A head-on confrontation with institutionalised corruption among Iraqi politicians is the only way to address the protests gripping the country, a senior adviser to the country’s beleaguered prime minister, Adel Abdul-Mahdi, has warned.

But admitting that Mahdi may not have the political capital to fight the corruption, Laith Kubba said: “We have problems with those political groups who have their grip over money, banks and power, and rooted to corruption. It is a problem and there is no real answer to it.

“My bet is, with the current political groups, Iraq cannot pull itself out of this mire.”

Kubba was speaking in London at an event at the Chatham House thinktank on the future of Iraq, arranged well before the violent protests that have swept Iraq in recent days leaving as many as 19 dead.

“Corruption is so institutionalised in Iraq that it takes more than cosmetic changes like creating committees,” Kubba said. “It requires a head-on confrontation, it will come with a high political cost. Whether or not the prime minister is prepared to pay that high cost, I don’t know. It will not go away just by wishing it away. It requires a crackdown.”

He said the prime minister had partly come to power to avoid a violent confrontation after the 2018 elections: “The situation is not normal. Iraq has 10 blocs who have real power via armed groups, they have banks, TV stations, MPs and the corruption merges with those blocs. We have a real problem.”

He added: “The biggest challenge facing Iraq is whether it has a state, a strong state, a state based on citizenship or it has a state within a state, or multiple states … The biggest sin was to dismantle the Iraqi state in 2003 and since then Iraq has been struggling in a tough region.”

A demonstrator burns tyres during a curfew in Baghdad on Thursday. Photograph: Wissm Al-Okili/Reuters

Kubba also said the current push to shift Iraq away from sectarian-based politics may help. “Iraq has 20 million young people aged under 20. They are raised with no memory of Saddam Hussein or the political issues. They are not getting the services in schools, the hospitals, or in the streets, and they are impatient.”

At the same event, Andrew Peek, the US deputy assistant secretary of state, said Iraq’s recent progress was being undermined by the fact that Iran had more control over 30,000-40,000 armed men in the country than the Baghdad government. If Iraq chose to become an abnormal country, he warned, it would be shutting itself off from foreign direct investment and western financial institutions. “The Iranian state model will not give any help to the Iraqis on the streets today,” he said. “The 1 million young Iraqis that come on the jobs market every year want something more than traditional politics.”

Dhia al-Asadi, the chairman of the Sadrist al-Ahrar bloc, the largest in parliament, also pointed to corruption, but rejected the idea of his bloc leaving the government to side with the protesters in the streets.

Asadi said the protests went far wider than one political faction, including his own, but had not yet crystallised into a single coherent movement.

“There are certain obvious indicators about whether the government is serious about correcting itself,” Asadi said.

He said the first would be signs that senior politicians accused of corruption were held accountable in court: “Nothing has happened, unfortunately, and no one is held accountable.”