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Freedomrules
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Oil prices to be depressed for months
21Thursday, August 13, 2015Eamon Quinn, Business EditorA quiet hurricane season in the US could be the latest factor bearing down on world oil prices and prices could stay depressed for months to come, a leading Irish-based expert has predicted.
A number of factors — ranging from a fight for market share raging between Opec and some non-Opec cartel producers, fields in southern Iraq pumping out more oil, and now the prospects for a quiet hurricane season later this summer that will keep rigs working around the clock in the Gulf of Mexico — have all acted to keep oil prices low.
In recent days, an apparent economic slowdown in China, one of the world’s top two energy consumers, that led to the devaluation of its currency, have come into play.
A bid by Opec producers to squeeze out suppliers in the US and Russia remains a significant factor in the supply and demand battle for world markets because it is taking longer than OPEC expected, said Paul Harris, head of natural resource risk management at Bank of Ireland Global Markets.
“This year will be a year of oversupply” said Mr Harris, as US output has been more robust than the Opec had expected.
He predicts that benchmark Brent crude oil price — which, at $49.50, is trading close to levels on the eve of the international financial crisis in 2008 — will recover by the end of this year to $60 a barrel, as winter in the northern hemisphere boosts demand for energy.
Weeks may yet pass before a recovery in prices takes hold and there is a potential for oil prices to fall to a floor of $45 a barrel. Mr Harris said predictions for a quiet hurricane season in the US mean production may not be disrupted this year. Longer term, the fundamentals of the world economy are significantly healthier than back in 2008 and prices are likely to firm as a result.
ADVERTISEMENTHe said: “China and the US are the two largest users of oil. On the supply side, Opec has tried to maintain its market share, while the US recovery has been weaker than many predicted and the slowdown in the Chinese economy appears to be more rapid than many expected.”
The International Energy Agency yesterday said the global oil glut will last through 2016 as the strongest demand growth in five years and faltering supply fail to clear the surplus. Stockpiles won’t be diminished until the fourth quarter of next year, or even later if sanctions on Iranian crude are lifted, the agency said.
“Global supply continues to grow at a breakneck pace,” the IEA said. Opec kept output near a three-year high at 31.79m barrels a day in July as record Iraqi production helped offset a pull-back by Saudi Arabia.
http://www.irishexaminer.com/business/oil-prices-to-be-depressed-for-months-347930.html
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On top of all other things .. Iraq is heading toward a new financial crisis
Shafaq News / Oil exports are by far the most important segment of Iraq’s economy, making up about half of the country’s GDP
and 90% of government revenue, Military and Defense News said.
Given the state’s reliance on oil, investors pay careful attention to the conditions of the industry. And today those conditions are mixed.
On the positive side, the country appears to be pumping and exporting more oil than expected, almost four million barrels a day, thanks to investments in production.
And the government in Baghdad appears to be on better terms with semi-autonomous Kurdistan — neither were upholding the terms of a 2015 budget agreement, with the former paying less money than promised and the latter providing less oil than promised.
But Iraq’s oil industry, and the government’s budget, is being squeezed by low oil prices.
As a result, the nation’s finances are being hit hard: the market price of oil is now half that needed to break even, expanding the budget deficit, forecast to return to balance until the rise of ISIS, to a projected 9% of GDP.
In the past, Iraq’s leaders approved budgets without seriously taking into account a drop in the price of oil. Now the severe revenue shortfall is forcing leaders to cut back on new investments. Russia’s Lukoil, Royal Dutch Shell, and Italy’s ENI are also cutting back, eyeing neighbouring Iran’s pending economic opening as a safer investment.
Despite improving its finances after the US troop withdrawal in 2011, the drop in oil prices and the rising costs of battling IS have pushed Iraq’s economy into a state of near-crisis. According to the IMF, the nation’s GDP shrank by 2.7% in 2014 and unemployment is estimated at over 25%.
The World Bank rated Iraq one of the worst places in the world to do business in 2015, at 156th out of 189 countries. The government is in talks with the IMF for a loan worth over $800 million to finance some of the budget shortfall. However, the country requires more fundamental reforms if it is to achieve long-term economic stability.
Iraq’s latest economic problems are linked to the increasingly costly battle with IS, now in control of much of Anbar province and Mosul, the nation’s second-largest city.
To stop the insurgency, many analysts have called on Iraq’s Shia-dominated government to reach a reconciliation with the Sunni minority.
Iraq’s Sunnis claim that they are targeted by security forces as punishment for collusion with insurgents like al-Qaeda in Iraq and IS. Reports of detentions without evidence, the use of de-Baathification laws to keep them out of lucrative government jobs, and forced eviction from their homes may have contributed to IS’s rise. Many Sunnis see the extremist group as preferable to the Shia-led government and current security forces.
