Douglas Silliman reveals the secrets of the Iraqi delegation's visit to Washington and makes recommendations regarding the dollar

[psdon]

Iraq to allow trade with China in yuan - state media

 

 

 

DUBAI, Feb 22 (Reuters) - Iraq's central bank said on Wednesday it planned to allow trade from China to be settled directly in yuan for the first time, in an attempt to improve access to foreign currency.

The central bank has been taking ugenrt steps to compensate for a dollar shortage in local markets, which prompted the cabinet to approve a currency revaluation earlier this month.

"It is the first time imports would be financed from China in yuan, as Iraqi imports from China have been financed in (U.S.) dollars only," the government's economic adviser, Mudhir Salih, told Reuters on Wednesda  link  https://www.reuters.com/business/iraq-allow-trade-with-china-yuan-state-media-2023-02-22/ 

[psdon]

2 hours ago, horsesoldier said:

The USA is the laughing stock of the planet.

opsss

[screwball]

21 minutes ago, psdon said:

It is the first time imports would be financed from China in yuan, as Iraqi imports from China have been financed in (U.S.) dollars only," the government's economic adviser, Mudhir Salih, told Reuters on Wednesda 

 

Edited February 23, 2023 by screwball

[psdon]

5 minutes ago, screwball said:

 

Did see in the post  which prompted the cabinet to approve a currency revaluation earlier this month.

[Hotcurl]

3 hours ago, horsesoldier said:

The USA is the laughing stock of the planet.

 

"Lets Go Brandon"

 

How can 88M voters be so wrong ??

 

Just sayin' ...............

 

Semper Fi

["Fred"]

[divemaster5734]

Stumbled onto this today...

Iraqi officials are in Washington to discuss “economic reforms” but are in fact being pressured to shun Iranian energy imports in the hope of having US sanctions and dollar rations lifted.

ByZaher Mousa

February 16 2023

Photo Credit: The Cradle

Photo Credit: The Cradle

 

 

On 8 February, 2023, an Iraqi delegation led by Deputy Prime Minister and Minister of Foreign Affairs Fuad Hussein arrived in Washington to discuss easing the recent US Treasury measures that have restricted the supply of dollars to Baghdad and imposed sanctions on the Central Bank of Iraq.

The high-level delegation, which includes several government officials, has indefinitely extended its stay in Washington for the “difficult” negotiations, indicating Iraq’s limited options in these talks. If the discussions fail and Washington does not ease its punishing measures, a major crisis could erupt in Iraq – resulting in the collapse of the dinar’s value because of high demand and limited supply.

A Washington Institute report suggests that the US is exerting “severe” pressure on Baghdad to redirect its energy sector away from Iran and to address allegations that its banking sector assists the Islamic Republic in evading western sanctions. These demands are likely to be challenging for Iraq to meet, given its vital ties to Iran and the importance of the energy sector to its economy.

New government, old challenges

The Iraqi visit takes place 100 days after the formation of the government of Mohammed Shia al-Sudani, which had to immediately grapple with the imposition of US sanctions on three Iraqi banks, and restrictions on dollar transfers from Iraq’s oil revenue account in New York to the Central Bank of Iraq.

These measures were put in place to ensure that Iraq did not violate US sanctions on Iran and Syria, which led to a significant decrease in the supply of dollars and a decline in the value of the dinar. This, in turn, stirred up discontent within a population already facing financial hardships.

Sudani’s new government responded by implementing quick measures: subsidizing some basic commodities, launching a campaign of arrests against dollar smugglers, and reducing the official exchange rate from 1,450 dinars to 1,300 dinars per dollar.

However, these steps were unable to control spiraling prices, and only resulted in a slight decrease in the dollar value in the parallel market. This situation has made negotiations with US officials even more critical for the Iraqi delegation, as failure to ease the US measures could have dire consequences for Iraq’s already fragile economy.

‘Forced to negotiate’

Sources in Iraq’s cabinet confirmed to The Cradle that the US did not want Prime Minister Sudani to lead the delegation to Washington, and requested a lower level of representation. As a result, Baghdad carefully selected the members of the visiting team, which is currently led by Fuad Hussein from the Kurdistan Democratic Party (KDP), who is considered an “old friend” of the US.

The Iraqi delegation also includes Adnan al Zarfi, a member of the Parliamentary Finance Committee (PFC), who was previously nominated for the prime ministerial position. Zarfi maintains good relations with Washington officialdom, and has held US citizenship since 2003, making him a strategic choice for inclusion in the Iraqi mission.

Hussein Muanis, a PFC member and head of the Huqouq movement – which is close to Iran-supported Kataeb Hezbollah – tells The Cradle that Iraq was “forced to negotiate:”

“Negotiations should have been based on the strategic framework agreement [which the two countries signed in 2008]. What has been leaked from it so far indicates that the talks were not limited to the economic issues, and that the Iraqi delegation heard American diktats.”

However, Muanis denies that the US had placed a veto on the participation of any Iraqi political personages in the delegation. He emphasized that the PFC had unanimously selected Zarfi as a representative of the legislative authority: “we understand the position of a large part of the political parties regarding relations with Washington.”

Hard bargaining by the US

Thamer Dhiban, a member of the PFC for the Al-Fateh Alliance, which opposes the US presence in Iraq and includes Asa’ib Ahl al-Haq and the Badr Organization, confirmed that the “Coalition for State Administration,” the largest bloc in the Iraqi parliament, supports these negotiations. Dhiban added that “what we have heard so far is positive in principle.”

