Reeling from the recent sharp drop in oil prices, Iraq's government is cutting tens of thousands of security jobs and will be unable to purchase ships and aircraft that Iraqi officials had hoped would allow the country to develop a basic ability to fend off external threats by 2012, the U.S. military's projected withdrawal date.

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BAGHDAD — Reeling from the recent sharp drop in oil prices, Iraq’s government is cutting tens of thousands of security jobs and will be unable to purchase ships and aircraft that Iraqi officials had hoped would allow the country to develop a basic ability to fend off external threats by 2012, the U.S. military’s projected withdrawal date.

U.S. officials say they fear the budget crunch will prevent the Iraqi government from keeping billions of dollars’ worth of U.S.-donated equipment in working condition, representing a potentially colossal loss for a key American investment.

Since November, the government has imposed a hiring freeze at the Defense and Interior ministries, the country’s largest, which employ more than 640,000 people. In recent weeks, at the urging of U.S. officials, both ministries began conducting personnel audits that could eliminate 12,000 army jobs and as many as 70,000 positions at Interior, which oversees the country’s police forces.

The budget squeeze is threatening the progress of Iraq’s security forces, already beset by ineffective management, corruption and political interference. As the U.S. military begins to withdraw from cities this summer, the Iraqis will increasingly be in the spotlight.

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For U.S. officials overseeing the handover effort, the funding problems raise an alarming prospect: Iraq’s security forces could be less prepared to fight in 2012 than they are today.

“Tough choices”

“The budget crisis is going to degrade the rate at which Iraqis will be able to develop their capabilities,” said Lt. Gen. Frank Helmick, who supervises the training and equipment of the Iraqi security forces. “We’re in a situation that the Iraqis have not had to face. They can’t pay for it, and we don’t have the money to pay for it. For the first time, the Iraqis will have to prioritize, and these will be tough choices.”

The Defense Ministry and the Interior Ministry will get $4.1 billion and $5.1 billion, respectively, this year — roughly half the amount each was counting on last year when oil traded at up to $140 a barrel. Now oil, Iraq’s main source of income, is $58 a barrel.

The most significant long-term initiatives jeopardized by the tightening budget are the development of a navy capable of securing oil platforms, an air force large enough to support ground operations, and a border force that can block the flow of weapons and fighters that have poured in through Syria and Iran.

The Iraqi army currently has 262,000 soldiers on payroll, roughly 12,000 more than its authorized strength. Because Iraq’s security forces are paid in cash that is passed down the chain of command, many commanders lie about how many soldiers they supervise so they can collect the wages of fictional soldiers.

According to a U.S. military summary of the Defense Ministry’s personnel audit obtained by The Washington Post, there are Iraqi army majors who currently make $70,000 a month through embezzlement. U.S. officials believe that as much as 25 percent of the ministry’s annual payroll budget is stolen, according to a U.S. official who provided the confidential estimate on the condition of anonymity.

Because the audit is likely to expose corrupt officers, the U.S. assessment said, some Iraqi army leaders are “predicting violent outcomes.” One senior Iraqi leader agreed to participate on the condition that the building where the audit is being conducted receive more security because “he’s convinced someone is going to blow it up,” according to the U.S. document.

Due to attrition, Helmick said, some brigades that were fully staffed last year are now operating with 80 percent of their ideal manpower.

The Interior Ministry, which had planned to hire approximately 67,000 new police officers this year, is instead having to trim its payroll. The hiring freeze has indefinitely delayed one of its top goals: to create a national police brigade trained in counterinsurgency for each province by the year’s end.

The ministry currently employs 480,000 people, plus roughly 80,000 contractors — well above its authorized strength of 476,000, said Maj. Gen. James Milano, who oversees police training.

Renewed insurgency?

The budget squeeze is also heightening concerns about the Shiite-led Iraqi government’s ability to continue paying U.S.-formed — and formerly U.S.-funded — Sunni paramilitary groups that are now working under its supervision.

The government promised to shift 20 percent of the 94,000 men in those groups to security jobs, but because of the hiring freeze, fewer than 5,000 of them have made the transition.

In recent months, many Sunni guards have walked away from their checkpoints after working unpaid for months. U.S. officials fear that the dissolution of the groups could refuel the insurgency, widen the sectarian divide and destabilize the government.

After the Iraqi parliament failed to allocate money to the program, the Interior Ministry, under pressure from the U.S. military, agreed to pay the men from its allocation.

Also worrisome, U.S. military officials say, is the Iraqi government’s failure to spend money on maintenance and spare parts for the vast fleet of armored vehicles and other military equipment the United States has donated to Iraq’s armed forces in recent years.

The Iraqi army and national police have received more than 5,000 U.S. Humvees in recent years and expect an additional 4,000 as U.S. troops continue to withdraw. Many vehicles are starting to fall apart, U.S. officials say.

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