But Iraq’s Sunni-Shia divide is a symptom of a more fundamental problem in poor governance. Writing for the Brookings Institution, Luay Al-Khatteeb explains how power in Iraq has been highly concentrated with the executive branch and bureaucrats, who have wide discretion to implement policy without legislative or judicial oversight.
The judiciary, already at a disadvantage after years of irrelevance under Saddam, is subject to executive pressure and does not adequately enforce property rights. Corruption has also worsened after the US withdrawal in 2011.
Rather than being the cause of Iraq’s poverty, persistent violence has become part of a cycle that feeds off the country’s weak institutions, in what Stanford economist Barry Weingast, calls the “violence trap”.
The key problem is that reducing violence in the long term requires alternative opportunities, and those opportunities tend to require reforms that respect the rule of law, protect property rights, and promote trade. Yet, those reforms rarely arise absent the kinds of opportunities that reduce violence in the first place. So poorly governed states like Iraq are trapped in a cycle of violence.
The long-term threat that violence poses to Iraq’s future is illustrated by the increasing role that Shia militias, often trained and funded by Iran and unconnected to the central government, now play in combating ISIS. Financial Times correspondent, Borzou Daragahi, argues that the Shia domination of the security services “will have the deepest and most lasting impact on Iraq.”
This deepening sectarianism is convincing some analysts that the best option, or perhaps rather the least bad option, is for Iraq to divide along ethnic or denominational lines.
Iraqi Kurdistan is already largely self-governed, and is even planning to issue semi-sovereign bonds to help finance oil industry development and its own fight against ISIS. Writing for Foreign Affairs, Marina and David Ottoway describe how the Kurdish example is prompting other provinces to seek greater autonomy from Baghdad.
Not all agree, but most arguments against partition do not put enough emphasis on Iraq’s poor governance. In Iraq, imperfect partition or poorly-executed federalism may be preferable to the current regime, despite the fact that conflicts over state finances, especially access to natural resources, would pose huge challenges.
Solving Iraq’s financial crisis requires fundamental reforms to how Iraq is governed, not just the defeat of IS and a sectarian reconciliation. But the slim prospects of reform from within the central government may drive some in Iraq’s periphery to push for more independence from Baghdad.
Frederic Hof, a senior fellow at the Atlantic Council, describes the growing movement for self-government among the victims of Syria’s civil war. It is likely that minorities in neighbouring Iraq, stung by years of corruption and abuse by their leaders, have similar designs.
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Reform Plan Could Tear Iraq Apart
Aug 12, 2015 5:12 PM EDTBy Noah FeldmanIt must be good news that Iraq’s parliament passed Prime Minister Haidar Al-Abadi’s anti-corruption reforms this week -- right? As with most things in Iraq, the answer isn’t as simple as it appears on the surface.
In the abstract, it’s a nice idea for Iraq to stop dividing the spoils of government office among its denominational and ethnic factions. But that structure, with all its obvious flaws and faults, was built into the DNA of the Iraqi constitution for a reason: to help quell Sunni Arab fears that the Shiite majority, in collusion with the Kurdish minority, would dominate the Sunnis in perpetuity and refuse to share oil revenue.
Today, with much of Sunni Arab Iraq under control of Islamic State, Sunnis have a much reduced say in Baghdad politics. Under these new circumstances, protesters, for the most part Shiite, have been objecting to the government’s old way of doing business. The leading Shiite religious figure in the country, Ayatollah Ali Al Sistani, reviewed and endorsed Abadi’s plan before it was publicly announced. Abadi told the public the reforms were inspired by the Shiite religious establishment.
The upshot is that the reform plan shows the Shiites' willingness to abandon the technique used to try to guarantee Sunnis some stake in the country’s future. For the moment, at least, there is no indication of what will substitute for it.
The centerpiece of the reform eliminates the offices of vice presidents and three deputy prime ministers. None of these posts were precisely as envisioned in the original Iraqi constitution. That document (I consulted on an earlier version) created a largely symbolic “presidency council” consisting of a figurehead president and two figurehead vice presidents. The idea was to make sure that there would be at least one Sunni Arab, one Kurd and one Shiite close to the symbolic head of state. In practice, three vice presidents were in office until Tuesday, all of whom are now out of a job. They included one Sunni Arab, Usama al-Nujaifi; one Shiite, Ayad Allawi, whose party mostly represents Sunnis; and one Shiite, Nouri al-Maliki, who was the powerful former prime minister ousted to make room for Abadi and still competitive with him. (The symbolic president, Fuad Masum, is a Kurd, and he’ll stay in office).
