Where is Iraq Heading? State Sovereignty Amidst External Influence, Corruption, and Economic Crisis

Great Wealth... Yet Citizens Await Their Most Basic Rights

Iraq possesses immense oil wealth, vast agricultural lands, a strategic geographical location, a deep-rooted historical and cultural legacy, and a pool of scientific and professional talent capable of contributing to the construction of a modern state. Despite this, Iraqi citizens continue to grapple with electricity shortages, rising prices, unemployment, inadequate public services, and bureaucratic hurdles. Meanwhile, questions persist regarding the fate of public funds and the future of the economy.

This paradox cannot be explained by a lack of resources; rather, it stems from poor management, misaligned priorities, eroding trust in institutions, the entanglement of political and economic interests, and the influence of regional and international powers on Iraq’s decision-making process.

The core issue is not the scale of Iraq’s wealth, but its capacity to translate that wealth into sustainable development, social justice, services that uphold human dignity, and a state that asserts its own sovereignty and enforces the rule of law for all.

This brings us to a question that transcends the mere formation of governments or the rotation of officials: Does Iraq today possess a clear national vision—one that can rebuild its institutions, safeguard its sovereignty, and prioritize the interests of its people above the agendas of competing political parties and factions?

A Fully Formed Government... Does a New Phase Begin?

On October 15, 2026, the Iraqi Council of Representatives voted to complete the formation of the government. This included the appointment of deputy prime ministers and several ministers to fill both vacant and newly created portfolios—resolving positions that had remained unfilled for months. The vote covered ministries responsible for security, the economy, and public services, and also saw the establishment of a new Ministry for Digital Economy, Governance, Science, and Technology.

While the completion of the government’s composition is a significant constitutional and administrative step, it is not, in itself, proof of the government’s success or its capacity to address the nation’s accumulated crises.

The Iraqi people have witnessed the formation of many governments, each accompanied by declarations of reform, promises to combat corruption, and pledges to improve public services. Yet, the true benchmark has never been the number of ministers or the scale of a government’s agenda; rather, it is the tangible change reflected in the lives of the citizens.

Furthermore, the political balancing acts that influenced the selection of certain officials once again raise questions regarding the extent to which government decision-making remains independent, and whether state institutions can operate based on competence and the public interest—free from the constraints of sectarian/ethnic quota-sharing (*muhasasa*) and partisan loyalties.

What is required today is neither to grant the government an open-ended period to repeat its promises, nor to preemptively condemn it to failure. Instead, its performance should be held to clear, publicly stated standards: defined objectives, established timelines, measurable indicators, and periodic reports detailing what has been achieved, where obstacles have arisen, and the reasons behind them. A ministerial position is a national responsibility—not a party entitlement or a political reward—and citizens are less interested in the announcement of plans than they are in seeing the actual results in their streets, schools, hospitals, and workplaces.

National Sovereignty: From Rhetoric to Decision-Making

The term "sovereignty" frequently appears in Iraqi political discourse; however, it remains incomplete unless it translates into institutional practice that safeguards the independence of national decision-making.

Sovereignty does not imply isolation from the world, the severance of ties with neighboring countries, or engaging in ill-conceived confrontations with international powers. Rather, it means that Iraq should manage its foreign relations in alignment with its own national interests. It entails that Iraq’s constitutional institutions—not external actors—hold the authority to make decisions regarding security, foreign policy, and the economy. Furthermore, international cooperation must be founded on mutual respect, rather than on dependency or the imposition of terms by others.

Iraq is situated in a region where regional and international interests intersect, and where conflicts directly impact its security, economy, resources, and strategic position. In such an environment, nationalistic slogans alone are insufficient to protect the state; what is required are robust institutions, balanced diplomacy, a resilient economy, and a unified approach to security decision-making.

