The inequality pertaining to the distribution of national income in Iraq is considered one of the country’s largest problems and thus, this lack of transparency breeds corruption. This has caused many political, social and economic issues and fuelled various demonstrations and protests against the Iraqi government. Undoubtedly, this issue has been widespread throughout Iraqi history. It can thus be assumed that Iraqi society is segmented into two groups, including a rich minority and a poor majority (1).

This situation worsened after 2003 when Saddam Hussein’s regime was overthrown by America and its allies. This occurred partly because the authority was handed back to the Iraqis in several stages, which has led to an unfavourable national wealth distribution. This meant that in the midst of this inequality, many corrupt political leaders and armed groups indulged in a luxurious lifestyle whilst the other part of society, which constitutes the majority of Iraq citizens, lived under the poverty line. Consequently, the rich had become richer and the poor, poorer (2).

The inequality in Iraq is the result of the economic distribution of income in an oil economy. It is apparent that Iraq is one of the most oil‑dependent countries and its national revenue is heavily reliant on selling oil. In other words, Oil contributes significantly to the state’s general budget. This income is not from Iraq’s international production, nor it is the product of an advanced tax system. Oil revenu has accounted for more than 99% of exports, 85% of the Iraqi state’s budget and 42% of gross domestic product (GDP) (3). However, this revenue instead of becoming a factor for economical development and the recovery of various war-devastated areas has instead become a curse for the majority of people and a vital source for corruption and waste. Simply put, it has become a source of unprecedented inequality creation in the distribution of national wealth, which has created a serious class inequality. Unstable political circumstances and sectarian violence have exacerbated the misuse of oil revenue and widened the gap.

As indicated above, Iraq is plagued with political instability and the presence of militia forces outside the official state forces. In addition, foreign interference, the grip of armed groups over the government, the lack of strong institutions and the high number of overruled laws have created a favorable environment for the abuse of national income and increased inequality. Specifically, the dominance of an elite and militia groups over the oil sector has eventually led to an abnormal increase of wealth for the few.

1: Inequality in the distribution of income and its oil economic structure

In most oil‑dependent countries that are not run by the rule of law and who do not possess a rational strategy behind overusing their oil revenue, such countries often tend to suffer from a lack of transparency in income, expenditures and the existence of effective financial supervision. In Iraq, in addition to the state’s official army and forces, there are other militias and armed forces that accelerate the inequality inducing side of a state’s oil economy. Simultaneously, this had widened the gap amongst various classes. In the next section will delve in to the mass production of millionaires and Iraq’s oil economic structure.

1.1 Exposing Iraqi millionaires 

One of the most obvious features of inequality in Iraq is the high number of billionaires and millionaires in the country. According to the Iraqi investors union there are 36 billionaires and 16 thousand millionaires in Iraq. With the Kurdistan region of Iraq (KRI) there are 10 billionaires and 8 thousand millionaires whose wealth exceeds 5 million US dollars (4) . Having billionaires in its historical context and in any society is related to the level of development of the national economy and it depends on the level of development of the production and services sectors as well as the ability to export goods to foreign markets. The higher the level of national economic growth, the more different production sectors and services participate in income development and increase the level of exports. However, in societies where the national economy has not yet been developed and the production sectors as well as the agricultural, industrial, tourism and other sectors have stagnated and are significantly under developed, such societies will continue to rely fundamentally on oil revenues (5). In these societies, the appearance of a large number of billionaires reflects the great injustice in the distribution of national wealth, the number of billionaires in Iraq is quite high, as can be seen in table 1, in comparison to other larger European countries and Arabic oil-based countries, the number of billionaires in Iraq is much higher.

Table No.1, Number of billionaires per country according to FORBES for 2022

According to the Table above, Iraq has more billionaires than a country with a robust economy such as Japan which is the third largest economic power in the world (6). Singapore which is the largest trade center only has 26 billionaires, a country like Netherlands which was once a great colonial power, possesses a mere 11 billionaires, Portugal has only 5 billionaires, an oil rich country like Kuwait has only 1 billionaire, Iraq alone has as many billionaires as the following countries combined: Hungary, Roman, Portugal, Holland, Denmark, Nigeria, Emirate, Kuwait, and Lebanon. Moreover, Iraq has more than 18000 millionaires.

1.2: Export fluctuation

Despite the large numbers of billionaires and millionaires in Iraq, the country’s production capacity remains weak, the level of participation of the industrial, agricultural, and other productive sectors in the country’s export remains small in its contribution. Iraq as an oil-based country relies only on its oil revenues. This income has not strengthened the local investment ability neither increased its export capacity, nor diversified its income sources.

Instead, it relies only on oil to provide income for the state, all other sectors of production contributing very little towards exports. In addition, the sectors of production, industry, and agriculture are in a precarious state; hence their contribution to exports is also low. Iraq mostly relies on oil to export goods and to import foreign currency, Table No. (2) explains the total exportations and the contribution of oil and non-oil products.

Table No. (2), Share of oil exports in total exports in Iraq between (2010-2020)

As illustrated in the Table above, in 2010, 52 billion 483 million dollars worth of goods were exported out of Iraq, with oil exports amounting to 51 billion, 589 million dollars. In other words, this means that oil consisted of 98.30% of Iraq’s exports income. 2011 was similar, with oil exportation representing 99.74% of its total exports. Until 2020, oil exports represented over 99% of the country’s exports before then representing 99.62%. Nonetheless, the total of non-oil exportation is less than 1% of overall Iraq exportations.