The three deputy prime ministers weren’t mentioned in the constitution at all. But, again, the structure was designed to produce inclusiveness. One of them, Saleh al-Mutlaq, is one of the most important Sunni politicians in the country, a one-time Baathist originally from Fallujah who strove to represent Sunni Arab interests in the cabinet.
To be fair to Abadi, there’s a strong argument that it’s wise for Iraq to eliminate these offices, together with the expensive security protection and many perquisites enjoyed by those who held them. Sectarian politics tend to perpetuate sectarian divisions.
To make matters worse, the positions haven’t successfully fulfilled their function of helping to hold the country together. After the U.S. withdrew from Iraq in 2007 and lost leverage over the Baghdad government, the Iraqi government reneged on promises made to Sunnis as part of the effort to end the Sunni insurgency. Disillusionment with Baghdad is one reason at least some Iraqi Sunnis are participating in Islamic State or at least tolerating its rule in the Sunni-majority parts of the country.
Meanwhile Iraqi Kurdistan has taken advantage of the rise of Islamic State and the weakening of the Iraqi state to expand its territory in contravention of the constitution. The important development here has been the Kurdish takeover of Kirkuk: It is (or was) an ethnically mixed city whose character and control were explicitly reserved by the constitution because the Kurds wanted it and Iraq’s beleaguered Turkmen minority feared it would lose its position there. Today, Kirkuk has become Kurdish, and it’s totally unrealistic to think that will ever change.
The point is that the existing constitutional and governmental structures designed to produce power-sharing have largely failed. Getting rid of them therefore seems superficially plausible.
The problem is that there’s no plan to substitute some new guarantor of national cohesion or at least something less than civil war. With Sunni Arabs largely out of the political picture in Baghdad, and the Kurds satisfied for the moment with their de facto autonomy and gradual expansion, there’s no one to tell the Shiite majority that it better find some way to bring the country together again.
One possibility is that, at this point, the Shiites just don’t care. The area controlled by Islamic State doesn’t have significant oil reserves. For the moment, the militant group isn’t immediately threatening Baghdad. From the Shiite perspective, the status quo perhaps doesn’t look so bad. A Shiite statelet in the rump of the former Iraq would include Baghdad as well as the Persian Gulf refineries and ports.
But if Abadi is thinking that he doesn’t need to give Iraqi Sunnis any incentive to take part in a unified Iraq, he’s making a big mistake. Islamic State won’t be satisfied in the long run with a desert enclave. It’ll eventually make a play for Baghdad, with its significant Sunni population. If Baghdad’s Sunnis see no future in a Shiite Iraq, they’ll side with Islamic State when that day comes. That could turn Baghdad into Beirut circa 1975.
Abadi’s reforms should therefore be met with a warning: Make sure you have some strategy for keeping the country together. Patronage has more or less failed. But it may have been better than nothing.
http://www.bloombergview.com/articles/2015-08-12/reform-plan-could-tear-iraq-apart
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Fitch Ratings: Iraqi Economy at Risk of DefaultAdding to embattled country's woes, Fitch Ratings grades Iraq lowest possible rating, B-.BFirst Publish: 8/7/2015, 3:44 PM
Shia militiamen in IraqReutersFitch Ratings graded Iraq Friday as being at risk of default due to insecurity, financial difficulties and poor governance, in its first rating of the country.
The Islamic State terrorist group (ISIS) overran large areas of Iraq last year and the country is still battling to regain ground, while lower oil prices have hit its petroleum-dependent economy.
"Political risk and insecurity are among the highest faced by any sovereign rated by Fitch," the agency said, explaining Iraq's B- rating with a stable outlook.
All B ratings "indicate that a material default risk is present."
Fitch said it forecasts a double-digit deficit for Iraq this year "owing to lower oil prices, higher military spending and costs associated with civil conflict", and that debt will reach 51 percent of GDP by the end of 2015.
Iraq is almost entirely dependent on oil for funds, and Fitch said the country's non-oil GDP contracted by nine percent last year, a situation that will likely worsen in 2015.
And "Iraq scores the worst of all Fitch-rated sovereigns on the composite World Bank governance indicator, reflecting not only insecurity and political instability but also corruption, government ineffectiveness and weak institutions," it said.
Iraq's inadequate finances have resulted in already poor services worsening even further, sparking nationwide protests in which demonstrators accuse the political class of being incompetent and corrupt.
And while the country's security forces have retaken some areas from ISIS, the jihadists still control large parts of Iraq, including second city Mosul and most of the western province of Anbar.
http://www.israelnationalnews.com/News/News.aspx/199175#.VcUsHfl-41c
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BAGHDAD — Tens of thousands of angry Iraqis took to the streets to demand changes to their government Friday in a potent challenge to Prime Minister Haidar al-Abadi from his own Shiite constituency, including the country’s powerful militias.