He tells The Cradle: “There was an agreement to send another delegation to delve into the details of the economic issues, and we were not informed that the negotiations discussed political or military matters,” adding:

“The conditions for financial compliance and connection with the SWIFT system are in the interest of Iraq in the first place, and we will not allow the repetition of the economic blockade that was imposed on Iraq previously.”

Other sources suggest that the meeting between Central Bank Governor Ali al-Alaq and the US Treasury Department only discussed the conditions of the US Federal Reserve regarding financial transfers in dollars and Baghdad’s plans to reform the economic and financial sector.

However, during Hussein’s meeting with his US counterpart Anthony Blinken, political issues were also on the table. According to a Kurdish source who insisted on confidentiality, these included:

“Iraq’s accession to the Abraham Accords, normalization with Israel (which is currently criminalized in Iraq), urging Baghdad to find alternatives to Iranian energy imports, implementing electrical interconnection with Persian Gulf states and Jordan, facilitating the extension of the oil pipeline from Basra to Aqaba, and accelerating the export of gas. The Americans also requested that the ISIS-fighting and pro-Iran Popular Mobilizations Units (PMUs or Hashd al-Shaabi) be repositioned far way from US military bases in Iraq.”

Sources close to Iraq’s pro-Iran political factions, however, believe that “the idea of dissolving the PMUs will be impossible to implement due to legal obstacles on the one hand, and an urgent need for its existence, in addition to the difficulty of integrating it into the regular army.”

Regarding normalization with Tel Aviv, the sources say that the law criminalizing any interaction with Israel – approved by Iraq’s parliament in 2022 – blocked this project.

The sources also say one possible solution toward brokering the US dollar-control issue in Iraq is to resolve Baghdad’s tensions with the Kurdistan Regional Government (KRG) in Erbil, as the latter is a trusted US intermediary in Iraq. If Baghdad accepts to pay Erbil’s public salaries, for instance, this may smooth the way for the US to reduce pressures.

Ditching the dollar

Iraq is facing a multitude of crises, from political divisions to economic struggles. Due to its vast oil and gas resources, it has become an object of interest for both global and regional powers. Hours before the Iraqi delegation headed to Washington, Russian Foreign Minister Sergei Lavrov visited Baghdad and held talks with Iraqi officials about the dollar crisis and ways to enhance energy cooperation.

One of the proposals discussed was for Iraq to join a system that uses the Chinese yuan to facilitate trade with Tehran and Moscow, which are both subject to US sanctions. This move could provide Iraq with an alternative to the US dollar and help to mitigate the effects of the sanctions.

According to Kuwaiti newspaper, Al-Jarida, some Iraqi experts described this particular Lavrov proposal as returning Baghdad to the era of “barter trade,” when the administration of Saddam Hussein entered into a food-for-oil exchange. For them, any payments outside the exalted dollar currency cannot build a proper economy.

But this is only one view from inside Iraq. According to official sources in Sudani’s media office, Baghdad does in fact “aspire to obtain membership in the Asian Development Bank and deposit the financial surplus in it instead of buying US bonds or increasing the financial reserves of the dollar.” The Asian Bank, the sources say, grants larger loan amounts with fewer conditions and lower interest rates than the World Bank.

Likewise, Iraq plans to submit membership requests to join the multipolar BRICS+ group of countries and the Chinese-led Shanghai Cooperation Organization (SCO).

As of this writing, the Iraqi delegation is still in Washington, but holding fewer official meetings and at a lower level.

[6ly410]

 

'Sudan's invitation is subject to a condition'

Douglas Silliman reveals the secrets of the Iraqi delegation's visit to Washington and makes recommendations on the dollar

2023.02.25 - 10:33

Douglas Silliman reveals the secrets of the Iraqi delegation's visit to Washington and makes recommendations on the dollar (nasnews.com)

like 0

  

Baghdad – Nas  

Former US Ambassador to Iraq Douglas Silliman revealed the secrets of the Iraqi delegation's visit to Washington a while ago and the results of the visit and made recommendations stressing the implementation of Baghdad's commitments on the dollar market sincerely, stressing that "if Washington feels sufficient commitment from the Sudanese and his government to the agenda set by the Foreign Minister, it will not be excluded to extend an invitation to the Prime Minister to visit Washington."  

  

  

  

The following is the text of what the former US ambassador and director of the Arab Gulf States Institute in Washington and affiliated with NAS wrote (February 25, 2023):  

  

Fuad Hussein, Iraq's deputy prime minister and foreign minister, visited Washington from February 9-15. As the first high-level representative of Iraq's new prime minister, Mohammed al-Sudani, Hussein came to the United States seeking to expand and deepen "financial and economic ties" with the United States, stating that his focus on economic — not security — issues shows that U.S.-Iraqi relations have been "healthy" and have reached a new stage.  

  

Although his visit had long been planned, Hussein's misfortune was that he had to deal with senior officials from President Joseph Biden's administration while they were still focused on Russia's invasion of Ukraine, the downing of a Chinese spy balloon, and fears that Iran and Russia would use the Iraqi banking system to circumvent U.S. sanctions and obtain U.S. dollars. In addition to further pressure, a letter dated February 10 from the new chairman of the US House Foreign Affairs Committee on Baghdad's relations with the Kurdistan Regional Government and a February <> letter from three other members of Congress accusing the Sudanese government of siding with the Iranian regime, colluding with the IRGC's money laundering operations in Iraq, and discriminating against Iraqi Kurds; both letters showed that many figures in Washington remain focused on the negative aspects. Or at least politically charged – in relations with Iraq. From the Iraqi point of view, Hussein arrived in the wake of the currency crisis and the sharp depreciation of the Iraqi dinar as a result of the Central Bank of Iraq's implementation of the new controls imposed by the US Treasury Department on the exchange of dollars in the Iraqi market.  

