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Criminals, Militias, and Insurgents: Organized Crime in Iraq

Criminals, Militias, and Insurgents: Organized Crime in Iraq - Cover

Authored by Dr. Phil Williams.

August 2009

290 Pages

Brief Synopsis

Dr. Williams looks in detail at major criminal activities, including the theft, diversion, and smuggling of oil, the kidnapping of both Iraqis and foreigners, extortion, car theft, and the theft and smuggling of antiquities. He also considers the critical role played by corruption in facilitating and strengthening organized crime and shows how al-Qaeda in Iraq, Jaish-al-Mahdi, and the Sunni tribes used criminal activities to fund their campaigns of political violence. Dr. Williams identifies the roots of organized crime in post-Ba’athist Iraq in an authoritarian and corrupt state dominated by Saddam Hussein and subject to international sanctions. He also explains the rise of organized crime after the U.S. invasion in terms of two distinct waves: the first wave followed the collapse of the state and was accompanied by the breakdown of social control mechanisms and the development of anomie; the second wave was driven by anarchy, insecurity, political ambition, and the imperatives of resource generation for militias, insurgents, and other groups. He also identifies necessary responses to organized crime and corruption in Iraq, including efforts to reduce criminal opportunities, change incentive structures, and more directly target criminal organizations and activities. His analysis also emphasizes the vulnerability of conflict and post-conflict situations to organized crime and the requirement for a holistic or comprehensive strategy in which security, development, and the rule of law complement one another.


Although organized crime has been the neglected dimension of the conflict in Iraq, both criminal enterprises and criminal activities have had a profoundly debilitating impact. Organized crime inhibited reconstruction and development and became a major obstacle to state-building; the insurgency was strengthened and sustained by criminal activities; sectarian conflict was funded by criminal activities and motivated by the desire to control criminal markets; and more traditional criminal enterprises created pervasive insecurity through kidnapping and extortion. Organized crime also acted as an economic and political spoiler in an oil industry expected to be the dynamo for growth and reconstruction in post Ba’athist Iraq.

The rise of organized crime in Iraq was a strategic surprise for decisionmakers and military planners. Although organized crime developed in particularly concentrated and corrosive ways in Iraq, it had parallels elsewhere—including the Balkans (especially Albania), as well as Russia, Mexico, and Nigeria. Warnings about the rise of organized crime came from several sources, including the United Nations Office of Drugs and Crime (UNODC).

Organized crime in Iraq, as elsewhere, can be understood in two distinct forms: (1) as entities or criminal enterprises which treat crime in Clausewitzian terms as a continuation of business by other means; and (2) as a set of illicit activities appropriated and utilized by various entities for specific purposes. Terrorist organizations, insurgents, ethnic factions, sectarian groups, and militias all use organized crime activities as a funding mechanism. Not surprisingly, therefore, organized crime in Iraq challenges existing concepts and categorizations, casts doubt on strategies that focused narrowly on the military dimension of a complex problem, and demands new measures of effectiveness. If the conflict in Iraq is a hybrid or mosaic form of warfare, organized crime in Iraq has an analogous form, adding another dimension to the anticoalition violence.


Chapter 1 serves as the introduction to an analysis which seeks to explain the rise of organized crime, pervasive criminality, and widespread corruption in contemporary Iraq. It contends that organized crime did not suddenly arise from the chaos of invasion and occupation but had deep roots in an authoritarian and corrupt state subject to international sanctions. The analysis explores how criminal activities were used not only by traditional for-profit groups, but also by insurgents, militias, sectarian groups, political parties, and tribes seeking to enhance their resource bases and prosecute their campaigns of violence more effectively. The monograph identifies key actors exploiting the criminal opportunity space in Iraq and explores the intersections and overlap between criminal organizations and more political or sectarian actors. Finally, it identifies necessary responses to organized crime and corruption in Iraq. These include efforts to reduce criminal opportunities, change incentive structures, and more directly target criminal organizations and activities.

The Rise of Organized Crime in Iraq.

