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IMF Staff Completes 2019 Article IV Mission on Iraq.

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On 7/27/2019 at 1:33 PM, DWS112 said:

Yes miquel, you could be right. The CBI shows Aug1 as a possibility: LINK

 

 

The table lists dates in Chronological order consistently. Eid ul Asha is slated for August 10 and 11 in 2019 and Islamic New Year is Friday August 30 and ends Saturday August 31. The dates on the tabl at the link are asteriked, meaning that they are approximations to when the table was created. These two still occur in August. Also the New Year occurs after Eid ul Adha and the table shows the first for the New Year but after Eid ul Adha in August. They are trying to show it will occur around that time of the first of September. Unless the first of August comes after the 14th of August, chronologically. 

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I know a lot of us were waiting on this report from the IMF but quite frankly the report was mixed. While it had its good points, the board was not pleased when they noted "The SBA went off track after the second review in August 2017, and expires in July 2019".

 

The main conclusion of the board stated that Iraq met the criteria for post-program monitoring (PPM) and Iraq's outstanding obligations to IMF are expected to remain above the SDR 1.5 billion threshold until April 2020. 

 

While I personally do not see an RV happening this year or next, due to the nature that Iraq has to address the weakness in the two largest banks and in public sector investments. Iraq also needs to address a risk strategy with oil prices. Maybe the reason for addressing the oil ministers next week rather than an Oil and Gas Law draft meeting. 

 

The IMF specifically pointed out 

- Financial sector. Bank supervision should refocus on the two largest and troubled state-owned banks, which need to be audited and restructured prior to recapitalization over the medium term.

 

- 27. The authorities were unconvinced of the urgent need to modify fiscal policy settings. The authorities also viewed reining in current spending as undesirable politically and socially at this stage, and signaled their intention for another expansionary budget in 2020.

 

(These two above statements are why I see no RV happening this year or in 2020. Although the next window might, might be, might be the Summer of 2020. It is a possibility but the percentage of happening is not too high)

 

Going forward we should see Iraq addressing the following:

-          See restructure work on the two largest Banks Rafidain and Rasheed (R&R)

-          See audits conducted on the R & R banks

-          Improvements in public sector investments (key to other countries rv)

-          Better bank tracking systems

-          Strengthening of the  anti-corruption framework

-          Implementation of the recommended Debt, Investment, Growth and Natural Resource (DIGNAR) model

 

I want this RV to happen as much as anyone; however, with a mixed conclusion and knowing that Iraq went afoul of the SBA in 2017, I began to have my doubts about the RV happening as soon as we all would like. The charts show projections out to 2024 and an exchange rate of 1182 in 2024 but these are just are standard 10 year numbers for financial projections. This does not indicate the RV will happen in 2024 or after, nor does it indicate the RV will happen sooner. The original projections from when the 2016 SBA was agreed to were not correct. For example the reserve remained above the original projections when the SBA was agreed to. So the exchange rate at the bottom of the charts after 2020 I take notice of but do not take stock in them. Anything really after 2 to 3 years is just guess work and to be taken as a guide. If Iraq does implement the changes this year and next, those numbers will definitely be incorrect. The good news is that the current program rate of 1190 is projected to be 1182.  Honestly, this was just not a good report for Iraq and an RV of the dinar. I remain strong in the belief that Iraq will reinstate their revalued currency in the Forex market, but that date, in my view, has been pushed back until at least after April 2020 (which is roughly less than a year). And why I feel the next window of opportunity will be the Summer of 2020, but that timeframe is pipe dream at this time. It all depends on how well Iraq does in the coming months. August starts the new budget negotiating season. Look forward to the new budget being passed quickly. 

 

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Iraq spending spree questioned

 
29 Jul 19

Iraq has been warned that its fiscal position is expected to deteriorate without policy changes as it continues to face “daunting” challenges.

The IMF has said the country’s 2019 budget will reverse recent progress in reducing vulnerabilities, with current spending expected to increase by 27% year-on-year.

The fund is encouraging authorities to seize opportunities presented by an improved security situation and higher oil prices in order to implement reforms aimed at ensuring stability.

In an ‘Article 4’ report taking stock of Iraq’s economic performance, the Washington-based organisation has said the country has benefited from an improved security situation and a recovery in oil prices.

