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A last chance

Leaders meet in Washington on 15 November for a summit to attempt to resuscitate a world finance sys

The giant video screen at 745 Seventh Avenue, in Manhattan, is still lit up: only now, instead of the old Lehman Brothers promo, with its tossing oceans and desert sunsets, it projects the ice-blue bling of Barclays Capital, five-storeys high. The problem is, though the lights are still on for finance capital, ideologically there’s nobody home.

Lehman's bankruptcy marked the end of a 20-year experiment in financial deregulation. But it was Alan Greenspan's congressional testimony, a month later, that marked the collapse of something bigger: the neoliberal ideology that has underpinned it all.

It was Greenspan who had begun ripping away restrictions on financial speculation and investment banking in 1987. Last month, he said: "I have found a flaw. I don't know how significant or permanent it is. But I have been very distressed by that fact . . . Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shock and disbelief."

The belief in self-interest as the guiding principle of commerce is as old as Adam Smith. What happened with the Anglo-Saxon model of capitalism was something different: the principle of rational self-interest was elevated to replace regulation and the state. Selfishness became a virtue. Inspired by Ayn Rand's credo - "I will never live for the sake of another man, nor ask another man to live for mine" - the giants of global finance revelled in amoralism. Morgan Stanley boss John Mack's legendary trading-floor motto - "There's blood in the water, let's go kill somebody" - sums up the era.

But the theory was flawed. Instead of safeguarding the property of shareholders, self-regulation drove the system to the point of collapse. Trillions of dollars worth of capital has been destroyed. "My view of the range of dispersion of outcomes has been shaken," Greenspan conceded. That's a logical response when the range of outcomes is clustered around the collapse of the savings system, the evaporation of global credit and the bankruptcy of most banks.

But selfishness was not the only tenet of neo-liberalism. Any definition of the term would include: a belief in the market as the only guarantor of prosperity and democracy; the futility of state intervention in pursuit of social justice; the creative destruction of cherished institutions and stable communities; the shrinkage of the state to regulatory functions only, and then as minimal as possible.

And the problem for the G20 leaders who will assemble at the Washington summit on 15 Nov ember is this: every single one of them has, to a greater or lesser extent, bought into the neoliberal ideology. It has dictated the direction of travel even in economies such as Brazil, India, Indonesia and China, classified as "mostly unfree" on the neoliberal league table.

The summit's most pressing task is to come up with a co-ordinated crisis response: for all the rhetoric, this is a firefighting operation not a second Bretton Woods. In the end, the route to a Bretton Woods-style settlement may be impassable for the weakened, multi-polar capitalism represented by the G20. But, even to begin that journey, there must be an honest reckoning with neoliberalism.

An ideology does three things: it justifies the economic dominance of a ruling group; it is transmitted through that group's control of the media and education; and it describes the experience of millions of people accurately enough for them to accept it as truth. But it does not have to be logical. For this reason, picking logical flaws in neoliberalism has been an exercise with diminishing returns.

For example, Milton Friedman's assertion that free-market capitalism and democracy are mutually reinforcing always looked a non-sequitur after he hotfooted it to Chile in 1975, personally urging General Pinochet to inflict a neoliberal economic "shock", even as the secret police were administering electric shocks to the genitals of oppositionists. But his theories continued to inspire policymakers.

Instead of logic, any balance sheet of neoliberalism has to begin from its outcomes. I will list five negative outcomes for countries following the Anglo-Saxon model:

In the first place, rising inequality. Between 1947 and 1973 the income of the poorest fifth of US families grew 116 per cent, higher than any other group. From 1974 to 2004 it grew by just 2.8 per cent. In the UK, the share of national income received by the bottom 10 per cent fell from 4.2 per cent in 1979 to 2.7 per cent in 2002.

Second, the replacement of high wages by high debt. The real wages of the average American male worker are today below what they were in 1979; and for the poorest 20 per cent, much lower. In 1979, personal household debt was 46 per cent of America's GDP; now it is 98 per cent. In the UK, real household incomes grew, but slower than in the postwar boom, until early this decade, since when they have fallen. The debt pattern, however, followed the US; 30 years ago British households were in debt to the tune of 20 per cent of GDP, now it is 80 per cent.

