DECENTRALIZATION AND ITS DISCONTENTS IN IRAQ MIKE FLEET SEPTEMBER 2019 POLICY PAPER 2019-18 CONTENTS * 1 INTRODUCTION * 1 HISTORY * 3 WHAT IS THE OBJECTIVE OF FEDERALISM IN IRAQ? * 3 WHAT IS THE LEGAL DESIGN OF FEDERALISM IN IRAQ? * 5 ADMINISTRATIVE AND FINANCIAL IMPEDIMENTS * 13 POLITICAL IMPEDIMENTS * 15 WHERE IS IRAQI FEDERALISM GOING? * 19 ENDNOTES SUMMARY In Iraq the issue of decentralization tends to kick up a flurry of activity and discussion whenever Law 21 is amended or a governor attempts to create a new region. Otherwise though, federalism only draws attention as it relates to Baghdad-Kurdistan Regional Government (KRG) relations, oil revenue sharing, or both. However, while federalism rarely lends itself to meaningful discussion beyond Baghdad-KRG dynamics, Iraq’s current public service regime is struggling to deliver on desperately needed services in part due to the issue of establishing a functioning federal state system across the country. Far more attention needs to be devoted to institutions and how those operating within them can deliver those services. One way to do this is to decentralize service provision to the governorates not incorporated into a region. However, this process has been hampered by administration, fiscal, and political issues. Identifying these and seeking solutions to resolve them will be key. This paper addresses the decentralization process, specifically focusing on the issues surrounding the governorates not incorporated into a region, as per Law 21. Thus, identifying the problem areas and INTRODUCTION seeking and implementing solutions to resolve them is the only way to capitalize In Iraq the issue of decentralization on gains made. This paper addresses the tends to kick up a flurry of activity decentralization process, specifically and discussion whenever Law 211 is focusing on the issues surrounding the amended2 or a governor attempts to governorates not incorporated into a create a new region. Otherwise though, region as per Law 21 of 2008. Oil sharing,6 federalism only draws attention as it Baghdad-KRG relations, and intra-KRG relates to Baghdad-Kurdistan Regional relations warrant an in-depth discussion Government (KRG) relations,3 oil and will be left to another time. revenue sharing,4 or both. However, while federalism rarely lends itself HISTORY to meaningful discussion beyond Baghdad-KRG dynamics,5 Iraq’s current To start, it is important to consider the public service regime is struggling to history of Iraqi institutional capacity deliver on desperately needed services and budgeting.7 Since 2005, the Iraqi in part due to the issue of establishing government’s organization and efficacy a functioning federal state system has evolved considerably. The Iraqi across the country. Countless articles federal government in 2005-06 had a and op-eds underline the need for good very rudimentary capacity to budget and governance in Iraq and functioning largely relied on pen, paper, and FoxPro, services, but far more attention should a basic and dated computer program. At be devoted to institutions and how those this point, Baghdad could only account operating within them can deliver those for one fiscal year of projections on services. revenues and expenditures, rather One way to do this is to decentralize than multi-year spending estimates.8 service provision to the governorates Additionally, the governorates lacked not incorporated into a region. However, executive strength, budgeting capacity, this process has been hampered by and legislative experience in the newly- administrative, fiscal, and political established Provincial Councils (PCs). issues. With that said, federalism and However, in the ensuing years, Iraq decentralization are constitutional and in would witness wide-ranging changes law. The capacity of the governorates is to this system. Parliament secured growing with time, and some gains have a say in the Iraqi federal budget, been made. To try to recentralize and authorities established the Accelerated step back from decentralization toward Reconstruction and Development another model would not address the Program (ARDP) as a nascent form fundamental issues that Iraq is facing. of fiscal federalism, the Ministry of 1 Finance developed the capacity over governorates (which notably happened the years to take hold of the budgetary again in the protests of 2018).12 Further, process, which under the Ba’athists some see Iraq as a de-facto federacy, was controlled by the Ministry of meaning that the federal government Planning, and governorates earned has one set of federal relations with the right to budget for, and ask the the KRG, and a symmetrical approach federal government for, specific funds with the provinces not incorporated to be allocated to the