Iraqi Prime Minister Ali al-Zaidi directed the Military Industrialization Authority to deal directly with manufacturing companies, and to prevent dealing with intermediary companies in contracts, in a move aimed at strengthening oversight of government purchases and reducing mediation rings, which sources say represent one of the channels of economic financing for armed factions.
The directive comes at a time when disputes are escalating between the government and some factions, against the backdrop of Al-Zaidi’s efforts to reset the relationship between state institutions and armed formations, including the economic interests associated with them. According to informed sources, the step raises concerns among parties that benefit from networks of intermediary companies working in the field of government contracts.
During a visit to the Military Industrialization Authority on Thursday, Al-Zaidi stressed “the necessity of dealing directly with the parent manufacturing companies, and not dealing with intermediary companies at all,” in a way that ensures transparency in contracts and limits mediation circles and areas of corruption, according to a statement from his media office.
Al-Zaidi stressed that Iraq has the ability to manufacture its weapons and equipment needs with national expertise, and that building an advanced military industry represents an essential pillar of national sovereignty, stressing the importance of research and development, and keeping pace with technological development in military industries.
The Military Industrialization Authority, which came as an alternative to the Military Industrialization Authority that was established by the previous regime during the Iran-Iraq war, is one of the government institutions concerned with the production and development of military equipment.
The government directive has brought to light the network of intermediary companies active in government contracts, which sources say are linked to the economic interests of factions, and benefit from political and administrative influence to expand their business within state institutions.
Information indicates that some of these companies operate within a network linked to the Al-Muhandis Company, one of the “Popular Mobilization Forces” formations, or shadow companies affiliated with it, and are used, according to sources, to pass government contracts and provide financial resources to armed parties.
An informed source told Asharq Al-Awsat that these companies represent “part of the mechanism for financing armed factions through two paths: the first is generating revenues from construction and contracts, and the second is money laundering and laundering sources of income resulting from illegal activities, including oil and drug smuggling.”
He added that the activity of these companies is not limited to a specific body or ministry, but rather extends to various state institutions, benefiting from political and administrative influence to obtain government contracts that give their commercial transactions official cover.
Although the new directive has not yet been accompanied by the announcement of executive measures against intermediary companies or the disclosure of contracts being cancelled, it opens the door to changing the contracting mechanism in the military industries sector, and exposes the interests associated with commercial mediation to the possibility of losing one of the courses of action within government institutions.
In the political context, disputes began to escalate between some armed factions and parties in the “coordination framework,” amid accusations directed by factions against political and governmental forces in cooperating with Al-Zaidi to reduce their economic and security influence, in response to external pressures.
Some of these parties accuse the government and its officials of benefiting from contracts worth billions of dollars, accusations that could not be independently verified.
These developments come at a time when the relationship between some factions, especially the Hezbollah Brigades and the Nujaba Movement, and the committee formed by the coordination framework to negotiate with the government, is witnessing a decline in the level of coordination, according to informed sources.
A wave of reports has recently emerged highlighting the commercial activities of figures and leaders in armed factions, including the Phalange, whose authenticity could not be verified.
As these reports circulate, a debate escalates regarding the declared role of these groups, from describing them as “resistance forces” to groups with economic interests and commercial influence networks. Which opens the door to questions about the nature of these interests and their relationship to its armed influence, and about the cost that Iraq may bear if it decides to engage in a regional war.
Political affairs expert Hussein Allawi believes that Al-Zaidi’s visit to the Military Industrialization Authority carried a message related to the necessity of protecting public money and developing Iraqi defense capabilities through direct dealings with international companies.
Allawi told Asharq Al-Awsat that the Prime Minister seeks to “solidify the defense industry file,” as it is a sensitive file that requires transparency and governance, and ensuring the quality of weapons and equipment used in Iraq.
He added that adopting direct contracts with international companies, in accordance with applicable commercial laws and regulations, in addition to directing the Financial Supervision Bureau and the Ministry of Planning to conduct a prior audit of the estimated prices in contracts, would reduce the additional costs borne by the state as a result of multiple mediation episodes.
For his part, security affairs researcher Mukhlid Hazem said that Al-Zaidi’s decision represents an important step in confronting networks of companies that benefit from the influence of political or armed parties to obtain government contracts.
Hazem added to Asharq Al-Awsat that these networks are not a new phenomenon, but rather their activity has extended over years, pointing out that some parties acquire large government contracts to finance their economic entities, without necessarily providing what is commensurate with the value of the contracts in terms of quality of products or adherence to implementation conditions.