Chanting crowds thronged Baghdad’s central Tahrir Square and jammed the main streets around it, some calling on Abadi to fire corrupt ministers and others urging more sweeping changes to the entire system of governance installed after the U.S. invasion of 2003.
The protest was the biggest in a surge of demonstrations that have erupted across the country over the past week as Iraqis enduring an unusually intense heat wave vent frustration with their government, which has proved unable to provide basic services 12 years after the invasion left the country’s infrastructure smashed.
The numbers in and around Tahrir Square far exceeded a much smaller demonstration a week earlier that had been organized by an assortment of secular activist groups to protest the lack of electricity at a time when temperatures are routinely hitting 120 degrees or more.
Friday’s, in contrast, had the backing of the powerful Shiite factions whose militias are leading the fight against the Islamic State and who have increasingly been agitating for greater political power. It also had the support of the highly influential religious leader Ayatollah Ali Sistani, regarded as the voice of Shiite moderation.
In a statement issued at Friday prayers, one of Sistani’s top aides called on Abadi to do more to combat widespread corruption in his government.
“What is needed from [Abadi] is to be more daring and braver in his reforms,” said the aide, Ahmed al-Safi.
Abadi responded with a statement vowing to heed the protesters’ demands.
“I promise to announce a comprehensive reform plan,” he said in the statement.
Similarly large protests were held across the Shiite south, including in the cities of Basra, Najaf, Karbala and Nasseriyah, underscoring the building challenge to Abadi, who was appointed a year ago at the urging of the United States to bring new impetus to the fight against the Islamic State. But he has struggled to wield his authority on a government widely perceived as corrupt and ineffective, and the power of the non-state militias has further eroded his ability to act.
Some of the demonstrators called directly for Abadi’s resignation.
“You have killed our joy and stolen our dreams. We don’t want you anymore,” said one banner held aloft above the crowd, which included families and older people who said their sons were fighting with the militias.
Though all the demonstrators complained about corruption and the lack of services, there were noticeable differences in their demands, reflecting rifts emerging among Iraqi Shiites as the fight against the Islamic State unfolds.
Supporters of Qais al-Khazali, who heads the powerful Iranian-backed Asaib Ahl al-Haq militia, echoed his demand for the abolition of Iraq’s elected parliament and its replacement with a presidential system of government.
“If you think you can carry out reforms, we are with you,” Khazali said in a televised statement late Friday night. “If you think you can’t, resign.”
The protesters also included a sizable number of supporters of former prime minister Nouri al-Maliki, who suppressed similar demonstrations against the corruption of his government four years ago by detaining and intimidating organizers. Maliki, who has not attempted to hide his hopes of returning to power, issued a statement calling on Abadi “to hit corrupt officials financially and politically.”
Many demonstrators said they had turned out only to demand what Lamia Fadhil, 29, called “a decent life.”
“For more than 10 years the government didn’t provide anything for us. No electricity, no services and no jobs,” she said. “That’s it. We’ve had enough
Iraqi protesters shout slogans and carry Iraqi flags during a demonstration at Tahrir Square in central Baghdad on Aug. 7. Thousands took to the streets in the different provinces of Iraq, fueled by anger over electricity shortages and demanding better services, economic reforms, and the end of corruption. (Ali Abbas/EPA)-
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Why do we have an Appendix?
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Iraq marks a relative rise in the monthly and annual inflation
Wednesday, 22 July 2015 14:08
Shafaq News / The Ministry of Planning announced in Wednesday, rising inflation for March index with percentage (0.4%), an annually rise by (2.2%)
while confirming that three Iraqi provinces were not included because of the security situation witnessed in those provinces.
The ministry’s spokesman , Abdul Zahra al-Hindawi said in an interview received by Shafaq News that , The Central Bureau of Statistics of the Ministry completed the inflation report for June 2015 on the basis of field data collection on the prices of goods and services components of the consumer basket from a selected sample of outlets in all governorates of Iraq noting that these rates calculate goods , services food, rent, transportation, communications, health, education and others, which the consumer use.
He explained that the monthly inflation index for June rose by 04%, indicating that the annual inflation index during June compared to the same month of 2014 rose by 2.2%.
He noted that the rise was influenced by a rise in housing prices by 4%, and rising food section prices and non-alcoholic beverages at a rate of (0.9%) in June 2015 compared with the same month last year, pointing that the survey which was conducted during last June did not include three Iraqi provinces because of the security situation in those provinces.
He also explained that the provinces not covered by the survey included the Nineveh, Salahuddin and Anbar, pointing out that the inflation index base rose during June at a rate of 0.4% in May compared with the previous month and by 2.1% for June 2014.