  

Hussein's choice to go to Washington was a wise choice because of his decades of political experience and friendships with high-level U.S. officials in four U.S. administrations. During his week-long visit, Hussein met with Secretary of State Antony Blinken, Special Presidential Envoy for Climate John Kerry, USAID Administrator Samantha Power, U.S. Deputy Secretary of the Treasury Wally Ademo, and other administration officials. Hussein and Blinken chaired the Cabinet-Level High Coordination Committee on the U.S.-Iraq Strategic Framework Agreement, which was also attended by National Security Advisor Jake Sullivan. Hussein also attended congressional meetings, spoke to U.S. business representatives, spoke to think tanks, and appeared in U.S. and international media.  

  

To refute Washington's strong narrative of Sudani's government's complicity in expanding Iranian influence in Iraq, Hussein pointed to the prime minister's actions that run counter to Iranian goals in Iraq, particularly his January public statement of support for the continued presence of US military forces in Iraq.  

  

Hussein came to Washington for several specific purposes. First, he wanted to avoid U.S. sanctions on Iraq because of its dollar market, trade with Iran, imports of natural gas and electricity, and business dealings with Russia. Regarding Iran, it has had some success arguing that Iraq needs US dollars to carry out legitimate international trade, and that Iraq depends on Iran for more than 40% of its electricity production. U.S. sanctions could cut off Iranian gas and electricity supplies, which could have catastrophic effects for Iraq and the region. Meanwhile, other members of his delegation worked with the U.S. Treasury Department and Federal Reserve officials to craft technical details through which the CBI will monitor the final destination of U.S. dollar deals in Iraq to boost confidence in reducing U.S. dollars reaching Iran. The strongly worded paragraph on currency markets in the HCC joint statement showed success in getting some flexibility from Washington, but it also made clear that the United States expects a lot from Iraqi action.  

  

Similarly, the delegation argued that Russia is an important part of Iraq's economy, so Washington should ease restrictions on deals with Russia. For example, Russian oil giant Rosneft bought a 60 percent stake in Iraqi Kurdistan's main oil export pipeline in 2017 and committed in 2018 to finance the KRG gas pipeline. However, Washington does not seem to have found the arguments for flexibility in deals with Russia convincing.  

  

Second, Hussein sought more U.S. government and private sector investment to capture the large amount of gas burning in Iraq and, therefore, goes to waste. Hussein argued that Iraq spends $4 billion each year to import natural gas and electricity from Iran, and wants to support the U.S. government and private sector to replace those imports, and use the money provided to provide services to Iraqis. Some members of the entourage expressed a willingness to re-examine previous gas acquisitions that faced political opposition or disappeared within the Iraqi bureaucracy. The joint statement demonstrated the U.S. government's strong support for the further development of Iraq's energy sector.  

  

Third, behind the scenes, Hussein and his entourage sought to downplay the administration's and congressional concerns that Sudanese was the result of Iranian support. They argued that political support for the prime minister comes not only from pro-Iranian political parties, but also from the two main Kurdish parties and the Sunni, Christian and moderate Shiite parties. In addition to Sudani's stated support for U.S. forces, the Iraqi delegation noted the focus of Sudani's early policy of providing services to Iraqis and taking steps to counter corruption. The delegation moderately lobbied for an invitation for Sudani to visit the White House in the not-too-distant future as a sign of support for Washington, arguing that this would help the prime minister pursue policies such as economic and administrative reform that do not have the support of pro-Iranian parties and militias. In the view of a senior and reliable Iraqi Kurdish official, these arguments were not only a point of response to fears of Iranian hegemony and its militias in Baghdad, but also came as a concrete step Washington could take to strengthen the prime minister's position against potential pro-Iranian rivals.  

  

Hussein's greatest achievement, however, was simply to return Iraq to the foreign policy map in a positive way. Senior U.S. officials involved in the HCC and Hussein's intense public debates on Iraq seem to have persuaded many in the administration to review how to make progress on U.S. policy's longstanding goals of a prosperous, democratic, and sovereign Iraq.  

  

Following his visit, Baghdad and Washington will need to take concrete steps to build trust.  

  

On the Iraqi side, Baghdad must faithfully implement its dollar market commitments. To expand the agenda beyond financial flow, Baghdad should position more frequent trips to Washington by cabinet-level officials, particularly those with economic portfolios. It would be wise for Baghdad to select cabinet officials capable of convincing arguing that Iraq is committed not only to signing a memorandum of understanding with the private sector, but also to doing business, perhaps with the full application of a number of test cases for high-profile businesses. Finally, tangible progress in addressing issues facing Iraqi minorities—especially Iraqi Kurds, Yazidis, and Christians—could garner greater political support from Washington.  

  

While Washington remains skeptical, it should consider reciprocal visits by senior U.S. officials and calls for further discussions of Baghdad's economic agenda, particularly on gas acquisitions and climate issues. If Washington feels sufficiently committed by al-Sudani and his government to the agenda set by the secretary of state, it would not be inconceivable to extend an invitation to the prime minister to visit Washington.  

  

Quoting: "agsiw"  

[yota691]

“The invitation of the Sudanese is subject to a condition.”

Douglas Silliman reveals the secrets of the Iraqi delegation's visit to Washington and makes recommendations regarding the dollar

2023.02.25 - 10:33

 

Baghdad - people  

The former US ambassador to Iraq, Douglas Silliman, revealed the secrets of the Iraqi delegation's visit to Washington a while ago, the results that resulted from the visit, and recommendations that stress the implementation of Baghdad's commitments regarding the dollar market with sincerity, stressing, "If Washington feels sufficient commitment from the Sudanese and his government to the agenda set by the foreign minister, it will not be It is unlikely to invite the prime minister to visit Washington.  