This begins with consolidating all arms and military decision-making authority within the state’s constitutional and legal frameworks. It requires preventing Iraqi territory from being used as a staging ground for settling regional or international scores, strengthening the authority of legitimate state institutions, and ensuring that all security and economic agreements are subject to legal and parliamentary oversight.

Moreover, Iraq’s relations with the United States, Iran, Arab nations, Turkey, and all other partners must be based on mutual interests—not on the logic of competing regional axes or concessions for which the ordinary citizen ultimately pays the price. A state that cannot protect its internal decision-making or manage its foreign relations independently will remain vulnerable to pressures beyond its own control. In contrast, a strong state is one that understands its interests, defines its priorities, and manages its disputes through dialogue and the rule of law—all without compromising the rights of its people.

Corruption: A Crisis of the State, Not Merely a Financial Issue

In Iraq, corruption is no longer just a matter of financial irregularities or isolated incidents that can be contained through temporary campaigns. Instead, it has evolved into an institutional challenge that undermines the efficiency of public administration, the quality of services, the equitable distribution of opportunities, and public trust in the state.

A 2025 International Monetary Fund (IMF) report on Iraq highlights persistent challenges, including corruption, weak governance, imbalances in public spending, and vulnerabilities within the oil, electricity, and public procurement sectors. The report underscores the necessity of strengthening accountability, improving public financial management, and enhancing investment efficiency.

These challenges reveal that combating corruption cannot be achieved through mere rhetoric or the announcement of new investigations. Rather, it depends on the capacity of institutions to prevent wrongdoing, detect violations, and hold those responsible accountable under the law.

Essential practical steps include publishing government contracts, tender procedures, and contract award outcomes; ensuring public access to information regarding state projects; bolstering the independence of oversight bodies; and developing digital systems that minimize direct administrative interaction—thereby reducing opportunities for bribery and favoritism.

Furthermore, it is imperative to protect whistleblowers, ensure the judiciary remains free from political interference, expedite investigations while upholding legal safeguards, and recover assets obtained through corruption in accordance with established judicial procedures. However, justice requires a distinction between an accusation and a conviction. Anti-corruption efforts must not be used to settle political scores or to defame individuals before their culpability has been established. Effective accountability is that which is grounded in evidence, applied to everyone without exception, and upholds the accused’s right to a defense and a fair trial.

The problem does not lie in a lack of diagnosis—Iraqis are well aware of many of the existing flaws. Rather, the challenge lies in translating this awareness into sustained reform, and in fostering a political will that accepts holding officials accountable, regardless of their positions or affiliations.

The Iraqi Dinar and Rising Prices: Who Pays the Price for Economic Decisions?

On October 7, 2026, a revised official exchange rate for the Iraqi Dinar came into effect. The selling price of the US dollar to the public was set at 1,520 dinars, while the rate for banks was established at 1,510 dinars; the purchase price of the dollar from the Ministry of Finance was set at 1,500 dinars.

This decision was made under challenging financial and economic conditions, amid disruptions to oil exports and a decline in revenues linked to regional developments. This situation underscores the extent to which the Iraqi economy is tethered to oil resources, and how vulnerable the national budget is to any instability in energy markets or export flows.

However, a change in the exchange rate cannot be assessed solely through numbers; it carries significant implications for import costs, general price levels, and the purchasing power of citizens—particularly given Iraq’s heavy reliance on imported goods.

Conversely, it cannot be assumed that every price increase stems exclusively from the exchange rate. Other factors also play a role, including transportation and shipping costs, market competition, profit margins, supply and demand dynamics, and the effectiveness of market oversight.

Consequently, it is the government’s responsibility to clarify the objectives of this decision, assess its potential impact, monitor price trends, prevent unjustified exploitation, and direct social protection programs toward the groups most severely affected. Furthermore, the outcomes of any decision should be evaluated periodically and transparently, rather than merely justifying the decision at the time of its announcement. Monetary policy is not measured solely by its ability to generate revenue for the treasury, but also by its impact on economic stability and the living standards of citizens.