Large fiscal and current account surpluses in 2018 – at about 8% and 6% of GDP, respectively – allowed the government to reduce domestic debt and accumulate fiscal buffers, with gross international reserves reaching $65bn by the end of the year. 

However, post-war reconstruction and economic recovery have been slow, the IMF said, and non-oil GDP rose by only 0.8% year-on-year in 2018. Overall GDP contracted by about 0.6% as oil production was cut to comply with an agreement by the OPEC+ countries. 

The 2019 budget implies a sizeable “fiscal loosening” that will reverse the recent reduction in vulnerabilities, the IMF has said, with current spending set to increase by 27% largely due to higher public sector wages, and revenues dampened by the abolition of non-oil taxes. 

As a result, the budget is projected to shift to a deficit of 4% of GDP in 2019, and reserves are projected to decline, falling below adequate levels. 

In its assessment, the IMF said that while it was encouraged by how Iraq’s economy had strengthened, the country continued to face “daunting challenges”.

Its report stated: “Social conditions remain harsh, post-war reconstruction progress is slow, development needs are large, and institutional weaknesses are significant. 

“Volatile oil prices and a difficult regional and geopolitical environment pose additional difficulties.”

IMF economists are recommending that Iraq’s economic policymakers strengthen fiscal buffers with broader reforms to manage oil revenue more effectively and encourage growth.

Efforts to contain primary spending and boost non-oil revenues are essential for maintaining fiscal and debt sustainability, they argue, and recommend that spending measures should give priority to containing the growth in wage bill and lowering electricity subsidies.

They have stressed the need to strengthen public financial management to ensure public spending is appropriately monitored and to reduce corruption.

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On 7/28/2019 at 8:26 AM, DoD said:

 

yota, what do you think would have happened today if they would have put 3.25 or 1.27 in that space? All the Dinar would be gone on EBay and total chaos in the Dinar world. 

I’m thinking 1182 was as good a number as any to use there....

 

Totally agree with you, why would the IMF advertise -Hey world look you could be very rich buy up the dinar it's gonna revalue soon, and here is when.

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5 minutes ago, fancy said:

 

Totally agree with you, why would the IMF advertise -Hey world look you could be very rich buy up the dinar it's gonna revalue soon, and here is when.

Exactly.

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On 7/28/2019 at 9:34 AM, Flyboy42 said:

I saw that too. Sounds like the IMF is recommending they stay on the peg at 1182 thru 2024.

And the IMF back in 2017 said that Iraq needs to make a sizeable fiscal adjustment and create monetary space....can do that at 1182! 

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It's always been said just before the rv there will be a lot of news coming out from cbi that they aren't going to revalue 

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5 minutes ago, screwball said:

The report also talks about a change to fiscal policy...

 

Right U Are .... also, did they not recommend implementing the FM Law ? 

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IMF. 2019 article IV consultation

 

Some notes of mine

 

I made it easy to follow along imo 

 

🤓

 

 

Avail.....verb
LITERARY
help or benefit


Iraq continues to avail itself of the transitional arrangements under Article XIV, Section 2 but no longer maintains any exchange restrictions or multiple currency practices subject to Article XIV, Section 2, and currently maintains one multiple currency practice (MCP) subject to Fund approval under Article VIII, Section 3. (30)

(Sub note: 30)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
The authorities have imposed a requirement that, to access the CBI foreign exchange window, a purchaser must have at least one bank account that has been opened for a minimum of six months. This requirement does not apply for access to foreign exchange from other sources, including purchases of foreign exchange from commercial banks’ own resources. Staff will monitor the implementation of this requirement to ascertain whether any undue burdens on access to foreign exchange for current international transactions emerge from its application in practice.
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx


The MCP arises from the lack of a mechanism to ensure that the exchange rate at the CBI foreign exchange window and the market rates (retail exchange rates of commercial banks and exchange bureaus for the sale of foreign currency from sources other than the CBI foreign exchange window) do not deviate from each other by more than 2 percent.