  

  

  

The following is the text of what was written by the former US ambassador and director of the Arab Gulf States Institute in Washington, followed by “NAS” (February 25, 2023):  

  

Fuad Hussein, Iraqi Deputy Prime Minister and Minister of Foreign Affairs, visited Washington from February 9-15. As the first high-ranking representative of the new Iraqi prime minister, Muhammad al-Sudani, Hussein came to the United States seeking to broaden and deepen “financial and economic relations” with the United States, stating that his focus on economic issues — not security — showed that U.S.-Iraqi relations were “healthy” and he had I reached a new stage.  

  

In addition to more pressure, a letter dated February 2 from the new chairman of the US House of Representatives Foreign Affairs Committee on Baghdad's relations with the Kurdistan Regional Government, and another letter dated February 10 from three other members of Congress, accused the Sudanese government of siding with the regime. Iranian complicity with money laundering operations carried out by the Iranian Revolutionary Guard in Iraq, and discrimination against Iraqi Kurds; The two letters showed that many figures in Washington remain focused on the negative — or at least the politically charged — aspects of relations with Iraq. From the Iraqi point of view, Hussein arrived in the wake of the currency crisis and the sharp decline in the value of the Iraqi dinar as a result of the application by the Central Bank of Iraq of the new controls imposed by the US Treasury on the exchange of dollars in the Iraqi market.  

  

Hussein's choice to go to Washington was a wise choice given his decades of political experience and friendship with high-ranking US officials in four US administrations. During his week-long visit, Hussein met with Secretary of State Anthony Blinken, Special Presidential Envoy for Climate Affairs John Kerry, USAID Administrator Samantha Power, Deputy Secretary of the Treasury Wally Ademo, and other US administration officials. With Blinken, Hussein chaired the Cabinet-level Senior Coordination Committee for the US-Iraq Strategic Framework Agreement, which National Security Adviser Jake Sullivan also attended. Hussein has also attended meetings in Congress, spoken to US business representatives, spoken before think tanks, and appeared in US and international media.  

  

To refute Washington's powerful narrative about the Sudanese government's complicity in expanding Iranian influence in Iraq, Hussein pointed to the prime minister's actions that run counter to Iranian goals in Iraq, particularly his public statement in January about his support for the continued presence of US military forces in Iraq.  

  

Hussein came to Washington for several specific purposes. First, he wanted to avoid imposing US sanctions on Iraq over its dollar market, trade with Iran, importing natural gas and electricity from it, and business dealings with Russia. Regarding Iran, he has had some success arguing that Iraq needs access to US dollars to conduct legitimate international trade, and that Iraq depends on Iran for more than 40% of its electricity production. US sanctions could cut off Iranian gas and electricity supplies, which could have catastrophic effects on Iraq and the region. Meanwhile, other members of his entourage worked with U.S. Treasury and Federal Reserve officials to craft the technical details by which the CBI would monitor the final destination of U.S. dollar deals in Iraq to bolster confidence in reducing U.S. dollars reaching Iran.  

  

Similarly, the delegation argued that Russia is an important part of the Iraqi economy, so Washington should ease restrictions on deals with Russia. For example, the Russian oil giant Rosneft bought a 60% stake in the main oil export pipeline in Iraqi Kurdistan in 2017, and in 2018 committed to financing the gas pipeline in the Kurdistan Region. However, it seems that Washington did not find the arguments for the need to show flexibility in deals with Russia convincing.  

  

Secondly, Hussein sought more investment from the US government and the private sector to capture the large amount of gas that is being burned in Iraq, and thus, wasted. Hussein argued that Iraq spends $4 billion each year importing natural gas and electricity from Iran, and wants the support of the US government and the private sector to replace those imports, and use the money saved to provide services to Iraqis. Some members of the entourage expressed their willingness to re-examine past gas acquisition deals that had faced political opposition or had disappeared within the Iraqi bureaucracy. The joint statement showed the US government's strong support for the continued development of the energy sector in Iraq.  

  

Third, behind the scenes, Hussein and his entourage sought to diminish administration and congressional concerns that al-Sudani was the result of Iranian support. They argued that political support for the prime minister comes not only from pro-Iranian political parties, but also from the two main Kurdish parties, Sunni parties, Christians, and moderate Shiites. In addition to al-Sudani's declared support for US forces, the Iraqi delegation noted that al-Sudani's early policy focused on providing services to Iraqis and took steps to combat corruption. Moderately, the delegation lobbied for an invitation for al-Sudani to visit the White House in the not-too-distant future as a sign of Washington's support, arguing that this would help the prime minister pursue policies such as economic and administrative reform that do not enjoy the support of pro-Iranian parties and militias.  

  

However, Hussein's greatest achievement was simply to put Iraq back on the foreign policy map in a positive way. The senior US officials involved in the SCC, and Hussein's intense public debates on Iraq, appear to have persuaded many in the administration to review how to advance the longstanding US policy goals of a prosperous, democratic, and sovereign Iraq.  

  

In the aftermath of his visit, Baghdad and Washington will need to take concrete steps to build confidence.  

  

On the Iraqi side, Baghdad must faithfully implement its commitments on the dollar market. To broaden the agenda beyond financial flow, Baghdad should consider repeating more trips to Washington by cabinet-level officials, particularly those with economic portfolios. It would be wise for Baghdad to select cabinet officials capable of convincingly arguing that Iraq is committed not only to signing a memorandum of understanding with the private sector, but also to doing business, perhaps with the full implementation of a number of test cases for notable businesses. Finally, tangible progress on issues facing Iraq's minorities—particularly Iraqi Kurds, Yazidis, and Christians—could garner greater political support from Washington.  