Third is the redistribution of profits from non-financial companies to the finance sector. In 1960s America, the pretax profits of financial firms made up 14 per cent of corporate profits; now they make up 39 per cent. Most of this profit is not generated from financing productive business: the world's total stock of financial assets is three times as large as global GDP. In 1980, it was about equal to GDP.

The new power of finance capital not only creates asset bubbles, as with the dotcom, housing and commodity bubbles of the past decade, but it allows speculative capital to descend on individual companies, countries and industry sectors, smash them and move on. I present the current economic plight of Hungary as Exhibit A.

Fourth is the growth of personal and financial insecurity, the destruction of social capital and the resulting rise in crime. If you want data, then the four stark pages of membership graphs at the end of Robert Putnam's celebrated book Bowling Alone show the decline of almost every voluntary association in America during the neoliberal age. If you prefer qualitative research, walk the streets of any former industrial city at night.

Fifth is the relentless commercialisation of all forms of human life: the privatisation of drinking water that provoked the people of Coch abamba, Bolivia to revolt in 2000; the creation of a private army of 180,000 military contractors in Iraq, unaccountable to international law. In these and many other instances, the functions of the state have been turned over to private companies to the financial detriment of taxpayers, the material detriment of consumers and the loss of democratic accountability.

But there is a plus side. Since 1992, there has been stability and growth across the OECD countries and beyond, albeit lower than the average growth achieved during the postwar boom years. There has been a marked fall in absolute poverty, with the number of people living on less than $2 a day falling by 52 per cent in Asia, 30 per cent in Latin America (though rising by 3 per cent in Africa) between the years 1982-2002. And though the data is mixed, many of neoliberalism's critics accept that inequality declines as per-capita GDP growth improves.

There has been a huge movement of humanity from the farm to the factory, and 200 million people have migrated from the poor world to the rich. Access to the financial system has brought rising liquidity: access to homeownership and overdrafts for families on low pay was real, whatever its macroeconomic outcome. And above all, the musty cultural and institutional barriers that made life a misery for the young in the 1960s and 1970s are largely gone; the flipside of commoditisation has been the decline of dependency and paternalism in social life.

And this has been the source of neoliberalism's strength as an ideology: borrow big-time, negotiate your own salary, duck and dive, lock your door at night. That is the new way of life for the world's workforce. My father's generation, the generation of organised workers which saw industry and social solidarity destroyed in the 1980s, could never really accept it. But hundreds of millions of people under the age of 40 know nothing else. And if you live in a Kenyan slum or a Shenzhen factory, you have seen your life chances rise spectacularly higher than those of your father's generation, even if the reverse is true in, say, Salford or Detroit.

Until 15 September 2008 (the day Lehman Brothers filed for Chapter 11 bankruptcy protection, the largest bankruptcy in US history), the left and the right were engaged in a political debate that revolved around the balance of these positive and negative impacts. Today that debate is over: we now know that neoliberalism nearly crashed the whole financial system. I will repeat, because the adrenalin rush has subsided and it is easy to forget: neoliberalism brought the world to the brink of an economic nuclear winter. Not by accident but because of a flaw in its central mechanism. It is for this reason that President Sarkozy (once labelled "Monsieur Thatcher" by the French left) declared it dead - not flawed - but dead. "The idea that markets were always right was mad . . . The present crisis must incite us to re-found capitalism on the basis of ethics and work . . . Laissez-faire is finished. The all-powerful market that always knows best is finished," he said.

S o what comes next? Though governments are scrambling to deploy Keynesian anti-crisis measures - from George Bush's tax cut to Gordon Brown's borrowing hike - it is axiomatic that the developed world cannot return to the way things were before the 1980s: the Keynesian model broke down spectacularly, and could cure neither high inflation nor economic stagnation.

It is clear, from the sheer level of pain and trauma inflicted by the changes of the past 20 years, that we have lived through the birth of something. Its founding ideology was neoliberalism; its most tangible result was globalisation; and it was achieved through class struggle by the rich against the poor. But none of these facts can encompass the scale of change.