A previously identified exchange restriction arising from an Iraqi balance owed to Jordan under an inoperative bilateral payment agreement has been eliminated.
---------------‐
Article XIV
Section 2.  Exchange restrictions

A member that has notified the Fund that it intends to avail itself of transitional arrangements under this provision may, notwithstanding the provisions of any other articles of this Agreement, maintain and adapt to changing circumstances the restrictions on payments and transfers for current international transactions that were in effect on the date on which it became a member. Members shall, however, have continuous regard in their foreign exchange policies to the purposes of the Fund, and, as soon as conditions permit, they shall take all possible measures to develop such commercial and financial arrangements with other members as will facilitate international payments and the promotion of a stable system of exchange rates. In particular, members shall withdraw restrictions maintained under this Section as soon as they are satisfied that they will be able, in the absence of such restrictions, to settle their balance of payments in a manner which will not unduly encumber their access to the general resources of the Fund.



Article VIII
Section 3.  Avoidance of discriminatory currency practices

No member shall engage in, or permit any of its fiscal agencies referred to in Article V, Section 1 to engage in, any discriminatory currency arrangements or multiple currency practices, whether within or outside margins under Article IV or prescribed by or under Schedule C, except as authorized under this Agreement or approved by the Fund. If such arrangements and practices are engaged in at the date when this Agreement enters into force, the member concerned shall consult with the Fund as to their progressive removal unless they are maintained or imposed under Article XIV, Section 2, in which case the provisions of Section 3 of that Article shall apply.

Article V
(Section 1.  Agencies dealing with the Fund

Each member shall deal with the Fund only through its Treasury, central bank, stabilization fund, or other similar fiscal agency, and the Fund shall deal only with or through the same agencies.)







Article IV: Obligations Regarding Exchange Arrangements
1. General obligations of members
2. General exchange arrangements
3. Surveillance over exchange arrangements
4. Par values
5. Separate currencies within a member's territories


[ ] Schedule "C"

Schedule 😄 Par Values

1. The Fund shall notify members that par values may be established for the purposes of this Agreement, in accordance with Article IV, Sections 1, 3, 4, and 5 and this Schedule, in terms of the special drawing right, or in terms of such other common denominator as is prescribed by the Fund. The common denominator shall not be gold or a currency.

2. A member that intends to establish a par value for its currency shall propose a par value to the Fund within a reasonable time after notice is given under 1 above.

3. Any member that does not intend to establish a par value for its currency under 1 above shall consult with the Fund and ensure that its exchange arrangements are consistent with the purposes of the Fund and are adequate to fulfill its obligations under Article IV, Section 1.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
(Article IV Section 1)

Section 1.  General obligations of members

Recognizing that the essential purpose of the international monetary system is to provide a framework that facilitates the exchange of goods, services, and capital among countries, and that sustains sound economic growth, and that a principal objective is the continuing development of the orderly underlying conditions that are necessary for financial and economic stability, each member undertakes to collaborate with the Fund and other members to assure orderly exchange arrangements and to promote a stable system of exchange rates. In particular, each member shall:

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX


4. The Fund shall concur in or object to a proposed par value within a reasonable period after receipt of the proposal. A proposed par value shall not take effect for the purposes of this Agreement if the Fund objects to it, and the member shall be subject to 3 above. The Fund shall not object because of the domestic social or political policies of the member proposing the par value.

5. Each member that has a par value for its currency undertakes to apply appropriate measures consistent with this Agreement in order to ensure that the maximum and the minimum rates for spot exchange transactions taking place within its territories between its currency and the currencies of other members maintaining par values shall not differ from parity by more than four and one-half percent or by such other margin or margins as the Fund may adopt by an eighty-five percent majority of the total voting power.

6. A member shall not propose a change in the par value of its currency except to correct, or prevent the emergence of, a fundamental disequilibrium. A change may be made only on the proposal of the member and only after consultation with the Fund.

7. When a change is proposed, the Fund shall concur in or object to the proposed par value within a reasonable period after receipt of the proposal. The Fund shall concur if it is satisfied that the change is necessary to correct, or prevent the emergence of, a fundamental disequilibrium. The Fund shall not object because of the domestic social or political policies of the member proposing the change. A proposed change in par value shall not take effect for the purposes of this Agreement if the Fund objects to it. If a member changes the par value of its currency despite the objection of the Fund, the member shall be subject to Article XXVI, Section 2. Maintenance of an unrealistic par value by a member shall be discouraged by the Fund.