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Sounds like a tactical move to try and scare dinar holders to sell.
Not sure how that would help. They would only sell to new investors and it would not lower the money supply.
4.1 million barrels a day. The second largest oil producer in opec. Bankruptcy REALLY. SOUNDS LIKE THEY NEED TO WAKE UP AND SMELL THE CRUDE.
Oil at $51 a barrel and we are paying well over $ 4.00a gallon here in Kaliforniastan
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Deleted Topic Markinsa. I respect your opinion so i'm glad to know it was not you.
I guess Its Ok to post news articles with videos of beheadings and murders but SHHHHH dont mention sex.
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Censorship is bad. Typical Moral minority tactic
Censorship is fascism and I'm sure you know it
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Actually, Iraq is the oil market's biggest problem
Akin Oyedele
Jul. 20, 2015, 8:35 AM 5,938 4
iraq oil gushREUTERS/Essam Al-SudaniIraqi workers near a pipeline as it ejects oil at Al Tuba oil field in Basra, southeast of Baghdad, on February 19.
There's a bigger threat to oil prices than Iran.
Iraq.
Last week, Iran struck a nuclear deal with several world powers that, among other things, will end an oil embargo and allow the country to increase production for export.
Analysts have begun to worry that the extra supply — estimated by Goldman Sachs at up to 400,000 barrels a day — could worsen the already flooded market.
In a note to clients on Friday, however, JPMorgan analysts said Iraq was a bigger, more immediate concern to the market.
The firm wrote (emphasis added):
Iran's agreement with the P5+1 solidifies the case of increased production in Q1. However, it is arguably additional supplies from Iraq that are pressuring world oil prices more than Iran at this juncture. Iraqi production has risen consistently over recent quarters, but surged ahead in 2Q2015 prompting us to conclude that Iraq will likely overtake Saudi Arabia as the biggest contributor to OPEC growth this year.
The full potential of Iranian oil exports is not expected within the next year, because the production infrastructure still needs to be brought back to life.
And so Iraq's surging production is a more immediate threat to oil prices, which last week fell for a third straight week.
On Monday morning, West Texas Intermediate crude futures were slightly lower, and fell to about $51 a barrel.
Writing to clients on Friday, Deutsche Bank's Michael Hsueh noted that Iraqi output surged to a record high of 4.1 million barrels a day in June.
"In comparison to other OPEC members, this means that Iraqi excess production at 920 kb/d above its inferred Iran Agreement quotas is second only to Saudi Arabia at 1,670 kb/d above quota," Hsueh wrote.
Here's JPMorgan's forecast of Iraqi oil production:
Screen Shot 2015 07 20 at 7.51.22 AMJP Morgan
And via Deutsche Bank, this chart compares how much OPEC members have pumped above their inferred quotas, with Iraq's output surging in June, second only to Saudi Arabia's:
Screen Shot 2015 07 20 at 8.05.38 AMDeutsche Bank
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I wonder who gets the kids
Smart Kitty!bad bad bad
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I wonder what our IQD will be worth if this happens. 10 fils on the dinar?
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WHAAAAAAAATTT ! . . . the World is NOT FLAT ? Now just a gosh darn minute here !!!!
Lets not get our panties in a wad . . . there's so much nonsense, news wise coming out of Iraq these days, nobody can really get a decent sounding on what the hell is actually going on. I doubt Iraqis have a clear grasp of what that corrupt mob called the GOI is really doing either
How did you know I like to wear panties? They do tend to creep up on you
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You do seem to want to antagonize people here Caz. Whats your motive? This is the LOP section after all. Why do you come down here You come here often to do just that.Here is a few of your derogatory statements in this one thread.
lyin thru his teeth partner in crimemust be 24/7 darkness, with no happiness or laughter-saI'd say have a Great weekend but I wouldn't want to offend anyone here in Da TankI'm constantly amazed by those that say they do (pro/con). Comical reallyLOL u guys crack me upI don't pretend to be a currency expert unlike the cartoon characters that NOW have become such here in Da Tank.Here's hopin ya'll discover there is a life other than negativityIn my opinion these are all childish statements intended to provoke an argument and singling out members here which i thought was against the rules.
I only see two other members here you are referring to.
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This was in Lopster section yesterday. I am cautious to think this could be good in any way shape or form. Insolvent banks is a good thing?
Thanks for the read
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99% of the dollars the CBI sells goes right back out of the country to buy food and hard goods. In fact most dollars are electronic and dont even come into the country.