Because none of them allows for the most fundamental change - that information has become a primary factor of production. C omputing power has doubled every 24 months; the internet and mobile telephony have, in the past ten years, altered the patterns of human life more profoundly than any single economic policy. Info-capitalism has been inadequately theorised: call it "post-Fordism", techno-capital or the knowledge economy, whatever the label it remains the central fact of the early 21st century.

If you accept this, then the experience of neo- liberalism looks less like the dawn of a free-market empire, more like the period between the invention of the factory system and the passing of the first effective factory legislation: between the establishment of Arkwright's mill at Cromford in 1771 and the Factory Act of 1844.

For much of that period, the pioneers of industrial capitalism believed that any regulation would kill the dynamism of the system. They too had a celebrity economist to justify their actions, namely Nassau Senior, the author of the theory that all profits were made in the last hour of the working day. The fate of capitalism, quipped reformer William Cobbett, depended on 300,000 little girls in Lancashire: "For it was asserted, that if these little girls worked two hours less per day, our manufacturing superiority would depart from us."

Child labour was abolished; minimal standards of order and humanity were imposed on the factories. But capitalism did not die - it took off. It is no accident, incidentally, that 1844 was also the year Britain, traumatised by recurrent financial panics, enshrined the supremacy of the central bank and the gold standard in legislation. If the parallel is valid, then the new regulations and institutions under discussion in Washington stand a chance not of killing info-capitalism but of unleashing it.

What are the intellectual sources for the system that will replace neoliberalism? Most of the prophets of doom in advance of the credit crunch were survivors from the Keynesian era: Paul Krugman, Joseph Stiglitz, George Soros, Nouriel Roubini, Morgan Stanley economist Stephen Roach. But with the partial exception of Stiglitz, they remain dislocated from the grass-roots opposition to neoliberalism. In turn, this opposition, dominated by the principles of anarchism and charity, has revelled in its own diversity and lack of engagement with state-level solutions.

As for the world's policymakers they, for now, resemble the Hoover administration in 1930, or if you are feeling really unkind, Chamberlain's British government in 1940. They are confronted by a crisis they did not think would happen. They are approaching it with the only tools they have - but they are the old tools: the old alliances, the old experts, the unreconstructed ideas and plans: Doha, Basel II, the Lisbon agenda. The IMF's conditions for bailing out eastern Europe - public spending cuts, interest-rate rises, privatisations - confirm the pattern.

The aim, made explicit during a speech on 28 October by Catherine Ashton, the EU's new trade commissioner, is to enact crisis measures while explaining to the public that "interventions and excessive use of public subsidies - while attractive today, will damage us tomorrow". This does not match the rhetoric coming out of Paris and Washington about the "end of trickle-down" and the death of laissez-faire; and it tends to ignore the fact that the most fundamental problem created by neoliberalism was not deregulation but the replacement of high wages by high debt. In other words, it is not the policy framework that is in trouble, it is the growth model.

There are three possible ways out. First, the revival of neoliberalism in a hair shirt: less addicted to the celebration of greed; with government spending temporarily replacing consumer debt as the driver of demand; and with some attempt at co-ordinated re-regulation. That is the maximum that can come out of the Washington summit.

Second, the abandonment of a high-growth economy: if it can't be driven by wages, debt or public spending then it can't exist. And if it can't exist in America, then Asia's model of high exports and high savings does not work, either. In previous eras the proposal to revert to a low-growth economy would have been regarded as simply barbarism and regression. Yet there is a strong sentiment among the anti-globalist and deep-green activists in favour of this solution, and it has found echoes in mass consciousness and micro-level consumer behaviour as the world has come to understand the dangers of global warming. Even a mainstream corporate economist, such as Morgan Stanley's Roach, has called for "a greater awareness of the consequences of striving for open-ended economic growth . . . This crisis is a strong signal that [high-growth] strategies are not sustainable."

The third alternative is the Minsky option. Hyman Minsky (1919-1996) was the godfather of modern financial crisis theory: his works, while largely ignored by politicians, are revered by both Marxists and hedge-fund managers. The "Minsky Moment" - a systemic financial crisis that crashes the real-world economy - was not only predicted in his work but theorised as a natural and intrinsic feature of capitalism. What we are going through now, Minsky argued, is the normal consequence of achieving growth and full employment through an unfettered private financial system.

