Exclusive: Iraqi finance committee deputy calls for diversification away from US dollar

Zaher Mousa, The Cradle, May 10 2023 —
The Cradle speaks to Iraqi parliamentarian Hussain Mouanes on the various economic, financial, and political challenges facing Sudani’s government.

Parliamentarian Hussain Mouanes is a member of the Finance Committee in the publicly-elected Iraqi Council of Representatives. He has been politically active through many different stages of Iraq’s recent history, including the Baathist era, the US occupation, and the war against ISIS.

Before 2003, Mouanes was persecuted and imprisoned multiple times for his political activism by the government of former Iraqi President Saddam Hussein. He joined an Iraqi resistance movement after the illegal US invasion of Iraq and, after the rise of ISIS, initially joined the Iraqi Popular Mobilization Units (PMU) to organize against the terror group.

Despite his past political and military engagements, it is Mouanes’ recent experience as an elected politician, member of the Democratic Political Framework, and leader of the Rights Movement (Harakat Huquq), which has catapulted him into the national spotlight. His political cadres were previously members of Kataib Hezbollah, a faction known for its hostility toward the policies of the US, Israel, and the Gulf Cooperation Council (GCC).

These details are significant in the context of the new Iraqi government – led by Prime Minister Muhammad Shia al-Sudani – the first in two decades that is not packed to the rafters with Iraq’s old political elite.

Today, other figures are emerging in this theater, including Mouanes, who has overnight become a prominent political figure in contemporary Iraqi politics – not least because he filed a high-profile lawsuit against former PM Mustafa al-Kadhimi for his negligence leading up to the January 2020 assassinations of Iranian General Qassem Soleimani and Iraqi PMU Deputy Leader Abu Mahdi al-Muhandis.

Iraq’s parliament just passed its first federal budget under the six-month old Sudani administration, which for the first time covers a three-year period instead of the traditional one year of previous budgets. This is part of a slew of economic and political changes promised by the prime minister, who appears to be tackling all of Iraq’s chronic problems at the same time.

In his interview, from his unique vantage point as a deputy in the parliament’s finance committee, Mouanes addresses those challenges, denounces his country’s enforced dependence on the US dollar, and candidly weighs in on both the good and bad policy directions being undertaken in Iraq today:

The Cradle: Does the federal budget presented in the parliament today actually address the necessary measures to reform Iraq’s economic system?

Mouanes: The Iraqi economic system has been built incorrectly. It has moved away from banks and financial institutions toward the bankers managing it. Iraq has been and continues to be a slave to the US dollar, even though every country’s economic strength depends on the strength of its currency.

Reforming and strengthening the economy starts with the federal budget. However, we face far greater challenges, such as reforming existing financial legislation like the Securities Commission Law, laws for private banks, and the Central Bank.

These laws must be in line with the global economic situation. The Financial Management Law should govern the budget, but instead, it is governed by the budget. The Parliamentary Finance Committee is seeking to establish a real political and economic system built on legislation, not on constant and continuous exceptions. For example, according to the Financial Management Law, the country’s deficit ceiling should be 3 percent, but the current budget allows it to swell to 18 percent.

The Cradle: Introducing a federal budget law covering three years – instead of one year – of government spending is a major change in the way the state deals with the economy, isn’t it?

Mouanes: Yes, but only if it includes actual programs, not a recurring annual budget under the pretext of escaping from political blackmail in a political system built on quotas. As a parliamentary financial committee, it is not clear to us what is meant by the three-year budget because the tables that we received cover only one year, and there is no evidence that it is a three-year budget except for some items related to oil prices.

Prime Minister Muhammad Shia al-Sudani and Minister of Planning Muhammad Tamim justified this by saying that limiting the budget schedules to one year is to ensure that projects do not stop. In this case, I agree with them. But the committee’s point of view is that the budget figures should be updated annually, which means a re-vote on the budget in Parliament.

The Cradle: There is much debate about the government’s attempt to appease protesters by employing them in the public sector. This has led to an increase in the number of public sector employees by about one million people within the first six months of the current Iraqi administration. Is this a correct policy?

Mouanes: No, it was not the right policy, and it stems from the despair of state-building. These measures reflect incorrect state-building practices and must be addressed. The government’s birth was abnormal, forced by the failures of previous administrations and the country’s widespread demonstrations.

However, the public sector cannot employ everyone. We need to explore alternative options, and our committee is working to include legislation in the budget that encourages people to seek jobs in the private sector.

Dependence on employment in the public sector burdens the state: take the operational budget, for instance, where 90 percent of its revenues are spent on salaries. This is not right and must stop. While, in the past, large public sector employment was necessary, continuing to rely on it when our needs have changed is a problem. It is necessary to look at the long-term interest of citizens and diversify their opportunities in various private sector jobs, because today, the public sector is simply unable to absorb anymore.

The Cradle: It is assumed that the measures taken by the current government are the result of a political agreement between the government coalition and the Rights Movement (Harakat Huquq), which you lead. Is there such an agreement?

Mouanes: The Rights Movement is not part of Iraq’s governing coalition or the Coordination Framework, nor is it part of the ministerial composition. Let it be clear that we will continue to criticize government performance, because we believe that improving the political process requires an active opposition bloc that challenges poor policies. The Rights Movement is keen to be the basis for such opposition.

The Cradle: Regarding the national interest in political agreements, should the agreement between Baghdad and the Kurdistan Regional Government (KRG) on oil sales be evaluated based on broader criteria than the decision of the current political forces?

