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Iraq's Scary Neighbors
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Even though Islamic terrorism related deaths fell by 5,000 in 2017 (compared to 2016) and continued to decline in 2018, Iraq remains the nation with the largest Islamic terrorism problem (followed by Afghanistan, Nigeria, Syria and Pakistan). Most of the deaths in Syria come from continued fighting between government forces and rebels. The largest source of Islamic terror deaths in Syria remains ISIL (Islamic State in Iraq and the Levant) although in the last year ISIL has been taking more casualties than it is inflicting.

While the problems with Islamic terrorism in Iraq are declining the problems with neighbor Iran are increasing and causing more political disruption. The anti-Iran election results earlier in the year created some initial confusion among Iranian leaders but that is gone now and Iran is pushing Iraq hard to ignore the American sanctions and help Iran evade them. Iraq is cooperating as much as it can, but not out of sympathy for or fear of Iran but because there is money to be made helping Iran out. Even so, Iraq does not blatantly flaunt the American sanctions because in many respects Iraq needs the Americans more than they need Iran. Moreover, the United States can be more trouble, using legal means, than Iran. The Americans can respond by going after the Iraqi corruption in addition to invoking banking and other financial restrictions. At the moment most Iraqis see the Americans as the good guys and the Iranians as the bully next door, and often just down the street because pro-Iran PMF (Peoples Mobilization Forces) commanders are being more aggressive with the army and any Iraqis who openly oppose Iran. The growing number of murdered Iraqi politicians is attributed to Iranian death squads, Iran denies this but it is something the Iranians do everywhere.

All this Iranian interference increases the risk of civil war in a country that has a minority of the Shia majority willing to use violence to support Iran. Pro-Iran PMF militias take orders from Iran and that is increasingly unpopular with most Iraqis. Iraqi leaders have been subjected to a lot of pressure from Iran to ignore the American sanctions. Iran pointed out that complying with the sanctions would hurt the Iraqi economy. That pressure caused Iraqi leaders to comply with the more immediate threat (Iran) even though they realized that most Iraqis preferred the Americans to the Iranians. After all, when Iraq asked the Americans to leave in 2011 they did. Iraq is seeking an exemption to some of the Iran sanctions because otherwise the Iraqi economy would suffer and the U.S. has been granting these requests. Iraqi economists and financial experts have made it clear that the Americans have a lot of options and many of them involve going after individual pro-Iran Iraqi leaders, especially those who are the most corrupt. Sanctions on individuals have proved very effective and Iraq has a lot of eligible targets. The Kurds had another advantage in that they were on good terms with the Americans who in turn had the ability to chase down leads via the international banking system. That turned up more leads and hiding places for ISIL money. Lastly, while the Americans are withdrawing their 2,000 troops from Syria they are apparently planning on stationing many of them in Iraq, along the Syrian border to protect Iraq from continued ISIL attack

Criminal Cash Combat

With ISIL having lost all its territorial control, and most of the billions in cash, gold and valuables they had stolen since 2013, they still have nearly half a billion in cash and portable valuables left and everyone wonder where it is. For more than a year ISIL has been trying to launder (turn the loot into legitimate assets) as much of this money as possible. That had made the ISIL stash easier to spot and track. At the same time, some of this wealth is buried in remote areas of western Iraq or eastern Syria. One of these stashes has been found so far (that is known of) but more valuable are the documents being found that contain data on how ISIL is laundering their cash. The Kurds in northern Iraq has been very active in doing this because ISIL (and Arabs from the south in general) have parked a lot of money in the Kurdish north because it is safer. While the Kurds were fighting ISIL there was little interest (or resources) in auditing local firms. In 2018 that changed because there was a lot less fighting and a lot more auditing.

The ISIL cash reserve does not mean ISIL forces stop raising cash whenever they can. Local ISIL groups still use extortion, or voluntary contributions from supporters, to pay for operations. The men who collect the donations also collect information and impart ISIL warnings or instructions (like we need more money or a contact with someone). Because these fundraisers are regularly out in the open they are often captured and provide a good source of information. When possible the fundraisers are watched and followed for a while to identify more suspects. This provides evidence that ISIL still has a lot of supporters in Iraq, where the Sunni minority is still angry at losing economic and political power in 2003, power they had held for centuries (under Turkish rule and since the 1920s in an independent Iraq.) These Sunnis used to support al Qaeda and other less fanatic Islamic terror groups but now they favor ISIL because this group actually achieved some success from 2014 to 2016 and might do so again.