Chapter 2 examines the rise of organized crime in Iraq, emphasizing that the actions of the international community in the 1990s unintentionally widened and intensified the scope of organized crime and the illicit economy. By 2003 all the conditions for an upsurge of organized crime were present; the toppling of the regime provided the catalyst. The upsurge itself had two distinct if overlapping waves. The first wave followed the collapse of the state and was accompanied by the breakdown of social control mechanisms and the emergence of social instability. The U.S. decision to react passively in the face of widespread looting was a major mistake, creating a climate of citizen insecurity and criminal impunity. The second wave of organized crime was driven more by the forces of anarchy, insecurity, political ambition, and the imperatives of resource generation for militias, insurgents, and other groups.

Major Criminal Activities.

Chapter 3 focuses on the diversion, theft, and smuggling of oil, probably the most lucrative source of illicit income for tribes, insurgents, and militias, as well as many criminal groups and corrupt officials. The legacy of oil smuggling during the sanctions era combined with growing demand, limited supply, and the desire to exploit arbitrage opportunities, thus intensifying and perpetuating the criminalization of the oil industry. This process was facilitated by the lack of standardized measures, the absence of meters or gauges on pumps and tankers, and the inadequacy of oversight.

Three different kinds of illicit activity—the theft and smuggling of crude oil, some of which involved oil bunkering; the theft, fraudulent diversion, smuggling, and black market sales of imported refined fuels; and theft of locally produced gasoline from the Baiji refinery—became almost a national pastime in Iraq, while funding much of the violence.

Chapter 4 examines another major criminal activity in Iraq—kidnapping. This chapter distinguishes between economic or for-profit kidnapping and political kidnapping, while acknowledging that the distinction is sometimes blurred. Activities which initially appear to be politically inspired, for example, sometimes turn out to be primarily concerned with profit. The participants in the kidnapping business are identified, as are its changing patterns over time. An assessment is also made of the profits obtained through kidnapping—profits which were significantly enhanced by the willingness of France, Italy, Germany, and several other countries to pay large ransoms. Although the kidnapping of foreigners led to some spectacular ransom payments, it was found that the kidnapping of Iraqis, because of its sheer volume, might have been more lucrative.

In Chapter 5, the focus shifts to extortion and related criminal activities which also helped to fund much of the violence in Iraq. Extortion was highly profitable partly because of the scale of reconstruction and partly because of the loss of security on Iraqi roads. Other crimes include bank robberies, various forms of commodity smuggling across Iraq’s highly permeable borders, drug trafficking (which is a modest but growing problem), the theft and smuggling of antiquities, car theft and smuggling, and the trade in black market weapons, as well as human smuggling and trafficking in women.

In Chapter 6, attention is given to business and government corruption, which not only undermined efforts to reestablish effective governance, but also contributed to a general feeling of impunity on the part of would-be perpetrators. Activities heretofore under centralized authoritarian control suddenly became diffused and democratic. In addition, the U.S. presence brought with it a massive injection of cash for reconstruction, much of which was administered in an ad hoc manner with insufficient oversight, thereby providing opportunities for corporate malfeasance on the U.S. side, along with skimming and personal profiteering on the Iraqi side.

Corruption was not only a condition characterizing government and bureaucracies, but also an instrument used by criminal organizations to advance their illicit business interests and protect the illicit markets in which they operated. Corruption in Iraq was also buttressed by violence, which effectively neutralized the mechanisms and institutions put in place by the United States to fight it.

The Players.

Chapter 7 looks more closely at the entities involved in organized crime, considering some of the ways in which they have interacted with one another. It identifies four major kinds of groups involved in organized crime in Iraq: traditional criminal enterprises; tribalbased criminal organizations; foreign jihadi groups; and militias which include splinter or rogue factions. The wide variety of criminal organizations active in Iraq make analysis more complex and generalizations risky.

Traditional criminal enterprises vary in size and scope. Some are highly specialized while others have a broad portfolio of activities. An important component of organized crime in Iraq was traceable to prisoners released by Saddam Hussein. Many of these criminals were prone to violence, with their presence contributing significantly to the post-invasion lawlessness. In some cases, they were organized by former regime elements.