  

While Washington remains skeptical, it should consider reciprocal visits by senior US officials, advocating for further discussions of Baghdad's economic agenda, particularly with regard to gas acquisitions and climate issues. If Washington feels sufficient commitment from the Sudanese and his government to the agenda set by the foreign minister, it would not be out of the question to invite the prime minister to visit Washington.  

  

Quoted from: "agsiw"  

[yota691]

What are the step dimensions?

Research paper: Washington's emphasis on the dollar is a message to the factions that al-Sudani can benefit from

2023.02.25 - 20:21

 

Baghdad - people  

Former government advisor and researcher at the French National Center for Scientific Research (CNRS) Hisham Daoud wrote about the strategic and political dimensions of the dollar exchange rate crisis against the dinar in Iraq, stressing that the repercussions and consequences of the financial crisis resulting from the dollar are "the most dangerous since 2003" because they are not limited to Not only on the economic situation, but it also has geo-strategic repercussions, and it will have a great impact on the political power relations in Iraq.  

  

  

  

Dawood stated in a research paper he wrote for the Emirates Policy Center (EPC), followed by "NAS" (February 25, 2023), that the goal of restricting the Federal Reserve in New York is to ensure Baghdad's compliance with an electronic system that guarantees transparency in dollar transactions and stops money laundering and dollar "smuggling". To neighboring countries, and this constitutes an incentive for the Iraqi authorities to adopt more prudent financial and economic policies. "This American policy also includes a strong message to the Iraqi factions loyal to Iran, which depend to a large extent in exercising their influence on networks of corruption and money laundering."  

  

Daoud pointed out that in the medium term, the Iraqi prime minister could benefit from the tightening US monetary policy to weaken his distant opponents, such as the Sadrist movement, as well as weaken his "close allies" in the coordination framework, who aspire to expand their sphere of influence and exercise extended executive powers.  

  

The research paper indicated that, while the United States is likely to ease its financial policy towards Iraq, it is not possible for it to accept the return of the previous situation to what it was. The electronic financial system will be implemented gradually, and factions linked to Iran will have to deal with it as a fait accompli.  

  

The following are excerpts from the paper:  

The crisis was exacerbated to some extent by rumors, misunderstandings, and a state of uncertainty, which led to a halt in the demand for some imported goods, which became expensive and were seen as unnecessary, and thus affected small traders who are today threatened with leaving the market and joining the ranks of Jobless. The World Bank estimates the unemployment rate in Iraq at 14.5% among the general population, and 27.5% among youth. The crisis has also prompted many merchants to resort entirely to the informal market (let's call it the parallel market), or even to load trucks with dollars and transport them out of Iraq.  

  

 Over the years, the armed factions and parties took control of the banking and private financial sector (full control or owning a majority stake in banks), and used the dollar auction system either to achieve huge profits (by taking advantage of the low price of selling dollars by the Central Bank of Iraq), Or to launder illegal money (resulting from smuggling, embezzlement of public property or commissions), or to send money to both Iran and Syria. The result is that these factions are now relying heavily on the regime to recycle their income. However, there is a problem with the new US restrictions towards the monetary system in Iraq represented in the fact that they affect individuals and importers, as well as financial institutions linked to the factions without any kind of exception or discrimination. However, the armed factions have huge sums of money at stake, and pressure from the New York Federal Reserve could incentivize them to "clean up".  

  

 And while the United States is likely to ease its financial policy towards Iraq, it is not possible for it to accept the return of the previous situation to what it was. The electronic financial system will be implemented gradually, and factions linked to Iran will have to deal with it as a fait accompli. By using disguised sanctions against pro-Iranian elements, supporting the approach of the Iraqi prime minister and his successor, the Dawa Party, and exerting direct pressure on Tehran, this new US policy may bear fruit. In any case, this crisis shows that all pressure cards are in the hands of the United States, such as the dollar weapon, as well as its ability to collect and extract data, in light of the fact that the information infrastructure of the main Iraqi ministries and institutions is entirely American industry, and the American military aid to Iraq, and the sanctions weapon, Perhaps resorting, as a last resort, to targeted strikes targeting militia leaders and facilities.  

  

In the meantime, the Iranian position has been greatly weakened due to the continuation of the protest movement in the country and the high rates of inflation (one of the motives for smuggling dollars from Iraq to Iran is to pump dollars into the market for the purpose of slowing the decline in the value of the Iranian riyal and the resulting inflation and financing the budget deficit); And the continuation of drone attacks (by Israel and with Washington's approval) on strategic facilities in Iran. In light of this state of weakness, the Iranian regime needs to rely on an Iraqi government backed by Washington. Therefore, Iran is likely to exercise its hegemony over Iraqi factions and militias, and limit these factions' obstruction of the Iraqi government's efforts to implement policies to adhere to the new monetary systems.  

  

At the local level in Iraq, there are fears of a slowdown in commercial activity, and a delay in approving the 2023 budget (which was supposed to be approved at the end of January, and to be approved within two months after that). The worsening economic crisis may also lead to social unrest, especially before the month of Ramadan, which will begin at the beginning of the last third of March, and thus the possibility of re-igniting the protest movement in the country. Moreover, the Sadrist movement may find itself increasingly besieged and excluded from informal decision-making positions and financial resources, and thus may threaten to organize mass demonstrations and possibly resort to street clashes.  

