Since the fall of Saddam Hussein’s regime, the Iraqi security sector has resembled a field of power centres competing against each other to exert their influence over institutions and play a crucial role in the internal and external dynamics of the “land of the two rivers”. Although the constitution approved in 2005 entrusted the protection of the country to the Iraqi Security Forces (ISF), they had to cope with a complex security scenario from the very beginning, one deeply influenced by the presence of armed groups not entirely under the federal government’s authority.
Blurred identities, competition, and politicisation are considered some of the main features of the ISF’s different components. Interestingly, they are also reflected in their different sources of funding. More institutionalised forces such as the Iraqi Army and the Federal Police are funded by the state. Less “conventional” forces such as the Peshmerga benefit from international financial support and regional government funding, while the Popular Mobilisation Forces — in addition to state funding — benefit from a wide range of legal and illegal economic activities.
The Peshmerga: a complex and evolving identity
The Peshmerga are a peculiar phenomenon to the Kurdish Region of Iraq (KRI), with a multifaced identity historically encompassing the roles of “soldiers, rebels and militiamen”[1]. Such distinctive identity is reflected in Peshmerga’s complex organisation that, in turn, is marked by pervasive politicisation. Notably, the lines between the organisational and political spheres are blurred and interdependent. In terms of tasks and structure, the Peshmerga are organised as a defence, internal security, and intelligence force. However, from a political perspective, they are structured as party militias: the “70s forces” of the Kurdish Patriotic Union (PUK) and the Kurdish Democratic Party’s (KDP) “80s forces”, respectively. While the 70s and 80s forces are clearly affiliated to the two parties that have traditionally dominated the balances in northern Iraq, KRI’s Regional Guard Brigades (RGB) were created thanks to US and European efforts aimed at unifying, professionalising, institutionalising, and reforming the KDP and PUK’s Peshmerga[2].
The complex nature and blurred identity of the Peshmerga is also reflected in the sources of their funding: i) the federal state, ii) the regional government and iii) international assistance –especially the US.
The Peshmerga, according to art. 121 of the Iraqi constitution, are a state-recognised regional security force; therefore, they should be funded by the federal state. However, the political and financial relations between Erbil and Baghdad are a notoriously thorny issue. Often, payments due to the KRI from the federal budget are delayed or refused, and Peshmerga’s funding is no exception. So much so that the payroll of KRI’s public servants is a recurrent issue during the draft of each federal budget.
In addition to the erratic federal budget’s allocations, KRI’s finances rely on revenues derived from its autonomous oil exports. However, this source of income has suffered two heavy blows, further limiting the capacity to sustain the Peshmerga. The first blow took place in 2017, when the Peshmerga were forced to hand over the disputed and oil-rich Kirkuk to the federal government. The second blow occurred in February 2022, when the Iraqi Federal Supreme Court ruled that KRI’s Oil and Gas law was unconstitutional. That, in turn, curtailed foreign investments and oil exports, further reducing KRI’s revenues.
International security assistance is the third main source of Peshmerga’s funding. The initial success of Da’esh in 2014 exposed not only the ISF’s weaknesses but also the problems affecting the Peshmerga, caused inter alia by their blurred identity, politicisation, and precarious funding. To contain Da’esh’s offensive towards Erbil, the US and several European countries increased their support to the Peshmerga. Notably, in addition to the provision of materials and trainings, Washington agreed to pay the salaries of over 30.000 Peshmerga belonging to the RGB. These salaries, even today, are paid through the “Counter-ISIS Train and Equip Fund” (CTEF) programme.
The financial impact of the above-mentioned political dynamics, and its practical consequences on security, shouldn’t be underestimated. The lack of funding, due to political mistrust and disagreement, is reportedly one of the reasons for the failure of the “Joint Brigades”[3] – Peshmerga and Iraqi Army joint units, expected to close the security gaps exploited by Da’esh in areas disputed areas from Erbil to Baghdad. As recently stated by the KRI’s Secretary General of the Ministry of Peshmerga, "financial issues are the only obstacle to implementing the agreement and ending ISIS expansion”. He was referring to the coordination plan between the regional and federal forces, covering a 550 km strip connecting the Iraqi border with Syria to the border with Iran.
Nesting in the State: the Popular Mobilization Forces
Mainly known for the critical role played during the war against the Islamic State, the Popular Mobilization Forces (PMF) developed into one of the most significant actors of the Iraqi system, moving well beyond the boundaries of the Iraqi security sector.