The other 1% is accumulated to make large purchases over time. If an Iraqi has an extra 120,000 dinar he would probably convert it to a 100 USD bill. He expects that to always be worth $100. Like we would use a CD. Dont expect to see a lot of USD 5,10s and 20s used for daily purchases.
The GOI treasury must be almost empty as the auctions are more than they could be getting in oil sales over the last 3 months. So they have been dipping into whatever surplus they had.
GOI hard goods purchases are done directly in dollars. We dont see those amounts in the auctions. So they could be spending a lot more.
Last I heard Rock the Central was independent of the GOI. I think you are right that the GOIs treasury is empty but i have not seen anything at all that leads me to believe they are using the Centrals Reserves to pay bills. As far as the auctions go the Cash transaction are different every day but usually average approx 10-20 % of the total auctions
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Where will they put that oil.?
The worlds reserves are at capacity. seems like they are cutting their own throats here with increasing production.
Also it is not up to the IMF to determine their production levels. Its just not up to them.
Thanks Mr. Dinar Thug
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Some of you squirm for no reason, relax. There will be no loans to Iraq prior to the revalue.
So I guess you were wrong??
Iraq Gets World Bank Funding To Rebuild War-Struck RegionsBy Reuters on July 12 2015 12:10 PM EDT- 1
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Iraqi Finance Minister Hoshiyar Zebari (right) shakes hands with World Bank Director for the Middle East Ferid Belhaj during a news conference in Baghdad July 12, 2015. Reuters/Khalid al-MousilyADVERTISEMENTBAGHDAD -- Iraq and the World Bank signed a $350 million loan agreement Sunday to fund emergency reconstruction in towns recaptured from Islamic State group militants, a deal Baghdad said marked the first international help to rebuild areas devastated by war. Finance Minister Hoshiyar Zebari said about one-third of the money would go toward repairing roads and bridges, with a similar amount allocated to restoring electricity networks, water and sewage.
Iraq faces a budget deficit of as much as $20 billion this year as it grapples with low oil revenue and the high cost of war with Islamic State group insurgents. The militants hold much of northern and western Iraq, but have been driven out of parts of Diyala and Salahuddin provinces north of Baghdad by Shiite militia, Kurdish peshmerga and Iraqi security forces, backed by U.S.-led airstrikes.
The extensive damage from those battles has left the Iraqi government, whose revenue has been battered by the halving in world oil prices, appealing for international help.
“This is the first direct tangible assistance for the reconstruction and stabilization efforts by the government to normalize life in the areas liberated from ISIS,” Zebari said at a signing ceremony in Baghdad, referring to the Islamic State group. He said Sunday’s deal granted Iraq a 15-year loan at around 1 percent interest, with a five-year grace period.
Iraq has also received pledges of financial support for a government reconstruction fund from the U.S., the European Union, Japan and individual European countries, Zebari said, but Sunday’s loan was the first to materialize.
Iraq’s Worst Crisis
Iraqi forces recaptured Tikrit, hometown of former leader Saddam Hussein, three months ago, in the biggest gain by government forces since Islamic State group fighters swept through northern Iraq in June 2014. But extensive damage and leftover bombs, as well as Sunni residents’ fear of retribution from mainly Shiite fighters who retook Tikrit, mean only 4,000 families have returned.
A World Bank loan document said there was a need to restore basic services quickly and to show that the “state is re-establishing its presence and credibility.” Iraq was “possibly going through the worst and most dangerous challenge to its territorial integrity, economic sustainability and human development capacity,” it said.
The World Bank is also preparing a separate $1 billion loan to help Baghdad deal with its budget deficit.
Bank officials say the program, awaiting approval by the bank’s board, aims to improve energy efficiency, reform state-owned enterprises and improve the efficiency of budget spending.
“We would like to be as fast with this budget support as we have been with the investment operation,” said Ferid Belhaj, the bank’s Middle East director. “We are looking forward to finalizing the process by … September or October.”
A third tranche of assistance of $355 million, aimed at improving road networks including links to the southern port of Umm Qasr, was approved by the World Bank in December 2013, but was ratified by Iraq’s new parliament only in March.http://www.ibtimes.com/iraq-gets-world-bank-funding-rebuild-war-struck-regions-2004637
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Why is our so called " Rich Country " so far behind in all payments and borrowing from everyone that will lend? I have always heard and been told here that Iraq is rich beyond belief and that's why a Revaluation is possible???
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I thought Bubbles was Dinar Thugs cousin?
