Surprisingly, the outside world has yet to take on board that the fragile stabilisation achieved by Iraq in the wake of the 15 years of devastating wars following the US-led invasion of 2003 is unravelling fast under multiple pressures.

Indeed, Iraq is the country most seriously damaged by the US and Israeli war on Iran because its economy and political stability are both more vulnerable than elsewhere in the Gulf.

It is once again becoming a war zone as drones or missiles fired by Iran or local pro-Iranian paramilitaries hit Baghdad International Airport, the US embassy and US bases. The US and Israel carry out air strikes on paramilitary targets while Saudi Arabia and Kuwait say they are being targeted by drones fired from inside Iraq. Two tankers in Iraqi waters were set on fire in the northern Gulf by a boat-borne unit from the Islamic Revolutionary Guard Corps (IRGC), who filmed the vessels exploding into flame.

Similar military actions take place every day in other Arab Gulf states, but Iraq is weaker than the rest because its large population of 46 million were wholly reliant on revenue from its oil exports of 3.3 million barrels a day – now abruptly halted by Iran’s closure of the Strait of Hormuz. Unlike Saudi Arabia and other vastly wealthy Gulf oil producers, Iraq has limited financial reserves to fall back on. “The government was already living hand to mouth,” a former Iraqi financial official told me.

Its monthly earnings from oil were less than expenditure, mostly spent on the nine million Iraqis receiving government salaries, pensions and welfare payments. Already payments were late or did not arrive at all. Contractors were owed some $23bn. One Iraqi economist writes that the country is facing “financial execution”.

The Iranian strategy is to spread the war wherever they can, energising old crises and creating new ones. This has been described as a sort of guerrilla war carried out at state level. Though the two previous Gulf wars in 1990/91 and after 2003 centred on Iraq, the outside world has been slow to recognise that peace in Iraq is once more under threat.

Yet, Iraq is the most populous Gulf country, the majority of its people Shia Muslims as in Iran. The IRGC will look to the 100,000 strong pro-Iranian Popular Mobilisation Units, or Hashd al-Shaabi, whose salaries are paid by the Baghdad government, to surreptitiously join the Iranian war effort. The US and Israel will try to thwart Iran’s strategy of spreading the war across the region, but so far they are not succeeding.

Iraqis are war weary after seeing their country wrecked in multiple conflicts since Saddam Hussein invaded Iran in 1980, the beginning of an eight-year war that left at least 500,000 Iraqi and Iranian soldiers dead. Crushing UN sanctions between 1990 and 2003 were followed by the US occupation and a complex civil war between Shia and Sunni which degraded Iraqi life at every level.

Just as the country was making a slow recovery, the Islamic State (Isis), rooted in the Sunni Arab community, captured much of north-western Iraq including the city of Mosul in 2014. The city was only recaptured by Iraqi forces, backed by US airstrikes, after a long and destructive siege in 2017.

Even before the war, the International Monetary Fund was protesting that Iraq could not go on outspending its revenues ad infinitum. As the second-largest oil exporter in OPEC after Saudi Arabia, Iraq produced some four million barrels a day of oil and exported 3.4 million barrels a day, largely from its southern oilfields. These oilfields are now shut down at a cost to the government of between $200m and $255m a day. Their closure also means a shortage of associated gas to fuel the power stations with consequent cuts in the electricity supply.

Prior to the Iran war, Iraq had been hit by declining oil prices. “We have a real deficit every month in regards to paying [government] salaries,” said Iraqi foreign minister Fuad Hussein. The number of government employees has ballooned from one million under Saddam Hussein in his last year in power to 4.55 million today, along with three million retired state employees and two million families in need.

All economists agreed that this vastly expensive and corrupt system could not endure for ever, but the rickety and corrupt Iraqi state has been too weak to reform itself. For all its failings, $7bn a month in oil revenues gave the country a certain unsatisfactory stability.

Before these revenues suddenly dried up, the system was already in the grip of an escalating crisis. When the government sought to raise extra money through increased customs tariffs, shopkeepers in Baghdad went on strike and containers remained heaped up and uncollected in the Iraqi port of Umm Qasr because importers said they could not afford to pay.

Iraq has been politically weak ever since the overthrow of Saddam Hussein. A new parliament was elected in November, but a government has yet to be formed. The acting prime minister Mohammed Shia al-Sudani was unable to do much to deal with burgeoning economic problems before the US-Israeli strikes on Iran began on 28 February, so it is unlikely that he can do much to avert a full-blown economic and political crisis brought about by the war.

Iraq has always been a fissiparous country, divided between its three main communities: Shia, Sunni and Kurds. The fragmentation does not end there. Iraqis say there are four powers in Iraq: the marja’iyyah (the powerful Shia religious establishment); the tribes; the militias or paramilitaries; and the foreign powers – the US and Iran. The latter have been waging a battle for influence in the country since 1980 when the US backed Saddam Hussein in his war with Iran.

Iraqi leaders have traditionally tried to walk a narrow path, bowing alternately to both Tehran and Washington. When relations were better between the US and Iran, the names of Iraqi prime ministers had to be covertly ratified by both the US and Iran. But now these two powers are once again set to use Iraq as an arena in which to fight, putting into reverse the slow shift towards Iraqis enjoying peaceful normal lives.

What some Iraqis call “the shadow war” is already underway and, to the horror of most people in Iraq, their short interlude of peace may be coming to an end.

© iNews