Following the 2014 Grand Ayatollah Ali al-Sistani’s call to arms, the Hashd al-Sha’bi enlisted thousands of volunteers, who mainly hailed from Iraq’s Shia heartland. However, the bulk of the force (which currently accounts for over 150.000 personnel) came from several combat-ready paramilitary groups. These had emerged during the decade that followed the fall of Saddam Hussein’s regime (including Kata’ib Hezbollah, Asa’ib Ahl al-Haq, or the remnants of the Jaish al-Mahdi) or preceded it (a clear example being the Badr Brigade).
Unsurprisingly, beneath the surface, the Hashd was marred since its inception by internal competition and different (often competing) interests, agendas, and loyalties. Iranian connections to some of the most effective PMF units has always been evident[4]. However, the same rings true for other power centers located within the country that considered these patron-client relations crucial for their hold over the Land of the Two Rivers and to secure their ability to influence the country’s power balance.
These factors were not eliminated by the PMF’s formal integration in the Iraqi security forces. Paradoxically, the Hashd institutionalisation has represented, especially to some of the most structured and solid units, the opportunity to further exploit the state for their own aims, securing a flow of financial support to consolidate their positions[5].
Building on the popularity obtained during the campaign against Da’esh, several key-groups succeeded in strengthening their influence over the Iraqi political arena, as aptly demonstrated by the crucial role Hashd-related parties play in parliament. This ultimately allowed some of the most powerful units to influence the distribution of state resources destined to the PMF. Moreover, it also gave them a say on their deployment on Iraqi territory, allowing them to take control of areas of particular strategic and financial significance. According to several reports, this allowed some of them to engage in extremely lucrative illicit activities, including oil and drug trafficking, fuel smuggling, or the imposition of illegal taxes at checkpoints under their control[6]. The situation appears all the more complex considering these groups’ activities often occur in several disputed areas[7] marred by difficult ethno-sectarian balances, the decades-long Baghdad-Erbil competition, as well as the complex legacy left by Da’esh.
Especially after the end of major combat operations against Da’esh, some Hashd units developed a significant presence within the Iraqi formal and informal economy. Several groups successfully re-oriented their activities employing demobilized fighters or acting as intermediaries, focusing in particular on the reconstruction business and the provision of basic services[8].
Reforming the security sector: prospects
Strengthening state control over armed actors’ funding sources would be one of the most powerful tools to effectively reform the security sector. However, in Iraq, the twisted nexus of security, politics, and the economy makes reforms particularly challenging. Moreover, the fragmentation of the security sector is mirrored in the competing economic relations and the different legal and illegal sources of funding.
Iraqi institutions and their international partners are actively engaged in addressing the funding and financial dimension of security sector reforms. However, a possible additional measure of reform could be the increased sanctioning of illicit economic activities, which are carried out by armed groups who don’t belong to the ISF yet still claim political or religious legitimacy. Targeting and exposing the criminal dimension of these groups might contribute to isolating and delegitimising them, clearing the murky waters of the Iraqi security sector.
The views and opinions expressed in the article belong to the authors and do not reflect other institutions’ positions.
[1] Clingendael CRU report, Fighting for Kurdistan?, Feike Fliervoet, March 2018
[2] See Defence Studies Journal 21:2, The Iraqi Kurdish Peshmerga: military reform and nation-building in a divided polity, Sardar Aziz and Andrew Cottey, 2021 pag. 226-241.
[3] Financial issues hinder ISIS elimination, senior Peshmerga officer says, Shafaq, March 2022; Lack of funds hinders formation of joint Kurdish-Iraqi brigades: Peshmerga official, Rudaw, September 2021
[4] Michael Knights, Iran’s Expanding Militia Army in Iraq: The New Special Groups, CTC Sentinel, 12:7, August 2019, p. 1-12
[5] In 2020, the PMF were allocated an annual budget of $ 2.6 billion. See International Crisis Group, Iraq’s Paramilitary Groups: The Challenge of Rebuilding a Functioning State, Crisis Group Middle East Report, n. 188, 30 July 2018.
[6] See Ranj Alaaldin and Vanda Felbab-Brown, New vulnerabilities for Iraq’s resilient Popular Mobilization Forces, Brookings, 3 February, 2022; Omar Al-Nidawi, The Growing Economic and Political Role of Iraq’s PMF, Middle East Institute, 21 May, 2019.
[7] Marc Skelton, Zmkan Ali Saleem, Iraq’s Disputed Internal Boundaries After ISIS, LSE Middle East Centre Report, February 2019.
[8] International Crisis Group, Iraq’s Paramilitary Groups: The Challenge of Rebuilding a Functioning State, Crisis Group Middle East Report, n. 188, 30 July 2018, p. 10-12. Nancy Ezzeddine, Erwin Van Veen, Who’s Afraid of Iraq’s Hashd?, War on the Rocks, 10 September 2019.