Weekly Iraq Update #42

Oct 17, 2012 - Sam Wyer, Stephen Wicken

Central Bank governor suspended amid political disputes

The governor of the Central Bank of Iraq (CBI), Sinan al-Shabibi, was suspended from his position on Tuesday after an Integrity Commission investigation was launched into allegations of corruption at the bank. It was originally reported on Monday that arrest warrants had been issued against Shabibi and Deputy Governor Mudher Saleh, as well as a number of other CBI officials, while they were attending an IMF conference in Tokyo. A spokesman for the Integrity Commission tasked with investigating such cases confirmed on Tuesday that the commission had recently initiated an inquiry into the CBI after receiving a report from the parliamentary Integrity Committee, reportedly related to “procedures that led to the weakening of the dinar against the dollar.”

Shabibi is a widely respected economist who has headed the CBI since 2003. He has, however, been a persistent critic of the Maliki government’s economic and financial policies, particularly its borrowing and spending. These criticisms, as well as Shabibi’s attempts to reform the Iraqi dinar, brought him into conflict with the Maliki government, which subsequently pressured Chief Justice Medhat al-Mahmoud into ruling that the CBI and other constitutionally independent institutions should be tied to the executive rather than parliament.[1] Shabibi subsequently became a figurehead for opposition to Maliki, with Parliamentary Speaker Osama al-Nujaifi coming out strongly in support of Shabibi. This effectively marked Shabibi’s card: White Bloc MP Aziz Sharif Mayahi stated in late September that “influential personalities” in the CBI would lose their positions in the near future, while an anonymous parliamentary source suggested at the beginning of October that Shabibi would be removed. Reactions to Shabibi’s suspension highlighted the highly politicized nature of the case. The Sadrist head of the parliamentary Integrity Committee, Baha al-Araji, insisted that the issuance of warrants against Shabibi and other CBI officials was premature and had been done for political purposes, while Iraqiyya MPs accused the government of targeting Shabibi for his criticism of the government. In response, State of Law MP and parliamentary Integrity Committee member Kamal al-Saadi on Wednesday characterized defenders of the CBI as falling into three categories: bank owners profiting from corruption; politicians and MPs doing the same; and financers of terrorism.

Shabibi may himself have been working to root out corruption at the CBI: it was reported on Monday that he had sought to dismiss four CBI directors over involvement in corruption, only to have his requests refused by Maliki. According to one source, an investigating judge subsequently attempted to halt Shabibi’s efforts by issuing a warrant for his arrest, only for Chief Justice Medhat to cancel the warrant on the grounds that arresting Shabibi would hamper Iraq’s stability. This would be surprising if true, given Medhat’s previous willingness to rule according to Maliki’s preferences, and might be an indication of the esteem with which Shabibi is held in Iraq.

The cabinet announced on Tuesday that Shabibi would be replaced in the interim by Board of Supreme Audit head Abdelbassit Turki, a former adviser to the President’s Office under Saddam Hussein and critic of the Coalition Provisional Authority. Turki himself is no stranger to legal controversy: in 2009, the Iraqi judiciary was reported to have issued an arrest warrant for Turki on charges of “crimes against humanity” related to undisclosed activities during Saddam’s reign. It is unknown what became of these charges. Maliki is thought to have been seeking to install his economic advisor Abd al-Hussein al-Anbaki at the CBI for some time; the installment of Turki as Shabibi’s replacement therefore warrants further scrutiny.

Iraq purchases Czech aircraft

On Friday, Iraq finalized the purchase of 28 subsonic L-159 Advanced Light Combat Aircraft as part of a $1 billion arms deal with the Czech Republic. Alongside the $4.2 billion arms deal with Russia outlined last week, this most recent purchase is part of a larger effort by Iraq to increase their defense capabilities and to establish full control over their airspace. As part of the weapons contract, within seven months Iraq will receive four L-159T1s, two-seat training variants of the L-159, currently owned by the Czech Air Force, with which Czech pilots will likely train Iraqi airmen before the 2014 arrival of 24 additional new L-159BQ aircraft. As a two-seater lacking advanced radar ability, the subsonic L-159BQ is limited in its air-to-air combat capabilities and will likely be used mainly for training, reconnaissance, and air-to-ground policing.

Meanwhile, Iraq is awaiting the delivery of 36 F-16 jet fighter aircraft from the U.S., the first half of which are scheduled for delivery in September 2014. The fully capable F-16 will constitute the core of Iraq’s air force and will be integral to secure Iraqi airspace. An estimate by the Parliamentary Commission on Security and Defense, however, emphasized that at least six squadrons of F-16s (between 100-120 aircraft) would be required to control the airspace fully. Given the time required for aircraft delivery, pilot training, and munitions and radar purchasing, Iraq could not expect to achieve this until sometime between 2016 and 2020, further assuming the requisition of additional F-16, MiG-29, or other comparable aircraft by that time. As of this moment, Iraq has only attempted to purchase 36 F-16s from the U.S. Iraq’s recent L-159 purchases suggest an attempt to expedite the training process in preparation for the upcoming arrival of the F-16s by using the L-159 as an intermediate trainer aircraft. Meanwhile, Kurdish officials have expressed their concern over the recent arms deals in fear that the newly acquired aircraft will be used against them, though an armed conflict between the Kurds and the Iraqi central government remains unlikely at this point.

[1] In a similar move to take power of independent institutions, Maliki appointed the interim head of the Integrity Commission itself in September 2011, raising serious questions about the impartiality of the commission.

Past Updates

Iraq Update #41- October 3-October 11, 2012: Iraq confirms massive arms deal with Russia

Iraq Update #40- September 26-October 3, 2012: Iraqi leaders gather in Ankara

Iraq Update #39- September 19-September 26, 2012: Protests present political opportunities

Iraq Update #38- September 12-September 19, 2012: Anti-film protests spread throughout Iraq

Iraq Update #37- September 6-September 12, 2012: Vice President Hashemi sentenced to death

Iraq Update #36- August 31-September 6, 2012: Iran resumes shipments of military equipment to Syria through Iraqi airspace

Iraq Update #35- August 22-August 31, 2012: Communications Minister resigns

Iraq Update #34- August 15-August22, 2012: Data suggests rise in violence along historic fault lines

Iraq Update #33- August 3-August 15, 2012: Baghdad’s Tensions with Irbil and Ankara Diminish

Iraq's Post-Withdrawal Crisis, Update 32- July 27-August 3, 2012

Iraq's Post-Withdrawal Crisis, Update 31- July 20-Aug 3, 2012: Al-Qaeda Leader Claims Credit for Deadly Attacks