In the long term, the stability of the dinar cannot be sustained unless it is accompanied by fiscal discipline, the diversification of income sources, and the development of domestic production, the strengthening of confidence in the banking system, and a reduction in reliance on imports.

Ultimately, no financial measure can be considered successful if its burden falls disproportionately upon those with limited salaries, retirees, and the most vulnerable segments of society.

The Banking Sector: Between National Oversight and the Pressure of International Sanctions

On October 15, 2026, the U.S. Department of the Treasury announced measures concerning the International Development Bank (IDB) of Iraq, accusing it of facilitating financial transactions linked to Iranian networks subject to sanctions.

It is essential to approach this matter with professional rigor; the U.S. statement reflects the position and allegations of the issuing authority, and it would be incorrect to automatically treat its contents as a final judicial conviction against any of the entities or individuals involved.

Regardless of the eventual legal outcome, this case raises significant questions regarding the robustness of the Iraqi banking system, the effectiveness of oversight on outward transfers, and the extent to which banks adhere to standards for combating money laundering and the financing of illicit activities.

The banking sector is not merely a conduit for the exchange of funds; it is a pillar of economic stability. Any disruption in its relationship with the international financial system could impact commercial transfers, the financing of imports, and the confidence of foreign financial institutions—with potential repercussions extending to companies and merchants operating legitimately.

A responsible approach entails neither the uncritical adoption of external allegations nor their outright rejection simply because they originate from a foreign state. The objective should be an independent, professional investigation and legal cooperation that safeguards Iraq’s interests, alongside a review of the evidence and procedures in accordance with both Iraqi law and relevant international standards. It is also necessary to strengthen the independence of banking supervision, develop compliance systems, and ensure that banks are not exploited for political conflicts or the financing of illicit activities—while simultaneously protecting compliant institutions and customers who have no involvement in any wrongdoing.

The strength of the Iraqi banking system is not measured by the number of banks operating within it, but rather by its capacity to safeguard funds, ensure transparency, facilitate legitimate trade, and maintain the confidence of both the public and international markets.

The Oil Economy: Wealth Alone Is Not Enough to Build a State

Oil remains the primary source of public revenue and foreign currency for Iraq. While this wealth presents a significant opportunity if managed effectively, it becomes a source of risk when government spending—and the economy as a whole—become excessively dependent on the volatility of oil prices and export volumes.

In its 2025 report, the International Monetary Fund (IMF) warned of challenges including high recurrent government spending, fiscal pressures, a weak private sector, unemployment, and systemic issues within the electricity sector. These problems render economic diversification a strategic necessity rather than an option that can be deferred.

Diversification does not mean abandoning oil; rather, it entails using oil revenues to build productive sectors that create jobs, increase non-oil income, and enhance the state’s resilience in the face of crises.

The agricultural sector requires modern water management, more efficient irrigation systems, support for farmers, and the integration of agricultural output with food processing industries and markets. The industrial sector requires a stable electricity supply, investment in gas and energy, streamlined administrative procedures, and the protection of fair competition against monopolies and unfair privileges.

Meanwhile, religious, cultural, and archaeological tourism could help revitalize Iraq’s provinces and generate employment—provided this is supported by adequate services, robust infrastructure, and the preservation of historical sites. Iraq can also leverage its geographical location by developing ports, roads, railways, and border crossings, thereby strengthening its role in regional trade—provided that such projects are based on realistic feasibility studies, managed through transparent contracts, and subject to evaluation and accountability.

The private sector—particularly small and medium-sized enterprises—remains a fundamental driver for job creation and the expansion of the production base. This requires adequate financing, simplified business registration procedures, a stable legal environment, and fair competition, free from the influence of cronyism or political leverage.

As for education, it must be aligned with the actual needs of the economy, fostering scientific research, innovation, and vocational training, so that university degrees do not become disconnected from available employment opportunities.