Many of Iraq’s tribes have a long tradition of smuggling, an activity that ballooned after 2003. Some of the tribes were heavily involved in oil smuggling in Basra, while those along the border with Syria smuggled livestock and various other commodities.

Foreign fighters and jihadis groups, especially al-Qaeda in Iraq (AQI), exploited various criminal activities to augment their financial base. Kidnapping, as we have seen, was very lucrative, surpassed only by the profits from the theft, diversion, smuggling, and black market sales of oil. Car theft was another important source of funding for AQI, having become particularly important in Mosul when AQI and its affiliates concentrated there after setbacks in Al-Anbar and Baghdad. Extortion and various kinds of fraud are also core funding activities.

Shiite militias, especially Jaish-Al-Mahdi (JAM), have been among the most powerful and important groups engaged in organized crime in Iraq—although how much has been carried out under the direct control of the organization and how much by rogue factions is uncertain. Four criminal activities provided Mahdi Army members with important revenue streams: extortion and protection; black market sales of petroleum; seizures of cars and houses inextricably linked with, if not done completely under the guise of, sectarian cleansing; and involvement in oil smuggling in Basra. The Iraqi army offensives (supported by U.S. forces) in Basra and Sadr City in the first half of 2008 had a major role in reducing the power of the organization, including its criminal reach and illicit activities.

Control over smuggling activities became a major factor in the defection of the Sunni tribes from AQI, which had sought to take over their traditional smuggling and black market activities. In Anbar Province, in particular, tensions over illicit activities and the attendant profits created opportunities for the United States. The U.S. military, as the “strongest tribe,” became adjudicator and enforcer in criminal disputes dressed up as political differences, siding with one set of violent armed groups engaged in criminal activities against other groups judged more dangerous. The tribes were losing the turf wars to AQI until the U.S. military came to the rescue. The result was the Anbar Awakening and the defeat of AQI in the province. Nevertheless, AQI’s criminal activities continue to finance its resistance in and around Mosul.

Conclusions and Recommendations.

Chapter 8, Conclusions, has four purposes: (1) to offer reflections on the nature of organized crime in Iraq; (2) to assess the impact of organized crime on the efforts to reestablish security and stability; (3) to suggest initiatives that could be taken in Iraq to combat organized crime more effectively; and (4) to elucidate the broader considerations and lessons for future U.S. military intervention.

It suggests that organized crime in Iraq is a complex system exhibiting emergent behavior, characterized by high levels of adaptability and resilience, and driven by a mix of need, greed, and creed. Organized crime is also a means of “primitive capital accumulation” and is closely linked to alternative (that is, nonstate) forms of governance, whether these provide security when the state fails to do so or provides services when the state marginalizes or neglects certain populations. Indeed, organized crime is both a safety valve and safety net amid massive economic and social dislocation. Yet, it is also highly predatory, and in Iraq has both sustained and precipitated conflict. In the final analysis, criminal activities and corruption have had profoundly debilitating effects, not only on U.S. efforts to restore political and military stability in Iraq but also on economic reconstruction.

Unfortunately, the very conditions that allowed the blossoming of organized crime in post-Hussein Iraq make it difficult to counter. Nevertheless, it is possible to outline a broad program that seeks to reduce the criminalization of Iraqi political and economic life, in tandem with the rebuilding of the state, the recreation of infrastructure, the revitalization of the Iraqi economy, and the generation of legitimate employment opportunities. Unless combating organized crime is integrated into this broader program for Iraq, it stands little chance of success. Conversely, unless the attempt to rebuild Iraq incorporates an effective strategy to combat organized crime, the prospects for stability will remain poor.

The monograph highlights the need for a fusion of military and law enforcement intelligence as the basis for a three-pronged strategy seeking (1) to constrict the opportunity space for organized crime; (2) to change the incentive structure for criminal, corrupt, or violent behavior; and (3) to target the most dangerous organizations and networks linked to crime and corruption.

More broadly, Iraq, like the Balkans and Afghanistan, reveals the vulnerability of conflict and post-conflict areas to organized crime, and the need for a holistic strategy in which security, development, and the rule of law complement one another. Such an approach is not a guarantee of success, but the absence of a holistic strategy is a guarantee of failure.

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