By Ned Parker and Missy Ryan
WASHINGTON, June 12 (Reuters) - The Iraqi army that disintegrated under an onslaught by Islamist fighters this week was a hollow force, riven by corruption, poor leadership and sectarian splits - a shadow of the military Washington had hoped to leave in the war-ravaged country.
The United States dismantled Iraqi dictator Saddam Hussein's military after invading in 2003 and spent $20 billion to build up a new 800,000-strong force, banking on its ability to keep the peace when the U.S. military withdrew in 2011.
While the 2003 decision to disband Iraq's army led to a bloody civil war, Iraqi forces were seen as generally competent by 2011 and sectarian fighting had eased, giving U.S. President Barack Obama some confidence as he pulled out all American forces.
But corruption sapped funds meant for soldiers' rations, for maintaining vehicles and for fuel, said an Iraqi officer in Sunni-dominated Anbar Province, parts of which have been out of government control for more than six months. Senior military posts are frequently for sale, and soldiers go to local markets to buy spare parts because government stores are empty, he said.
The Iraqi force has also been heavily politicized under Shi'ite Prime Minister Nuri al-Maliki, said Retired Lieutenant General Jim Dubik, who led the U.S. and NATO effort to train Iraqi forces from 2007 to 2008.
"Their leadership has eroded," said Dubik, who is now a senior fellow at the Institute for the Study of War in Washington. "If you're a fighter and you think your side's going to lose, you don't fight until the last man. You save yourself."
A former U.S. official in Iraq said poor treatment of rank-and-file soldiers by their superiors contributed to mass desertions. "These guys, these units are demoralized. They are underpaid and ripped off constantly by their commanding officers, who steal their allowances and use their commands as a way to build a personal nest egg," the former official said.
A HOLLOW ARMY
Apart from a few standout units, such as special forces who have borne the brunt of the fighting, "it's a hollow army," the former official said.
The performance of the Iraqi forces was far from perfect even before the U.S. pullout. Endemic problems of fraud in military contracting, extortion at checkpoints, and the padding of rosters with non-existent soldiers were things the U.S. military was never able to solve and sometimes ignored.
The collapse this week started at the top with the senior-most commanders abandoning their positions early on Tuesday morning as black-clad fighters of the radical Islamic State of Iraq and the Levant (ISIL) swept into the country's second city of Mosul.
Mosul's defenders held up well for three days until late Monday evening, but over the next few hours the force imploded, with the senior commander for all of Nineveh province, Mahdi Garawi, fleeing.
The commander of Iraq's ground forces, General Ali Ghaidan, and the vice chief of army staff, Lieutenant General Abboud Qanbar, also abandoned their posts, according to an Iraqi official and a Western security expert.
The entire military structure deployed by the Shi'ite government in Baghdad to protect the north and west melted away before the well-armed Sunni rebels, who had been advancing for weeks across the rocky, dusty flatlands of western Iraq.
"There's no question there was a breakdown, a structural breakdown, in Mosul," Pentagon spokesman Colonel Steve Warren said in Washington.
CAPTURED U.S. EQUIPMENT
The Sunni rebel advance engulfed towns and cities, allowing them to seize weapons and other equipment, much of it supplied by the United States. Two days after the fall of Mosul, ISIL militants staged a parade of American Humvee patrol cars.
Eyewitnesses said they saw two helicopters captured by the militants flying over the city.
President Obama expressed frustration on Friday.
"The fact that they are not willing to stand and fight and defend their posts against admittedly hardened terrorists, but not terrorists who are overwhelming in numbers, indicates that there's a problem" with morale and commitment that is rooted in politics, he said.
Since the withdrawal of U.S. troops, American support for Iraqi forces has been modest, consisting mostly of a small number of advisers attached to the U.S. embassy in Baghdad, some cooperation on intelligence and limited arms deliveries.
This changed after the war in neighboring Syria flared in 2013 and fueled resurgent violence. U.S. special forces began training small numbers of elite Iraqi soldiers in Jordan and Washington accelerated arms sales.
This included deals for Apache attack helicopters, Hellfire missiles and surveillance drones, much of which has yet to arrive.
Warren, the Pentagon spokesman, declined to discuss what, if any, U.S. weapons sold to Iraq might have been seized by ISIL, but said the militants had exaggerated gains.
The military collapse this week can be traced back to Maliki's earlier failure to rebuff ISIL in western Anbar province, which has become a militant stronghold as the conflict in Syria intensified.
After ISIL fighters seized Falluja and other areas of Anbar late last year, Iraqi medical sources say some 6,000 soldiers died there. Iraq-based foreign diplomats say 12,000 deserted their posts. Iraqi forces have not been able to retake Falluja or regain all of the largely Sunni province's capital, Ramadi.
In the battle for Mosul, U.S. government experts estimate that Iraqi army forces outnumbered ISIL fighters by a factor of "double digits." Still, the militants easily took the city.
Senior Iraqi military officials "are picked because Maliki values their loyalty to him over any kind of war-fighting skills. They don't understand what it takes to fight a counterinsurgency like this," one former senior U.S. military officer said.
"They failed to put in rigorous training (for their soldiers). They failed to invest in maintenance and logistics as we told them to," the former official said. "We warned them this would be their Achilles' heel." (Additional reporting by Ahmed Rasheed, Mark Hosenball and David Alexander; Writing by Missy Ryan; Editing by David Storey, Jason Szep and Jonathan Oatis)