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The Sovereign Fund.. Managing National Wealth and Securing the Future of Generations Wednesday 13 October 2021 94 Faris Al Salman The decision to establish the first sovereign fund to manage the national wealth in the country is the most important and bold decision since the stage of change, but it will face major challenges, as the importance of this decision lies in that it will lay the foundation for the establishment of the Generations Fund, which aims to secure the future of future generations, and the government can adopt it within economic reform policy. The oil wealth is permeable in addition to being threatened with being dispensed with, and many countries have begun to adopt alternative and clean energies. The government is considering establishing a sovereign wealth fund, in which it will deposit funds equal to the ongoing compensation for the Kuwait war (deduction of 3% of the proceeds of each barrel of Iraqi crude oil that is exported). The establishment of the Sovereign Fund should not be under the supervision of a narrow range of government advisors (with our respect for their capabilities), but through openness to the people’s forces and segments, because it is the owner of wealth, especially that Iraqi universities are full of professors specialized in this field, as well as civil society organizations specialized in the economy And economic development has already dealt with the subject and organized mature and advanced workshops, including the Baghdad Economic Forum, in which international organizations such as the United Nations and the World Bank participated and came out with solid recommendations. The biggest challenge to the project is corruption and partisan and sectarian quotas and their impact on the process of forming the fund and its future method of work, especially in choosing the chairman and members of the fund's board of directors. Because if corruption and quotas infiltrate it, these assets and resources will be squandered and will be lost forever. Especially since we have before us the pension fund model (the size of 50 billion dollars), which, due to corruption and mismanagement, is on the verge of bankruptcy. We need to be careful in drawing up the fund's structure, its legal framework, methods of governance, management, financing, implementation of its tasks and control, choosing consultants in international investment specializations and investment portfolios. In addition to being careful to draw up the fund’s policy, because we want it to be a good source of revenue (if it were scientifically managed and prosecuted) to compensate for the missed opportunities that Iraq missed, including the rise in oil prices to more than 130 dollars / barrel in 2008, which Norway and the Gulf countries exploited to create a surplus wealth Kabir went to the sovereign funds, while Iraq squandered these revenues as a result of mismanagement and corruption, and they are added to the lost opportunities in the life of the Iraqi state. The other worrying dilemma is where the fund’s money will be invested? Is it by investing in profitable international stocks or bonds, similar to the Gulf funds and the Norwegian sovereign fund, or going to risky emerging markets? Or in the international real estate market, hedge funds, investment funds in the financial markets and bonds Stocks, futures and raw materials? In addition to the foregoing, a logical question is added: Will the fund meet the aspirations and ambitions of the Iraqi people and the current Iraqi government in reorganizing the national economy in a way that ensures that the Iraqi national security is met? I do not think so....because this fund cannot meet several requirements at the same time. If we say that to guarantee the future of future generations, the controversial and legitimate question will be: What about the current generations who suffer from poverty, illiteracy, etc.?, and if we consider that this fund can It should be a buffer against the normals of time and the government can borrow from it in economic crises, then the fund will be forced to forfeit its investments in investment portfolios and assets to provide liquidity to the government at a time when the market is suffering from a financial crisis. Therefore, Iraq needs a set of bumpers, not a single one, that is, a package of sovereign funds by benefiting from the experiences of other countries that preceded us in this field, while putting the national touch in line with the requirements of the Iraqi economy. Iraq is characterized by the abundance of its natural, financial and human resources and wealth, as well as the importance of its geopolitical position in the region, which urgently requires a rational management of its resources and its economy. A package of sovereign funds managed with good governance and transparency, as well as the development and support of the Iraqi Fund for Foreign Development as one of the tools of the Iraqi state's influence to secure the vital space within the theory of Iraqi national security. It is noteworthy that the Baghdad Economic Forum had previously organized, in partnership with the General Secretariat of the Council of Ministers, a workshop entitled “Sovereign Funds and their Role in the Development of the Iraqi Economy” on 25/10/2017 at Al-Mansour Hotel, in the presence of a group of concerned officials, parliamentarians, local and foreign economic figures, academics, international organizations and the Bank International and the United Nations.