8. The par value of a member's currency established under this Agreement shall cease to exist for the purposes of this Agreement if the member informs the Fund that it intends to terminate the par value. The Fund may object to the termination of a par value by a decision taken by an eighty-five percent majority of the total voting power. If a member terminates a par value for its currency despite the objection of the Fund, the member shall be subject to Article XXVI, Section 2. A par value established under this Agreement shall cease to exist for the purposes of this Agreement if the member terminates the par value despite the objection of the Fund, or if the Fund finds that the member does not maintain rates for a substantial volume of exchange transactions in accordance with 5 above, provided that the Fund may not make such finding unless it has consulted the member and given it sixty days notice of the Fund's intention to consider whether to make a finding.

9. If the par value of the currency of a member has ceased to exist under 8 above, the member shall consult with the Fund and ensure that its exchange arrangements are consistent with the purposes of the Fund and are adequate to fulfill its obligations under Article IV, Section 1.

10. A member for whose currency the par value has ceased to exist under 8 above may, at any time, propose a new par value for its currency.

11. Notwithstanding 6 above, the Fund, by a seventy percent majority of the total voting power, may make uniform proportionate changes in all par values if the special drawing right is the common denominator and the changes will not affect the value of the special drawing right. The par value of a member's currency shall, however, not be changed under this provision if, within seven days after the Fund's action, the member informs the Fund that it does not wish the par value of its currency to be changed by such action.

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21 hours ago, Theseus said:

 

The IMF specifically pointed out 

- Financial sector. Bank supervision should refocus on the two largest and troubled state-owned banks, which need to be audited and restructured prior to recapitalization over the medium term.

 

- 27. The authorities were unconvinced of the urgent need to modify fiscal policy settings. The authorities also viewed reining in current spending as undesirable politically and socially at this stage, and signaled their intention for another expansionary budget in 2020.

 

(These two above statements are why I see no RV happening this year or in 2020. Although the next window might, might be, might be the Summer of 2020. It is a possibility but the percentage of happening is not too high)

 

Going forward we should see Iraq addressing the following:

-          See restructure work on the two largest Banks Rafidain and Rasheed (R&R)

-          See audits conducted on the R & R banks

-          Improvements in public sector investments (key to other countries rv)

-          Better bank tracking systems

-          Strengthening of the  anti-corruption framework

-          Implementation of the recommended Debt, Investment, Growth and Natural Resource (DIGNAR) model

 

Thanks 

 

Thanks Theseus, your analysis makes a lot of sense as well as several other thoughts in this thread.

Do you think the banking issues mentioned in the report is the reason the CBI is getting a new governor? I realize the announcement about the new CBI Governor was made before the report was publicized but maybe the proverbial “handwriting on the wall” was already noted. 

Goodness, I want the RV today but wishing and hoping won’t make it so. Until everything lines up correctly, it just isn’t going to happen. Imho, Maliki and ISIS are to blame for our lonnnngggg wait. 

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Thanks for your analysis. I personally havent read the report yet but look forward to doing so this week. One thing I am curious about - given the enormity of statements already mentioned) ((thanks Laid Back and others as well who have given their input refarding the statements conclusion)) is: when did the IMF initiaite its review, and how long sid they take to review it? ...as  It seems like some of the starements you highlighted have already been addressed.

 

In addition, although the lack of electronic tracking and auditing departments by the banks referenced  may not already be in place, it  doesn't mean that oother utside organizations such as those with three (3) letter names haven't alreasy done the work.

 

This is analogous to Trump's meeting with Kim in Vietnam -  and Kim's departure from.the meeting when learning the fact that we were already aware of ALL of North Vietnam's nuclear production sites - and not just the already cloaed one one that he offered to give up in his negotiations)....

 

I personally still have high hopes of what's to come - SUDDENLY - and soon!

 

Go RV!!!

 

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Editorial date:: 2019/7/30 13:53 • 50 times read
International Monetary Fund warns Iraq
{International: Al Furat News} The International Spotting Fund warned of Iraq's continued over-spending.
The IMF said in a report on Tuesday that Iraq's budget for the current year, "if the current spending continues as it is, it will eliminate any progress achieved by Iraq economically during the past years." 
He pointed out that "the projections indicate an increase in Iraqi spending by 25% per year, unless the authorities amend their financial laws and balance sheet items." 
The report noted that Iraq's economic situation "faces serious challenges, social conditions in the low and still severe."
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105446.jpg?width=750&&height=375

 
2019/07/30 12:09
  • Number of readings 107
  • Section: Iraq
  •  

The International Monetary Fund (IMF) warns Iraq not to continue with its current excesses

The International Monetary Fund warned on Tuesday, July 30, 2019, the Iraqi authorities to continue what he described as "extravagance" current.

