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Q&A: Lukman Faily, Iraqi Ambassador to the U.S.

By BEN VAN HEUVELEN of Iraq Oil Report
Published Wednesday, January 13th, 2016

WASHINGTON, DC - After capping 2015 with a string of victories on the battlefield in Baiji, Sinjar, and Ramadi, Iraq still faces a host of daunting challenges.
Many of these areas recaptured from the self-proclaimed Islamic State (IS) now lie in ruin, raising the question of whether - and how - the government can secure and rebuild them in a way that will allow resettlement.

Another question is what comes next. Iraqi Prime Minister Haider al-Abadi has signaled his eagerness to capitalize on recent momentum and regain more territory, setting his sights on Mosul; yet IS militants have proven to be resourceful and cunning in their ability to recognize when security forces have over-extended, and deliver powerful counter-punches.
A third question is whether - and how - the government will close a yawning budget deficit while paying for costly reconstruction, funding a war, maintaining oil investment, and supporting a massive public sector payroll.

As Iraq's ambassador in Washington, DC, Lukman Faily wrestles with these issues, and sits at the heart of Iraq's efforts to tackle them with as much American support as possible. He spoke with Iraq Oil Report over breakfast at a diner near the U.S. Capitol.

Ben Van Heuvelen: To start with current events first, there was the attack Monday on the Jawhara mall in Baghdad, and other seemingly coordinated attacks in other parts of the country. Is this foreshadowing another change in tactics by Daesh [an Arabic name for the IS group]? Are they moving back toward a paradigm where it's more asymmetric attacks?
Lukman Faily: Historically, we've been through this a few times. Whenever there's a clear front, there is less suicide attacks and less terrorism on the civilian side. There is obviously a significant hit on Daesh on a number of fronts. Daesh will change tactics and become more civilian-focused, with more asymmetrical attacks, as you called it, which they have done before. We anticipate that, yes.
Is this a new trend, as you are saying? I don't know. The numbers we have, casualties, the nature of the attack, were less - damaging, certainly - but at the same time the casualties were not as grand as other previous operations they had. So to that effect, I can't say there is a new asymmetrical war. But historically there has been a trend that whenever they have suffered at the front, they have redirected toward softer targets.
Another change that is worth knowing: there has already been some change because of the demography, by IDPs and so on. That will have an impact on their prior safe havens, in areas under government control. That will significantly change. They have much less safe haven than they had before. That's a new factor that will have an impact on their ability to move, become less agile.

BVH: Looking beyond the recent operation in Ramadi, is there a clear priority about what comes next?
LF: Mosul. The focus is definitely on Mosul. And we squeeze on them from all directions -- from Hawija, from south, from the Syrian side.
We don't want to contain Daesh. Our objective is not to contain Daesh. It is to destroy them, as far as big cities are concerned.
It will take some time -- significant time thereafter -- to try to deal with the politics and to deal with the operational issues of controlling a vast desert area. We do have good relationship with tribes within the borders, and so on.
Another dimension to this is the interdependency with Syria. That will be ongoing for a long time to come.

BVH: I understand Mosul is the city that you would most like to evict them from, because it's the largest. But given that they've proven to be a formidable enemy, do you have to secure, say, the rest of Anbar before Mosul becomes achievable? Or do you have to see progress in Syria, via the broader coalition effort, before Mosul becomes achievable? Or is the determination that the conditions exist now, militarily, to set Mosul as a target?
LF: The prime minister promised that this year would be the liberation of Mosul.
There is definitely interdependence with Syria. We need to keep a close eye on the coalition attempts and domestic Syrian politics. So there is that, definitely.
There is also a dependence on making sure the politics around Mosul, the local politics, with the tribes, with the Kurds and Turkomen, so on, in that area -- we need to get those politics right.
Our relationship with the Peshmerga, and their involvement, after the attack is another factor. How agile are the coalition on the ground, in relation to their mobility and close combat cooperation needed? That will be a factor. How ready is our army, and not just our CT forces? That's another factor.
However, the point is that, we're trying to work on all fronts. And we don't need to have Anbar cleansed -- all of it -- and then go to Mosul. That's not the strategy. Anbar will keep having -- we need different people for different operations.
There is certainly a realization and very hard work in making sure that we will have local tribes to work with us on this. In all the areas, to sustain control.

