MESOP KEY-NOTE : Iraq’s Oil-Driven Financial Crisis Exacerbates Conflict between Prime Minister Abadi and Maliki

By Patrick Martin – ISW – Key Take-away: PM Abadi faces resistance over how to address Iraq’s debilitating financial situation caused by a sharp drop in oil prices. The 2016 federal budget is a hotly-contested piece of legislation, as it allocates funding for government ministries. PM Abadi and the Council of Ministers (CoM) approved a draft budget on October 19 and submitted it to the Council of Representatives (CoR) for approval. The CoR will begin reading the budget after the CoR Finance Committee reviews it, a process that does not have a set timeline. PM Abadi and his opponents, including Iranian-backed Iraqi Shi’a militias, are at odds with how much of the budget should go to the militias within the “Popular Mobilization,” whose allocation decreased from the 2015 budget.

Iranian proxy militias are thus demanding that PM Abadi increase the share for the “Popular Mobilization.” PM Abadi also introduced a new salary scale to reduce expenditures and increase the pay of the poorest government employees. This has led to a backlash against PM Abadi’s reform agenda, including from his most powerful supporter, Grand Ayatollah Ali al-Sistani, and from PM Abadi’s primary political opponent, Vice President Nouri al-Maliki. The final salary scale will likely be heavily modified from its current form and less effective in reducing expenditures. PM Abadi’s opponents will use his unpopular measures to obstruct his reform agenda. Maliki in particular will exploit discontent among political blocs with the reform agenda in order to undermine PM Abadi’s authority and bolster his own prominence and profile, and has begun assembling a still-small coalition with potential to vote no-confidence in PM Abadi.