“We Fund Their Political Projects”: Refugee and IDP Rentierism in the Kurdistan Region of Iraq

Abdullah Omar Yassen, Erbil Polytechnic University and Thomas McGee, University of Melbourne Law School

 

Introduction

As of September 2023, the Kurdistan Region of Iraq (KRI) hosts one million displaced people, including refugees from Syria, Iran, Türkiye, and Palestine, as well as internally displaced persons (IDPs) from elsewhere in Iraq. Syrian refugee numbers in the KRI have surged to more than 260,000, constituting 97% of all Syrians currently residing in Iraq (UNHCR Iraq Factsheet 2023). Additionally, some 40,000 non-Syrian refugees and asylum seekers have registered with the United Nations High Commissioner for Refugees (the UN Refugee Agency, UNHCR) in Iraq. Of these, the KRI hosts 7,860 from Türkiye, 8,241 from Iran, and 615 from Palestine (Joint Crisis Coordination Centre 2023). The KRI also hosts approximately 700,000 Iraqi IDPs who have fled territories occupied by the Islamic State (ISIS) since 2014. Counted together, refugees and IDPs account for a 12% increase in the KRI’s population. Recent statistics (Joint Crisis Coordination Centre 2023) indicate that 1 in 5 people in the KRI was a refugee or IDP, a ratio higher than in Lebanon (1 in 6), Jordan (1 in 11), and Türkiye (1 in 28) (extracted from UNHCR’s Global Trends data). Often, the density of displaced people within the host community of KRI is obscured when statistics provided by the United Nations and other humanitarian actors are given for the whole of Iraq (where displaced people represent less than one in every 33 people). Displacement is also highly visible within the landscape of the Kurdistan Region, with a total of 35 official camps for refugees and IDPs and many informal settlements in addition to urban displaced people (UNHCR 2020).

While it has been noted that the authorities in refugee rentier states sometimes “adopt policies that extract revenue from other state or non-state actors in exchange for retaining refugee groups within [their] borders” (Tsourapas 2019), such dynamics still need to be explored for authorities associated with non-state and/or sub-state entities. The question of how this situation plays out in the context of the autonomous KRI, where the vast majority of Iraq’s refugees are to be found, leads us to reflect on: i) the relationship between humanitarian operations and the ability of de facto states or state-like governance systems to secure their own funding streams that circumvent the central state, and ii) the utility of humanitarian programming for displaced populations (both refugees and IDPs) within the politics of legitimacy for aspirant states. Indeed, analysis of these dynamics became all the more pressing in the context of, and subsequent backlash to, the 2017 independence referendum called by the leadership of the Kurdistan Regional Government (KRG). Adding to the emerging body of work on refugee rentierism, we also consider the parallel case of “IDP rentierism” (a new contribution to the literature) in the context of the mass internal displacement crisis caused by the 2014 ISIS occupation of significant swathes of Iraqi territory.

This paper’s core research questions consider how the KRI authorities have instrumentalized the presence of refugees and IDPs, and assistance programs responding to their needs, in the pursuit of both financial independence and political legitimacy. Broadly drawing on reflections about refugee rent-seeking strategies (Lynch and Tsourapas 2024), we seek to map out the systematic steps taken by the KRI authorities to benefit from hosting refugees and IDPs in the Kurdistan Region. With this in mind, we consider: i) how the KRI authorities have sought, and continue to pressure the international community to provide, humanitarian funding to fill their resources gap when hosting large numbers of refugees and IDPs in the post-ISIS context (especially when the KRI struggles to provide employment opportunities for its own, often disgruntled, youth population, many of whom are considering migrating out of Iraq); ii) how, in parallel, the KRI, like many MENA countries, has used the employment sponsorship (Kafala) system to generate a secondary income from refugees; iii) how the KRI has attempted to use “hospitality” for refugees and IDPs to gain legitimacy for its statehood aspirations, with refugees and their electoral votes being used to obtain greater representation in parliament and a larger budget from Iraq’s federal government; and iv) how the dynamics of earmarked funding has also created a hierarchy among refugees, for example by prioritizing Syrian over Iranian and Turkish refugees because of donor attention to their plight, further marginalizing the latter through processes that we elsewhere label as the “othering” of certain refugees (Yassen et al. forthcoming).