Mouanes: The agreement has not yet been presented to parliament, and it is vague. We support a comprehensive solution to this issue in accordance with the Iraqi constitution. The Rights Movement will not allow the interests of the central, southern, and western governorates to be neglected for the sake of political favors, and I expect that the agreement will not last long if it does not comply with the constitution and existing laws.

The Cradle: Would you consider adopting a law to grant amnesty to those sentenced to prison and abolishing the Accountability and Justice Commission, which denies members of Saddam Hussein’s regime participation in political life and repatriates the displaced?

Mouanes: These demands must be discussed, and if an agreement is reached, we will deal with them in accordance with the constitution and laws. But the way in which the general amnesty is being promoted is incorrect.

Amnesty for those not involved in terrorism must be offered in a way that does not provoke Iraqis who are still suffering from the crimes that befell them. With regard to the Accountability and Justice Commission, it will be transformed into a judicial body after the termination of its work. But we believe that it is necessary to activate and expand the law banning the Baath Party to ensure that this party is not revived.

The Cradle: Is there any push to remove the current speaker of the Iraqi parliament, Mohammed al-Halbousi?

Mouanes: Halbousi’s dismissal requires political will. There is a popular demand within the Sunni political blocs for his dismissal. Among the Shia political blocs, too, there are those who believe that there are Sunni personalities who are excluded from the political arena and should be allowed to play their rightful roles. Let’s be frank, the discussion of Halbousi’s dismissal is related to competition between political blocs, not to public sentiment, and it is clear that there is no real political desire for that. So this is not an issue at this time.

The Cradle: What about the corruption allegations targeting Halbousi and his party in Anbar, such as the seizure of millions of meters of government land? You were involved in this operation, so what is your take on it?

Mouanes: This case is very important. It is more than the theft of money, rather, it represents the establishment of a political project. We are talking here about a crime greater than the “theft of the century” (a corruption scandal involving more than $3 billion).

There is another corruption file related to some areas of Fallujah that we will announce soon. This is not targeting a specific person as much as it is targeting corruption, and we will expose any corruption file, even if it is in our own areas. We are determined to prevent the waste of public money and honor our oath in parliament.

The Cradle: There seems to be a political dispute between PM Sudani and Speaker Halbousi. Do you think that there is a possibility that the latter could be dismissed?

Mouanes: Disagreement is normal, and there are efforts to end it, and it seems that things are going toward reconciliation. But let me make it clear that we are with Sudani in that the executive and legislative branches should not encroach on one another. We will stand in the face of any intrusion from any side.

The Cradle: We have heard about Iraq’s efforts to move away from the domination of the US dollar. How can this be achieved?

Mouanes: The current system of selling oil and transferring 100 percent of those revenues to the US Federal Bank – under the pretext of protecting Iraqi funds – is unsustainable. We need to develop real economic foundations to advance our country and break free from the dollar’s hegemony.

It is clear that Iraq is economically dominated by the US, and our government does not truly control or have access to its own money. This is evident in the new banking restrictions on Iraqi dollar bank accounts, any and all banking transactions in dollars, and America’s imposition of an electronic platform to register all Iraqi currency exchanges. 

Currently, most of Iraq’s foreign investment generation is limited to the lucrative energy sector, ignoring other vital sectors such as agriculture, industry, and tourism. It is time for Iraq to diversify its sources, basket, and storage of currency, especially given that the whole world is moving in this direction.

The Iraqi dinar must be strengthened and consolidated within Iraq as the primary currency used in transactions and ultimately be part of the basket of international currencies. As an oil-rich country that exports about four million barrels daily, we have a strong financial situation that can be leveraged to increase the value of the dinar in the market.

We believe that it is crucial to move away from the hegemony of the dollar, especially as it has become a tool to impose sanctions on countries. It is time for Iraq to rely on its local currency or at least diversify its sources of income.

The Cradle: Do you think Sudani’s efforts to replace ministers, governors, and hundreds of senior positions in the government will be successful?

Mouanes: One advantage of not being tied to any political agreement is that we have the freedom to make decisions without any alliance commitments. Sudani has set standards in his government program and identified shortcomings in the performance of some governors and ministers, and it is his responsibility to make changes.

It is normal for some political blocs to resist these changes as they try to maintain their entitlements. We have always advocated for ministers to be selected by the prime minister and not by their political blocs. Therefore, I believe that Sudani’s efforts to make changes are right, and we support him as long as we know the reasons behind the changes.

Sudani has assured us that he is not restricted by party or sectarian affiliations and that his changes will affect everyone who proves negligent. However, we reject any external international interference in Iraqi affairs or in the process of changing ministers. If such interference occurs, the prime minister should take a firm stance against it, as we entered the political process to lift tutelage and stop its imposition on the country.

The Cradle: Do you think the American delay in inviting Sudani to Washington indicates US suspicion toward him and his political program? Is this good or bad for Iraq?

Mouanes: The prime minister should assert his position in meetings as he represents the face of our country. We do not view the American people as enemies, but we are opposed to reckless US policies that impact Iraq’s interests adversely.

The government has the right to communicate with those it deems to be in the general interest of Iraq. However, the importance of Sudani’s visit to the US depends on its purpose. Is it just a ceremonial visit, or to discuss critical issues facing Iraq? And will Iraq benefit from the discussion of these issues with the Americans?

Given the ongoing US presence in Iraq, we do not see the importance of a Washington visit as much as a visit to Beijing, for example, as strengthening and diversifying relations with China would be more economically beneficial for us. Ultimately, the decision is up to the prime minister for the best interests of Iraq.

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