This chapter outlines the illicit trade in Iraq and in particular how the conflict has worsened illicit activities by reducing the government's ability to limit illicit trade. A specific attention is given to illicit trafficking in weapons, narcotics, human organs as well as heritage and antiquities.
Illicit Trade in Conflict-affected Countries of the Middle East and North Africa
Focus on Yemen
Illicit Trade
5. Iraq
Abstract
Background to current conflict
In Iraq, serious conflict began in 2014 when the Islamic State advanced into Iraq from Syria and took control over northern parts of the country and the key city of Mosul. To address the risk, the United States formed a large coalition that now includes nearly eighty countries, and launched numerous targeted airstrikes to counter the Islamic State. Regional forces, including Iranian, Kurdish, and local tribal forces assisted the Iraqi army in recapturing the key metropolitan areas of Tikrit, Ramadi, Fallujah, and Mosul over the course of two years. In December 2017, the Iraqi government declared victory over the Islamic State.
The struggle to dislodge the Islamic State was arduous and complex, exacerbated by sectarian tensions between Sunni and Shiite groups, as well as tensions between northern Kurds and the central government in Baghdad. These tensions have been growing since 2003, following the United States invasion and the fall of Saddam Hussein. These tensions persist even in the absence of the Islamic State, and they are threatening the stability of the new Iraqi government which is striving to rebuild the country and prevent an Islamic State resurgence.
Iraq faces significant challenges in its recovery from the war against the Islamic State. More than two million people remain internally displaced and nearly nine million remain in need of humanitarian assistance. In addition to reintegrating liberated Sunni communities into the political system, the new government must also deal with the demobilization and integration of powerful Shiite militias that formed during the fight against the Islamic State into the Iraqi security forces, as well as ongoing tensions with Kurdish groups pressing for greater autonomy in the north following a failed independence referendum in October 2017.
In 2018, the United States disbanded its command that oversaw the fight against the Islamic State, although some forces have remained to assist and train the Iraqi military. The 2018 election also sparked controversy as a Shiite cleric surprisingly won Iraq’s parliamentary election and has since appointed Shiite officials to form a new government. This has resulted in protests that have since turned violent, particularly in the southern city of Basra. Since then, an ongoing low-intensity Islamic State resurgence has continued to destabilize the nation. The 2021 elections resulted in a victory of Sadrs nationalist bloc, at expense of Iran aligned Hashd Shaabi groups. These elections resulted in severe clashes in Baghdad between Iraqi supporters of Iran-backed militias and Iraqi security forces.
Illicit trade in Iraq
Illicit trade in Iraq is driven by political instability and socioeconomic strife. During the conflict, the Iraqi government has slowly lost control over their borders, weakening their ability to limit illicit trade. Non-state actors control many ports of entry around the nation, with the border in Iran being a large weak point for the government. In addition, widespread corruption has also worsened the illicit trade problem, weakened customs apparatuses and strengthening criminal and opposition networks.
The non-state organizations with the most control over the border are the Popular Mobilization Front, and its numerous subgroups, and Iran’s Revolutionary Guards Corps. The former has instituted import and export taxes on both licit and illicit products at the border checkpoints which they control. Cartels also maintain a strong presence throughout the country, although they are most prominent in the Mandali border crossing region in the east and the Umm Qasr port city on the Persian Gulf. The border with Syria also serves as a key international smuggling point.1
Weapons
Illegal arms smuggling is a problem in Iraq, although it appears to be less significant than the trade in Yemen and Libya. In the past few years, weapons have been sold to the public via social media networks such as Facebook, in addition to the sale of weapons on the black markets in east Baghdad and by well-known traders. Iraq’s supreme religious leader, Ayatollah Ali al-Sistani, has since called for crack down on the possession of illegal weapons outside of state control, which Prime Minister Kadhimi has supported for the first time in history. The current campaign targets heavy weaponry in the South, postponing the confiscation of light weaponry until a later time. The focus on the southern portions of the country was a deliberate move to counter aggression of rival factions and drug cartels. The arms confiscation operation is also being hailed as an opportunity to decrease stability and secure the environment for future elections. Whether it achieves this goal is yet to be seen.2
Narcotics
According to the U.N., drug trafficking and abuse in Iraq has been steadily increasing since 2003. The drug trade in Iraq operates largely the same as the trade in Syria, which has similar consequences on public health. Historically, Iraq was a transit point for global drug operations, but more recently a domestic market has emerged. Drugs typically enter the country from southern regions and are quickly transported to all parts of the country. The Basra, Maysan, Anbar, Najaf, and Baghdad regions are the most influential provinces in drug trafficking. The Islamic State has been powerful in increasing drug flows by diverting government attention to fighting militant groups and away from controlling illicit trade.
