SEATTLE — In 2013, two years after the Arab Spring and the start of the Syrian Civil War, the Islamic State in Iraq merged with its Syrian counterpart, Nusra Front, to form the Islamic State of Iraq and the Levant (known colloquially as IS, ISIL, ISIS or Daesh).
Shortly after, the group began a blitzkrieg land-grabbing campaign during which it seized multiple Iraqi cities, including Fallujah, Mosul and Tikrit, as well as large swathes of Syrian territory. Within a year of its founding, ISIS declared a caliphate. By early 2015, it controlled half of Syria and had claimed the Iraqi city of Ramadi. The United States government announced that the Islamic State was no weaker than it was a year before.
The caliphate today is barely recognizable compared to what existed in 2015. Iraq’s armed forces heroically chipped away at ISIS-held territory from 2015 through 2017, reclaiming Tikrit, then Fallujah, then Mosul. By December 2017, the government of Iraq pronounced the Iraq-Syria border secure and the country free of the Islamic State. As of April 2018, ISIS maintains only small pockets of territory along the Syrian side of the Iraqi border and near Deir ez-Zor.
With the Islamic State having been reduced to nearly nothing, Baghdad’s efforts now shift to rebuilding Iraq. The cost? More than $88 billion.
Debate Over Rebuilding Funds
According to a March 2018 Congressional Research Service report on Iraq, an estimated 2.3 million Iraqis remain internally displaced after liberation. Iraqi territory may be free of Islamic State fighters, but counterterrorism operations continue. While Iraqi Security Forces maintain control of all previously occupied cities, many areas remain uninhabitable, crumbling, razed and laden with unexploded ordnance and IEDs.
The actual cost of rebuilding Iraq is practically incalculable. While officials in Baghdad suggested the $88.2 billion price tag, local leaders in Mosul, the largest city occupied by the Islamic State (where the United Nations estimated 40,000 homes need to be rebuilt or restored), believe around $100 billion would be needed to reconstruct their city alone. That is nearly equal to the amount of money allocated by the United States towards reconstructing Europe in the Marshall Plan following World War II.
Between 2014 and 2017, the United States contributed $265 million to reconstruction efforts in Iraq, in addition to $1.7 billion in humanitarian assistance. While only a small fraction of the lowest-cost estimates for rebuilding the country, far less than Iraqis hoped, this number makes the United States the largest financial contributor to these efforts so far. The U.S.’s refusal to commit more to rebuilding Iraq can be summed up in remarks made by former Secretary of State Rex Tillerson last year, in which he said the United States is no longer in the business of “nation-building.”
Private Sector Key to Rebuilding Iraq After ISIS
On the positive side, experts in both Iraq and the United States are encouraging private sector growth, which could over time make up for the shortfall in foreign government assistance. At a Kurdistan 24-sponsored panel in March titled “Iraq’s Economy in Transition,” Ahmed Tabaqchali, CEO of Asia Frontier Capital Iraq Fund, said “State-owned companies are fairly weak. We need to privatize them, or bring in foreign entities to strengthen them, to ultimately lead to economic growth.”
This brings to mind the possibility of privatizing the Iraq National Oil Company, which has operated nearly every aspect of Iraq’s oil industry since its founding in 1966. This was proposed most notably by a U.S. State Department advisory panel of exiled Iraqi petroleum experts in early 2003, of which one member said privatization “could provide more money, better technology, better efficiency, better management and worldwide market outlets,” attracting billions of dollars in foreign investment to Iraq. Such a project could also be beneficial to the United States in that by harnessing more of Iraq’s untapped oil reserves – some of the largest in the world – oil prices would likely be lowered, and the Saudi-Iranian petroleum duopoly undercut.
Governments and NGOs Pledge Their Support
One month earlier, in February 2018, the International Conference for the Reconstruction of Iraq convened in Kuwait to raise funds for reconstruction and advertise the country to foreign investors. While the United States government pledged nothing at this conference, more than 100 American companies made an appearance, as well as representatives from Kuwait, Turkey, Saudi Arabia and Qatar, who were among the largest donors.
In total, roughly $30 billion was raised, mostly in credit and loans. While this does cover the cost of short-term reconstruction, it is eclipsed by the numbers calculated for the price of long-term reconstruction.
In addition to this recent uptick in foreign direct investment, Iraq has benefited from the efforts of the more than 100 non-governmental organizations (NGOs) that signed on as direct beneficiaries to the NGO Coordination Committee for Iraq. Among those on the executive board of this consortium are the Agency for Technical Cooperation and Development and the Foundation United for Abiding Development, both of which have a hand in economic development projects.
Though private sector reform and growth are both noble goals, they are part of an often slow, involved process that entails stamping out corruption and ensuring the public and private sectors in Iraq work together rather than acting as competitors. To return displaced Iraqis to their homes and solve the humanitarian crisis created by the Islamic State, the United States may consider directing more aid towards rebuilding Iraq; this may be also in its best interest. As Abdulsattar al-Habu, director of Mosul municipality and reconstruction adviser to Nineveh province, said if Mosul is not rebuilt, “it will result in the rebirth of terrorism.”
– Talmage W. Tyler III