This paper contains a review of the available data from the KRG, including from the Joint Crisis Coordination Centre (JCC), which is the governmental entity responsible for humanitarian affairs and displacement policy under the KRG’s Ministry of Interior. We also studied media and financial reports produced by the KRG and donor agencies with a view to understanding the motivations behind programmatic and funding decisions. This methodology is complemented by semi-structured interviews with key stakeholders and individuals affected by funding and political contestation. We combined interviews with desk research to improve our understanding of the complex legal framework and procedures in place.

 

Background: From Oil to Displacement Rentierism

Following the fall of Saddam Hussein in 2003 and the adoption of the KRI’s Oil and Gas Law in 2007, the Kurdistan Region experienced rapid growth in petro-revenue (Heshmati and Auzer 2018), with the booming economy leading Kurdistan to be dubbed the “new Dubai” (Rubin 2016). However, in 2014 the so-called “oil boom” or “golden days” of Kurdistan’s economy ground to a sudden halt with the security threats posed by the advances of, and capture of nearby territory by, the Islamic State terrorist group. ISIS’s presence and the deterioration in the security situation caused many oil companies and other international contractors to withdraw from the KRI. Alongside this, the continuation and exacerbation of existing budgetary disputes with the central Iraqi government in Baghdad (Rudaw 2014) has resulted in years of unpaid salaries to civil servants in the KRI (Jalabi and Rasheed 2018), compounding the economic difficulties that Kurdistan has faced since 2014.

Further, this loss of oil revenue and budgetary allocation coincided with the large-scale displacement of Iraqi civilians into territories governed by the KRI, increasing demand on public services. While it had already been hosting a significant population of Syrian refugees since 2011, we argue that this constellation of new factors from 2014 led the KRI to seek compensation for the loss of traditional rentier capital (in the form of oil and gas extraction) by leveraging, and increasingly relying on, refugee and IDP rentierism. Moreover, we consider the particular circumstances when an aspirant state utilizes displaced citizens from elsewhere in the country to which it currently—perhaps reluctantly—belongs for the mobilization of its own resources and political capital to advance arguments for independence. Indeed, the introduction of “IDP rentierism” as a viable form of (much-needed) revenue is observable in the fact that the German government and a number of other EU members made immediate aid increases to the KRI to fund the shelter of hundreds of thousands of IDPs fleeing ISIS in 2014 (Rudaw 2014).

While the KRI has taken great efforts to support these IDPs, we observe the utility of displaced persons in a context of limited other resources. In line with the findings of the literature on refugee rentierism, the authorities have on occasion also exploited the presence of displaced communities for their own ends (Tsourapas 2019; Freier, Micinski, and Tsourapas 2021).

 

Refugee and IDP Rentierism in the KRI: Where Hospitality Meets Utility

UN agencies and international non-governmental organizations have played a critical role in funding the local authorities of the KRI through both refugee and IDP support programs (see, respectively, Abdulrahman 2020; Buijsse 2015). This was especially the case in the period of sudden general decline in Kurdistan’s economy following the 2014 emergence of ISIS and the resultant security threats (UNHCR 2020). In this paper, we build on work arguing that the UNHCR functions as a “surrogate state” within large-scale and protracted refugee responses (Slaughter & Crisp 2009; Kagan 2012). In principle, the protection landscape for refugees in the KRI is relatively favorable in comparison to federal Iraq and neighboring states such as Lebanon and Jordan: Syrians in the KRI can obtain a temporary resident’s permit, which subsequently provides the right to work, health care, and education (for detailed discussion of KRI’s refugee protection landscape: Twigt and Yassen forthcoming).

