Event

The coalition formation in Iraq has been dragging on since the May 2018 parliamentary elections. The incumbent prime minister, Haider al-Abadi, wants to remain a second term in office. However, his Nasr parliamentary bloc performed badly in the elections, which complicates the government formation.

Moreover, since June 2018, protests against political and economic grievances have increased, particularly in the southern city of Basra. Protests are directed towards the poor quality of public services (such as frequent power outages and lack of drinking water), high perception of corruption, high unemployment and lack of overall progress. This has led largest political parties and parts of the population to speak out against a second term for Abadi.

Impact on country risk

The federal elections of May 2018 proved to be inconclusive. After the downfall of Sadam Hussein, a proportional electoral system was introduced, which makes it de facto impossible for any political party to obtain a majority. But, this has already proven to entail difficulties in forming coalition. That way, the popular alliance led by populist Shia cleric Moqtada al-Sadr (Sairoon) surprisingly won the elections by obtaining 54 out of 329 seats. The Fatah alliance, which is the political wing of the Iran-backed Popular Mobilisation Units, came second. These are the militias that where created after the collapse of the regular Iraqi army in the battle against ISIS. The Nasr bloc of the incumbent Abadi came only in the third place. Moreover, the elections were marked by a record low turnout and by allegations of voter fraud. Currently Abadi is acting as caretaker prime minister, and while he has the support of Western governments, his reappointment as prime minister becomes unlikely in the light of the ongoing protests.

After all, protests represent a challenge for the central government. Up to now the government’s response has consisted in allocating more security personal to the southern region and promising more investments. However, the population doubts about  any future improvements. Years of conflict have left Iraq’s infrastructure in a bad shape. Therefore, meeting the population’s demands will require long-term efforts. For example, improving  public services such as electricity and water will require multibillion dollar investments and will take years to complete. Nevertheless, the large inflow of oil revenue should help fund these investments. However, given the high perception of corruption, fear from the population that significant shares of the promised investments will be diverted is palpable.

Given the difficult political environment Credendo’s short-term political rating, currently in category 6, further remains under pressure. 

Analyst: Jan-Pieter Laleman – jp.laleman@credendo.com