Iraq's stalemate deepens as finance minister Allawi resigns and Al Sadr postpones march

Allawi's role has been limited this year as contested elections have left Baghdad without a new government

Ali Allawi handed in his resignation as Iraq's finance minister on Tuesday. AP

Iraqi Prime Minister Mustafa Al Kadhimi on Tuesday accepted the resignation of his finance minister Ali Allawi, as the country's political deadlock continues.

“We will hand over power to another minister for the time being following the resignation of Mr Allawi,” a source in the prime minister's office told The National.

The source said Mr Allawi had submitted his resignation during the weekly Cabinet meeting in Baghdad and that he had threatened several times to resign over political pressures.

Asked who would fill the role of finance minister, the source said “it will most likely go to the oil minister, Ihsan Abdul Jabbar”.

In a statement to his Cabinet ministers, Mr Al Kadhimi said they must all "rise to the challenge" and that "making sacrifices for Iraq is not an element of weakness but is a strength".

"Compromise is a real strength and I urge you to be patient and courageous," he said. "We have reached a stage where we are able to build our country, despite the absence of a budget for two years."

He said the Iraqi public had the right to ask for "paved streets, water, schools and health care, but all this must be balanced in order for the government to do its part".

Mr Al Kadhimi called for a national dialogue with all political factions to break the country's deadlock.

Mr Allawi, a political veteran who was once an exiled opposition figure, was respected in some circles for publishing several papers outlining Iraq's structural economic problems. He also wrote a celebrated book about the turmoil in Iraq after the US-led invasion, The Occupation of Iraq: Winning the War, Losing the Peace.

An embattled government

Mr Allawi has come under increasing pressure from across Iraq's political spectrum as government formation floundered this year following October's contested elections.

Two rival groups, one led by radical cleric Moqtada Al Sadr, the other an alliance of mainly Iran-linked parties known as the Co-ordination Framework, have sought to block attempts to form a government through a series of parliamentary boycotts, legal challenges, threats and protests.

Mr Al Sadr won the plurality of seats in the October election, putting him in pole position to form a government. But the unpredictable cleric has since withdrawn his MPs from Parliament in protest against widespread political corruption.

Mr Allawi's decision in December 2020 to devalue the Iraqi dinar by 22 per cent while Iraq struggled with low oil revenue amid the global pandemic was firmly opposed by Mr Al Sadr, whose supporters now occupy the area around Parliament in a sit-in protest.

In February, Mr Al Sadr tweeted that Mr Allawi should appear before Parliament for questioning, and the following day, Parliament's Deputy Speaker — then Sadr loyalist Hakim Al Zamili — summoned him for interrogation in the legislative assembly.

This prompted an angry response from Mr Allawi, who said it was an insult to the "dignity" of the government — under the constitution, ministers can be questioned if 50 MPs agree to the summons.

Mr Allawi said Mr Al Sadr was trying to influence the government through Twitter.

But Mr Allawi has also made concessions to the Sadrists this year, with both the Al Kadhimi government and the cleric’s supporters backing a bill to allocate funds for food distribution to poor members of the public, as well as operational expenses for the electricity sector.

The legislation was firmly opposed by the Co-ordination Framework.

To Kirk Sowell, who runs the Iraq-focused Utica Risk consultancy, Mr Allawi has long lacked the power to govern.

"Allawi had only modest influence when the government was in formal power and none to speak of now," Mr Sowell said.

The absence of a new government places constitutional limits on caretaker government spending, curbing government salaries, despite Mr Allawi's call to increase investment in public services.

Mr Sowell says Mr Al Sadr is not likely to have had a hand in Mr Allawi's resignation and that tension will continue. On Tuesday, Mr Al Sadr postponed what he said would be a "million man march" after the Co-ordination Framework promised a counter-demonstration.

"Sadr isn't backing down from the shutdown of Parliament by his supporters and needs Parliament to be dissolved before a government can be formed so that his rivals can't amend the election law — and election commission — to his detriment," Mr Sowell said.

"He is de-escalating, not retreating."

Norman Ricklefs, who runs Iraq-focused consultancy Namea Group, said that it was possible Mr Allawi's resignation, and the cancellation of the planned protests by Mr Al Sadr’s followers, were linked to a recent meeting between members of the Co-ordination Framework and Mr Al Sadr's former coalition partners the Kurdish Democratic Party, in Erbil.

“This might indicate that a political deal has been done that could allow Parliament and the acting government to start preparations to hold another round of elections, presumably in 2023.”

A veteran politician

The former minister, 74, was born in Baghdad but lived much of his life in exile in London.

He comes from a prominent Shiite family that fled Iraq after the 1958 coup that overthrew King Faisal II.

Educated in Britain and the US, including at Massachusetts Institute of Technology (MIT) and Harvard, where he obtained a master's in business administration, Mr Allawi later worked as a merchant banker and at the World Bank.

Following the US-led invasion in 2003, Mr Allawi returned to Iraq after four decades to help run the country.

During the 2003-2004 interim government, he served in the Iraqi Governing Council's Cabinet as the minister of defence and trade, and later as finance minister in the Transitional National Government of Iraq from 2005-2006, when the country's post-2003 constitution was ratified.