Baghdad’s real estate boom… Has it turned into a hidden economy for political leaders? | economy
BaghdadThe relaxed role and absence of oversight agencies in Iraq after 2003 turned real estate into a convenient environment for money laundering through the purchase of real estate and agricultural land. Because of this, real estate in the capital of Iraq, Baghdad, has become a target for those accused of corruption and theft of public money.
Observers attribute the rise in Baghdad real estate prices – by more than 50%, higher than similar prices in neighboring countries – to the existence of money laundering operations, especially after the inclusion of a number of political figures and leaders of some influential parties on the US Treasury Department’s sanctions list, prompting them to change their investments by buying real estate instead of smuggling it out of the country.
For several years, Iraq was on the list of high-risk countries in the area of money laundering, but on January 9, 2022, the Iraqi government announced that it had removed the country’s name from the European Union’s list of high-risk countries in the areas of combating money laundering and terrorist financing.
Globally, according to the statistics of the International Monetary Fund, the amount of money circulating in money laundering ranges between 950 billion and 1.5 trillion dollars, and Iraq occupies an advanced position among countries where money laundering is widespread.
Also in the 2015 report of the Finance Committee in the Parliament, it is mentioned that Iraq is among the 6 most corrupt countries in the world, and that the symbols of this corruption are banks, companies and people who forged documents to smuggle huge sums of money. money to several countries.
The process of money laundering or money laundering is defined as the transfer of funds resulting from the practice of illegal activities into funds that have a sound legal appearance. As for its legal definition, it is “accepting deposits or funds obtained by illegal or criminal activity and concealing or disguising their source.”
Officials in the shadows
This is despite the fact that the Iraqi capital – which has a population of about 9 million people out of a total population of more than 41 million in Iraq – is mired in chaos, its crowded streets, suffering from deteriorating services, power outages, deteriorating infrastructure and high poverty rates that exceed 20%.
In addition, Baghdad is ranked among the worst cities in the world in terms of livability, as it ranked last in a list of 231 cities in 2019, according to Mercer’s Quality of Life Index.
Al-Jazeera Net contacted 4 real estate offices in different districts of Baghdad to find out the influence of money laundering operations on the increase in real estate and land prices in the capital. 3 of them refused to speak due to the sensitivity of the topic, while only one agreed, on the condition that his name not be mentioned, fearing for his life.
The owner of the office reveals that the demand for buying real estate in Baghdad has generally increased to about 60% in the last five years due to money laundering by some traders and influential political figures.
This demand was evident in some luxury areas in Baghdad, where their prices rose 3 or 4 times; For example, the price of a commercial meter in the areas of Al-Arsat, Al-Jadriya and Al-Mansour increased from about 4 thousand dollars to more than 13 thousand dollars, and in some areas it exceeded 16 thousand dollars, and in residential areas prices jumped from 500 dollars to about 4 or 6 thousand dollars and more.
Demand for commercial real estate has grown mostly more than residential, such as large stores (malls) and mega-buildings, and has peaked over the past three years, particularly from bank and bank owners, which has been reflected in rents that have risen by nearly 4 times. The purchase is made through “shadow officials” or brokers, as the owner of the real estate office explained to Al Jazeera Net.
In 2007, the Iraqi government established the Office for the Prevention of Money Laundering and Terrorism Financing within the structure of the Central Bank, and it was re-established in 2015 after the issuance of the Law on Prevention of Money Laundering and Terrorism Financing No. (39) from 2015.
A member of the Integrity Committee in the previous session of the Iraqi Parliament, Kazem Al-Sayyadi, seems to have agreed with many regarding the lack of seriousness in the fight against the phenomenon of high real estate prices, which have been called by different names for what he describes. as the “economy” of party and political leaders within the Iraqi state.
What al-Sayadi relies on most in this approach is that it has been repeatedly requested to stop all sales and purchases in prime and important areas such as al-Mansur, Karrada, Daoudi, al-Arsat and others, except until submitting a copy of the purchase request to the Integrity Commission to find out the source of these funds, but to no avail. .
He further supports his opinion by criticizing the lack of seriousness in the fight against this phenomenon on the part of previous governments, not even the executive. Such as the Commission for Integrity, the Department of Public Inspectors and the State Attorney’s Office, explaining that “everyone knows that the largest part of the sale was made by laundering the money of many politicians”.
Al-Sayadi confirmed to Al-Jazeera Net that most political parties have many of those involved in this phenomenon in their ranks.
He specifically referred to the period of the government of former Prime Minister Mustafa Al-Kazemi, describing it as a “black, corrupt era”, noting that the volume of money laundering carried out by influential Iraqi figures in the neighboring country increased from 18 billion dollars to about 60 billion dollars.
Al-Sayyadi called for the formation of specialized committees to track and trace the source of this money and the names and personalities who own it. The scale of real estate money laundering in the capital is estimated at between $5 billion and $10 billion, and could grow much higher than that.
The secrecy and permissive environment that prevails in the Iraqi free market has made real estate a quagmire and haven for money laundering and laundering, and as a result prices have risen, and this is largely supported by economic researcher Salam Sumaisem, “with large amounts of money available to a certain class, which is besieged and cannot bring forth its money.” The country, therefore, now trades in real estate as a front for investing these funds.
In an interview with Al-Jazeera Net, the economic researcher seemed surprised by the rapid development of the construction of residential complexes at prices she described as “fabulous”, since the price of an apartment of less than 200 meters reaches about half a million kunas. dollars.” This phenomenon confirms that whoever established such projects enjoyed exceptions and support.” legal, and reveal the amount of money laundered in it.”
Dirty money networks mixed with clean money, real estate, malls, hotels, business complexes, banking, etc. They participated in or bought from businessmen who have no knowledge of the source of the money and are not legally guilty of it. My point of view is not to punish everyone for poisoning the blood of money in the body of the economy. We need a professional surgeon
– Mustafa Jabbar Sanad (@m_j_sanad) November 5, 2022
In a tweet addressed to him on Twitter, MP Mustafa Sanad said: “Networks of dirty money mixed with clean money; real estate, hotels, shopping centers, banking, etc., and they shared or bought it from businessmen who have no knowledge of the source of the money and there is no legal guilt. My view is not to punish everyone for poisoning.” The blood of money is in the body of the economy, we need a professional surgeon.”
It is worth noting that under the regime of the late Iraqi president Saddam Hussein, only those who had lived there at least since the 1957 census, as well as their children and grandchildren, were allowed to own real estate in Baghdad, and after 2003, anyone could buy real estate in the capital. .