The Political Economy of the Protest Crisis in Iraq: An Institutional Analysis from 2003 to 2025

In post-Saddam Iraq, since 2009, the protest crisis has occurred regularly in Baghdad and most of the southern cities of Iraq, including the oil-rich city of Basra, reflecting the growing frustration of young people with public services, widespread corruption, and lack of job opportunities. However, since October 2019, the protests have intensified and witnessed significant changes in the demands of the protesters on the one hand and the government’s response on the other, expanding from mere material and livelihood demands to criticism of the political framework, especially elite quotas (al- Muhasasa). This article aims to examine the roots and economic context of these protest crises. The main question is how Iraq’s political and economic institutions, especially those established after 2003, contributed to the economic and social conditions that underpinned the crisis. The theoretical framework of economic analysis is based on new institutionalism, which is used to understand the economic and social contexts of the protests. The research is descriptive-analytical in nature and qualitative-quantitative in approach. The research findings show that the political institutions established after 2003 have hindered economic development in Iraq, and that increased political openness and inclusion have not led to greater economic inclusion. The way out of this situation is to move away from extractive institutions that benefit only a small segment of society, towards more equitable structures and improved governance through stronger rule of law and better quality public service delivery.

Introduction

The political economy of the Iraqi protests from 2003 to 2025 is a complex interplay of institutional failures, political dynamics, and economic challenges that have significantly shaped the country’s development trajectory. This paper investigates the role of political and economic institutions in Iraq, particularly those established after 2003, in creating the socio-economic conditions that led to the widespread protests that began in 2019.
     The research explores how the post-2003 institutional landscape in Iraq, particularly the muhassasa (sectarian quota system), has created a deeply entrenched power structure that has hindered the development of inclusive political and economic institutions. The muhassasa system, which allocates political positions based on sectarian and ethnic identities, has entrenched the power of elite groups, leading to widespread corruption, inefficiency in governance, and a lack of accountability. This system has not only failed to promote economic development but has also exacerbated socio-economic inequalities, leading to public discontent and the emergence of large-scale protests.

Theoretical Framework

The article is grounded in the New Institutional Economics (NIE) framework, drawing on the works of Douglass North, who emphasizes the role of institutions in shaping economic outcomes. It also incorporates the distinction between extractive and inclusive institutions as proposed by Acemoglu and Robinson, highlighting how extractive systems hinder development and perpetuate inequality. The study further integrates the concept of political settlements, as outlined by Khan, to analyze how power dynamics and historical shocks, such as the 2003 invasion and the rise of sectarianism, have shaped Iraq’s institutional landscape. The paper examines how the muhassasa (sectarian quota system) has entrenched elite power, leading to corruption and economic stagnation. By combining these theoretical perspectives, the article provides a comprehensive analysis of how institutional structures in Iraq have contributed to socio-economic crises and the rise of mass protests.

Method

The paper analyzes the relationship between institutional structure and economic performance in Iraq, focusing on key indicators such as GDP growth, unemployment rates, and poverty levels. While Iraq has experienced significant GDP growth due to increased oil production, this growth has not been evenly distributed, and the economy remains heavily dependent on oil revenues, making it vulnerable to global market fluctuations. The lack of diversification and the persistence of extractive institutions have further constrained economic development and limited the benefits of oil wealth to a small elite group.

Findings & discussion

The 2019–2020 protests, which began as a response to economic grievances such as high unemployment, poor public services, and corruption, quickly evolved into a broader political movement demanding the end of the sectarian power structure and the establishment of a more transparent and accountable government. These protests, which were met with a harsh government crackdown, highlighted the deepening institutional failures and the inability of the current political system to address the needs of the population.
The study also examines the role of historical shocks—such as the 2003 invasion, the fall of Saddam Hussein, and the rise of ISIS—in shaping the political and economic landscape of Iraq. These events have not only destabilized the country but have also reinforced the power of elite groups, further entrenching the existing institutional structure.
     The article highlights the central role of political and economic institutions in shaping Iraq’s socio-economic crisis, particularly after 2003. It argues that the muhassasa (sectarian quota system) and extractive institutions have entrenched power among elite groups, leading to corruption, inefficiency, and economic stagnation. These structures have limited public access to resources, deepened inequalities, and fueled widespread discontent. The 2019–2020 protests reflect this systemic failure, as citizens demanded an end to sectarian governance and improved public services. The study shows that Iraq’s economy remains overly dependent on oil, with little diversification or inclusive growth. Institutional weaknesses, including poor governance and a lack of accountability, have hindered development and exacerbated poverty. The paper concludes that without major institutional reforms, Iraq will continue to face political instability, economic vulnerability, and social unrest. Reforms must address power imbalances, promote transparency, and create inclusive economic policies to ensure sustainable development and stability.
     Looking ahead, the paper assesses the potential for economic transformation and political reform in Iraq by 2035, emphasizing the need for institutional reforms to create a more inclusive and sustainable economic environment. It argues that without significant changes to the current political and economic structures, Iraq will continue to face instability, corruption, and underdevelopment. The paper concludes that the future of Iraq depends on its ability to reform its institutions, reduce corruption, and create a more equitable and inclusive system that addresses the needs of all its citizens.
Ethical Considerations
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Funding
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Conflict of interest
The authors declare no conflict of interest