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Because Its not the GOI's money. The CBIs foreign reserves could be loaned to the Goi but it does not belong to them. The CBI is independent
Thats like saying the Feds money is the US governments money. It's not
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Thanks Ron
Nice recovery for the market rate at 1237 today
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Premature excitement about Iraq’s new government reforms
in Opinions, Perspectives, and Your Two Cents on the Iraqi Dinar
Posted
Premature excitement about Iraq’s new government reforms
Following more than a decade of decrepit government performance and spurred by popular protests in many parts of the country, Iraqi Prime Minister Haider al-Abadi proposed a reform plan on Aug. 8, which was then expanded and approved unanimously by parliament on Aug. 11.
The plan was met with widespread approval within Iraq and abroad: Protesters carried signs saying that they were “delegating” the prime minister to reform the government; the Shiite religious establishment in Najaf offered its full support; Iraqi and international commentators were also quick to praise the plan.
However, having reviewed it in detail and having followed developments in Iraq’s governance structure for the past 10 years, I felt deeply depressed after reading Abadi’s plan. Had I been given an opportunity to do so, I would have voted against it.
Those who have offered their support ignore a number of key aspects of the plan, including the historical context. The fact is that, in 2006, 2010 and 2014, after each of Iraq’s three post-constitution governments were formed, “programs” were drafted and approved by parliament, each of which look almost exactly like Abadi’s reform program. They all promised to “revitalize the anti-corruption agencies,” broaden Iraq’s tax base and improve services. And, just like Abadi’s plan, they were totally silent on how these objectives would be achieved. What’s more, following Iraq’s previous round of national protests in 2011 after the outbreak of the Arab spring, then-Prime Minister Nouri al-Maliki canceled all ministries of state, stated he would establish new anti-corruption measures and that ministries should merge to streamline the state bureaucracy.
If most of Abadi’s plan sounds familiar to longtime Iraq watchers, it is because it has indeed almost all been said before.
Some enthusiasts have argued that, this time, the pressure to reform from the street and from the religious establishment will be too great to ignore, but those exact sentiments were expressed following the 2009 and 2010 elections and the 2011 protests. As of yet, Abadi’s supporters have been unable to articulate exactly why government will have to get its act together this time, most probably because we have in fact not reached the critical point of no return just yet.
And while few will dispute that al-Maliki should be sidelined, it is worth noting that al-Abadi’s own record is not particularly inspiring either. During al-Maliki’s entire tenure as prime minister, al-Abadi never appeared to differ from his party colleague on any important policy matter. He also does not have any major accomplishments to his name from his own eight-year tenure in parliament.
Finally, his performance as prime minister over the past year has not been particularly impressive. Those who followed Abadi’s parliamentary career clearly prefer him to al-Maliki, but they are equally reluctant to celebrate Abadi as the hero of modern Iraq (just yet).
In addition, the constitutional context in which the reform plan was written is not particularly reassuring. Although Abadi claims to want to reform the constitution, that text makes it clear that the only way in which it can be amended is through a referendum, which would take years to organize in the current security climate. This means that any major reforms passed in the current context will either have conform with Iraq’s current decrepit constitution, or they will necessarily open the door to an even more lawless environment than the one we are living in now, in which any sitting prime minister can change the constitution at will. And that is why the proposal to cancel the vice president’s position is so problematic: Contrary to what some commentators have written, several constitutional provisions actually require for there to be a vice-president.
Furthermore, Iraqi law actually provides that it is the president’s prerogative to nominate his or her vice-president; the prime minister should not have any authority on the matter. The plan will be challenged legally and politically and has put the entire constitutional system of government in doubt, all for changes that will not make much difference in practice.
Finally, the issue that Abadi’s supporters appear to ignore the most is the plan’s actual content. Its proposals are minor, hopelessly vague, dangerous in their tendency to concentrate power in the PM’s hands or impossible to implement.
Most commentary on its substantive provisions focuses on the elimination of certain offices, including the vice president and the deputy prime minister positions and the revoking of their security detail among other privileges. While these are all welcome measures, on their own, they will not make an important difference. Compared to the amount of money that has been stolen from the state since 2003, the funds that will be saved through these measures is actually very low. They will also not make the state more effective, given that those offices had little impact on the state to begin with. The suggestion by some international observers that this measure risks alienating Sunnis by depriving their leaders from senior positions is completely misplaced given how unpopular and irrelevant these leaders have become in recent years.
The plan also calls to eliminate the system through which government portfolios are distributed on a sectarian basis in favor of a more meritocratic system. It would be generous to describe this proposed measure as part of a “plan” given that it does not include any detail whatsoever on how this particular objective will be met. The political parties that populate parliament and control government (including and perhaps even especially Abadi’s own Dawa party) have treated ministries like private treasure-troves that they can plunder at will since 2003. That is a privilege that they will be unwilling to surrender without a fight.