"Iraq's current budget for 2019, if current spending continues as it is, will eliminate any progress Iraq has made economically over the past years," the IMF said, according to a report by Babel Finance International.

"Expectations indicate an increase in Iraqi spending by 25% annually, unless the authorities amend their financial laws and budget items," he said, describing the Iraqi economic situation as "facing serious challenges, social conditions in the low and still severe."

"The post-war reconstruction is going slowly, growth requirements are very high, institutional weakness is very clear, and volatile oil prices and geopolitical relations have a big role on the Iraqi economy," he said.


Follow the obelisk

http://almasalah.com/ar/news/175744/صندوق-النقد-الدولي-يحذر-العراق-من-الاستمرار-بـ-الاسراف-الحالي

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Iraq spending spree questioned

 
 
29 Jul 19

Iraq has been warned that its fiscal position is expected to deteriorate without policy changes as it continues to face “daunting” challenges.

The IMF has said the country’s 2019 budget will reverse recent progress in reducing vulnerabilities, with current spending expected to increase by 27% year-on-year.

The fund is encouraging authorities to seize opportunities presented by an improved security situation and higher oil prices in order to implement reforms aimed at ensuring stability.

In an ‘Article 4’ report taking stock of Iraq’s economic performance, the Washington-based organisation has said the country has benefited from an improved security situation and a recovery in oil prices.

Large fiscal and current account surpluses in 2018 – at about 8% and 6% of GDP, respectively – allowed the government to reduce domestic debt and accumulate fiscal buffers, with gross international reserves reaching $65bn by the end of the year. 

However, post-war reconstruction and economic recovery have been slow, the IMF said, and non-oil GDP rose by only 0.8% year-on-year in 2018. Overall GDP contracted by about 0.6% as oil production was cut to comply with an agreement by the OPEC+ countries. 

The 2019 budget implies a sizeable “fiscal loosening” that will reverse the recent reduction in vulnerabilities, the IMF has said, with current spending set to increase by 27% largely due to higher public sector wages, and revenues dampened by the abolition of non-oil taxes. 

As a result, the budget is projected to shift to a deficit of 4% of GDP in 2019, and reserves are projected to decline, falling below adequate levels. 

In its assessment, the IMF said that while it was encouraged by how Iraq’s economy had strengthened, the country continued to face “daunting challenges”.

Its report stated: “Social conditions remain harsh, post-war reconstruction progress is slow, development needs are large, and institutional weaknesses are significant. 

“Volatile oil prices and a difficult regional and geopolitical environment pose additional difficulties.”

IMF economists are recommending that Iraq’s economic policymakers strengthen fiscal buffers with broader reforms to manage oil revenue more effectively and encourage growth.

Efforts to contain primary spending and boost non-oil revenues are essential for maintaining fiscal and debt sustainability, they argue, and recommend that spending measures should give priority to containing the growth in wage bill and lowering electricity subsidies.

They have stressed the need to strengthen public financial management to ensure public spending is appropriately monitored and to reduce corruptionhttps://www.publicfinanceinternational.org/news/2019/07/iraq-spending-spree-questioned

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15 hours ago, screwball said:

Now in this report they say “sizeable fiscal loosening” youall  miss that ****!

"sizeable fiscal loosening" is not what you think it means - an RV. 

 

Have you ever loosened your belt after eating a rather large meal (gluttony).

 

In the report "sizeable fiscal loosening" refers to Iraq's excessive spending not a move towards RV. Didn't miss it. I said this was a mixed report that wasn't good for Iraq. The aforementioned article explains why.

 

Edited by Theseus
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201907180213431343.jpg
 

Kalgamesh Press / follow up

The International Monetary Fund (IMF) on Tuesday warned the Iraqi authorities against continuing financial waste, pointing out that continued spending in its current form would eliminate any economic progress achieved by Iraq.

"Iraq's current budget for 2019, if current spending continues as it is, will eliminate any progress Iraq has made economically over the past years," the IMF said, according to a report by Babel Finance International.