Building a diversified economy is not achieved merely through the announcement or high-profile inauguration of projects; rather, it requires continuous planning, responsible financing, effective implementation, the measurement of outcomes, and accountability for delays or waste.

Public Funds and Equitable Entitlements

It is the right of the Iraqi people to know how state funds are managed, and upon what basis salaries, pensions, subsidies, allowances, and other financial entitlements are determined.

Transparency in public spending is not merely a media-driven demand; it is a fundamental prerequisite for achieving justice and strengthening trust in public institutions. When the rules governing entitlements are clear and publicly disclosed, the scope for exploitation and cronyism diminishes, making it easier to uncover and rectify irregularities.

Financial entitlements must be subject to periodic audits, conducted according to standardized legal criteria. Any violations substantiated by evidence must be addressed, while ensuring that every individual retains the right to object and defend themselves.

At the same time, the auditing process must not be transformed into a tool for political or social targeting; conversely, legal protections must not be used as a pretext to perpetuate wrongdoing.

The proper standard is to apply the law to everyone equally, to disclose findings with clarity and accountability, to safeguard the rights of those truly entitled, and to recover—through established legal procedures—any funds proven to have been disbursed unlawfully.

A just state does not squander public funds, nor does it infringe upon legitimate rights; it ensures that privileges do not become a means of discrimination among its citizens.

Citizens' Rights and the Rule of Law

A state does not derive its legitimacy solely from its natural resources or the strength of its security institutions; rather, it stems from its capacity to protect human dignity, ensure equality before the law, and safeguard constitutional rights and freedoms.

The 2026 Human Rights Watch World Report, which examines the situation in Iraq throughout 2025, highlights concerns regarding freedom of expression and assembly, impunity, judicial guarantees, and other human rights-related issues.

Article 14 of the Iraqi Constitution guarantees equality before the law, while Article 19 provides for judicial safeguards. Furthermore, Article 38 guarantees freedom of expression, the press, assembly, and peaceful demonstration, subject to constitutional provisions.

However, the mere existence of constitutional provisions is insufficient if they are not reflected in daily practice—and if citizens cannot claim their rights without fear of threats, discrimination, or retaliation.

What is required is a review of policies and procedures that may infringe upon constitutional rights, a serious investigation into complaints, the strengthening of the independence of the judiciary and human rights bodies, and the assurance of accountability for violations confirmed by investigations.

Moreover, precision must be maintained when citing the number of detainees, convicted individuals, or those otherwise affected; figures should not be circulated unless they are based on reliable, up-to-date sources. Responsible human rights discourse is grounded in facts and evidence, balancing society’s right to accountability with every accused individual’s right to a fair trial.

There is no inherent conflict between stability and the respect for rights. In fact, true stability is strengthened when citizens trust that the law protects them, that institutions listen to their voices, and that their dignity does not depend on their social status or political affiliation.

The Emigration of Talent: A Loss That Cannot Be Compensated by Appointments

Iraq possesses significant scientific and professional talent across fields such as medicine, engineering, education, scientific research, management, and technology. However, harnessing this potential requires an environment rooted in competence and fairness, rather than one based on personal loyalties or connections.

When cronyism becomes a decisive factor in appointments and promotions, the opportunities for experienced professionals diminish, institutions weaken, and the sense of frustration among the youth grows—often making the pursuit of a career abroad a more attractive option.

Calls for Iraqi professionals living abroad to return are insufficient if they are not met with suitable job opportunities, clear recruitment standards, professional independence, and a stable research environment.

Consequently, it is essential to reform recruitment and promotion systems, support universities and research centers, expand vocational training, and involve experts in the formulation and evaluation of public policy.

Furthermore, Iraq can benefit from its diaspora through programs focused on academic collaboration, consulting, technology transfer, investment, and joint research projects—fostering sustainable partnerships even with those who cannot return permanently.

A nation is not built by distributing official positions; it is built by selecting the right person based on competence, providing them with the necessary tools to perform their duties, and holding them accountable for the results.

