Iraq moves to curb corruption at border crossing

MANDALI, Iraq -- Iraq's prime minister took a first step Saturday to combat cross-border corruption that has long plagued the country's frontiers, part of a plan to grapple with unprecedented financial shortfalls.

Mustafa al-Kadhimi launched a campaign to recover "hundreds of millions" of Iraqi dinars in import tax revenue lost to bribery in the northern province of Diyala. In the first phase, security forces from the Interior Ministry will supervise the work of border guards to ensure proper payment of tariffs at the Mandali border crossing with Iran, he told reporters.

"Today, military forces were sent and allowed to shoot anyone who violates customs, in order to protect the people's money and to search for 'ghosts' who blackmail businessmen," he said.

The strategy is expected to be repeated at other border points.

Local security and government officials said enforcement brings with it the risk of contending with powerful armed groups.

[Gallery not loading above? Click here for more photos » arkansasonline.com/712iraq/]

A Mandali border official with the rank of lieutenant colonel said "ghosts" referred to armed factions, some with links to groups within the country's Popular Mobilization Forces. The array of militia groups in the Popular Mobilization Forces includes some with ties to Iran. The officer spoke on condition of anonymity, fearing retribution.

Hours before the prime minister's arrival at the frontier, Iraqi security forces announced the start of the fourth phase of a military campaign to root out Islamic State militant group elements from Diyala province, according to a military statement. At least 15 Islamic State hideouts were destroyed after the dawn operation was launched.

The start of the border corruption campaign comes as Iraq's government struggles to plug a widening budget deficit amid spiraling oil prices that have slashed expected state revenue, leaving the country with little liquidity to pay salaries and finance a response to the coronavirus.

In June, the crude-exporting country received $2.68 billion in oil revenue, about half of what a draft 2020 budget projected.

Attempts at financial overhaul have been met with protests and rejection from parliament, which voted down proposals to cut public salaries that represent a chunk of the government's monthly expenditures.

The government plans to pay full salaries for the months of June and July by borrowing from reserves through state banks, but this is a short-term option, two Iraqi officials said. The officials spoke on condition of anonymity in line with regulations.

With strong opposition to wage cuts from political blocs in parliament, al-Kadhimi is considering measures that don't require their approval, according to two members of the government's Crisis Cell, a high-level committee overseeing top economic issues. These include changing taxation methods and enforcing tariffs at customs. Iraq imports nearly all of its goods from neighboring Iran and Turkey.

"We are in crisis mode; we have a 3 trillion [dinar, or $2.5 trillion in U.S. dollars,] deficit every month," said one official. "It's not sustainable for the future."

Improving customs collections across Iraq's 21 border crossings had been on the agenda of previous Iraqi governments, but officials have repeatedly said enforcement was the key obstacle.

The government alleges that corruption arises from certain border officers accepting bribes for charging lower tariffs, while others say they are intimidated by armed gangs with links to militia groups that are dominant in the area.