  

conclusions  

Today, Iraq has come to the conclusion that it is necessary to get rid of the dominance of the informal sector and abandon the cash-based economic model, and move towards an organized banking sector that would make way for the growth of the private sector. The commitment of Iraqi Prime Minister Muhammad Shia al-Sudani to make his rule an opportunity to launch major development projects sends two somewhat contradictory messages. He appears to be sending a message to the factions that he will not attempt to change the status quo, while at the same time encouraging them to transcend political and factional differences to focus on the economy. However, it is clear that the aspirations of economic development require adherence to international standards, transparency and the fight against corruption, standards that the dominant factions currently see as weakening them organizationally, socially and politically. After it became a wealthy class that relied for an important part of its income on the dollar auction system, these same factions created a weapon that Washington can now use against it.  

[yota691]

Sources reveal America's conditions for receiving Sudanese in Washington

2023.02.26 - 17:47

 

Baghdad - Nas  

Foreign Minister Fuad Hussein was unable to convince American officials of the importance of receiving Prime Minister Muhammad Shia'a al-Sudani. Officials in Washington linked such a visit to al-Sudani to translating his program on the ground, especially in relation to combating currency smuggling to Iran, according to American sources to The London-based Al-Arab.  

  

  

  

The sources added to the newspaper’s report, followed by “NAS” (February 26, 2023), that the visit of Prime Minister Muhammad Shia’a al-Sudani to Washington has become hostage to presenting evidence and evidence of progress in combating money smuggling to Iran, and commitment to the government program, especially in terms of getting rid of dependence on Iranian energy sources. and comply with the sanctions imposed on Russia.  

  

During his presence in Washington in the second week of February, Iraqi Foreign Minister Fouad Hussein discussed the restrictions imposed by the Federal Reserve on dollar transfers to Iraq, and offered to receive Al-Sudani to discuss the details of plans related to stopping money smuggling operations.  

  

The sources stated that US officials met the Iraqi offer with reservations, and said that the invitation will be extended to the Iraqi prime minister when the US administration is certain that Al-Sudani is carrying out his commitments, and that he is not subject to the authority of the pro-Iranian groups that support his government, and that he needs to act in accordance with the declared political agenda.  

  

According to those sources, Hussein heard assurances from US officials stating that Al-Sudani's declaration of his desire for the US forces to remain in Iraq was beneficial, but not sufficient, especially since the presence of these forces serves the security interests of Iraq and does not serve the interests of the United States alone.  

For his part, Douglas Silliman, the former US ambassador to Iraq and director of the Arab Gulf States Institute in Washington, said in an article followed by "NAS" "Although Hussein's visit was planned for a long time, it was his misfortune that he had to deal with senior officials from the administration." President Joe Biden at a time when they are still focused on the Russian invasion of Ukraine, the downing of the Chinese spy balloon, and fears that Iran and Russia will use the Iraqi banking system to circumvent US sanctions and obtain dollars.  

Silliman indicated that the new chairman of the Foreign Affairs Committee in the US House of Representatives, Michael McCaul, sent a letter on the tenth of February to the White House accusing the Sudanese government of "biasing the Iranian regime, complicity with money laundering operations carried out by the Iranian Revolutionary Guards in Iraq, and discrimination against the Kurds." ".  

  

The former US ambassador believes that the Iraqi foreign minister came to Washington "to avoid imposing US sanctions on Iraq because of the dollar market in it, trade with Iran, importing natural gas and electricity from it, and business dealings with Russia."  

  

Observers of the newspaper say that the follow-up to the implementation of commitments is now under the consideration of the US embassy in Baghdad. Among the most prominent indications of this was that the US Ambassador to Baghdad, Alina Romanowski, held a meeting in Erbil with Minister Hussein to discuss the results of his visit to Washington, where the two parties agreed “on the need to create a joint mechanism to follow up on the desired results of the Iraqi delegation’s visit to Washington.”  

[yota691]

The Minister of Labor criticizes the American measures and reminds of the decision to remove its forces from Iraq

2023.03.05 - 12:07

 

Baghdad - people  

The Minister of Labor and Social Affairs, Ahmed Al-Asadi, criticized the conditions of the US Treasury Department regarding the circulation of hard currency, while recalling the parliamentary decision that stipulates the removal of foreign forces from Iraq.  

  

  

  

The minister's statements came within the activities of the "Al-Rafidian Conference 2023" in Najaf, which was followed by "NAS", where Al-Asadi addressed "the conditions of the US Treasury Department regarding the circulation of hard currency, and its impact on the decline in the value of the Iraqi dinar and its effects on the life of the Iraqi citizen," noting that "this caused great suffering among large segments of society.  

  

Al-Asadi commented on the issue of the American presence, saying: "There is a binding parliamentary decision to remove foreign forces from the country."  

 

 

 

 

[Theseus]

Written earlier this year:

 

The Devaluation of Iraqi Dinar: Political and Economic Implications

February 12, 20230

http://iraqieconomists.net/en/wp-content/uploads/sites/3/2023/02/Excange-rate-USD-IQD.jpeg

With the rollout of new controls developed by the US Federal Reserve in collaboration with the Central Bank of Iraq to combat currency smuggling, the dollar exchange rate continued to rise in the Iraqi market, pushing up the prices of food and other essential items. The Central Bank of Iraq has asserted that the rise in the dollar-to-dinar exchange rate is a passing side effect of changes in the mechanism of US dollar selling and will disappear as people get used to the new procedures. There are three possible outcomes for how the crisis will play out:  First: Measures by the Iraqi government and the outcome of its talks with the US officials could brake the rising dollar-dinar exchange rate.  Second: If banks and businesses fail to adjust to the new controls and the Iraqi government cannot persuade the US monetary authorities to use a more accommodative policy, the dollar exchange rate could continue to rise.  Third: The dollar-dinar exchange rate could remain volatile, fluctuating up and down for quite some time.

