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Entrenched Corruption Feeds an Autumn of Discontent Across the ‘Shia Crescent’

The uprisings in Lebanon, Iraq, and Iran over the past several weeks have many factors in common, but the most fundamental may be this: in all three countries, most of the population is forced to deal with economic deprivation while corrupt elites – many of them boasting strong ties to the Iranian government – enjoy the fruits of power. The sacking of Iran’s consulate in the Shia holy city of Najaf this week offers just the latest reminder of how closely frustration with corruption in all three countries dovetails with resentment of the Iranian regime.

This endemic corruption has fuelled the current protests, with Lebanese, Iraqi, and Iranian demonstrators all demanding an end to the power wielded unaccountably by elites and an equitable distribution of both economic opportunities and social liberties. Both protestors and the entrenched interests they are fighting have been influenced, if not directly backed, by their peers abroad.

Iran’s overbearing hand

While the Arab Spring of 2011 responded to similar experiences in countries as disparate as Tunisia, Egypt, Syria, and Yemen, these uprisings in the so-called “Shia crescent” are marked by the ubiquitous sway of Iran’s rulers over economic and political affairs. This is highlighted by the recent leak of documents from Iran’s intelligence services in Iraq, which documents pervasive Iranian influence over internal Iraqi affairs – and how Iraq’s leaders are beholden to their larger neighbor.

Since the American invasion of Iraq in 2003, the Islamic Republic has exploited the opportunity to reverse years of marginalization inflicted on Iraq’s Shia majority by Saddam Hussein’s Baathist regime. Many exiled Iraqis who sought refuge in Iran returned after Saddam’s fall, taking up positions of authority in the power vacuum. These exiles, along with other factions such as the Kurds Iran supported against Saddam, have become the leading power brokers in Iraq and largely follow the roadmap laid out by Tehran.

In Lebanon, Iran’s Revolutionary Guard was instrumental in founding Hezbollah, who they continue to fund, train, and give ideological guidance. Over three decades, Hezbollah has come to dominate Lebanese politics. Hassan Nasrallah, Hezbollah’s leader, maintains close connections with Iran, and his inner circle has leveraged its positions to maximize power within Lebanon’s fragile confessional system. Outside the country, Hezbollah has been the vanguard of Iran’s bloody intervention in Syria, helping Bashar al-Assad maintain a tenuous grip on power.

Over several decades, the overbearing weight of these Iranian-backed actors has contributed to economic ruin in Iraq and Lebanon. High youth unemployment, high inflation, and a lack of essential services has left citizens fed up with these power brokers. Now that the public is speaking out, these cabals have employed harsh crackdowns to protect their influence, wealth, and control – and, in turn, Iran’s interests.

Not always Iran

Nonetheless, the transnational ties of corruption do not only run through Tehran. One prominent relationship involves the powerful Barzani family of Iraqi Kurdistan and Lebanese business mogul Raymond Rahmeh.

Sirwan Barzani, who is both a Peshmerga general and businessman, and Rahmeh are accused of corrupting Iraqi regulators to expropriate hundreds of millions of dollars’ worth in foreign investments by France’s Orange and Kuwaiti logistics firm Agility, who launched a joint venture in 2011 to buy a 44% stake in Iraqi telecoms company Korek.

Both Barzani and Rahmeh, executives at Korek, are alleged to have colluded with Lebanese IBL Bank to acquire a $150 million loan after the purchase, with a reported annual interest rate of 13.25%. The two are accused of telling the directors of Korek this loan was unsecured, justifying the high-interest rate. In reality, the loan was secured, which should have meant an annual interest rate of around 4%. Barzani and Rahmeh allegedly profited from this difference.

In 2013, Iraq’s Communications and Media Commission (CMC) effectively revoked its approval of the Orange-Agility investment in Korek, handing control of the company to Barzani and leaving the investors empty-handed. A Financial Times investigation last year revealed how Rahmeh allegedly used real estate in London to corrupt these Iraqi officials and secure their problematic decision, which has benefited Barzani and Rahmeh but thrown Iraq’s reliability as an investment location into serious doubt.

Corruption supersedes ethnicity and religion

The case of Korek is just one of the suspicious ventures involving these parties. The Sunni Kurdish Barzanis have long demonstrated how entrenched corruption can transcend ethnic and sectarian lines, with the extent of their wealth reflected by the secret purchase of two homes in Beverly Hills for $47 million by relatives of former Kurdistan president Masoud Barzani. Rahmeh, meanwhile, has been implicated in the 2004 murder of an American contractor in Iraq and the misappropriation of $25 million due to the American’s company.

Though the Barzani clan, one of the most powerful in Iraqi Kurdistan, has no ethnic or religious ties with Iran’s rulers, both the Pahlavi dynasty and the Islamic Republic helped them wage guerrilla wars against Saddam. The relationship remains close today. As the recently leaked cables reveal, Nechirvan Barzani – a nephew of Masoud Barzani who has served as both prime minister and president of the Kurdistan region – reportedly shared details of his meetings with Western and Iraqi officials with the Iranians as well.

The Barzanis help demonstrate how, in both Iraq and Lebanon, a fragile balance of power has seen institutions parceled out to various ethnic and religious elites. Despite their ethnic and religious differences, these elites have a mutual understanding that they need each other’s cooperation in maintaining the status quo.

In Lebanon, where Sunni, Shia, and Maronite Christian parties govern through fractious coalitions, a recent scandal involving former premier Saad Hariri and a $16 million payment to a South African model helped remind the Lebanese public of just how much money their factional leaders have set aside for themselves.

Can united civil societies overthrow kleptocracies?

Those confessional systems may bring Iraqi and Lebanese elites together to protect their own interests, but they have also served to keep the general public in both countries divided. Civil societies in Iraq and Lebanon have only now set aside these fault lines to form a united front, with protestors transcending religious and ethnic allegiances in a way that would have seemed unthinkable during Lebanon’s civil war or Iraq’s postwar insurgency.

In Iran as well, recent protests have been the most broad-based in the history of the Islamic Republic, which may help explain the unprecedented level of violence used by the regime in cracking down.

Could these movements end these countries’ confessional systems and allow the emergence of genuinely democratic and transparent alternatives? It may too early to tell, but the cracks they have generated in the existing circles of power are already plain to see.