But he had a solution - outlined in the chapters the hedge-fund managers skip and the Marxists dismiss: the socialisation of the banking system. This, he conceived, not as an anti-capitalist measure but as the only possible form of a high- consumption, stable capitalism in the future.

Minsky argued: "As socialisation of the towering heights is fully compatible with a large, growing and prosperous private sector, this high-consumption synthesis might well be conducive to greater freedom for entrepreneurial ability and daring than is our present structure."

Minsky never bothered to spell out the details of how it might be done. But there is no need to, now.

Stumbling through the underground passageways of 10 Downing Street on the morning of 8 October, I saw it done. Tetchy and bleary-eyed, fuelled by stale coffee and takeaway Indian food, British civil servants had designed and executed it in the space of 48 hours. Within days, much of the western world's banking system had been stabilised by massive injections of taxpayer credit and capital.

The problem is, though they have now been there, done that, the G20 politicians have no desire to get the T-shirt.

The G20 summit will meet in the context of a global finance system on life support. Their impulse is to get it off the respirator as quickly as possible; to put things back to normal. But the ecosystem which sustained global finance in its previous form is also in crisis: easy credit and speculative finance were the oxygen, and they have gone.

The policy challenge, in short, is much more fundamental than is being recognised in the run-up to the G20 summit. Gordon Brown speaks of a "new global order" emerging out of Washington. But in reality he is talking about multilateral crisis-resolution mechanisms, not a rethink of the relationship between finance capital, growth and debt.

If the world's leaders seriously intend to "refound capitalism on the basis of ethics and work", there is plenty of source material to start brainstorming from.

I would throw this into the mix, from Franklin Roosevelt's Oval Office in January 1934: "Americans must forswear that conception of the acquisition of wealth which, through excessive profits, creates undue private power over private affairs and, to our misfortune, over public affairs as well. In building toward this end we do not destroy ambition . . . But we do assert that the ambition of the individual to obtain a proper security, a reasonable leisure, and a decent living throughout life is an ambition to be preferred to the appetite for great wealth and great power."

Paul Mason is economics editor of BBC Newsnight; his book "Meltdown: the End of the Age of Greed" is published by Verso in April 2009

Road to the summit

The summit, due to start in Washington DC on 15 November, was first proposed by President Nicolas Sarkozy of France at the United Nations General Assembly debate on 23 September. He urged reform of international institutions, warning that "the 21st-century world cannot be governed with institutions of the 20th century".

On 3 October the US enacted its $700bn bank bailout. EU leaders had initially been confident that their economies would be sufficiently resilient, but the world stock-market collapse now convinced them otherwise. The next day, France, Britain, Germany and Italy agreed to work together to support financial institutions, and issued a joint call for a G8 summit.

On 8 October Gordon Brown announced a rescue package for UK banks. Leaders of the G7 countries (the US, Japan, Germany, Britain, France, Italy and Canada) met in Washington on 11 October, issuing a five-point plan. On 12 October, in Paris, Sarkozy held an emergency meeting of the 15 eurozone leaders, the first such meeting since the launch of the euro. Unusually, Gordon Brown was also invited to attend, and a rescue plan based on the UK model was agreed. The following week, George Bush went to Italy, Germany and the UK in a bid to coordinate response to the turmoil, and on 14 October announced crisis talks to be held between Bush, Sarkozy and President José Manuel Barroso of the European Commission at Camp David four days later. Here, plans for the summit were unveiled.

Attending will be leaders of the G20, which includes the G7 and major developing nations such as China, India and Brazil, along with the head of the IMF and other international institutions. Of the African nations, only South Africa, the continent's biggest economy, will attend; on 27 October the African Union announced it would hold its own summit in response to the crisis.

Alyssa McDonald

This article first appeared in the 10 November 2008 issue of the New Statesman, Change has come

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Tearing down the "caliphate": on the frontline against Islamic State in Mosul

Truck bombs and drone warfare in the fight to take back Iraq’s second city from Islamic State.