1.3: Constructive distortion in Iraqi economy

In general, the Iraqi economy suffers from distortions. This means it lacks a diversity in income revenue, with an absolute reliance placed on oil. Moreover, one of the biggest problems in Iraq’s economy is the imbalance that exists between the fluctuating contribution of certain economic sectors over others. Other issues include a taxation system which is considered as weak and that overall contributes little to the formation of the country’s budget. As a result, due to a heavy reliance on the oil sector in Iraq, other production sectors have been ignored. In this regard, we can look at below at the table that displays the contribution of local products to the country’s overall budget:

Table No (3) The share of oil revenues in the formation of the Iraqi government budget between 2010-2020

Table (3) illustrates that oil greatly contributes in the consistency of Iraq’s budget. In 2010, oil consisted of 96.1% of the Iraqi government’s budget. In 2011 oil contribution was estimated at 98.1%, in 2012, 96.6% and in 2013, 97,1%. Yet, in 2015 due to the rise of ISIS and the terrorist organisation seizing oil refineries, the contribution of oil in the country’s annual budget decreased to 77.1%. Yet, in the following years oil contributions reached 92.1% once again.

2. Inequality in rent and work

Inequality in the distribution of income does not only bolden the appearance of billionaires, there are other forms that play a role in income distribution inequality, we will only elaborate on three of those inequalities, which are the following:

2.1: Inequality in salaries, rights and privileges

Iraq’s financial policies such as salary distribution, rights and privileges are a strong source of inequality in Iraq. Higher ranking members of states receive large salaries. In Iraq’s political elite, only a social minority reaches high ranks within the government’s institutions. Their salaries are often many times higher than the salary of an ordinary state employee. According to the American CEOWORLD magazine (7), the average net salary of a government employee who worked six days a week and six hours a day in Iraq amounted to no more than 580 dollars in 2022. Nonetheless, this does not prevent higher state officials from seeking much larger salaries for themselves.

For instance, each member of the Iraqi parliament receives a salary amounting to 24 million Iraqi dinars per month, converted to US dollars, this amounts to 16,200$ per month (8). In other words, the salary of a parliamentarian is 28 times more than the salary of an Iraqi ordinary employee. Iraqi minister’s monthly income reaches 35 million Iraqi dinars per month, which amounts to 28 000$/ month, which is 58 times more than the salary of an ordinary employee.(9)

The president’s salary is 90 million Iraqi dinars, 60,800$/ month when converted to US dollars (10), which is 187 times more than the salary of an ordinary employee. The prime minister and his deputies received a monthly wage of 60 million Iraqi dinar (40,500$ US), and their salary is 84 times more than the salary of an ordinary employee. The head of Parliament and his deputies are paid 55 million Iraqi dinars per month (37,100$ US dollars) and their salary is 77 times more than the salary of an ordinary employee (11). These salaries are on top of the thousands of other special salaries in the director general, where deputies, advisor of parliament, government, presidencies and ministries, receive ‘special salaries. This of course creates huge gaps between the various social classes in Iraq, with these civil servants earning on average 10 times more than an Iraqi citizen.

Alongside this enormous accumulation of wealth, exists a staggering poverty in Iraq, according to the numbers provided by the Iraqi Ministry of planning, the number of Iraqis living below the poverty line has reached 25% of the population, which means a quarter of Iraqi citizens. In other words, 10 million Iraqi individuals live below the poverty line.(12)

2.2 Inequality in getting public goods

One of the obvious inequalities in Iraq, is the inequality that resides in access to public goods. According to economics, public goods can be defined as a good that is equally provided to every citizen. In other words, no individual can be deprived from public goods. Despite being used by everyone, it does not decrease in value, these goods are not taken into account for market competitions to be valued (13). Perhaps the best example of a public good is security. Providing security for every citizen equally, local security which the national security force provides, or external security which is provided by the nation's military force result in the nation’s security which can be viewed as an economic public good(14).

This good is provided by the government, who should provide it equally for every citizen, the problem here is that in Iraq, this good is not equally distributed. All citizens do not benefit from this security. Some citizens greatly benefit from this security while other groups find themselves entirely deprived from this and thus in danger. In Iraq, there are forces other than police and local security departments that are armed and play an instrumental role in providing security. All together, these forces provide a greater security from other armed groups whilst simultaneously, posing a threat to other groups. In Iraq apart from security forces and police, there also exists the Hashd Al-Shaabi. This mobilization front consists of approximately 67 armed groups, (15) although their numbers are permanently fluctuating. If this military group is introduced as part of the Iraqi military force, they in fact have their own aims and are not afraid to use brute force to attain those aims. These armed groups are accused of terrorist acts and using armed force towards sectarian goals.

The Hashd Al-Shaabi armed groups have various loyalties, with some groups swearing allegiance to the Iranian government, some groups are loyal to other Shia groups. This diversity in allegiances can lead to complications in the decision processes and create different understandings of security. As a result, this makes certain populations and parts of Iraq benefit from larger portions of Iraq’s diverse security apparatus whilst others are virtually deprived from any security.

2.3 Corruption as a source of inequality

The existence of corruption and the waste of national resources, using power and force to coherce others into misusing public revenues and towards personal benefits, are one of the most important features depicting the political economy of Iraq today.

According to an international transparency agency for the year 2021, Iraq is one of the countries that suffers the most from corruption. Iraq ranks 157th amongst 180 countries suffering from corruption (16) . Corruption in Iraq can never be denied, government officials having openly admitted to rampant corruption throughout the country.

Former Iraqi president Dr. Barham Salih announced a project to return the stolen money. Dr. Barham in a television interview announced that the amount of money that was exported out of Iraq is valued as 150 billion Dollars. In the interview, the former president requested to form a national unity with other parts to return the stolen money. Other Iraqi politicians estimated the total value of the stolen money to be around 350 billion dollar (17).