The Iraq Report: Ukraine turmoil triggers food crisis in Iraq

More than two weeks after Russian President Vladimir Putin ordered a “special military operation” into Ukraine, a cascade effect that has rippled out of that conflict has had global repercussions, including on countries as far away as Iraq.

Whilst the Iraqi government has sought to maintain a level of neutrality, other factions have openly supported Russia’s invasion of its Ukrainian neighbour. Their support comes despite the fact that Baghdad has blamed recent surging food prices on the conflict.

It is not just the Ukrainian whirlwind that has created problems for Iraq, but the country’s endemic quagmire of corruption has once more implicated a global technology giant in a series of serious allegations of bribery, graft, and funding militant groups.

"Hundreds of Iraqis have been protesting rising food prices since Wednesday, sparking fears that the 2019 protest movement that ended the career of one prime minister and started the career of another may find new life in light of the Russian invasion of Ukraine"

Iraqis protest increased food prices as Baghdad silent on Ukraine war

Hundreds of Iraqis have been protesting rising food prices since Wednesday, sparking fears that the 2019 protest movement that ended the career of one prime minister and started the career of another may find new life in light of the Russian invasion of Ukraine.

Protests were reported in Nasiriyah in southern Iraq where locals have been complaining about the price of flour and cooking oils skyrocketing in local markets in a matter of weeks.

“The rise in prices is strangling us, whether it is bread or other food products,” retired teacher Hassan Kazem said. “We can barely make ends meet.”

The dramatic rise in prices has been blamed by the Iraqi government on the ongoing war in Ukraine, now in its third week.

“There's a major global crisis because Ukraine has a large share of [the world market in cooking] oils,” said trade ministry spokesman Mohamed Hanoun.

Prior to the protests erupting, the Iraqi government announced an economic aid package that would increase the pensions of retired people not earning more than $700 a month by a further 10 percent.

Meanwhile, civil servants earning not more than $350 per month would also receive a $70 increase to their monthly salary as an interim measure to combat price pressures blamed on Russia’s decision to invade its smaller Ukrainian neighbour.

The authorities also announced the suspension of customs duties on food products, basic consumer goods and construction materials for two months in the hopes that retailers will pass on these savings to their customers, although this has not been enforced uniformly.

Nevertheless, the Iraqi interior ministry announced it had arrested 31 merchants for “abusing citizens” by raising the prices of staples and commodities to take advantage of the crisis in supply and demand.

The government’s aid packages were seen as not going far enough, leading to a wave of protests.

“Pensioners and civil servants got some support, but not the rest of us. Why?” Ahmed Tahir, a small business owner in Baghdad, told The New Arab.

“Price rises affect all of us, not just civil servants and pensioners. Of course they deserve aid, but so do we,” Tahir said.

Iraq is heavily reliant on food imports to accommodate its burgeoning population and has long faced a food security crisis. Between 2000 and 2019, and despite the ravages of war and terrorism, Iraq’s population grew by 66 percent from 23.5 million to 39 million in less than two decades.

Iraq once had a strong agricultural economy that produced large quantities of domestically produced foodstuffs. However, rural communities have increasingly left the countryside for better economic opportunities in urban spaces, leading to almost two-thirds of all Iraqis living in cities.

With endemic insecurity in rural areas, increased salinisation of Iraq’s once-rich soil due to water crises, and a massive reduction in the workforce willing to work agricultural jobs, Iraq has been forced to import millions of tons of food each year.

"Baghdad is hesitant to draw the ire of Washington while simultaneously wishing to curry favour with the Kremlin and towing the line adopted by Tehran with which it is closely intertwined"

This amounts to almost 50 percent of Iraq’s total food supply being imported, and as Russia and Ukraine are both large producers of both wheat and sunflower oil, the value of these two commodities in particular has reached alarming heights, leading to fears of sustained hyperinflation.

Making matters worse is the Iraqi government’s seeming inability to deal with the Russo-Ukrainian crisis politically. While Iraq abstained earlier this month from a United Nations General Assembly vote demanding Moscow withdraw its forces from its neighbour, it has offered lip service to both sides, urging “dialogue” and “restraint”.

However, Shia militants close to Iran have made their stances infinitely clearer by plastering large posters of Russian President Putin on Baghdad billboards.

This was to such a degree that the Russian Embassy in Iraq tweeted out some photos from Baghdad showing support to the Russian leader from Shia militias loyal to Tehran, while photos were also released of senior Iraqi officials attending high level security meetings last month with Russian, Syrian, and Iranian counterparts.

Baghdad is hesitant to draw the ire of Washington while simultaneously wishing to curry favour with the Kremlin and towing the line adopted by Tehran – which also abstained in the UN vote – with which it is closely intertwined.

Ericsson embroiled in Iraq corruption, IS scandal

In another embarrassment for global corporations after French cement giant Lafarge was accused of conducting illicit activities in Syria and helping finance the Islamic State (IS), Swedish telecommunications company Ericsson has now been implicated in a similar scandal in Iraq.

Leaked documents have revealed that Ericsson allegedly paid bribes to IS militants in order to sell its services in parts of Iraq.

An internal investigation by the Swedish-based firm, which was later obtained by the International Consortium of Investigative Journalists (ICIJ), found that tens of millions of dollars were spent in suspicious payments to sustain Ericsson’s activities in Iraq between 2011 to 2019.

This includes a period of time before IS controlled any territory in Iraq, and hence suggests that kickbacks and bribes were accepted by corrupt Iraqi officials.

"By engendering an environment where kickbacks and bribes were the norm, Iraq has arguably created a business environment where 'anything goes,' especially if a company had the right political connections"

Company investigators said they could not rule out the possibility that Ericsson financed terrorism through subcontractors at a time when IS-held large parts of Iraq, although they could not identify any employees “directly involved”.

The internal report found “evidence of emails indicating illegal bypassing of customs and passing through IS-controlled areas in connection to transportation in Iraq”.

“There were numerous interviews stating it was more important to do business and deliver to customers, than ensuring the transportations were conducted according to laws and regulations,” the investigators said after questioning a number of Ericsson employees and associations.

Records showed that the company's persistence to work in IS-controlled areas led to militants kidnapping the crew chief of their subcontractors.

While Ericsson agreed to a $1 billion deal with the United States Department of Justice to prevent a criminal prosecution, the DoJ has now confirmed that it believes that Ericsson has violated the terms of that agreement by failing to disclose information pertaining to Ericsson’s interactions with IS.

While these fundamentally highlight how dangerous corporations can be especially in a context involving terrorist organisations, it is also highlights that Ericsson’s cooperation with IS would have been difficult where it not for the established and corrupt mode of business in Iraq.

By engendering an environment where kickbacks and bribes were the norm, Iraq has arguably created a business environment where “anything goes,” especially if a company had the right political connections.

This will further damage the Iraqi government’s domestic credibility as Iraqis will link these events to how IS was able to flourish.

Arguably, IS’ activities and successes were directly related to the rampant corruption and political violence engendered by Iraq’s ruling elite, and the Ericsson story will be one more piece of evidence Iraqis will point to when they explain why they do not believe in the political process anymore.

The Iraq Report is a regular feature at The New Arab.

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