Five million inhabitants. One million displaced Iraqis and 200,000 Syrian refugees. Seven hundred thousand people below the poverty line, living on less than $90 per month (that’s 14 percent; it was 4 percent in 2013). The unemployment rate jumped from 4.8 percent to 14 in six years. Half a million barrels of crude oil per day. Eighteen percent of GDP is from oil. And $1 billion of oil revenues disappeared into thin air. An $18 billion deficit.
That is the story of Iraqi Kurdistan in numbers. Then there are the lives. There’s Akhbar, an economics graduate, who arrived in Erbil in search of work and is still unemployed. There’s Mahmoun, a receptionist at a two-star hotel, who in a war among the poor blames refugees who work for half the price. And there are the teachers, on strike for months, who finally were forced to reopen the schools for the good of the students.
Against this backdrop of growing social tensions are the Kurdistan Regional Government buildings, the construction sites and the high-rise towers that form the skyline of this city modeled on the Gulf petro-state. The modern development clashes with traditional markets where elderly vendors lay a piece of cardboard on the ground and sell belts, lighters, candy.
Yet this is the model, strong in hidden wealth, that the government is trying to impose. At its base are the two clans, Barzani’s and Talabani’s, who for decades have held political and economic power, families founded with the support of the military, a network of businesses, vote trading and nepotism.
With the U.S. invasion of Iraq in 2003 came a new Baghdad without Saddam Hussein and the entrance of the Kurds into the network of Western alliances. “In 2003, Kurdish society experienced a significant economic advance,” explains Kamal Chomani, an Iraqi Kurdish journalist with AI Monitor and Foreign Policy. “After Saddam, the KRG received a substantial flow of money from Baghdad, which clearly improved living conditions.”
The population, “liberated” from misery, began to demand radical changes in the political system: democracy and participation in socio-economic life. But the two main parties, Barzani’s KDP and Talabani’s PUK, have tightened control over the flow of money coming from the central government. And with petroleum revenues, in 2007 foreign companies began to arrive for exploration and extraction.
The decade of prosperity has opened the door to a wild capitalism, and the policy of neoliberalism resulted in expanding the gap between rich and poor. In only a few years, the conflict between the people and the political parties has erupted in a tribal-style society, where there are several informal centers of power. The most powerful families generate social and economic cliques, often by region (with the poles of Erbil, Duhok, Sulaymaniyah), in which no clan-party can establish itself as the only power and source of a clear socio-economic vision.
Support for social rebellion, which became overt in 2007 with the first demonstrations, is taking over the popular consciousness, combined with the emergence of independent media and the spread of the internet. The repression came immediately: the PUK and KDP use force to silence critical voices, get rid of activists and journalists, and to suppress the protests.
They also use force in the economy. “It is the Dubai model, the Gulf model: an economy based on crude canceling other forms of production,” Chomani said. “Barzani has said many times: We will make Erbil the new Dubai.”
The lights of the new palaces illuminate the crisis that erupted in 2014, when KRG budget cuts led Erbil to begin selling crude oil independently of Baghdad. Salaries of civil servants were cut by two-thirds and suspended for months. Demonstrations multiplied. The unemployment rate tripled in six years, and the nascent middle class began to die.
“From 2003 to 2013, the new middle class had developed because of the substantial increase in public employees,” Chomani said. “Out of about five million inhabitants, more than one million worked in the public sector. But the jobs were cut, along with wages. A civil servant earns 450,000 Iraqi dinars per month, about $350. How can you afford a decent life in a country where rent costs at least $ 250, there is no public transport system and public services are only on paper?”
While protests grew against the patronage system that had kept society compact for decades, robberies, prostitution and murder also multiplied. “There had never been a boom in social unrest before 2013,” Chomani said. “Society has always been tied to traditional, tribal and religious values, which ensured social control. The government’s response is the Dubai model, which raises prices and devours the purchasing power of the middle and lower classes.”
Some people went back to the land, the traditional source of livelihood that had been abandoned for oil work. At the end of the 1990s, the population had moved to the city. Now it went in reverse. “They went back to the villages, but with great difficulty,” Chomani said. “The government doesn’t invest there, it doesn’t buy local products and imports from abroad nullified domestic agriculture potential.”
That’s the face of Iraqi Kurdistan, between economic crisis and Islamist threat. ISIS is at the gates, a bogeyman used by the leadership to mask the social inequalities while insisting on the need to support the armed forces.
Another peculiarity is that the KRG doesn’t have a national army, but rather peshmerga units affiliated with the political parties. It’s made up of 200,000 men, 36 brigades, all employees of the KDP or PUK, a tribal bond used as the instrument of consensus and, indirectly, the choking of discontent.
“They are paid by the state but controlled by the two parties,” Chomani said. “Those uniforms serve to curb unemployment, maintain hundreds of thousands of families, and generate political affiliation, votes, and silence.”
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