governorates for into a region.13 Nonetheless, the Iraqi projects.9 The Iraqi government can government is slowly attempting to now develop and implement federal move away from such thinking. For budgets despite challenges like the pre- example, in 2015, former Iraqi Prime existing institutional culture, turnover Minister Haider al-Abadi issued an of staff and ministers, capacity deficits, executive order to implement Law 21. violence, and a radical shift toward The law had been passed in 2008 with the federalism. With that said, there remain goal of empowering the governorates issues to address and overcome, and through decentralization. This pushed the progress of federalism as a model forward various administrative reforms, for service delivery in Iraq has waxed affecting six different federal ministries.14 and waned since 2005. For example, However, the decentralization process capacity is growing to execute on has been poorly executed with some budgets, but there is still no investment federal ministers reluctant to see it budget to execute on in the provinces. enacted, while the war against ISIS and Additionally, budgetary execution rates the ensuing financial crisis in 2014-15 have sat around 65 percent since 2015,10 significantly hampered decentralization and protests over poor services and initiatives. These issues have been unemployment continue to wrack the exacerbated by many other underlying Iraqi state. structural concerns, such as endemic corruption, politically driven distribution Federalism as a concept is deeply of oil revenues, and mismanagement of unpopular across most of Iraq,11 as state assets and resources. many fear it will empower corrupt local politicians and interests while failing to improve services. Previous protests in Iraq made clear citizens’ distrust and anger with local politicians through the targeting of PC buildings and political party offices. For example, the massive 2011 “Day of Rage” protests targeted local politicians and provincial offices, burning down PC buildings in some 2 WHAT IS THE WHAT IS THE OBJECTIVE OF LEGAL DESIGN FEDERALISM OF FEDERALISM IN IRAQ? IN IRAQ? Following the establishment of the 2005 Iraq’s constitution creates a federal system Constitution, the conceptual design of Iraq of 18 governorates, three of which consist was that of a decentralized model following of territory governed by the KRG in what is the principle of subsidiarity, allowing for currently Iraq’s only region. As per Article asymmetrical relationships between the 119, one or more governorates can hold governorates and Baghdad. The goal of a referendum and form a region. Regions this was to recognize that the needs of the operate with their own constitution governorates differ from one another; the (provided that it does not contradict the needs of Diwaniyah differ from those of 2005 Constitution), which defines the Basra, and again from Ninewa. Furthermore, region’s structure of powers, authorities, asymmetry has a very important political and mechanisms, and outlines how function; Baghdad’s relationship with the such powers may be exercised (Article KRG is necessarily different because of 120). Article 121 provides that regions history and politics. To treat some of the are responsible for the creation and governorates the same as the KRG, or even administration of internal security forces the same as each other, is to both ignore and police, outside of federal forces. This is reality and the politics driving federalism. the article that legally allows the Peshmerga This is what allows federalism in Iraq to be and Asayish in the Kurdish Region of Iraq. To adaptive as the country progresses. Once note, the Hashd al-Shaabi — or the Popular paired with subsidiarity, the governorates Mobilization Forces (PMF) — are separate should in theory deliver their services in a from Article 121. This umbrella organization timely and efficient fashion, tailored to their was institutionalized with the passage of a own needs and circumstances. Overall, special law in 2016 by the Iraqi Parliament. decentralized asymmetrical federalism, Under this law, the PMF is an independent in principle, should allow the Iraqi federal organization with a corporate personality, is government, the KRG, and the governorates part of the Iraqi armed forces, and reports not incorporated into a region to manage to the prime minister (whose role includes inter-governorate/region or governorate- commander-in-chief), with the commander Baghdad issues to settle disputes and being appointed by Parliament. The PMF improve governance. law draws from Articles 61 and 73 of the Constitution.15 A Kurdish MP stands outside Kurdistan’s Parliament building in Erbil, the capital of the autonomous Kurdish region of northern Iraq, on Sept. 15,