The battle to retake west Mosul began, for me, rattling around in an armoured Humvee with two Abaases. “I’m Abaas One. He’s Abaas Two,” the driver, Abaas Almsebawy, said in English with a broad smile, pointing to the gunner on top.

“I have killed two Da’esh,” Abaas Two said, using an Arabic acronym for the so-called Islamic State (IS). “Well, one for sure. The other one crawled away but he was bleeding badly. I was told he died.”

Abaas One was jealous of his gunner’s luck. He was shot twice by IS in the city of Ramadi, in central Iraq; he still had a bullet lodged in his back. “The doctor said it is my gift from Da’esh,” he told me and laughed.

Over the sound of gunfire and mortars, the two Abaases called out to each other, giving directions, spotting targets. The cry of “Abaaaaas!” was constantly in the air. One from Babylon, the other from Baghdad, they stretched out on a felt blanket inside the armoured vehicle during lulls in the fighting and fell asleep, oblivious to its discomforts and the IS mortars landing outside.

They had been involved in the fighting in the east of the city, which it had taken 100 days to recapture, in hard, street-by-street clashes and through an onslaught of IS car and truck bombs. Yet the battle to retake the west, which began on Sunday 19 February and is being led by Iraq’s Emergency Response Division (ERD) and counterterrorism forces, has proved different – and faster.

Abaas One, the driver, was exhilarated. As Iraqi army helicopters flew overhead and the air force strafed villages with machine-gun fire and rockets, he rolled on, part of an armoured assault on a front that stretched for miles. His Humvee was built for this kind of terrain, moving at speed across the desert towards villages, the airport and eventually the city of Mosul.

Something else was different about this battle, too. These men were not technically soldiers: they were policemen. Abaas One went into battle in a hooded top and a leather jacket. Stuck outside manning his gun, Abaas Two, like a fighter from another age, wore a greatcoat, small, circular spectacles and a woolly hat. One lean and broad-shouldered, the other bulky and round-faced, they were a contrast but a good fit.

The Abaases were part of Iraq’s elite ERD, which has led the charge into the west of the city, just as the country’s heralded “Golden Division”, the counterterrorism unit, had pushed into the east. The ERD, part of the ministry of interior, is the less experienced junior brother of the battle-hardened Golden Division but it was determined that west Mosul would be its prize. It made swift progress and, as it took back village after village from IS, troops posed for selfies with enemy corpses on the roadside.

The closer to Mosul you were, the more charred bodies you would see, lying along the route. Two in a ditch, killed by a mortar, and two on the road, the motorcycle they were travelling on cut in half by an air strike.

In command of the 1st Brigade was Colonel Falah al-Wabdan. In Ramadi in 2015, he and his men had been cut off and surrounded by IS forces and had escaped only when more troops came to their rescue.

As he stood on the ruins of a former palace that had belonged to one of Saddam Hussein’s brothers, he had a view of all of Mosul. “I will be very glad when I see my forces move forward,” he said. “Also [when I see that] my soldiers are all safe. And I will be even happier when we have killed IS. These people [IS] are like a disease in the body, and we are now removing it, day after day.”

From there, the Iraqi forces took the town of Abu Saif, and then, in a six-hour battle, what was left of Mosul’s airport. Its runways were in ruins and its terminal buildings reduced to rubble. Yet that was the last open ground before they reached the city. By the end of the week, Colonel Falah’s forces had breached the IS defences. Now they were heading into the dense and narrow streets of the city’s old town. Meanwhile, the elite Golden Division was the secondary force, having earlier been bogged down in heavy fighting.

The competition between the two rival divisions had helped to accelerate the advance. The ERD, however, had a secret weapon. “We need to ask your men to hold off, sir. We have helicopters in the air,” the US special forces officer told an Iraqi lieutenant colonel on the rooftop as the assault on Abu Saif was in full force.

The Iraqi mortar team in the orchard and olive grove below held fire. Then the mighty thud of coalition air strikes could be heard and, just two miles away, a huge, grey cloud rose above the town.