Parliament may have voted in favor of the general principle, but the real challenge will be to develop a plan that eases the parties out of all levels of the state’s bureaucracy, ends partisan abuse of government offices and ensures that parliament will accept a plan that will deprive them of their cash cow. Until such a plan is developed, there is nothing to discuss; this proposal has been on the table with the same lack of detail for years now.
Just as unrealistic is the plan’s time frame, which requires for a huge number of senior officials to be confirmed by parliament in the next few weeks. If actually carried through, there is no way that more than a small number of these individuals will be properly vetted before parliament makes its decision, opening the doors wide for yet more political appointments and abuse.
Even more worrying is the way in which the plan concentrates power in Abadi’s hands. The plan grants the prime minister the authority to dismiss governors and even directly elected local officials, in case of “poor performance, violating the law or corruption.”
There are so many problems with this provision that they are difficult to count.
First, there is no reason to believe that the prime minister will be a good judge of who needs to be dismissed, particularly given how loyal he has been to his own political party over the years. Will the prime minister be just as willing to dismiss a political ally as he is an official from a rival party? If so, that will probably be a first in world politics.
Second, the measure goes completely against the constitution’s decentralizing features and the increasing tendency among many of Iraq’s provinces toward greater autonomy, instead concentrating power not just in Baghdad but directly in the prime minister’s hands. In that respect, Abadi’s plan has taken its cues from a long and disastrous Iraqi tradition of centralism and clearly illustrates his incapacity to seek modern solutions to Iraq’s long-standing problems.
The third reason why this particular measure is so worrying is its overt contempt for institutional safeguards. In any constitutional system, the courts are supposed to judge whether officials should be sanctioned for acts of corruption. Systems of government cannot function properly without oversight from an independent judiciary, and this plan has usurped that authority by granting Abadi the authority to judge members of the political class.
As a result, Abadi’s plan is actually a lucid illustration of how little Iraq’s political elites understand about governance. Iraq’s court system is known to be rife with corruption. Report after report has detailed how executive abuses have been totally ignored by judges since 2003. There is a desperate need to reform the judiciary, in order to provide an independent and credible check against executive abuses, and yet the only mention of the issue in Abadi’s proposal is a requirement that the judiciary submit a reform plan of its own. This is not only an admission that the government does not have an opinion of its own on this issue, despite the fact that it has been pressing for years; but it is also a serious error of judgment to consult a judiciary that is corrupt to the bone on the matter of its own reform.
Worse still, the plan calls for the courts and anti-corruption agencies to be “activated” and corruption cases sent to them “immediately.” Rather than establish institutional mechanisms that will ensure that no act of corruption, when discovered, will go unpunished, the plan relies on the prime minister’s discretion to allow for outstanding cases to move forward, which will always be politicized. In so doing, Abadi has failed in exactly the same way that his three predecessors (Allawi, Jafari and Maliki) did and which I document in detail in my book, “The Struggle for Iraq’s Future.”
One analyst commented that were the plan to be successful, Abadi could become the “Mandela of Iraq.” However, one of the South African transition’s most important legacies was the establishment of an independent and progressive constitutional court and strengthened rule of law. Abadi, and anyone who is interested in genuinely improving Iraqi governance should pay close attention to that lesson. Abadi’s failure to take this issue seriously is evidence of the poverty of ideas and the absence of capacity at the highest levels of Iraq’s government.
Even if Abadi manages to satisfy the narrow political objective of sidelining his political rivals, governance in Iraq is extremely unlikely to improve without significantly more effort than has been offered thus far.
A few sacrificial lambs may be cast out of the political system to appease protesters, until the weather improves and demand for electricity declines, in the hope that the numbers of demonstrators will also recede. However, unless the current plan is seriously reconsidered, the political parties will be impossible to uproot from government departments given the absence of an effective police force and an independent court system. Policy formation and implementation will remain as weak as it is today, and the country will continue to drift into an economic morass from which it may not recover.
Barring a surge in oil prices and/or production sometime over the next two years, Iraq is heading for a crisis that will lead to even worse services and even more popular anger at the political elite. The outcome of ever increasing popular anger without any genuine hope of improvement is likely to be very painful.
Some more cautious analysts have described Abadi’s plan as a “step in the right direction.” In fact, on its own, the plan does almost nothing and has all been said before. If Abadi really wants to impress and offer some genuine hope for our country, he has a lot more work to do.
Zaid Al-Ali is a lawyer specializing in comparative constitutional law and was a legal adviser to the United Nations in Iraq from 2005 to 2010. He is the author of “The Struggle for Iraq’s future: How Corruption, Incompetence and Sectarianism Have Undermined Democracy.” (Yale University Press, 2014) http://www.washingtonpost.com/blogs/monkey-cage/wp/2015/08/14/premature-excitement-about-iraqs-new-government-reforms/