BVH: When it comes to reconstruction and normalization, the most hopeful example so far seems to be Tikrit, where there has been somewhat less damage and limited resettlement. Other areas, particularly farther north in Salahaddin and Diyala, there's cities reduced in many places to rubble, and virtually no resettlement, months after liberation. So one challenge seems to be the scope of the destruction, and part of it is the question of what kind of a security force is going to exist in those areas. Is there a viable path forward, on either track?
LF: In Anbar, it has been more straightforward because it's more homogenous. We have a very close partnership with the provincial council and the governor. Straight after the liberation of the city center of Ramadi, the prime minister passed a decree passing significant authority to the provincial governor. So, it's easier to identify the responsible authorities and to work with them.

BVH: There also seems to have been an effort to retrain and arm the local police.
LF: This is an easier solution than Mosul, because of the cosmopolitan nature of Mosul. The scale of Mosul, the size of the city. And so on. This means it will be harder for us.
Unfortunately, the collateral damage will be the key factor moving forward. These are all Iraqi citizens, so this is not a normal trench war.
Six months or seven months ago, or more, the prime minister appointed a military commander for Mosul, for the liberation. I think he still needs significant amount of support, to be able to start putting together the base -- the operational and the day-after scenario plans, in stabilization and so on.

BVH: What needs to happen, specifically?
LF: We as a government do not have enough funds to deal with these issues. We're working with the coalition and seeking support from other countries to help significantly in the reconstruction. The rate of the destruction has been significant. We know there is a long road ahead. We also know that, without addressing the stabilization factor, it will still be a hot spot.

BVH: I know the U.S. Congress just approved a large loan that can be used for financing military sales. That could free up some money then for reconstruction. Is Iraq going to take advantage of this? And what else is in the works? What's the scope of possible assistance?
LF: We have the whole issue of the budget, of filling the budget and making sure we can sustain the war. Wars by their nature are open-ended bills. There is no fixed price.

BVH: And no revenues.
LF: And big costs. So, we will have significant challenges this year, next year, in sustaining the war, winning the war, and sustaining the population, basic services, some investments, and so on. So, to that effect, we are seeking support from, more or less, everyone we know. Whether it's the Japanese, the Europeans, Americans, and so on.
I think you also know from your own research that this year's budget projects a significant deficit, for 2016. And we need to cover that with IMF, World Bank, Islamic Development Bank, JICA, and others as well. We'll seek to do that.
I have to say that may not be enough to address the full stabilization funds required for the destroyed cities. What we've seen in Tikrit, what we're seen in Ramadi, and what we might see in Mosul going forward, it will require a substantial amount of money.

BVH: Have you put a number on the shortfall? Have you made specific requests with specific amounts?
LF: Yes, with the stakeholders I just mentioned, we are asking members. We want to know the limits.
We are, only three weeks ago, I signed for a loan from the World Bank for $1.2 billion, which was a significant amount, in relation even to World Bank standards. We are also seeking to sell bonds, to local banks and international market; seeking things like sovereign guarantees, deferred payment, things like that, which we never had before and never had to think about before.
There has been a small sea change in the culture of seeking international support. We are, for example, last year we had the first credit rating. We will have it again, end of first quarter, to sustain that. So these are new financial instruments and revenues we are seeking. And we will need significant amounts of support moving forward.
We are the global front for this war against terrorism. We request and we expect support from the international community. This is not only our war; we are doing it on behalf of everyone else. We are not seeking troops on the ground from anyone else. We will do that fight. But we need support.