Of course, provision of such services to displaced communities incurs significant additional costs, bringing legitimate cause to seek international funding and support. However, we argue that the KRG has consciously pursued “anti-integration” policies as a means of sustaining the material capital at its disposition through displacement. While it has been argued that the ethno-national solidarity between Kurdish hosts and Kurdish refugees results in a form of “border thinness” (Dionigi 2019), and that the notion of guests is a negotiated concept (Bahram 2018), Syrian (Kurdish) refugees in the KRI have nonetheless found themselves having to navigate the political and financial interests of the local authorities. Indeed, the KRG authorities effectively maintain their refugee funding through infrastructure that excludes Syrian refugees from accessing the welfare system, integrating into the national/local polity, and benefiting from durable solutions. A highly securitized residency regime—operated largely by the Asayish (security service)—and difficult socio-economic realities combine to keep refugees in situ and maintain the need for aid from internationally funded humanitarian structures. At the same time, a recently introduced government quota by the KRG on employment limits employers to recruiting 25% of their staff from non-Iraqis (Council of Minister Decision 2022), thus reducing the possibility that refugees can become financially independent as access to employment is restricted in a exclusionary manner (Yassen 2023).

While in many parts of Iraq IDPs were “encouraged” to return to their regions after the defeat of ISIS, the KRI has adopted a more relaxed policy on return and continues to host 700,000 IDPs (Travers and Al-Khatib 2023; Bechocha 2023; Al-Arabiya News 2023). In a recent televised interview, the new Iraqi Minister for Migration and Displacement accused the “KRI authorities of encouraging IDPs to stay in order to continuously secure substantial economic gains and secure votes” (Shafaq News 2023); resources that might be characterized as “IDP rent.” In 2022, to boost the economy, the KRG relaxed the legal barriers preventing IDPs from buying property and registering it in their own names; previously, property buyers needed a Kurdish sponsor. The financial benefit of this policy for the KRG has come at the expense of communal tensions with Arab IDPs blamed for skyrocketing house prices in the KRI (IOM 2021).

It could be argued that policies that welcome refugees and IDPs are largely motivated by the financial necessities facing the KRG as it struggles to provide for its own population: salaries for public officials have been withheld by Baghdad and international investment has been cut off since security threats from ISIS. Even the UNHCR representative in Iraq, Jean-Nicolas Beuze, recognized this reality when he noted that: “[when] Syrian refugees can finally go back home to a Syria in peace, the UNHCR’s investments, such as these new schools, health centres or investment in the local economy, will remain in Kurdistan and benefit the local communities” (Van Wilgenburg 2023). This is also echoed by the German Minister of Economic Development and Cooperation, who noted: “KRG have convinced us that we should work with the EU to shoulder a broader responsibility in the crisis” (Rudaw 2014). Humanitarian rentierism has thus stepped in to replace, and compensate for, the rentierism of the oil economy that was badly hit by the ISIS crisis.

 

Secondary Stream of Refugee Rent Generation Through the Employment Sponsorship (Kafala) System

In addition to humanitarian funding provided to Kurdistan (directly or indirectly) by the UN and other international actors, the KRI also extracts income from Syrian refugees in the form of residency and work permits. Parallel to the international refugee regime, immigration rentier situations emerge in which financial “migration rent” is extracted through governmental control of immigrants’ labor, often initially brokered by private actors, notably through the Kafala system of sponsorship. While such a system is widely practiced in the Arab region (ILO 2012), much of the recent literature on the employment sponsorship (Kafala) system in the Middle East has focused on its implications for migrant domestic workers in Lebanon (Block et al. 2023; Pande 2013) and the Gulf states (Vora 2015). However, Abdul Reda et al. note that Iraq’s Kafala has brought workers from Bangladesh, Indonesia, Nepal, the Philippines, Sri Lanka, and Thailand to fill “labor demand in construction, domestic service, hospitality, and healthcare” (2023). Since the arrival of Syrian refugees in the KRI in 2011, local authorities there have realized the potential to expand the work sponsorship system to profiles of people arguably eligible for humanitarian protection—sometimes creating confusing bureaucratic outcomes.[i]