Consider mechanisms for establishing sovereign funds that achieve sustainable development 26/10/2017 12:00 am In a workshop for the Baghdad Economic Forum in cooperation with the Secretariat of the Council of Ministers Baghdad / Hussein Thugb The Baghdad Economic Forum in cooperation with the General Secretariat of the Council of Ministers folded the second episode of a continuous series aimed at finding real development mechanisms that promote all sectors. The two sides discussed in the presence of a group of parliamentarians, economists, specialized institutions and international embassies on the subject of "sovereign funds in Iraq and their role in economic development". Challenges that limit the activation of projects and the implementation of projects in all cities of Iraq. The workshop, which was conducted by economist Bassem Jameel Antoine, began with the speech of the secretary-general of the Cabinet, followed by Acting Representative Karrar Mohammed Abdul-Zahra. He said: "The need for sovereign funds in Iraq stems from the possession of natural resources that provide a financial surplus. Saving the surplus and investing it in the process of development and safeguarding the rights of future generations ». "The workshop represents a platform of ideas and visions that we need today and express a consistent approach that we are keen to spread and consolidate, which is to expand the participation of institutions of society and the state in decision-making and policy-making. He stressed that «the outputs of the work within this series of seminars will be the subject of great attention and attention by those involved in the industry and decision-making at all levels» Reconstruction, in turn the head of the Baghdad Economic Forum Fares Al-Salman that "the presence of leaders of thought and economy in Iraq, along with parliamentarians, academics and representatives Diplomacy to discuss this issue, is very important. " He pointed out that the workshop of the sovereign funds comes in conjunction with the Iraqi people's victories against the forces of darkness and terrorism and the start of the reconstruction phase. He pointed out that the Iraqi economy should be identified and strategic bases should be put in place to serve Iraqi national security and contribute to the success of the economic development process. The Prime Minister's financial advisor addressed the appearance of Mohammed Saleh, "the sovereign fund of the submersible and the guarantees of economic development, which is a means by which governments and institutions can put money and accumulate over time to extinguish debts." "Iraq is still at a safe level in its virtual capacities and has a standard rate of less than 60 percent in the ratios of public debt to gross domestic product," Saleh said, adding that "at the last consultation with the IMF, the possibility of Iraq establishing a subprime sovereign fund Financing by supplementary borrowing from the international market by the executive cohesion with the global contracting market to improve the ratio of fixed capital formation relative to gross domestic product to 50% instead of 25% currently and in the coming years. Spokesman of the Central Bank of Iraq d. Bassem Abdul Hadi proposed "forming an administrative unit in the Ministry of Finance and under the supervision of the Central Bank to prepare the structure and staff and develop its capacity to establish a sovereign fund that performs its functions in such a way that it becomes an active contributor to the economic development process." Achieve development The academic d. "The experience of establishing the DFI was aimed at ensuring the transparent use of the Fund's resources to rebuild Iraq and meet humanitarian needs. Since its establishment under Security Council resolution 1483 (2003) until the end of 2013, Of the role of the Fund in financing various economic sectors aimed at achieving economic development, but did not achieve the desired development despite the funds spent from the Fund for this purpose and for several reasons, including the Fund's adoption of a clear development strategy. Investment Operations He added that the requirements for setting up the Iraq Fund are to define the objective of the Fund's general policy, to provide a legal framework that is the cornerstone of an institutional framework and an effective governance structure underpinned by the proposed fund, as well as to define the functions of responsible government agencies to ensure the professional and operational independence of the Fund The appropriate forms of investment and risk management aimed at promoting the safety of investment operations, as well as the separation between political ambitions and the interest of the economy to ensure economic decisions and implementation of investment operations, and comply with all the requirements of regulation and disclosure and Transparency applied in countries that invest in Iraq 's sovereign fund. Revenue flow "The objectives of the Fund are as a tool to finance economic and social development and contribute to achieving macroeconomic stability by planning spending through the strategy of the flow of oil revenues to the budget, and to maximize savings directed to future generations of depleted resource and achieve the principle of equity in the distribution of wealth, Activating the activity of the stock market through direct and indirect investment of the Fund's financial assets ". He stressed that "the adoption of scenarios for the establishment of Iraq's sovereign fund (stability - investment - development - submersible subject to the priorities of the requirements of the Iraqi economy, which is almost integrated and interact among them, as can not separate the process of development and stability and investment from each other, and the model that may put Iraq at the top of the priority is Sovereign investment fund, because it will be the entrance to each development process and then a factor of economic stability. " Human development Dean of the Faculty of Business Economics at Al-Nahrain University Star Al-Bayati discussed in his paper Future Fund, which is fully compatible with the concept of sustainable human development, which takes into account the right of future generations to the resources of the poor, then it is unreasonable that the country is going to borrow from abroad and the future generations to bear part of the burden of these loans and their increasing benefits? To the extent that the right of future generations to the underdeveloped resources is demonstrated, it represents an achievement of intergenerational justice and goes even further in its goal when it is a matter of belonging to the homeland. An investment possibility , explaining that it is "Fund financing through the deduction of a certain percentage of oil revenues are deposited in this fund with the possibility of investing its assets, and some might agree that this percentage be increased by 5 percent, permanently fixed , whether or of the increase in oil prices whenever necessary so "He said. Al-Bayati pointed out that "the stability fund derives its importance and the obligation to create it from the deficit suffered by the general budget of Iraq since 2003, because of reliance on oil as the most important resource or source of income or public revenues," pointing out that "the main objective is to fill the budget deficit and protect the state To protect the economy as a whole and to stabilize the exchange rate of the national currency against fluctuations in the balance of payments resulting from fluctuations in commodity prices, especially oil, as explained above, as well as to face economic shocks and thus seek sustainable development. Sources of funding According to the Academy d. Hamdiya Shaker to the importance of sovereign wealth funds is more evident in the rentier economies, especially in the oil-dependent countries, one of the dependence on oil as the main source of revenue, and thus suffer from structural imbalances resulting from the high contribution of the oil sector in the generation of GDP and on exports and public revenues , Which may expose them to external shocks and periodic crises due to the continuous fluctuations in oil prices globally and unpredictability, so the biggest challenge facing the oil countries is how to diversify the sources of financing their economies and not rely on a resource and one The countries are creating sovereign wealth funds to guarantee the right of future generations to these wealth by converting a certain portion of oil revenues into medium- and long-term financial assets that benefit the generations. Coming.