Jobless men pay $500 bribes to join the police force. Families build houses illegally on government land, car washes steal water from public pipes and nearly everything the government buys or sells can now be found on the black market.
Painkillers for cancer (from the Health Ministry) cost $80 for a few capsules; electricity meters (from the Electricity Ministry) go for $200 each and even third-grade textbooks (stolen from the Education Ministry) must be bought at bookstores for three times what schools once charged.
"Everyone is stealing from the state," said Adel al-Subihawi, a prominent Shiite tribal leader in Sadr City, throwing up his hands in disgust. "It's a very large meal and everyone wants to eat."
Corruption and theft are not new to Iraq, and government officials have promised to address the problem. But as Iraqis and U.S. officials assess the effects of this year's U.S. troop increase, there is a growing sense that, even as security has improved, Iraq has slipped to new depths of lawlessness.
One recent independent analysis ranked Iraq the third most corrupt country in the world. Out of 163 countries surveyed, only Somalia and Myanmar were worse, according to Transparency International, a group based in Berlin that publishes the index annually.
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And the extent of the theft is staggering. Some U.S. officials estimate that as much as a third of what they spend on Iraqi contracts and grants ends up unaccounted for or stolen, with a portion going to Shiite or Sunni militias.
In addition, Iraq's top anti-corruption official estimated this fall - before resigning and fleeing the country after 31 of his agency's employees were killed over a three-year period - that $18 billion in Iraqi government money had been lost to various theft schemes since 2004.
The collective filching undermines Iraq's ability to provide essential services, a key to sustaining recent security gains, according to U.S. military commanders. It also sows a corrosive distrust of democracy and hinders reconciliation as entrenched groups in the Shiite-led government resist reforms that would cut into reliable cash flows.
In interviews across Baghdad, though, Iraqis said the widespread thieving affected them at least as powerfully on an emotional and moral level.
The Koran is clear on stealing: "God does not love the corrupters," one verse says. And for average Iraqis, those ashamed of the looting that took place immediately after the fall of Saddam Hussein, the current era of anything-goes is particularly crushing because almost no one can avoid its taint.
For many, it is not a question of getting rich. Theft and corruption have become survival tools, creating a spiral of dishonest transactions that leave nearly everyone feeling dirty.
Cash is also often what leads to promotions - with the help of a fake college degree, purchased for about $40 - and theft is no less common. One government worker, who goes by the name Abu Muhammad, said a senior administrator at the ministry where he worked recently sold computers, laser printers, office furniture and other supplies that appeared to have been paid for with U.S. aid. The official was never caught or prosecuted, he said.
Haider Abu Laith, an engineer at the Culture Ministry, said that a close friend and fellow engineer at a government agricultural agency recently told him he was being pressured to inflate the cost of equipment purchased abroad so that senior officials could skim the surplus. His said his friend quit, fearing that he would be killed if he refused.
And at the Health Ministry's main warehouse in Baghdad, U.S. troops discovered this summer that two trucks full of medicines and medical equipment had disappeared while several guards on duty said they saw nothing.
Even some Iraqi lawmakers admit that the free-for-all has become too extensive to stop easily.
"The size of the corruption exceeds the imagination," said Shatha Munthir Abdul Razzaq, a member of Parliament's largest Sunni bloc. "Because there are no tough laws, no penalties for those who steal."
Stuart Bowen Jr., who runs the Office of the Special Inspector-General for Iraq Reconstruction, said Prime Minister Nouri Kamal al-Maliki actually undercut anti-corruption efforts this year by requiring that investigators get permission from his office before pursuing ministers or former ministers on corruption charges.
Maliki has also not rescinded a law, opposed by the Americans, that lets ministers exempt their employees from investigation.
"Those two legal positions within the fledgling Iraqi government are incompatible with democracy," Bowen said in an interview. "My concerns about the corruption problem have risen."
And President Bush want to send them 50 Billion more this year! Ron Paul is the only one running for president who says "no!"