Matters of domestic political competition and political order are notoriously hard for the international community to influence. Usually, external parties struggle to understand the local political economy and do not take sufficient trouble to develop adequate insight into how the many faces of power and voice interact to produce change. Bearing in mind the humility that such observations should engender, the analysis suggests two broad international interventions that could help mitigate some of the factors of instability identified.

Insist on international mediation for the resolution of the disputed territories

The Iraqi government needs international support for the country’s reconstruction regardless of its oil wealth. Such support can be made conditional on acceptance of international mediation in efforts to resolve the issue of the disputed territories, together with a promise to scale up support once a mutually acceptable resolution has been agreed. This can be framed as an effort to expedite the recovery/reconstruction of these hard-hit areas. Resolution of territorial affiliation and administration of the disputed areas should be linked to how much of the Iraqi state budget is allocated to the KRG.‍[42] In discussions about the central budget allocation to the KRI, the Iraqi government has typically based its thinking on the number of Kurds living in the KRI, ignoring the fact that it also has many Arab inhabitants that require both administration and services. Any disputed areas that might come under Kurdish administration in the future would increase this problem. The diplomatic advocacy required for this intervention consists of a united stance by Iraq’s key donors, a willingness of the United Nations to make its good offices available, and a sustained strategy for engaging Turkey and Iran as Iraq’s key neighbours with a stake in the matter.

Create or adjust a flexible and catalytic fund for the reconstruction of the greater Mosul area

Mosul and its surrounding areas, including parts of western Iraqi Kurdistan and the disputed territories, have been hardest hit by the fight against IS. The city and parts of the Nineveh plains are also adjacent to western Iraqi Kurdistan. If they remain underdeveloped and/or insecure, it will not be long before the KRG will be drawn in via their Kurdish populations, IDP returns or clashes and crime in the disputed areas. In fact, IDP return is already problematic due to the fragmented security landscape. If such key issues are unaddressed, the area will be fertile ground for an IS version 2.0. More positively, expedited reconstruction of these spaces could tie Iraqi Kurdistan to the Iraqi polity in productive economic ways that improve living conditions in the wider region. Iraq’s Reconstruction and Development framework of 2018 proposes both a UN and World Bank-led fund as part of its Reconstruction and Development Financing Facility (IRDFF), but it will take time to get these funds up and running.‍[43] The UNDP Funding Facility for Stabilization in Iraq also exists of course, and it seems to perform well in terms of rebuilding infrastructure, creating temporary jobs and providing cash handouts.‍[44] This notwithstanding, it largely stays out of the disputed territories and does not really address the security issues that plague the areas, without which a sustained recovery will be difficult to achieve. Hence, either this fund could be re-purposed first and then expanded, or a companion fund can be created/mobilized that is more politically-savvy and more security-oriented (i.e. more akin to the UN’s Peace Building Fund, or the EU’s Instrument for Stability). This could catalyze initial hopes and recovery activities that the local Iraqi population can build on.

Given how inextricably politics and economics are linked in both Iraqi Kurdistan and Iraq itself, these two interventions must be pursued in tandem to mitigate the risk of creating political progress without tangible benefits for ordinary Iraqis, or of financing reconstruction that particular groups use for partisan political purposes / expropriate as rents.

The Iraqi government recently moved to reduce the KRG’s share of the national budget. Initially, it planned a reduction from 17% to 12%, but strong Kurdish opposition is likely to limit the reduction to 14%. See: One Iraq News, online; link (both accessed 6 June 2018).
See: State of Iraq, Reconstruction and Investment, Part 1: Reconstruction and Development Framework, 2018, online: link (accessed 25 June 2018).
UNDP (2017), Fast Facts: UNDP and the Funding Facility for Stabilization in Iraq, online (accessed 5 July 2018); UNDP (2017), Funding Facility for Stabilization: Annual report 2016, New York: UNDP.