In addition to the Islamic State profiting from the drug trade, it is alleged that armed Kurdish organizations are using the trade to finance their guerrilla operations. Kirkuk is a key transit point for Kurdish trafficking networks. In addition to the illegal cannabis, hashish, and Captagon flows seen through the Middle East region, the Kurdistan Worker’s Party has also introduced Afghan heroin into the domestic supply chain. The drug trade has been immensely profitable, with hundreds of millions of dollars being earned by supplying and transporting drugs throughout Iraq.3
Iraq has tried to slow the drug trade in recent years by leveraging international cooperation. Numerous U.N. programs, initiatives, and special envoys have worked to mitigate drug problems in the country, although further help is needed to control the situation.
Illicit trade in human organs
Iraq is also emerging as a global hub for the illicit trade in body organs. Poverty across Iraq caused by years of war, compounded by corruption and economic crises, has led to the rise of a black market in organs that has grown in recent years. Due to the economic problems in the country, some individuals are selling their kidneys to raise money to support their families. Organ trading networks can be disguised as charities and sell organ operations through online ventures. The Iraqi government allows its citizens to donate their organs, which has created legal loopholes where these fake charities are able to sell illicitly them for a profit. The illicit trade is lucrative to dealers since they typically take 2/3 of an operation’s profit, whereas donors only receive 1/3. 4
Heritage and antiquities
The final sector heavily affected by illicit trade in Iraq is national antiquity and cultural heritage. The trade in illicit antiquities is not new. The art and antiquities markets of the developed world continue to demand vast quantities of cultural heritage, most of which originates in fragile or conflict-ridden states like Syria, Libya, Iraq and Yemen. While Iraq has policies to limit the exportation of cultural heritage, it is extremely difficult to enforce the legislation. Corruption, maladministration, poorly funded cultural organisations and police, and few alternative assets available to poor locals, fuel illicit excavations and trade.5
Quantitative picture – illicit trade in counterfeits in Iraq
According to the OECD data on customs seizures, Iraq is an important source of counterfeit goods. Over 2017-19, Iraq ranked 32 in the list of provenance economies of counterfeit goods. Over time, Iraq has continuously strengthened its role since it ranked 38 in 2014-16 and 44 in 2011-13.
Data on customs seizures are scarce, most likely due to insufficient enforcement levels in Iraq. Consequently, import of fakes in Iraq is outside the scope of this analysis.
As can be seen in Figure 5.1, European countries and the United States were the main destinations of fake goods originating from Iraq over 2011-19.
Figure 5.1. Main destination economies of counterfeit goods exported by Iraq, 2011-19
Source: OECD global customs seizures database
Fake clothing were the most frequently seized products originating from Iraq over 2011-19, they represented almost the half of seizures coming from this country (see Figure 5.2). They were followed by fake footwear (15%) and fake leather goods (11%).
Fake watches were by far the main counterfeit goods exported by Iraq over 2011-19 in terms of seized value, representing 83% of global seized value of counterfeit goods coming from this country.
Figure 5.2. Product categories of fake goods originating from Iraq, 2011-19
Source: OECD global customs seizures database
Seized fake goods coming from Iraq were mostly shipped by mail (67% of customs seizures originating from this country). Air and express courier were also used to ship counterfeit Iraqi goods.
Figure 5.3. Conveyance methods of counterfeit goods originating from Iraq, 2011-19
Source: OECD global customs seizures database