Iraq Slipping

Spearhead Analysis – 26.06.2014

By Enum Naseer
Research Analyst, Spearhead Research

Iraq Unrest MapIraq is in a state of deep turmoil once again—just 2 ½ years after the US pullout, chaos in the country has resurfaced as an enormous challenge for the US and the rest of the world. The return to sectarian violence had been feared ever since U.S. brought its troops back from the country. Since that time, the US has urged the Shiite-dominated government to work for the creation of a government that would share power between Shiites, Sunnis and Kurds and help bring about national solidarity at which it failed miserably. The situation started to become more dangerous with the passage of time and in 2013 Sunni protesters stormed the streets and militants stepped up their attacks taking advantage of Syria’s civil war spillover.

Al-Maliki: the solution or the problem?

After 8 years as a repressive and authoritarian head of state, Al-Maliki is now trying to make amends. Observers, however, are deeply skeptical—to them, he is part of the problem and not the solution. A new man is required to lead the country out of the crisis: even Iran and the US are on the same wavelength. Iraqis have had enough of Maliki’s high handedness and reluctance to share power. His refusal to include Sunni leaders in his government and to grant economic concessions to the semiautonomous Kurdish area coupled with his disregard for power sharing agreements has pushed the country to the brink of disaster. To hope that he will facilitate the formation of a more inclusive government now is wishful thinking.

Already, he has rejected the idea of forming a national salvation government and in his weekly address only given a vague call for “all political forces to reconcile” while sticking to the principles of constitutional democracy.

A foreign policy challenge for the US

The Obama administration finds itself caught in an embarrassing situation—after taking immense pride in liberating Iraq successfully, it is once again evaluating policy options to bring peace to the country. Saving face has become difficult especially as Republicans have already started criticizing the US president for ‘taking a nap’ while Iraq bleeds. With the Iraqi leadership flailing in the wind and the low morale of the security forces, there is little hope for the nation to be able to lead the change and to step back on its feet without foreign help. Taking comfort in the fact that most of what is heard about the ISIS’s success in Iraq should not be taken at face value and that there are more rumors doing the rounds than actual facts will make it more difficult to figure a way out.

What about oil?

Global oil prices have been fluctuating ever since the ISIS seized control of Mosul, Iraq’s second-largest city and began advancing towards the capital southwards. While it is argued that a major economic slump isn’t likely, the instability in the country is sparking anxiety in the global oil market. Though the fighting is limited to fields north of Baghdad, the fear that OPEC’s second largest producer could even break up is making oil traders and companies nervous—the Al Maleki administration has been unable to contain the crisis thus far and is not very likely to succeed in the future.

While Baiji (producing up to 300,000 barrels of oil a day for domestic consumption) may not be important to the global oil supply and the idea that destruction of the refinery will be counterproductive to the ISIS’s goal of establishing an Islamic state is keeping nerves in check, the instability in the country itself should serve as a reason to reconsider the security of fuel supply lines. The ISIS’s advance is accelerating and poses a grave threat to the global supply of oil—the international community should start working on figuring out various compensatory measures in case of an interruption in the supply of oil. Besides, the possibility that Iraq might have to import oil to meet its domestic consumption needs which will further tighten the oil markets. As it is, contributors such as Algeria and Libya have already showed a dismal performance.

The ISIS is closing in on Baghdad and the global oil benchmark is responding despite the fact that for now, Iraq’s exports haven’t been impacted by the ongoing violence. The largest oil fields lie in northeastern and southeastern Iraq and have so far been protected from the fighting but concerns about Iraq’s ability to continue to export amidst such turbulence could have a far-reaching impact on global oil market as the Sunni insurgency sweeps downwards from northern Iraq. Big oil companies such as Exxon Mobil, Shell, BP, Total, Lukoil of Russia and China National Petroleum are considering evacuation and/ setting up private forces to safeguard oil assets.

The safety of Iraq’s oil producing capacity is integral for the stability of the global economy. If the ISIS insurgency is not countered by swift and effective policy solutions, the ongoing chaos in the country could not only engulf the global oil market but be detrimental for world peace and security.


The only thing that will help save Iraq from falling deeper into crisis is a fresh face in premiership—someone who can win the trust of the disgruntled Sunni population whose disillusionment is fueling the ISIS insurgency. Though a military offensive is the need of the hour to prevent further ethnosectarian violence and bloodshed, in the long run political reconciliation will provide the necessary tools to keep the country from disintegration. Al Maliki is still hopeful that Iraq’s security forces and Shiite militias like the Mahdi Army will stop the advance of the ISIS and while the latter may be able to do so to a great degree, policy inertia will only make civil war inevitable—and this time around, militant groups are better armed and more deeply entrenched than ever before.