From Diagnosis to a National Action Program

If the Iraqi government wishes to regain the trust of its citizens, it needs a concrete, practical action program—not merely another list of promises.

This program must begin by strengthening the independence of security and political decision-making, managing foreign relations in alignment with the national interest, developing constitutional institutions, and ensuring that Iraqi territory is not used in the conflicts of others.

It must also encompass the fight against corruption through transparency, independent oversight, and an effective judiciary. This includes publishing contracts and information regarding public spending, as well as developing digital systems that reduce opportunities for bribery and cronyism.

Economically, it requires assessing the impact of monetary and fiscal decisions, protecting low-income groups, expanding productive sectors beyond oil, improving electricity services, supporting small and medium-sized enterprises, and fostering an environment that attracts legitimate investment.

Regarding rights, the government must promote equality before the law, safeguard freedom of expression and peaceful assembly, ensure fair trials, and hold accountable anyone found responsible for rights violations.

In public administration, appointments and promotions must be based on standards of competence and integrity. Ministerial performance should be linked to measurable objectives, with periodic reports published to inform citizens about what has been achieved, what has not, and the reasons for any setbacks.

All of this must be accompanied by a clear timeline, publicly stated performance indicators, independent monitoring mechanisms, and periodic reviews that allow for course correction rather than the repetition of past mistakes.

Ultimately, reform is not measured by what is written in government programs, but by what is translated into tangible results in people’s lives.

Iraq Deserves More

Iraq is not a country poor in resources or capabilities; rather, it faces a genuine challenge in transforming this potential into a stable, equitable state capable of safeguarding its own interests.

The future of its people should not remain hostage to the volatility of oil prices, the shifting power dynamics between political blocs, or the competition for influence among regional and international powers. Wealth that fails to translate into public services, opportunities, and justice loses much of its national value; sovereignty that does not protect the citizen remains incomplete; and a legal system that is not applied equally to all loses the public’s trust.

Restoring this trust begins when citizens see reliable electricity, improved healthcare and education, fair employment opportunities, prices subject to market competition and oversight, an administration that respects their time and dignity, and a judiciary free from political or financial influence.

The responsibility for state-building is shared among the government, parliament, the judiciary, regulatory bodies, political forces, and civil society. However, the primary responsibility for initiating change lies with those who hold decision-making authority and the means of implementation—those capable of turning pledges into policies subject to accountability.

Iraq requires a national project that places the citizen at the heart of public policy, subjects public funds to the scrutiny of both society and the law, balances its foreign relations without subservience, converts its wealth into sustainable development, and grants skilled individuals and the youth a genuine opportunity to participate in building the future. And the unavoidable question remains: how much longer must the Iraqi people wait for their country’s wealth to be transformed into services, justice, and equal opportunity—and for sovereignty to become a true guarantee of human dignity and rights, rather than merely a slogan repeated in official statements and speeches?

The answer will not come from promises alone, but from courageous decisions, independent institutions, the impartial application of the law, and a national will that places Iraq’s interests above all else.

Iraq deserves a state worthy of its history, its resources, and its people—a state in which the citizen is the ultimate purpose of governance, not an afterthought.

Sources:

1. Council of Representatives of Iraq - Statement on the vote for Deputy Prime Ministers and eleven members of the cabinet, October 15, 2026.
2. International Monetary Fund (IMF) - 2025 Article IV Consultation report on Iraq, covering issues such as corruption, public spending, unemployment, the banking sector, and electricity.
3. Reuters - Report on the new exchange rate for the Iraqi dinar, October 7, 2026.
4. U.S. Department of the Treasury - Statement regarding measures taken against Iranian financing networks and an Iraqi bank, October 15, 2026.
5. "Cited as the source of the allegations and the U.S. position, rather than as an independent judicial ruling."
6. Human Rights Watch - World Report 2026, Iraq chapter, covering events in 2025 as well as rights and freedoms.