The dollar exchange rate in the Iraqi market climbed further in the final days of January 2023. It exceeded 1650 Iraqi dinars per dollar, up about 190 dinars from the official exchange rate of 1460 dinars per dollar. Food and commodity prices increased, forcing the Iraqi government to scramble to restore the national currency’s exchange rate. The most recent of these measures was the removal of the Central Bank of Iraq (CBI) governor and the appointment of a new governor. The crisis was precipitated mainly by the US Federal Reserve’s decision to enforce stringent new controls over the sale and transfer of dollars to Iraqi banks and traders.

 

The Fed and Monetary Circumvention in Iraq 

Since most of the money from Iraq’s oil exports ends up in a US bank account set up for the Iraqi ministry of finance, the US Federal Reserve has a lot of say over how much, how quickly, and based on what mechanism, dollars flow into Iraq. The ministry sells these dollars to the Central Bank of Iraq (CBI). This entity controls the country’s foreign exchange rates, oversees its foreign financial reserves, and then deposits them in its account with the US Federal Reserve. Due to this arrangement, the US Federal Reserve has greater discretion over the flow of American currency into Iraq.

 

The CBI sets the market exchange rate for the US dollar and ensures its stability through the currency sale window, a mechanism through which the CBI sells dollars to licensed banks, currency exchanges, and businesses to pay for imports. Because of this, businesses that purchase currency are required to provide invoices for the goods they import to be paid in dollars at the official exchange rate. However, since this system’s introduction, numerous dodgy enterprises have reaped their benefits. For instance, political parties, armed groups, and even foreign entities have set up banks or companies to profit directly from the CBI’s dollar auctions, bypassing the traditional banking system.

 

Additionally, these banks fraudulently forged import invoices to acquire US dollars at the government rate, subsequently transferring those funds to off-shore accounts.  According to an Iraqi economist, dollar smuggling operations from Iraq extended beyond the Middle East to include nations like Russia, Cuba, and North Korea, besides its immediate neighbors, including Syria, Lebanon, Turkey, and Iran. Reuters’ report showed they obtained about US$ 100 million a month by exploiting the CBI’s sale system.

 

The central bank previously received some of its dollar deposits in the form of banknotes that were regularly shipped from the US to Iraq. However, recent reports indicate some of these were smuggled to Iran and Turkey, as the powerful neighbors were struggling with plummeting their national currencies. A member of the Iraqi parliament claimed that the country’s central bank sold about US$ 37 billion through the currency sale window in 2022. As recorded by the Iraqi Customs Authority, the value of imported goods is only about US$ 14 billion. This indicates a discrepancy of about US$ 23 billion between the volume of currency sold by the central bank and the amount used for imports.

 

With the rollout of some controls designed by the US Federal Reserve in collaboration with the CBI in November 2022, the Iraqi dinar’s exchange rate against the dollar took a downhill slope. In particular, the controls include a new electronic platform that requires Iraqi banks wishing to buy dollars from the central bank to disclose information about their financial transfers and end users. Moreover, it has become obligatory for merchants and business owners to provide documentation about the financial movement of the purchased dollars and the accounts in which they end up.

 

Al-Ansari, Al-Qabidh, BIME, and Asia, four of the biggest banks engaged in currency trading, were also shut out from the currency sale window because the Iraqi authorities established that they had engaged in money laundering activities. Three of these banks are associated with a businessman named Ali Ghulam, who enjoys close ties with top Iraqi politicians and government figures. He was detained in November while traveling from Lebanon to Baghdad. However, he was quickly released after a few hours without providing details about the charges brought against him or the justifications for his release. This incident indicates the enormous power he wields.

 

Political and Economic Implications

Discussions between the US Federal Reserve and the CBI to reform the currency sale window and end pervasive fraud and smuggling operations have been ongoing for some time. International pressure has also been on Iraq to modernize, automate, and reform its financial and banking system. However, the new controls have occurred in the context of three factors:

 

First: The new mechanism was implemented at the same time the United States government — specifically the Treasury Department — stepped up sanctions against Iran. It was in response to the breakdown in talks concerning that country’s nuclear program and the brutal crackdown on protesters in Iran. The sanctions also targeted members of the Quds Force and the Lebanese Hezbollah involved in fuel smuggling and tightened regulation of money flow into Iran.

 

Second: Iraqis have recently been preoccupied with a major financial scandal involving the looting of more than US$ 2.5 billion from the Iraqi Tax Authority, which they have dubbed “the theft of the century. ” The scandal made it clear that there is a vast network of shared interests benefit businesspeople, politicians, and public servants. This again brought to light the extent of Iraq’s pervasive corruption and the widespread smuggling and manipulation of state funds, which are shielded by collusion on the parts of the executive, legislative, and judicial authorities.

 

Third: A new government was formed in Iraq a few months ago, with the Coordination Framework, an alliance controlled by pro-Iran parties, as its primary leader. Armed factions and militias have significant influence within this government. As evidenced by the formation of the Al-Muhandis Company, which is affiliated with the Popular Mobilization Commission, these parties and factions can influence the government’s monetary and economic policies.

 

It would be overstating to say that any of these factors had a decisive impact on the decision to increase oversight of Iraq’s dollar sales. However, they all helped speed up or otherwise back up the case for the new controls. Due to these actions, the number of dollars available on the Iraqi market was significantly reduced, which raised the exchange rate. An Iraqi economist revealed that after introducing the new controls, particularly the aforementioned digital platform, around 90 percent of the dollar purchase orders were turned down. Earlier, the central bank was selling US$ 250 million daily; now, it is selling an average of US$ 55 million.