Indeed, for Syrians (and other foreign nationals) to enter the KRI by plane, they must apply for a “foreigner residency permit” before they can be considered to have “legally entered Iraq” (Iraqi Nationality Law 2006). Besides being security cleared and achieving a negative blood test, an employer must be a sponsor and it is compulsory for a private lawyer to be involved, costing about $1,000 (IQD 1.2 million) per annum (Rudaw 2017). Non-renewal of the permit incurs a penalty of about $14 (IQD 20,000) per day (NRC 2022, 8). Some of those holding a foreigner residency card cannot pay the renewal sum, never mind the accumulated penalties, and ultimately submit for refugee protection and registration with the UNHCR (subsequently receiving asylum seeker certificates). Others entering by the land border first register as refugees with UNHCR but then go on to apply for work residency through a local employment sponsor (kafeel) once an employment opportunity with an international contractor arises. A 2017 report by Kurdistan’s semi-official media agency (Rudaw) cited a Kurd from Syria as saying, “I have been doing business here for nearly five years […] I never faced a problem in these five years regarding the renewal of my residency permit.”

Employers pay such fees through the KRI’s Residency Department, which operates under the Ministry of Interior. As such, this capital enters the KRG’s budget. While few statistics are publicly available on the extent of revenue generated through Syrian residency applications, this process can be considered a secondary stream of income from some Syrian refugees. For example, according to the KRG’s own 2017 statistics, a significant proportion of the 285,494 residency applications are assumed to be Syrian (Rudaw 2017). That is, not only is the KRI receiving funding from the UN and international NGOs to meet refugees’ humanitarian needs, but it is also charging employment residency fees from some of the same individuals. This overlap between the “foreign residency” and asylum systems has created much bureaucratic confusion between local authorities and the UNHCR,[ii] and may also be considered as “double counting” the same Syrians as both needy humanitarian beneficiaries and economically productive employees. Two further points can also be noted here. First, while the KRI is regularly praised for allowing refugees to work, the authorities are also benefiting financially from the refugee labor force. Second, when quoting refugee figures, governmental bodies such as the JCC have considered all Syrians as refugees, but as noted above, those who enter via air are not recognized asylum seekers. One might argue that this is done to inflate the figures to further extract financial gains.

 

Kurdistan’s Attempts to Gain Political Legitimacy Through Refugee and IDP Rentierism

Besides the financial or material benefits that the KRI has seen from hosting refugees and IDPs (as outlined above), we now consider the political capital generated through humanitarian hosting and how it has served the KRI as an aspirant state. Such dynamics became clearly visible in the context of the 2017 referendum for an independent Kurdish state. Parts of the campaign in favor of Kurdish independence (the “Yes” vote) focused on showing how the KRI was already functioning as a sovereign state in its refugee and IDP response, because this allowed the KRI to position itself and perform as a sovereign state. Additionally, building on a long history of the Kurdish diasporas around the world lobbying to raise the profile of Kurdish interests and the need to address historic injustices against Kurds (Khoshnaw 2023; Kaya 2020; Toivanen and Baser 2019), Syrian Kurdish refugees in the KRI have more recently mobilized as advocates within KRI’s independence campaign, and for the wider Kurdish right to self-determination.

Beyond the rhetorical advantage of KRI’s track record in hosting refugees as being a strong argument for statehood, several key interviewees from Syria confirmed that during the 2017 referendum, in which a majority of 92.73% ultimately voted in favor of independence (Chulov 2017), refugees were issued with ID cards by the KRG so that they might vote for an independent Kurdish state. This was also the case in other elections, when refugees were given a special voting pass so the KRI could obtain greater representation in parliament and a larger portion of the budget. One of our Syrian interlocutors noted that, “during the elections, we get a lot of attention and good service for the camps by the two ruling political parties of the KRI [so that we might] vote for them and fund their political projects.” A similar argument existed around the contested right of IDPs from outside Kurdistan, or the “disputed territories” between Erbil and Baghdad, to vote for a secession that would arguably render them “refugees” overnight. As such, the KRI has provided humanitarian beneficiaries with political concessions (issuing voter passes during elections) in return for their continued security and services to meet their daily needs.

