Political failure, not economic shock, unmasks Iraq

The grievance-laden rhetoric delivered by Iraqi Prime Minister Ali Faleh al-Zaidi before parliament is a transparent attempt to package a systemic crisis as an unpreventable “external shock.” His claim that Iraq is suffering under an “economic blockade” due to the closure of the Strait of Hormuz and the halting of crude exports is merely a political lifeline. It seeks to conceal a burning truth: Iraq is not enduring a temporary disruption; it is suffering from complete institutional nakedness that was previously hidden behind the price of an oil barrel.

The danger of the government’s narrative lies not only in justifying the devaluation of the Iraqi Dinar to 1,520 per US Dollar, but in the glaring regional false equivalence Baghdad relies upon.

Gulf Arab states, standing directly on the frontlines of regional conflict, face identical—if not more acute—disruptions to maritime trade through the Strait of Hormuz. Yet, their national currencies have not collapsed, nor have their leaders presented their publics with a grim choice between fiscal insolvency and cutting public sector wages.

The contrast is stark: Gulf states spent decades investing in strategic bypass pipelines, sovereign wealth funds, and asset diversification. Baghdad, meanwhile, considered itself immune simply because petrodollar liquidity kept flowing into a treasury governed by sectarian quota politics (Muhasasa).

This political hypocrisy deepens when examining the contradictory narratives within the ruling elite itself. How can a public now asked to absorb the cost of contraction reconcile this glaring dissonance? Only yesterday, the government of former Prime Minister Mohammed Shia’ al-Sudani was broadcasting a celebratory discourse on “financial recovery,” “developmental achievements,” and monetary stability.

Today, al-Zaidi steps up to declare an empty inheritance, a national debt exceeding 208 trillion dinars, and a monthly deficit of 10 trillion dinars merely to meet the state payroll.

This contradiction raises a decisive question: Who was misleading the public? Were yesterday’s recovery figures merely cosmetic makeup on a decaying financial corpse, or is the current government exploiting regional turmoil to cover for chronic mismanagement?

The reality is that both administrations manage the exact same model. Since 2003, Iraq has been systematically stripped of its productive capacity: no industrial sector feeds the treasury, no agricultural sector secures basic food security, and the country has been turned into an exclusive consumer market for foreign goods—principally from Iran. Oil revenues were transformed from an instrument of state-building into “cash loot” distributed among political cartels to fund shadow-state networks.

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Furthermore, this financial chaos extends beyond technical incompetence; it underscores a deeper sovereign crisis. Iraq has been converted into a rear-guard financial and banking conduit for regional networks via the notorious “Currency Auction” and illicit parallel markets. While official avenues are shut under the guise of blockades and maritime vulnerability, parallel channels leaking US dollars remain vibrantly active for powerful non-state actors. The ruling class chose to leave Iraq’s economic body without protective buffers or strategic defences, mortgaging monetary policy to regional dynamics instead of fortifying the national treasury. Consequently, financial sovereignty became an illusion that evaporated at the first beat of regional war drums.

Moreover, threatening “compulsory savings” and targeting the livelihoods of public sector workers reveals a severe erosion of the already fragile social contract between the citizen and the political class. Instead of dismantling the astronomical privileges of senior officials and plugging structural waste in non-productive state bodies, the government heads straight for the pockets of ordinary civil servants as its last line of defence. The politicisation of basic livelihoods under the pretext of “exceptional circumstances” is not an unavoidable financial necessity; it is an authoritarian logic that enforces dependency and uses the fear of total collapse to pacify public discontent.

Therefore, talk of a “blockade” facing Iraq lacks any grounding in reality. The country is not blockaded internationally; it is blockaded from within by organised plunder that has reduced its budget to a zero-sum equation: the oil pipeline is the state, and the moment its valve is closed, the entire structure stands exposed.

The decision to devalue the currency, accompanied by threats of wage cuts and further indebtedness, is not a monetary solution—it is a declaration of political and institutional bankruptcy. Baghdad’s ruling elite is forcing citizens to foot the bill for two decades of corruption and deliberate economic paralysis under the convenient scapegoat of regional tensions.

The Dollar will not stabilise, nor will the Dinar be rescued from its downward spiral, until Baghdad admits that its crisis did not arrive from the sea or the straits. It emerged directly from the corridors of a political system that stripped Iraq of everything, leaving it without an economy and without protection.

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