Iraq continues to be handicapped by the departure of one million citizens who fled after the 2003 US-led invasion, Ali Allawi has said.
The former deputy prime minister and finance minister said the legacy of the war remains clear in Baghdad at the bureaucratic and political levels.
The incursion and the bitter sectarian militia battles for neighbourhoods that followed displaced about one in 25 Iraqis from their homes.
About 1.25 million crossed borders into neighbouring countries, seeking refuge.
Their absence is keenly felt to this day, Mr Allawi said, as he regretted the lack of talent of those in positions of power.
Speaking at the Iraq Initiative conference hosted by Chatham House, a London think tank, he said the exodus meant his country was stripped of some of its brightest people.
While he acknowledged that many who left had links to the regime of Saddam Hussein, a great many honest and qualified people were also among the masses streaming across borders.
“It was denuded of its talent,” Mr Allawi said.
“Bureaucracy as a vertical organisation, a hierarchical organisation, was really shaken and people who were not competent, who were not even up to international standards of 30 years ago, either left or were put into positions of power.
“This weakening allowed another force to come in, which is the horizontal intrusion into the bureaucratic structures, not only by politicians but by warlords, by tribal chiefs, by corrupt businessmen, by all kinds of people.
“So you have people in positions of great authority unable to manage the system hierarchically because it had lost that capacity. And [they] are prone to being subverted by these forces that keep them in position.”
Assessing the current political situation, Mr Allawi said: “The single most glaring deficiency we have in Iraq is basically the collapse of the state, not in terms of its range of control but in terms of a failed state as such."
He resigned as finance minister in August in protest against what he called widespread corruption and the influence of political parties on the country’s revenue.
Mr Allawi said that Baghdad today was “incapable of managing a modern state” because it severely lacked personnel, human resources, an effective administrative system and vision.
“We just don’t have it,” he said. “It’s not a question of who is prime minister, now it’s a question of who is minister and who is not minister. The entire structure is deficient.
“I am not saying that Iraqis have a unique lack of capacity to manage, that’s not true, but the curious mixture and the very peculiar circumstances in which the machinery of government emerged in the last 20 years or thereabouts makes it impossible to have a modern state.
“You can be the most brilliant minister, you can be the most brilliant executive, you can be the most brilliant manager, but there’s just no depth to it.”
He said a team effort was required to push Iraq, one of the world’s most corrupt nations, in the right direction.
Mr Allawi also regretted the lack of public service, which he said was a rare quality in today’s bureaucratic and political systems.
“The ethos of public service in Iraq died in the 1970s,” he said.
“I spent most of my life politically fighting the Baath Party but I have to admit in the 1970s we had people who had a high sense of public duty, even though they had wrong ideological framework. And so they were extremely technically competent.
“We don’t have that, we have a complete degradation of qualifications.
"The government is choc-a-block with people with fake degrees … some of them have not probably attended these schools. We are drowning in so-called qualified people.”