"Expectations indicate an increase in Iraqi spending by 25% per year, unless the authorities amend their financial laws and budget items," he said, describing the Iraqi economic situation as "facing serious challenges, social conditions in the low and still severe."

"The post-war reconstruction is going slowly, growth requirements are very high, institutional weakness is very clear, and volatile oil prices and geopolitical relations have a big role on the Iraqi economy," he said.

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"authorities were unconvinced of the urgent need to modify fiscal policy settings." 

 

so they dont want to change. being forced to change and rv is our only hope atm imo.

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If article 140, oil law and investment laws pass quickly and activated then we are good to go. Don’t see privatising state owned banks an issue and kuwait has two government owned or state owned banks.

Edited by screwball
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On 7/29/2019 at 11:32 PM, Bama Girl said:

Thanks Theseus, your analysis makes a lot of sense as well as several other thoughts in this thread.

Do you think the banking issues mentioned in the report is the reason the CBI is getting a new governor? I realize the announcement about the new CBI Governor was made before the report was publicized but maybe the proverbial “handwriting on the wall” was already noted. 

Goodness, I want the RV today but wishing and hoping won’t make it so. Until everything lines up correctly, it just isn’t going to happen. Imho, Maliki and ISIS are to blame for our lonnnngggg wait. 

First, the outgoing CBI Gov was actually long rumored and many wanted him gone as being a stooge for Maliki. Second, the GOI would have seen this report before it was made available to the public. If it wasn't I would be surprised because that is not the way things work. 

 

Someone asked when this review was done. Before this review was submitted to the IMF board, the last mention of the SBA between Iraq and the IMF was like in November 2017. All was silent until the IMF review team said they completed this back in May 2019. Due to this timeline, the review was done at the beginning of this year until about March/April 2019 (I am leaning more towards March due to the published date of when the review was to take place in a previous IMF document on the 2016 SBA). There were a few articles out right before the completion of the SBA and the end of the review in May about how Iraq should break the IMF deal because of the internal stirrings that the IMF was dragging their heels. 

 

As to ISIS, remember the time when Abadi was to declare Iraq free of ISIS then it was delayed. ISIS was still in Iraq and it wasn't until the latter part of last year and a few months into 2019 that ISIS remained a formidable force in Iraq. Although it was small, it still presented a danger to Iraq. Iraq was not a secure as most thought it was. One of the reasons why we (the USA) have stayed there. Remember Trump secretly flying to Iraq on Christmas day last year? ISIS was still in Iraq then which gave rise to the reason of the outcry to the President's security. So yes, ISIS was very much to blame but Iran and Maliki are much more to blame than ISIS. 

Edited by Theseus
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5 hours ago, screwball said:

If article 140, oil law and investment laws pass quickly and activated then we are good to go. Don’t see privatising state owned banks an issue and kuwait has two government owned or state owned banks.

 

Like your thinking .....

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On 7/29/2019 at 11:32 PM, Bama Girl said:

Thanks Theseus, your analysis makes a lot of sense as well as several other thoughts in this thread.

Do you think the banking issues mentioned in the report is the reason the CBI is getting a new governor? I realize the announcement about the new CBI Governor was made before the report was publicized but maybe the proverbial “handwriting on the wall” was already noted. 

Goodness, I want the RV today but wishing and hoping won’t make it so. Until everything lines up correctly, it just isn’t going to happen. Imho, Maliki and ISIS are to blame for our lonnnngggg wait. 

Take note, this is from a day ago

 

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Middle East

UN Warns Islamic State Leader Plotting Comeback from Iraq

By Jeff Seldin
July 29, 2019 07:45 PM
 

The chief of the Islamic State group, Abu Bakr al-Baghdadi, purportedly appears for the first time in five years in a propaganda video in an undisclosed location, in this undated TV grab taken from video released April 29 by Al-Furqan media.

 

The chief of the Islamic State group, Abu Bakr al-Baghdadi, purportedly appears for the first time in five years in a propaganda video in an undisclosed location, in this undated TV grab taken from video released April 29 by Al-Furqan media.

Margaret Besheer contributed to this report.

The Islamic State terror group's self-declared caliphate may be dead, but its leaders are hanging on in Syria and Iraq, dreaming of the day when they can again direct attacks on targets around the world.

