International crises: The Iraqi financial system’s entanglement with the political elite hinders reform.
International crises: The Iraqi financial system’s entanglement with the political elite hinders reform.
2026-09-09
Shafaq News – Washington
Mustafa Hashim
Lehib Higel, senior Iraq researcher at the International Crisis Group, ruled out on Wednesday the ability of external pressures to bring about fundamental changes or structural reforms in the Iraqi financial system, given the lack of internal political will and the deep entanglement between financial institutions and the ruling elite in Baghdad.
Hagel told Shafaq News Agency that “the close link between the financial systems in Iraq and the political elite makes it unlikely that substantial reforms will be achieved,” stressing that “external pressure will not produce tangible change unless there is genuine political will.”
The lead researcher added that efforts to reform the banking sector are hampered by the lack of sufficient political support for the Iraqi government, explaining that “even if the government has the intention to reform the banking system, it lacks the broad political cover to move forward on this path.”
This analysis comes amid escalating discussions in Baghdad about ways to protect the Iraqi economy from any potential crises. Two days ago, economist Manar al-Obeidi argued that the Iraqi banking sector is not experiencing a collapse, but rather a process of “sorting, reforming, and restructuring” that may be harsh, but is necessary to prepare the sector for a period of greater growth.
Concerns have recently increased after the Central Bank of Iraq decided to place Al-Taif Islamic Bank under guardianship for 18 months, following the detection of serious violations that affected its financial position. This sparked demonstrations and protests by depositors in front of the bank’s branches in Baghdad and Basra to demand their money, while these events further deepened the erosion of Iraqis’ confidence in banks.
shafaq.com