Despite the CBI’s emphasis on the technical nature of the problem, the decline of the Iraqi dinar’s value triggered a political and social backlash. The largest social group that drives market activity comprises government employees, wage earners, and recipients of state-sponsored social welfare. Hence, a decline in the dinar’s value means a decline in their purchasing power, which has led to an economic downturn in some sectors. Meanwhile, the currency speculation market and some banks and exchange companies attempted to use their dollar holdings to manipulate the currency’s supply and increase their profits, contributing to the rapid ascent of the dollar’s exchange rate. Protests were held on January 25 to demand a quick solution.

 

Some political parties and armed factions that the new controls have negatively impacted are increasing their pressure on the government and the CBI. They have been calling for Iraq to wean itself off the dollar and end its reliance on the US Federal Reserve to manage the country’s foreign exchange reserves, or at the very least for the United States to be pressured into relaxing the controls for a set time to allow banks to adjust before reinstating them. In addition, some Coordination Framework coalition members demanded the dismissal of the governor of the Central Bank and suggested that he was affiliated with the Sadrist movement, which is not part of the coalition and is interested in seeing Prime Minister Mohammed Shia’ al-Sudani’s government fail.

 

On the other hand, the ruling Coordination Framework is under increasing fire from Sadrist bloggers and affiliated journalists for failing to stop the dollar exchange rate from crossing the 1600 dinars threshold or to return it to the rate that was in place prior to the government of the former prime minister Mustafa Kadhimi increasing the exchange rate in 2020.

 

Under this pressure, Sudani’s government took some measures, some of which were seen as populist, such as the arrest of several currency dealers on charges of speculation. The Central Bank governor, Mustafa Ghaleb, resigned on January 23, 2023, and the government announced that Ali al-Allaq, the previous governor Mustafa Kadhimi fired, would serve as acting governor. It is common knowledge that Allaq is an associate of former prime minister Nuri al-Maliki and the Dawa Party and that he served as governor under Maliki’s administration.

The implication is that this change also takes place in the context of fierce competition for key government positions between the members of the Framework coalition, especially between Maliki and Qais Khazali, the leader of Asain Ahl Al-Haq. Maliki appears more receptive to American demands about the Iraqi currency sale window.

 

The Iraqi prime minister sent the head of the Trade Bank of Iraq into retirement and replaced him with Bilal Hamdani. The same day, he decided to open a new foreign currency window through the Trade Bank of Iraq to sell currency to small businesses, subject to CBI funding the bank with an amount of US$ 500 million to issue letters of credit to small businesses. This action appears to be intended to make it easier to sell dollars outside of the new mechanism established by the US Federal Reserve.

 

The new window might also be an effort to buy time and prevent the value of the exchange rate for the Iraqi dinar from falling further until a deal is reached between the CBI and the US Federal Reserve. However, the new window could develop into an alternative vehicle for currency manipulation and smuggling, putting the Trade Bank of Iraq in danger of US sanctions.

 

According to the Iraqi Foreign Minister, Prime Minister Mohammed al-Sudani will travel to the United States, with the issue of the dollar exchange rate and US Federal Reserves’ new regulations expected to be high on the agenda.

 

Scenarios

There are three possible outcomes for how the crisis might play out in Iraq:

 

The first scenario assumes that the Iraqi government’s measures and negotiations with the US authorities will stop the dollar’s upward trend against the dinar. It would possibly lead to a compromise mechanism to loosen regulations that will allow the exchange rate to fall and return to its prior levels. However, this possibility depends on the relations between Baghdad and Washington and the Iraqi government’s ability to convince the United States that it is not wholly under Tehran’s sway. In this case, Sudani’s alliance with Maliki would grow stronger at the expense of his ties to Asa’ib Ahl al-Haq and other pro-Iranian Iraqi factions.

 

The second potential scenario is that the dollar exchange rate keeps rising on the assumption that banks and businesses will be unable to adjust to the new regulations, and the Iraqi government cannot convince the US administration to use a more accommodative policy. Such a scenario risks escalating Iraq’s economic crisis, putting more social and political pressure on the government, and igniting fresh street protests. It could also bolster the power of hardliners within the Coordination Framework and fuel calls for even more extreme action to curtail the Federal Reserve’s sway over Iraq’s banking and financial sector.

 

The third scenario assumes that the dollar-dinar exchange rate will remain volatile, fluctuating up and down, for quite some time. This will happen due to market forces, currency speculation, a need for clarity regarding new financial controls, or the US and Iraqi government’s inability to agree.

 

Conclusions 

The biggest challenge the Sudani government has faced since taking office in October 2022 is the crisis brought on by the plummeting of the Iraqi currency. This predicament threatens the platform upon which the government made its promises of economic reform, enhanced public services, and higher living standards for citizens. Meanwhile, the crisis affords the Iraqi prime minister an opening to push forward with long-awaited reforms to the country’s banking and financial system to modernize and automate the sector and free it from the grip of financial mafias, political factions, and the black market.

 

Moreover, he may find it easier to promote his moderate approach to relations with the US and to withstand pressures from hardliners in the Coordination Framework and the Iranians behind them, especially as more Iraqis recognize that the US still has strong sway over the country’s economy. Prime minister Sudani’s political future could hinge on how this crisis plays out. If the crisis worsens and spins out of control, the parties to the Coordination Framework may abandon their support for him and scapegoat him to save themselves. This is especially true if the crisis causes public discontent and triggers a new wave of protests.