 

The “Othering” of Non-Lucrative Displaced Peoples

The monetizing of displaced people through refugee and IDP rentierism initiatives has had the adverse consequence of producing a hierarchy among different displaced groups in the KRI. In contrast to the principles of international law, this grants preferential protection to some forcibly displaced communities, such as Syrians, at the expense of “others”, such as Iranians and Turks. The international response to Syrian refugees has been prioritized through the Syria Regional Refugee and Resilience Plan (3RP) (UNDP and UNHCR 2015), which was established as a “strategic, coordination, planning, advocacy, fundraising, and programming platform for humanitarian and development partners to respond to the Syria crisis” (UNHCR 2019). At the same time, only very limited—sometimes tokenistic—funding is delivered to the so-called “old caseload” communities of Iranian and Turkish refugees in the KRI. Indeed, only limited funding goes to other profiles of refugees who are not Syrian. The lack of funding from the international community has meant that the KRI authorities do not see these groups as potential contributors to the KRI economy and therefore they are treated differently, namely with generally stricter measures and much more scrutiny (Yassen et al. forthcoming).[iii]

The KRI authorities’ actions are also comparable to other processes elsewhere in the region, for example the treatment of Syrian refugees in Türkiye is much more favorable to those of Afghan refugees because of the aid and assistance programs they attract from donors (Almasri 2023 2024). Likewise, the Jordanian treatment of Syrians compared to other migrant and refugee communities is similar (Parker-Magyar 2019, also 2024). As described by Arar (2023), “In the wake of Syrian reception, Iraqi refugees were quickly deprioritized. International aid given to the UNHCR was largely earmarked for Syrian refugees, with a small percentage reserved for Iraqis.” Such processes are ultimately producing new ways of othering certain refugees.

 

Conclusion

In this paper, we have explored the application of refugee rentierism and introduced the parallel concept of “IDP rentierism” (taking account of similar dynamics resulting from internal displacement) to the KRI context. The KRI authorities have adopted a number of measures to generate income from the presence of refugees and IDPs in the KRI, and the use of the Kafala system is a clear example of this. Contrary to the international refugee law regime, the KRI authorities treat Syrians entering their territory via air as foreigners rather than refugees, which subjects the latter to penalties for unpaid residency cards and restrictions on sponsorship. This system of generating income in return for continually providing security to these groups of refugees and IDPs has excluded other refugees who often struggle to garner donor attention.

Moreover, we argue that the KRI has attempted to gain financial benefit as well as legitimacy and mobilization for statehood by capitalizing on the presence of refugees and IDPs­—notably during the 2017 campaign for Kurdish independence where the KRI sought to frame its hospitality to displaced peoples as evidence that it was already performing like a state. Although such efforts ultimately failed, the KRI continues to pursue financial and diplomatic independence. There is overwhelming evidence that the KRI has sought external economic capital from refugees and IDPs (through international donors and governments) as well as political benefits by using refugees during elections to obtain greater representation and a larger portion of budget). In this sense, one can see how each case of refugee and IDP rentierism has become a significant alternative, or back-up, to oil rentierism.

Certainly, refugee and IDP rent has presented the KRI with a convenient (perhaps partial) substitution for lost oil revenue in the aftermath of the ISIS crisis. More recently, as the oil economy has picked up (Chalak 2022)—albeit tensions between KRI and Baghdad ongoing (Iraq Oil Report 2022)—the KRI now combines traditional rentierism with refugee and IDP rentierism in a more diversified portfolio. This requires a careful balancing act for the Kurdistan Region: on the one hand, stressing that it, and the rest of Iraq, is stable enough to support the return of international investment in the fuel sector, while, on the other hand, highlighting that the IDPs’ places of origin are still too insecure for their return, necessitating continued funding for the KRI’s humanitarian sector.

 

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[i] Interview with international humanitarian organization lawyer, June 3 2023.

[ii] Interview with local legal specialist, July 14 2023.