 

***

It is Iraqis who are doing most of the fighting and the dying in the battle against IS, but since the Pentagon relaxed its rules of engagement late last year more Americans are at or near the front lines. They are calling in air strikes and laying down fire from their MRAP (“mine-resistant ambush-protected”) vehicles. They are not in uniform but, despite being a covert force, they are conspicuous and still wear the Stars and Stripes on their helmets. When journalists, especially cameramen, approach, they turn their backs.

In and around Mosul, it is more common now to get stuck in a traffic jam of US vehicles: either artillery or route-clearance teams. The Pentagon will soon respond to President Donald Trump’s call for a new plan – an intensification of US efforts against IS – but on the ground around this city, the Americans are already much more engaged in the fight against the militants.

British special forces were also in the area, in small numbers. Unlike their American counterparts, they went unseen.

Also seemingly absent in the early part of the offensive were civilians. It was three days before I met one: a shepherd, Ali Sultan Ali, who told me that he had only stayed behind because he could not get his flock to safety, as a nearby bridge had been destroyed.

As his sheep grazed, Ali explained: “They continued to attack this area, and now we are three days sitting in our homes, unable to go out because of attack and mortars . . . All the people, they have left this area one after another. They went to the east of the city of Mosul and they rented houses there because there are too many attacks here.”

Almost 60,000 people have fled west Mosul. In this area, with its population of three-quarters of a million, the battle has the potential to become a humanitarian crisis. Camps for internally displaced people still have capacity, but they are filling up.

IS, with anywhere between 500 and a few thousand fighters inside Mosul, is again using the local population as cover. But coalition air strikes may be taking a heavy toll on civilians, too. Officially, the US-led force claims that 21 civilians have died as a result of its bombs since November, but an independent monitoring group, Airwars, suggests that as many as 370 have been killed by Western aircraft since the start of March.

After the airport was recaptured, the columns of desperate people heading south began to thicken. The children among them usually held a white flag – perhaps a clever distraction thought up by terrified parents for their long walk to safety. Near the airport, I met a man who was too distraught to give his name. He told me that his brother’s family – six people – had been killed in an air strike. With his eyes red from crying and a blanket over his shoulders, he stood by the roadside, pleading. “For God’s sake,” he said. “We need you to help us. We need a shovel to get the dead bodies out of the building, because there are still two bodies under that building.”

But the battle was reaching a new pitch around him, so he left for a camp to look for his brother, the only remaining member of his family, he told me.

When the ERD finally made it inside the city, the first thing I noticed was the fresh laundry hanging in the yard of a family house. Then I heard a huge explosion as an IS truck bomb slammed into one of the Iraqi Abrams tanks.

The tank trundled on regardless and, by nightfall, the ERD had a tiny foothold inside the city: the al-Josak neighbourhood.

 

***

 

Islamic State is steadily losing Mosul and in Iraq, at least, the end of the so-called caliphate is in sight. In Abu Saif, state forces found the corpses of foreign fighters and, hiding, an IS operative who was still alive.

“He’s Russian,” one officer told me, but the man might have been from one of the central Asian republics. There were dead Syrians on the battlefield, too, men from Deir az-Zour; and for the tens of thousands of foreign fighters who joined IS, Syria will likely be a last refuge.

There may be another reason for the faster pace of the assault in west Mosul. The Iraqi forces, having fought IS in Ramadi, Fallujah and east Mosul, are getting better at dealing with the militant group’s tactics.

Truck bombs took a huge toll on their men in eastern Mosul. It is hard to describe the force unleashed when one of these detonates near you. In an early assault on one village, IS sent out four truck bombs and one of them exploded a few hundred metres from where I was standing. The shock wave ripped around the building and shards of engine went flying over our heads. My mouth was full of dirt. The debris was scattered for what seemed like miles around – yet no one died.

The suicide attack driver may have been taken out by an Iraqi soldier firing a rocket-propelled grenade (RPG). Whenever they advance now, men stand ready with RPGs, specifically to tackle the threat of car bombs. And they are becoming better at “hasty defence”. An armoured bulldozer is always in the lead. When a new street is taken, defensive berms made of mud or rubble are built to halt any speeding car bombs.

