Under a scorching sun, a man in faded blue overalls hung from a boom on the back of a truck, attempting to stitch together some unpromising bundles of electrical cables.
“We are in an endless game of fix and repair,” said Faris, a young, earnest engineer as he watched his colleague grapple with ancient wires that needed welding back into a battered electricity grid, itself a relic of the Saddam era.
The maddening confusion of cables looked like thickets of wild vines springing from rusted electricity poles. Most of the wires carried power from private generators that are more reliable than the state’s patchy electricity.
More than a decade after the US invasion – and more than $40bn (£26bn) of investment later – Iraqis must still make do with limited electricity. In a country with one of the world’s largest oil reserves, this is a matter of great exasperation for locals.
“People here get a few hours of electricity every day, so when the current comes there is a huge demand: everyone plugs in their fridges and air conditioners, the old network is overloaded and transformers fry and cables melt,” said Faris. “We work three shifts, 24 hours a day, trying to patch up the old network and we can’t keep up.”
When summer temperatures peak above 50C (122F), it’s a matter of life and death – a far more emotive issue than Isis and the sectarian divide. This summer, as temperatures surged and tempers frayed, thousands of people staged a series of protests, pressing into city centre squares to denounce the corruption that riddles the system.
It is ordinary folk who bear the brunt of this crisis, while the elite find ways to survive – or even profit from – the problem.
For those who can afford it, “golden lines” of power from private neighbourhood generators provide some respite, supplying the air conditioners that make life bearable. The rest are left to fend for themselves in the face of the intense heat, which is only now just starting to abate.
“When we get the electricity quota for our area, first we allocate a share called special lines,” said Faris. “They are meant to be for hospitals and emergency units but in reality they go to influential people; 40% of the electricity quota goes to about 5% of the houses. The rest is divided among the 95%.”
After people started protesting in the streets, the authorities moved to increase quotas to ordinary neighbourhoods. “But in the past two weeks, we started implementing cuts again because the influential people managed to get their privileged lines back.
“It is unfair, because the poor are supposed to get special lines because they can’t afford the private generators but, here in Iraq, everything is flipped: it’s the powerful and the influential, the generals and their bodyguards. Even hospitals have their own generators but instead they take state electricity and sell the fuel.”
Lack of accountability
Four years ago, things looked more promising. A new law allowed the government to sign contracts with private-sector companies to modernise the grid.
But deals worth almost $7bn ended in farce: some contractors were simply shell companies; others unqualified to do the work. The minister resigned and a parliamentary report was drawn up – it has yet to see the light of day.
“Back in 2011, I demanded the report be sent to the courts and read to the parliament,” said an MP who was on parliament’s energy committee. “But the deputy head of parliament, who belonged to the same political bloc as the senior official who oversaw the contracts, blocked it for three years.”
“But this is relatively simple,” he shrugged. “Corruption is responsible for the loss of 25% of the money we have spent on electricity. That means we have lost $10bn. Mismanagement, on the other hand, is costing us hundreds of billions of dollars.”
Another engineer, who did not want to be named, explained how the byzantine system of corruption within the energy system worked. “During Saddam’s time, the Iraqi ministries worked to service one state. Now each ministry belongs to a sect and a party, and they treat it as their fiefdoms,” he said.
“The ministry of oil stopped providing fuel to the ministry of electricity because of $4bn of debt; the ministry of electricity has around half a billion dollars of unpaid debts from different ministries and government institutions including the international airport and the ministry of finance.”
The most common form of corruption, he said, was negotiating with an internationally renowned company and then, at the last minute, switching the contract to a Chinese provider.
“The difference in price will go to the directors and the minister as commissions,” the engineer added. “Not only the ministers are corrupt, also the directors and heads of departments – each has a share.”
Bribery chain
Soon after the US invasion, the Iraqi bureaucracy seems to have transformed from one that was serving a dictator-ruled estate to a fully formed kleptocracy. Everything – from obtaining a hajj visa to issuing a new passport, from obtaining contracts for printing school books to building power station and oil refineries – demanded a bribe or a commission.
