According to the U.N., 761 people were killed in militant attacks in Iraq this month, down from May’s 1,045, a multi-year record high. With this streak of steady terrorist and sectarian militant attacks, as well as amplifying regional tensions, many have predicted that Iraq is headed toward civil war. Yet, Iraq’s economic prospects also present the chance for significant development. Will a young and still budding Iraqi state prove itself in times of domestic and regional hardship or will it fall victim to sectarian divide?
Following the departure of American forces in 2011, Iraq faced a precarious political and security situation. The federal government, under Shia Prime Minister Nouri al-Maliki, was operational, holding free and fair elections, but relied on a delicate cooperative balance between political powers in the nation. To exacerbate the turbulent political environment, regional and domestic issues have made this balance increasingly unsteady. The government struggles to foster accountability to its divided population, as the Sunni, Kurdish and even other Shia sects develop harsh critiques of Maliki’s government. Although on the surface the present Shia Prime Minister, Sunni Speaker of the Council of Representatives, and Kurdish President of Iraq would appear to provide sufficient sectarian representation, reality presents a tumultuous state of affairs not easily maneuvered by self-interested parties.
What challenges prevent the successful political navigation of such a crucial time for Iraq? While the nation has always dealt with a domestic atmosphere tense with sectarian issues, this specific uptick in violence has particularly strained the state of affairs and progress in the political arena.
Perhaps the most frustrating result of increased regional and domestic pressure is the reemergence of al-Qaeda in Iraq (AQI or The Islamic State of Iraq). Following years of brutal al-Qaeda operations, by 2007 Iraq was all but unified against al-Qaeda with the efforts of U.S. forces, the ISF, and the U.S.-backed Sunni Awakening Movement. This coalition, coupled with independent Shia militias who, in addition to targeting U.S. troops, also fought al-Qaeda militants. However, with the departure of U.S. Forces and growing minority discontent toward Maliki’s Shia-led government, al-Qaeda has benefited from a resurgence in violence. This renewal of strength pulls from simultaneous goals of fighting both the Syrian and Iraqi governments. Al-Qaeda in Iraq has publicly associated and claimed partnership with parts of the Sunni opposition in Syria, most notably its questionable merger with Jabhat al-Nusra. The spillover of Iraqi al-Qaeda fighters into Syria and vice-versa, as well as similar practices among Shia militias, has threatened a short-lived lull in sectarian violence.
However, fresh terrorist violence is not the only confrontation to Iraq’s political stability. In order to briefly address the dwindling security situation in Iraq one must consider Iraq’s place in a region of conflict. Historically sandwiched between neighbors that all see great value in promoting their respective opinions in Iraq, regional actors play a significant role in Iraq’s security, economic, and political affairs. While past decades saw meddling on the part of Turkey and the Gulf nations, the most substantial external influence now comes from other actors. Cradled between the ongoing Sunni uprising against Bashar al-Assad in Syria and strong, yet unpredictable Shia neighbor Iran, Iraq must deal with an international presence in its domestic affairs.
While sectarian hardships have stifled progress in the political and security realms, there have been significant economic developments and accomplishments in Iraq since the U.S. withdrawal. Iraq has experienced rapid growth: 10.2% in 2012 and estimates of 9.4% annually through 2016. With these kinds of promising economic prospects Iraq is viewed by some as a market of the future; Citigroup recently opened in Iraq this week as its first new market since 2007. However, in the eyes of other interested investors, such as HSBC who is considering a pullout from Iraq, the situation is not so bright. In a recent program note on Iraq, the IMF reported the powerful effect oil has had on the Iraqi economy, bringing in $90 billion in revenue in 2012, but also emphasized that Iraqi economic prospects are subject to “significant risks, deriving mainly from institutional and capacity constraints, oil prices volatility, delays in the development of oil infrastructure, and an extremely fragile political and security situation.”
Due to this potential for remarkable gains or equally damaging regressions, Iraq is at a significant turning point in plotting its future course. U.N. Special Envoy to Baghdad Martin Kobler concernedly discussed this crossroads, noting that Iraq could experience a collapse of the federal state into sectarian-defined regions or it could blossom into a regional economic power with political stability. Whether or not increasing oil revenues can lead to comprehensive economic prosperity and development for Iraq will be greatly decided by the ability of the country to advance past the recent period of political and sectarian conflict.