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Will Scandals Destabilize Kurdistan?

Kurdistan may be the “other Iraq” but, when it comes to corruption, it is in a league all its own. After a disappointing trip to Washington capped off when TSA agents subjected his entourage to searches, Kurdish President Masud Barzani has now, according to a report in the Kurdistan Tribune, cut short a trip to the United Arab Emirates after his son Mansour Barzani lost $3.2 million in a local casino. Where his son got $3.2 million, whether it came from government coffers and, if so, why Barzani was traveling with so much cash is unanswered. Mansour has always been tempestuous; in his youth, a dispute about a woman led to a botched suicide attempt. Elder son Masrour Barzani, whom Kurdish dissidents accuse of running death squads, has, according to multiple sources in the American Kurdish community, set up a corporation to acquire a $10+ million villa in northern Virginia. Youngest son Mullah Mustafa publicly consorts with figures during his Washington trips which make even Secret Service agents blush. Masud Barzani’s nephew expropriated $600 million from the public coffer to fund his bid for the Korek company. The multibillion dollar return flowed not into the public coffers, but into Barzani private coffers.

The question regarding Barzani’s family holdings will come to a head next year as the Kurdish presidency again comes up for election and could undermine the stability and security about which the family brags and foreign investors depend. Masud Barzani, first elected in 2005 and then re-elected four years later in elections marred by widespread fraud, should, by law, not run for a third term. If he does seek to become president for life, the disgruntled youth may again take to the streets, and all pretense of Kurdistan being anything but a Mafioso state will disappear. Few expect Barzani to follow the lead of the opposition Kurdistan Islamic Union party leader who resigned his post to allow a true successor to emerge.

Masud has, since his return from exile, lived in a mountaintop resort expropriated first by Saddam Hussein and then, in the wake of the 1991 uprising, by Masud himself. The questions Kurds will face—and which may also presage violence in the region—is what happens to the substantial properties which Masud Barzani has acquired. Barzani is used to luxuries—sources in the high-end retail industry reported that his agent once dropped $50,000 in a Bulgari store without blinking.  The question which Kurds have never addressed is whether such property belongs to the presidency, his political party, or Barzani himself. If Barzani claims the property for himself, then it raises questions about how he acquired multibillion dollar holdings on a politician’s salary. In the unlikely event Barzani releases the property to his Kurdistan Democratic Party, it could exacerbate squabbling within the party between his eldest son and nephew and myriad other family factions.

In the face of Iraqi central government opposition, Exxon is trying to extricate itself from Kurdistan. During Barzani’s meeting at the White House, both President Obama and Vice President Biden underscored that, in the dispute between Kurdistan and Baghdad, the United States stood with Baghdad. Unrest in Kurdistan may spook further oil investment. Questions about Barzani’s power and the legality of his holdings—especially should a new Kurdish government seek to reclaim property the Barzanis hold—may cause them to question their shadow partnerships with Barzani proxies. The opposition, which says it stands against corruption, has not gone beyond the rhetoric of change, however, and so may seek its own shadow partnerships. This in turn could further spook investors and send them fleeing, just as Western oil firms cut their losses and fled Russia and Turkmenistan when local corruption became insurmountable.

Good governance and transparency matter. Iraq is one of the most corrupt states on Earth, and Kurdistan is perhaps the most corrupt part of Iraq. Whenever corruption thrives, stability becomes increasingly an illusion.


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