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Ali is an economist and political analyst, working at a private UK-based company. He worked previously at the World Health Organisation and has an MSc in Development Studies from SOAS. You can follow him on Twitter (@alialsaffar).

It’s the Stupidity, Stupid

Back in February, I wrote a post on the need for institutions in Iraq, and mentioned the Central Bank of Iraq as being one of the only independent, competent bodies in the country, largely thanks to the work of its governor, Sinan Shabibi. True to form, in an act of institutional self-flagellation, the Iraqi authorities have issued an arrest warrant for Shabibi (who has sensibly decided to stay away from Iraq rather than try to clear his name from inside the country).

The charges made against Shabibi by the parliamentary committee investigating corruption at the Central Bank are numerous: Shabibi was recklessly colluding with nefarious banks that were responsible for destroying the Greek economy (Goldman Sachs) with plans to invest some of the reserves held at the CBI; Shabibi put some of the Iraq’s reserves in low-yielding accounts abroad where the returns were a paltry 3%, rather than place them in Iraqi banks where they could have gotten 8% yields; and that the bank was overseeing the smuggling of $200 million a day.

These sound like serious charges, except when you hear Qusay al-Suhail, the deputy speaker of parliament who oversaw the investigation, you come to realize that instead of being serious allegations, they are a complete misunderstanding of quite ordinary behavior, represented instead as being heinous. It is ordinary for sovereign wealth to be invested in low-yielding securities—these present the least risk. The $200 million smuggling operation is in fact the daily currency auction that are used to stabilize the Iraqi dinar. These are still going on by the way (the last one was conducted just today)

Apart from the fact that we have lost a rare and endangered specimen in Iraq, an independent and capable institution (it has kept the currency steady and inflation low, the true measures of a central bank’s success), what struck me most about the situation was the that the whole thing could have been avoided if you had the right people with the right skills doing the job of investigating the initial claims against the bank. The accusations made by Suhail show very clearly that he is out of his depth, he just does not understand the issue he is supposed to be investigating. KPMG and Ernst and Young, two of the big four global auditing firms, have already audited the CBI’s books and have given the bank a clear bill of health. In their infinite wisdom the Iraqi authorities  decided that their deputy speaker of parliament was better suited to pass judgment on the issue, and as a result,  Iraq has lost the services of a capable technocrat with 25 years experience as an international civil servant and who was in part responsible for negotiating the largest debt-forgiveness programme the world has ever seen, without much prospect of replacing him with a similarly competent alternative.

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14 Comments on “It’s the Stupidity, Stupid”

  1. ABS December 11, 2012 at 1:51 pm #

    Tragically, and painfully, stupid.

  2. Haider December 11, 2012 at 4:11 pm #

    Actually it has not kept currency stable so it is a flop, shabibi mismanaged bank

  3. Sara December 11, 2012 at 9:20 pm #

    ‘The right people with the right skills’ just for somehow do not exist in Iraqi politics, in order to deal with cases like that.

    That’s just sad.

  4. mudaffer al-mudaffer December 12, 2012 at 12:16 am #

    the problem of the iraqi politics is that it’s being run by ignorants. they understand no economy , no politics , no manners. the so called government there is stealing everything. the Iraqi central bank will be bankrupted at their hands soon. the government does like to appoint bad people in the good place. the stealing of Iraq continues.

    • Ahmed December 12, 2012 at 2:46 am #

      hear hear

  5. zaid Redha December 12, 2012 at 10:06 am #

    Very sad to hear that, no place for intellectual and educated people in Iraq. During Saddum we had hope, those destroyed the Hope.

  6. Muhammad Ayad December 13, 2012 at 5:03 pm #

    Is it sensible deciding to stay away from Iraq rather than trying to clear his name from inside the country? If he is a technocrat, and the rest who are stupid accuse him of being corrupt, is it wise to let the whole world think that the stupid are right about him? Or is he hiding something?

    • Ali Al-Saffar December 14, 2012 at 11:48 am #

      The reason I think it’s a sensible move for him to stay away (despite him recently suggesting he would go back to Iraq to clear his name), is that I do not think for a second that he will be given the proper opportunity to clear his name. The swords are already out.

      • Muhammad Ayad December 18, 2012 at 8:48 am #

        Whether not guilty or guilty to the bones, everybody can say that. By that you suggest that Iraq’s courts don’t have the slightest credibility which means green light for all corrupt people to steal and run.

        However I don’t think that Iraq’s courts are that much politicized (give me a court in the world that is not more or less so), and most of the time people accuse it of being so but never have proven it.

        If it rules in favor of somebody doesn’t mean necessarily that it is biased towards him or her. It might also mean that he is playing it legally right.

        And worse: because of these continued accusations that the court is politicized now the court is going to be under the mercy of the Iraqi Parliament – the worst thing in Iraqi politics that could happen actually happened. What do you think will be court after that other that politicized?

  7. Ali Al-Saffar December 18, 2012 at 10:12 am #

    Muhammad, thanks for your post.
    I certainly think the judiciary in Iraq is politicized, yes. I have seen enough to make me certain of this. I won’t go into detail, but I would recommend you read Michael Gordon’s ”Endgame”, which has a chapter called ”Strange Justice” which does an excellent job of detailing the flaws in the judicial system.

  8. Sara Amin-Jaf December 18, 2012 at 3:51 pm #

    It certainly is politicised. I approve.
    It’s very clear, and in fact if fail to acknowledge to, then there’s a real issue.
    Secondly, how on earth can Iraqs courts have any credibility and validity, if deep within the countrys roots there’s non-curable corruption?
    There’s just no pathway for an independent government, yet alone court.

  9. Muhammad Ayad December 18, 2012 at 5:03 pm #

    Well then, why is the debate in Iraqi politics about the government and not the judiciary? Why not recreating everything from new instead of talking about the government. If the problem is with the court, what the hell are all doing?

    Or is the court only corrupt if it rules in favor of the government?

  10. Muhammad Ayad December 18, 2012 at 5:05 pm #

    However I think that this paralysis in the Iraqi system is exactly what is wanted. So that everybody can do things and get away with it. My 50 cents. Thanks.

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