That's not really evidence of a scam. Someone in Iraq may not be able to read your website, may not be able to afford your prices, may have different needs than potential customers from other countries, may not have access to a credit card, may not have access to a credit card that will pass AVS and other fraud screening systems designed for North American customers, and a myriad of other reasons they're less likely to buy your product despite clicking your ad without any malicious intent.
Meanwhile, you were probably outbidding all the advertisers in those countries where the average CPC is lower, ensuring prominent positioning for your ads. This is why you geo-target ads, and Google isn't engaging in some kind of scam to sell you clicks from countries you don't want. When you create a new campaign, your location targeting is part of the very first form you see, and defaults to your own region.
http://i.imgur.com/gcFynQk.png