The targeting of Iraq’s well-respected central bank chief appears to be a move by Prime Minister Nuri al-Maliki to consolidate power and sends a bad message to international investors, experts and diplomats say.
Sinan al-Shabibi was last week replaced as governor of the Central Bank of Iraq (CBI) while he was overseas, and arrest warrants have since been issued for him and other bank officials over allegations of currency manipulation.
The moves are the latest that appear to undermine CBI independence, after a supreme court ruling early last year put the bank under the supervision of Iraq’s cabinet rather than parliament.
“It (is) another step down the road (to) an extremely centralized level of control,” said Crispin Hawes, the London-based director of the Middle East and North Africa group at the Eurasia Group think tank.
“Via a proxy, he (Maliki) has direct control of the CBI, the ministry of defense and the ministry of interior - these are the signature institutions of a Middle Eastern state,” Hawes told AFP by telephone, referring to the fact that the top ministers at the two security ministries are seen as Maliki allies.
“It’s not a complicated story,” he added.
Shabibi, a 70-year-old economist who worked for two decades at the U.N. trade and investment body UNCTAD and had been CBI governor since 2003, has been described by analysts and diplomats as a capable technocrat who fought to maintain the independence of the central bank.
Iraq’s cabinet nevertheless decided on Tuesday to replace him with Abdelbassit Turki, the head of the Board of Supreme Audit, after a parliamentary report blamed Shabibi and other CBI officials for currency manipulation, according to Maliki’s spokesman Ali Mussawi.
“I do not think the accusations are true because Mr Shabibi is a well-known economist, and he has a good reputation,” said Abdulrahman Mashhadani, head of the economics department at Mustansariyah University in Baghdad.
“There may be corruption at the central bank, but it is at a low level. In fact, we economists see Mudher Saleh as a kind of professor for us,” Mashhadani said, referring to the CBI’s deputy governor.
The decision to effectively sack Shabibi comes after Maliki sought to fire the former election commission chief, and pushed for reforms to the commission that were widely seen as likely to give his Dawa party greater clout.
He was unsuccessful on both counts.
“The Maliki government will claim it (the move against Shabibi) is part of long-standing efforts to root out corruption,” said Joost Hiltermann, deputy chief of the Middle East and North Africa programme at the Brussels-based International Crisis Group.
“It looks more like a long-standing effort to gain control over independent institutions.”
“The problem is that even if certain allegations - in this case or others such as VP Hashemi’s -- could contain an element of truth, there is no way of finding out, because the judicial process in Iraq remains deeply flawed,” he said, referring to the death sentence handed down to Tareq al-Hashemi.
The Sunni vice president was accused of running death squads, charges he has dismissed as politically motivated. Last month, he was sentenced to death in absentia.
Of the ousting of Shabibi, Hiltermann added that it was “not a positive move as the country heads into a series of important elections,” namely provincial elections in 2013 and national polls the following year.
Maliki’s opponents, many of whom are members of the national unity government he heads, accuse him of consolidating power and displaying increasingly authoritarian behavior.
He has dismissed those charges, insisting he is grappling with an unwieldy coalition.
But many remain skeptical, pointing to a spat with communications minister Mohammed Allawi this summer which prompted Allawi to resign from the government, claiming Maliki was interfering in his ministry.
“This is similar to the issues he had with the former communications minister,” said one Western diplomat, who spoke on condition of anonymity.
“Maliki wants to govern alone. He has a personal problem with Shabibi - this is not about the law.”