The days of easy money when the US army paid for non-existent projects seems to have ended but in their place have come new methods of siphoning money, adding large margins to contract quotes or simply suppling inferior goods.
Fadi is one of the new generation of entrepreneurs who emerged after the US invasion. After a few contracts with the US army, his humble shop selling secondhand laptops and printers evolved into a business handling contracts worth millions of dollars with multiple government departments, including the electricity ministry.
I met him in his offices in an upmarket neighbourhood of Baghdad so he could explain bribery to me, with the hum of a generator in the background.
“Each minister, each general director had a ‘key’ – usually a son or a nephew who handled all the business,” Fadi said. “To get a contract with a certain [institution] you needed to find the key and negotiate with him.
“Sustaining a relationship with a key cost money – multiple rounds of hospitality and gifts and travel – so that one day the key would think of you when there was a major contract to reward.”
But that didn’t always work.
“Because there are certain ministries which are tied to companies that belong to the party and the sect of the minister, if you wanted to work with them, you had to buy the contract from one of these companies.”
The cost for the contract was sometimes set by arranging a tender and collecting estimates from respectable international companies, then cancelling the tender and awarding the bid to a company that had been selected earlier. It would use the same international pricing standards but offer inferior goods and services.
The skimming arrangements work like this: Fadi has a contract with a ministry for, say, 100m Iraqi dinars [£55,000]. They make him sign a contract for 130m dinars, of which 30m is commission. He has already built in the margin of 30%. He needs to find perhaps 10% for the bribes he has to pay to get things going.
These huge margins can explain why a country such as Iraq has little to show for years of huge oil surpluses. Now, with the oil price falling sharply, the margins are shrinking, according to Fadi.
A tall man in Ray-Bans entered the room. Hameed is technically a ministry inspector, observing the completion of contracts. In reality, he is hired by businessmen such as Fadi to ensure stamps and signatures are provided in exchange for bribes. “I call it legitimised corruption,” Fadi said.
Hameed said a third layer of corruption had to be dealt with. The final payment to the businessmen would be held back without explanation until a local exchange company stepped in to offer to buy the cheque minus a few hundred thousand dollars. In the end, everyone would get paid.
According to the MP, people don’t realise that the corruption in the economy is “more dangerous” than Isis or the militias combined. “For the first time in the history of the rentier state [one relying on income from property or securities], the ruler finds himself unable to pay for loyalties and services. Saddam found himself in a similar position during the sanctions and substituted rentier with savagery.”
Climate of fear
Not everyone sweats the summer away in airless rooms. In a large and spacious office, decorated with plastic flowers and plants, a former chief inspector of the electricity ministry held forth, while an air-conditioner purred out teeth-shattering cold air that made one yearn for the late summer heat outside.
There were pressing questions in front of him. Why was the parliamentary report never submitted to parliament? Why was the ousted minister reappointed as a ministry adviser?
“When you don’t have a state ruled by law, everyone lives in constant fear,” he said. “The whole ministry is corrupt. The inspectors are just another layer of corruption: they will sell your information to the minister. You can’t work because you are scared of the militias. I can’t question any senior official because then one militia or the other will come and take revenge.”
The inspector, who spent three decades working in Iraqi ministries, either as an inspector or chief auditor, was removed from his post only four months after his promotion to the position of inspector general. He was exiled to become the head of a prestigious directorate of little significance on the fringes of the ministry. His presence had become inconvenient for senior management.
“There is no power that can stop corruption in all the ministries and not only electricity, because the offices of the inspectors are themselves nests of corruption, with each layer of bureaucracy, a layer of corruption is added,” he said.
“Corruption in Iraq is like God – it’s omnipresent, but you can’t prove it and can’t deny it.”
The International Energy Agency has estimated Iraq is losing $40bn a year because of power shortages.
original source: http://www.theguardian.com/world/2015/oct/05/iraq-power-cuts-isis-corruption-electricity