Economic Growth

Foreign economists, especially those from the credit rating agencies, believe Iraqi GDP will grow four percent in 2019 if oil prices remain high (averaging $75 a barrel) and Iraqi production continues as it has for the last two years. The Arab dominated OPEC oil cartel has had some success in cutting production to keep the oil price high but non-OPEC (especially the North American frackers) have been increasing production a lot. GDP growth for 2018 was 2.8 percent and more growth was expected as more of the country recovered from the three years of ISIL violence. But basically, the Iraqi economy is still based on oil and the ability to pump and ship it to foreign customers. Iraq has ten percent of the world's oil reserves and 2017 exploration efforts have that increased by 10 billion barrels. That makes 153 billion barrels, which more than a third larger than it was after the resumption of oil exploration a decade ago. Iran has reserves of 158 billion barrels, Saudi Arabia 266 billion and Venezuela 300 billion. These four nations have the largest reserves which are about 60 percent of the world total.

What is keeping the world oil price low is fracking and related novel extraction methods. That new American technology is making much more oil and gas available and it is expected that the U.S. and Canada will soon have "proven reserves" equaling a third of the current world total. The fall in oil prices since 2013 (from over $100 a barrel to as low as $30) cut Iraqi foreign currency reserves to about $48 billion by the end of 2017, compared to $53 billion in mid-2016. That forced the government to adapt and the reserves were $60 billion by the end of 2018. By early 2018 the price of oil had climbed to $60 a barrel and later to over $80 mainly because OPEC members were not cheating on their quotas and several members were producing less than their quota because of internal security problems. Despite all that oil prices have been declining since October and are now under $60 a barrel. The ISIL crisis forced Iraq to be more prudent with its finances, and government operations in general. The Americans are no longer being blamed for all that goes wrong. Taking responsibility does indeed make it easier to deal with problems. But many Iraqi leaders and politicians still prefer to blame all the problems on America, Israel and so on.

Turks Who Must Be Obeyed

The Turks have long launched airstrikes on PKK (Turkish Kurdish separatists) camps or concentrations they have identified in northern Iraq. Until recently most of these attacks were near Mt Qandil, a remote area near the Turkish and Iranian borders that has long harbored PKK hideouts. This has forced the PKK to try and moved its Qandil headquarters west to Sinjar (in Nineveh Province, 120 kilometers west of Mosul). Turkey has succeeded in persuading the Iraqi government and the Iraqi Kurds to assist in preventing this.

The move to Sinjar began in early 2018 when a large (over a thousand armed men) force of pro-PKK Yazidis (who are generally considered Kurds) sought to establish a PKK base near Sinjar. This is a largely Yazidi area west of Mosul that became the scene of a major battle between ISIL and Kurdish forces who came from Kurdish controlled Dohuk province to assist the Yazidis. The October 2017 Iraqi offensive against the Kurdish occupied areas outside the autonomous north pushed Kurdish forces back to Dohuk but local Yazidi forces remained and these contained many PKK supporters. Turkey considers all the Yazidis pro-PKK, something the Iraqi government and Iraqi Kurds disagree with. In response to the Turkish advances Iraq sent an army brigade to Sinjar and the PKK announced it was leaving Sinjar. The Turks were not convinced and insisted that Iraq ensure there are no PKK bases in the north.

In early 2018, Turkish attacks (usually via airstrikes) in northern (Kurdish controlled) Iraq left 10-20 dead a month, at least until April. The Turks are usually pretty careful about hitting only PKK targets and the PKK do not try and use local Kurdish civilians as human shields. So it is rare for civilians to be hurt by these attacks although it has happened at least once so far in 2018. Until recently about 80 percent of the operations against the PKK (and their Syrian PYD associates) took place in eastern Turkey and northwest Syria. But when Turkish operations in northwest Syria were stalled (which was often) then Turkish operations, especially airstrikes, increased against PKK in northern Iraq and just across the border in southeast Turkey. That has led to more complaints from Iraqi Kurds living in the remote areas where the PKK operate that the increased Turkish airstrikes have hit targets close to Kurdish towns and villages and this has civilian casualties when here were increased airstrikes.

Currently, Turkey has openly said that it will pursue PKK and PYD Kurds into Syria or Iraq without asking permission from the governments of either country. This annoys the Iraqi government but at the moment it is considered preferable not to oppose the Turks. In some cases, Iraqi borders are officially open for some groups and vice versa. Such is the case with Iraqi forces chasing ISIL forces into Jordan. That can work the other way around but there is a lot more ISIL action on the Iraqi side of the border and the two countries have agreed to share intel on ISIL activities in their territory and tolerate cross-border operations. It was not until late 2018 that there was some Assad government control on the Syrian side of the border. That degree of control is growing but currently independent factions (SDF in northern Syria, Iranian mercenaries further south) more or less control the Syrian side. The Assads can still grant permission to Iraqi forces to cross the border when it comes to dealing with mutual foes like ISIL. Compared to other neighboring countries the Turks continue to be the most difficult for Iraq to deal with.



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