Iraqi-Israeli Normalization: Economic Solution or Accelerant of Internal Division?

Rachel Kantz-Feder analyzes the Iraqi public discourse regarding possible normalization with Israel. This article is part of "The New Normal? Arab States and Normalization with Israel".

Signing the Abraham Accords, September 15, 2020
Abraham Accords Signing Ceremony, September 15, 2020. The White House [public domain]

Not long ago, peace between Jerusalem and Baghdad was dismissed as a social media fantasy promoted by Israel’s Foreign Ministry and Iraqi intellectuals. The public indignation directed at prominent Iraqis who visited Israel or expressed favorable views of it seemingly supported this. However, today, Iraq’s economic turmoil and trans­formations in the political landscape already have to a large extent normalized public debate on how connections with Israel, with its population of Iraqi Jews, might advance national strategic interests. Although Iraq is by no means an imminent candi­date for normalization, the issue has come onto the agenda in conjunction with sensitive fault lines in Iraqi politics and society, and a potential economic inflection point.

On January 4 2021, after a parliamentary commit­tee revealed that $239.7 billion has been siphoned from Iraq since 2003, Iraqi Prime Minister Mustafa al-Kadhimi, pledged to pursue aggressive anti-cor­ruption reforms and to deliver justice to those who have emptied Iraq’s coffers – “even if it costs him his life”.

Kadhimi – who ascended to his position in May 2020 – is striving to maintain Iraq’s precarious equilibrium, while addressing demands of the ‘October Revolution’, the unprecedented popu­lar reform movement that erupted in late 2019. This decentralized movement, strongest in Shi‘i populated centers and supported by Iraq’s reli­gious establishment, contests the informal quo­ta-based power-sharing arrangement that has produced Iraq’s endemic corruption. In recent years, journalists and whistleblowers have exposed the mechanisms of the ruling elite’s abuse of national wealth, particularly in the oil industry and through egregious monetary policies of the Central Bank of Iraq, long controlled by Former Prime Minister Nuri al-Maliki’s allies. Unlike previous anti-govern­ment mobilizations, the movement has repudiated Iranian influence and the politicians and oligarchs who enable Iran’s predatory economic relation­ship with Iraq.

The geopolitical realignment illustrated by the Abraham Accords therefore coincides with Iraq’s broader reckoning with Iran’s role in the plunder­ing of the post-2003 economy, cascading domes­tic crises, and fear of economic collapse wrought by low oil prices and the coronavirus pandemic.

During his visit to Washington, days after the agreement was unveiled, Kadhimi touted progress towards trilateral collaboration with Egypt and Jor­dan, members of the Eastern Mediterranean Gas Forum. He announced further talks on the “New Levant Plan,” a European-like free trade agreement conceived by the World Bank in 2014 and embraced by Iraqi elements seeking to decrease dependence on Iran. Kadhimi’s pursuit of a Levantine axis and his remark that the Abraham Accords are an Emi­rati decision in which Iraq should not interfere, reverberated among the political class, already roiled by Iraq’s deficit crisis and inability to pay government salaries.

Normalization in Iraqi Public Discourse

Soon thereafter, leaks about clandestine talks on Israel and politicians’ hyperbolic statements shocked Iraqis. Former Deputy Prime Minister Bahaa al-Araji, who previously led the Sadrist bloc, declared that Iraq is prepared to normalize with Israel and that the decision might be issued from Najaf (the seat of the religious establishment), not Baghdad. Araji, who is known to be close to Maliki and head of the al-Fateh Alliance and Badr Organi­zation Hadi al-Ameri, pointed out that many Iraqis “see the corruption of the ruling system as the real danger.” In November, former MP and leader of the Umma Party Mithal al-Alusi, an unapologetic proponent of relations, divulged that an Iraqi dele­gation discussed normalization with Europeans on the sidelines of meetings to address Iraq’s acute fiscal crisis. Leaks also revealed that represen­tatives of political blocs convened to address the salary crisis, the possibility of an Israeli consulate in Erbil, and an Iraqi-Israeli agreement.