The conclusion is part of a sobering assessment in a newly released quarterly United Nations report on IS, also known as ISIS or ISIL, which warns the epicenter for the terror group's budding renaissance is Iraq, "where Abu Bakr al-Baghdadi and most of the ISIL leadership are now based."

"The leadership aims to adapt, survive and consolidate in the core area and to establish sleeper cells at the local level in preparation for eventual resurgence," the report cautioned. "When it has the time and space to reinvest in an external operations capability, ISIL will direct and facilitate international attacks."

In the meantime, the report warns the terror organization, "has continued its evolution into a mainly covert network," since the fall of Baghuz, the last territory it held in Syria, this past March.

While the assessment that Baghdadi is operating mostly out of Iraq is new, the other warnings are similar to concerns voiced by U.S. officials and others dating back to last year.

FILE - A member of the Emergency Response Division holds an Islamic State militants flag in the Old City of Mosul, Iraq, July 10, 2017.

IS "is well-positioned to rebuild and work on enabling its physical caliphate to re-emerge," Pentagon spokesman Commander Sean Robertson told VOA last August.

"This is not the end of the fight," U.S. Special Representative for Syria, Ambassador James Jeffery, said this past March, following the fall of Baghuz.

More recently, a report by the Washington-based Institute for the Study of War (ISW), said the terror group is poised for a comeback that "could be faster and even more devastating" than when it first swept across parts of Syria and Iraq.

FILE - Islamic State members walk in the last besieged neighborhood in the village of Baghouz, Deir Al Zor province, Syria, March 10, 2019.

Intelligence from U.N. member states anticipates that "comeback" will take place in the Syrian and Iraqi heartlands, where IS has the majority of its estimated 10,000 to 15,000 fighters, many in clandestine cells.

Echoing U.S. intelligence and military assessments, the U.N. report stated IS operations are more advanced in Iraq but that its operatives are still able to move freely across parts of both Iraq and Syria.

The group's attacks, which seem to be coming with increased frequency, appear aimed at frustrating the local populations, for example burning crops in northern Iraq to prevent any steps toward recovery and stabilization.

"Their hope is that the local populations will become impatient, blame the authorities and grow nostalgic for the time when ISIL was in control," the report said, adding member states fear it may be working.

At the same time, intelligence officials said IS is effectively using its media and propaganda arms to maintain relevance until such time that it is again ready to strike on the global stage.

FILE -  This image made from video posted on a militant website July 5, 2014, purports to show the leader of the Islamic State group, Abu Bakr al-Baghdadi, delivering a sermon at a mosque in Iraq.

Adding to the concerns of intelligence officials around the world are the large number of foreign fighters that may still be at large, either in Syria and Iraq, or in the surrounding countries.

U.S. counterterror officials estimate that more than 45,000 fighters from 110 countries flocked to Syria and Iraq, almost all to fight for IS.

As of earlier this year, as many as 10,000 were thought to be at large, having escaped the fall of the terror group's caliphate. But the new U.N. assessment warns that number could be higher, and that "up to 30,000 of those who travelled to the so-called 'caliphate' may still be alive."

A U.S.-backed Syrian Democratic Forces (SDF) fighter watches illumination rounds light up Baghuz, Syria, as the last pocket of Islamic State militants is attacked on March 12, 2019.

Despite all this, the U.N. report finds IS still faces some significant challenges, especially when it comes to money.

While IS still has an estimated $50 million to $300 million in revenue left over from its self-declared caliphate, the group "is reported to lack liquid funds to run operations," according to the report. As such, member states told the U.N. that IS operatives have become more dependent on crime while also trying to profit from legitimate businesses.

IS has also become more dependent on provinces and its more established affiliates, so it runs the risk that its agenda will slowly become less international and more regionalized. 

And it continues to face stiff competition from its main rival, al-Qaida, as the two terror groups battle in Syria and Iraq, and increasingly in parts of West Africa and the Sahel, for followers.

Al-Qaida, itself, also faces a somewhat uncertain future, at least in the near term, according the U.N. report, with its leader, Ayman al-Zawahiri, "reported to be in poor health and doubts as to how the group will manage the succession."

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That rotten S.O.B., I'd strangle him with my bare hands given the opportunity. Then drag his sorry carcass into the desert for the buzzards.

 

No offense to the Buzzards meant. Geeze that guy makes me mad.  😖

 

  pp

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