The IS fighters are crafty. Iraqi forces took me to a house on a captured street. Its yard was covered and the front wall was gone. Parked in the front room was what looked like an ambulance. Hidden from surveillance aircraft, this was another truck bomb.

“It’s still live. I wouldn’t go any further,” a major warned me. Even the bomb disposal team said that it was too dangerous to touch. It was later destroyed from a very safe distance.

Although the group violently suppresses modernity, IS fighters are innovators. They have no air force but they can get their hands on drones, which are commercially available, and they have “weaponised” them. If the battle for east Mosul was the attack of the car bombs, the battle for the west began as a drone war.

For the men on the ground, IS drones are enormously disconcerting. During a gun battle in west Mosul, I stopped to speak to some troops taking cover behind a wall. As I asked a final question, the captain I was talking to cupped his ear and leaned forward because of a sudden eruption of gunfire. Then, just to my right, I felt a shock wave of a detonation that seemed to come from nowhere.

A member of the BBC team was hit, receiving a small blast injury to the arm. When we got back to the Humvee, the driver explained that there had been a drone above us. The gunfire was from Iraqi troops trying to bring it down. The detonation had not come from nowhere; it had come from directly overhead. As we drove out of there, I noticed that the gunner had closed the hatch. We were protected inside, but he was outside manning his weapon, looking for more drones.

“They drop MK19 40mm grenades from the drones to stop the movements forward. All the time, they will use four to five drones to attack one location,” Captain Ali Razak Nama of the federal police explained. “As you know, we can’t always see these drones with our eyes, but if we do see them we can attack the drones with our rifles. [But] when we go into the battle, we are not looking at the skies. We are looking ahead of us for car bombs, suicide attackers, IEDs or snipers.”

A unit of the Golden Division was hit 70 times in a single day by wave upon wave of IS drones. The operator managed to drop a grenade inside a Humvee from above; all four men inside, members of a bomb disposal unit, were killed. Dozens more were injured that day.

The sound of a drone, even one of their own, is enough to make the Iraqi forces hit the dirt and scramble under a vehicle. They are difficult to bring down. I once watched as snipers and heavy machine-gunners opened fire on some drones; they managed to strike one but still it flew on.

The IS fighters control them from motorcycles in an attempt to prevent the operators being tracked and killed. They switch frequencies in the hope that they will not be jammed. Yet as a coalition commander told me: “The enemy aren’t going to win by dropping grenades from the sky. So it is certainly not a game-changer.” Iraqi and coalition forces now appear to be having success in countering the threat. Just how, they will not say, but in recent days there has been a “very significant” drop in their use.

 

***

 

Mosul has been the biggest battle for Iraqi forces against Islamic State, but commander after commander said that others had been tougher. In Ramadi and in Fallujah, IS had a better grip. In Mosul, the local people have been quicker to turn away from the militants.

In the eastern part of the city, the bazaars are busy again and children have returned to school. Girls are receiving education for the first time in nearly three years, since IS captured the city. The so-called caliphate was declared on 29 June 2014 and, four days later the new “caliph” and IS leader, Abu Bakr al-Baghdadi, made his first and only filmed appearance, delivering a sermon at the city’s al-Nuri Mosque. Iraqi forces are now in sight of the mosque, with its Ottoman-era leaning minaret.

Mosul is Iraq’s second-largest city and has a cosmopolitan heritage, but Islamists had influence here for many years before IS arrived. As one Mosulawi told me, after neglect by the Iraqi capital, “There is discontent with Baghdad, not support for Isis.”

Al-Baghdadi is believed to have fled the city already. According to US and Iraqi commanders, he is hiding out in the desert. Shia militiamen and Iraqi army forces are attempting to seal off escape routes to the west, into Syria. Yet senior commanders accept that in a city Mosul’s size, it will be impossible to close all escape routes. Capturing al-Baghdadi is not a priority, they say.

There is also an acknowledgement that neither his death nor the loss of Mosul will be the end of Islamic State. But in Iraq, at least, it will destroy the caliphate.

Quentin Sommerville is the BBC’s Middle East correspondent

This article first appeared in the 16 March 2017 issue of the New Statesman, Brexit and the break-up of Britain