With these revelations fueling wider public debate about Iraq’s national interests and the benefits of ties – from energy collaboration to development of Jewish heritage sites to promote tourism – par­liamentarians are counter-employing economic arguments to reject an Iraqi-Israeli agreement. A Sadrist MP criticized Kadhimi’s borrowing requests as an effort to advance normalization, alleging that the salary crisis was manufactured. Simi­larly, in opposing relations, an Islamic al-Da‘wa Party MP dismissed the “Levantine axis” because it requires significant investment. These com­ments seemingly acknowledge that traditional arguments against relations with Israel, stressing the need for solidarity with the Palestinians, are no longer sufficient.

Despite influential voices of unequivocal rejec­tion that denounce normalization as an instru­ment of Iraq’s division, Iraqi analysts increasingly regard relations with Israel as a fait accompli, and acknowledge that the political-economic calculus has changed. A prominent politician from Shi’i cleric Ammar al-Hakim’s Hikma Party confirmed that political forces comprehend the magnitude of change in the street, stating “Sunnis, Kurds, and half of Shi‘a do not have a problem with normal­ization.” Sources close to pro-Iran factions concede that many see normalization as a panacea to Iraq’s manifold crises.

Obstacles to Iraqi-Israeli Normalization

Notwithstanding these perceptions of evolving public opinion, the forces arrayed against normal­ization are powerful, and therefore most political players do not want to endorse an Iraqi-Israeli peace agreement. Even the Kurds of Iraq, who have maintained well-known relations with Israel, cau­tiously balance their interests and relations with Baghdad, Ankara, and Tehran, and find no incentive in advocating for normalization publicly.

Given that anti-Iranian sentiment is not tanta­mount to desire for normalization with Israel, the issue is a minefield for October Movement leaders transitioning from street mobilization to the bal­lot box ahead of elections. Civil society activists who supported but did not drive the movement are generally critical of newer activists’ willing­ness to participate in the political system, and the issue of normalization compounds these divisions. Some are trying to prevent the conflation of new parties’ positions on Israel with their vision of the movement’s anti-corruption, anti-sectarian, econ­omy-first objectives.

High profile arrests of officials and businessper­sons hitherto shielded by ties to Iran and militias have created pressure on the movement’s pro-Ira­nian adversaries, and counter-measures by them. As the struggle to exert state authority over Iran-backed militias hangs in the balance, these actors are sabotaging efforts to diversify the economy and harnessing the issue of normalization to more generally discredit Kadhimi’s stewardship of the economy and the state.

Despite calibrated moves against conduits of Ira­nian exploitation, Kadhimi – a technocrat still work­ing to build a political base – does not possess the power to wholly expunge political actors and economic networks vested in Iraq’s status quo. These actors and networks are not limited to Iran and Iraqi Shi‘i militias (nor are they defined by sec­tarian affiliation). Lebanese Hezbollah, which has played a mediating role between Shi‘i political and paramilitary forces, also possesses entrenched economic interests entangled with Iraqi oligarchs close to Nuri al-Maliki and others who wield pow­er. Many Iraqis looking to Kadhimi to deliver on his anti-corruption promises wish to see justice meted out to the major purveyors of graft and cronyism, like Maliki and his ilk, the most vocal opponents of normalization.

An increasingly popular view is that normalization is an Iraqi interest and is possible, but, as simply put by a prominent Iraqi writer, “it depends on separating the Shi‘i house from Iranian hegemo­ny…”. It also would seem to require a critical mass of the ruling elite identifying normalization as a national interest, for which is worth forgoing per­sonal enrichment and risking whatever a separa­tion from “Iranian hegemony” could entail.

This is not to be expected in the near to medium term. It is all the more unlikely if President Biden and the US State Department do not appreciate the gravity of change expressed by the October Move­ment enough to prioritize support for the mandate given to Kadhimi to reclaim Iraqi sovereignty.

This article is part of The New Normal? Arab States and Normalization with Israel.

For a full version of this article that includes source citations, please see the original publication file, here.