourists – almost 1.5 million – visited from other parts of the country. That year also saw international tourists outnumber those from within the KRG region for the first time in recent years, with about 434,000 visitors from beyond Iraq’s borders, compared with 313,000 from within the Kurdistan region.
Regardless of where they come from, most visitors to Kurdistan go to Erbil. In 2012, the province attracted 1.5 million of that year’s 2.2 million tourists. This is largely a consequence of it being the commercial centre for the region and having the best-connected airport. Some 21 airlines fly in and out of Erbil International, serving 24 destinations around Iraq, the wider Middle East, Europe and Asia. The smaller Suleimaniyah International airport offers flights to 16 destinations on nine airlines.
Despite the efforts to lure more holidaymakers, most of the people flying into and out of these two airports are either travelling for work or returning home to see family members. One hotel industry executive estimates that about 95 per cent of the guests at his Erbil hotel are visiting for business.
“It is mainly international businessmen coming in for the oil and gas sector, staying a week or two and talking to the government and opening factories and offices,” he says. “We have enjoyed some great occupancy levels since we opened, but it is mainly business.”
The nature of the visitors explains the character of tourism-related developments currently under way in the KRG region. There have been some efforts to make Erbil itself more attractive, not least the fountains and clock tower that now adorn the arcaded square to the south of the citadel. But the most notable additions for travellers have been the numerous hotels that have sprung up to cater for the business travel market, often in the four- and five-star categories.
Overall, the number of hotels across the region increased from 168 in 2010 to 259 by 2012, and almost 10,000 new rooms were added during that time, according to the General Board of Tourism. Several more have been completed since then. Among the more recent openings is the 78-room, four-star Copthorne Hotel Baranan in Suleimaniyah, developed by the local Faruk Holding at an estimated cost of $40m, and the larger Sheraton Dohuk, which has 202 rooms and was developed by the local Brilliant Role Group for $150m. The latter claims to be the first five-star hotel in the city.
Many more hotels are due to follow in the near future, with a number of major international hotel chains moving in. Among the properties currently under construction are the five-star Hilton Erbil Hotel & Spa with 300 rooms close to the city’s airport; a 160-room Best Western hotel closer to the city centre; and the 293-room Sheraton Erbil hotel.
As these projects indicate, the Erbil governorate is attracting the lion’s share of investment in the region’s tourism and hospitality sector. In a number of instances, the hotels form part of a wider development, as is the case with a Marriott hotel that will form part of the Empire World real estate scheme in Erbil.
Construction was also due to start later this year on the $3bn Downtown Erbil development planned by the UAE’s Emaar Properties. This is set to include two hotels alongside a shopping mall, restaurants, office space, 15,000 apartments and associated facilities; the masterplan is still awaiting approval, however. Similarly, the $200m Korek Tower, planned by the local Korek Telecom, will house a five-star hotel as well as a shopping mall and office space in what will be the tallest building in the region.
Some other standalone projects are also under development, including Citadel Park in the Mustawfi area of Erbil. It will include a 2,000-seat open-air theatre and other space for public events. The project has an estimated budget of $200m, but is still waiting for approval from the client, the KRG. A main contract award is expected in the third quarter of this year, according to MEED Projects, which tracks project activity in the Kurdistan region and across the rest of the Middle East.
Although Erbil is the focus of most of the investment, there is some activity in other parts of the region too. In Suleimaniyah, for example, the KRG is planning a $2bn development known as Dukan Tourist City. This will include hotels, restaurants, a theme park, cinemas and casinos on a 2.4-square-kilometre site. The project is currently at the study stage, with Emaar and Faruk Holding both involved as developers.
The local Sherwan General Construction Company, owned by Kurdish developer Ibraheem Othman Khoshnaw, is also constructing a five-star hotel in Suleimaniyah, which will include a casino. There are further shopping malls planned by the Erbil-based Darin Group in Suleimaniyah and Dohuk, and the Kurdistan Board of Investment is behind the $500m Avro City project in Dohuk, which will include a sports stadium, a five-star hotel and several thousand residential units.
Not everything is going smoothly, however. Work on a $30m shopping mall planned by the local UB Holding in Dohuk, and known as the Dohuk UB Mall, is reported to have been put on hold during its execution phase and it is not clear if or when the work will resume. The project was to include a cinema complex and other leisure facilities alongside the retail outlets.
Perhaps the most important projects for the future of the region’s tourism industry are the various plans to improve aviation infrastructure. Significant expansion work is earmarked for the two existing international airports at Erbil and Suleimaniyah, with the KRG’s Ministry of Transportation & Communications as the client.
The $500m expansion of Erbil International is still in the initial planning stage, but could include a theme park, a golf course and a convention centre alongside more conventional additions, such as improved logistics and cargo-handling facilities. The contract for the expansion of Suleimaniyah airport is not due until June 2015. That project is designed to lift capacity from 2 million passengers a year to 3.5 million.
The government is also hoping to tap into rising demand by building another international airport in the northwest of the region. Speaking to the Royal United Services Institute, a defence industry think-tank, in London in October last year, Falah Mustafa Bakir, who as head of the Department of Foreign Relations is the de facto foreign minister of the KRG, said, “We have major international airlines flying in and out of Erbil and Suleimaniyah and we are building a third airport in Dohuk.”
In March 2013, a joint venture of two Turkish firms, Makyol and Cengiz Holding, was awarded the contract for the construction of Dohuk airport. Earth works are currently being carried out on the site and the main construction work is due to be completed by June 2016. Once complete, the airport will have six aircraft gates and the capacity to handle about 1 million travellers a year, along with 34,000 tonnes of cargo.
Having put so much infrastructure in place, the task for the authorities will be to persuade more people to come and use them. For the hospitality sector to thrive in the Kurdistan region, people must come for leisure as well as business. Notwithstanding the award of the tourism capital title this year to Erbil, it is likely to be some time before the region is seen as an enticing destination for most holidaymakers, but some at least are hopeful it will eventually succeed.
“I think there will be a tourism industry in time,” says the Erbil hotelier. “It does have a lot more to offer in terms of tourism, but the tourist psyche needs to be a little more prepared. I don’t think people are completely ready yet to travel for a two- or three-week holiday to Iraqi Kurdistan.”