Thread: Iraq/Dinar News. (before Jan.20,2007)

There is always the possibility of a surprise Move though.

Transcript of Press Conference by IMF Managing Director Rodrigo de Rato
January 16. 2007

QUESTIONER: Thank you. A little over a year ago, the IMF approved a $685 million loan for Iraq. I was wondering what the status of that loan, how much of it has been dispersed at this point, the status of any programs you have in Iraq, and with the ongoing violence and the hopes going forward if this could have any chance of being successful.

MR. DE RATO: Let me say that the discussions between us and the Iraqi Authorities toward completing the next review under the stand-by arrangement are right now going. So we are in the middle of seeing that review, and I cannot give you a specific date when that review will be completed.

We see as positive steps the strengthening of the dinar and certainly a more effective use of monetary policy because inflation has reached very high inflations in 2006 as you all know, and in that respect we were urging the authorities to move into tighter monetary policy. Nevertheless, of course, security considerations in Iraq are crucial. As I said before, I can't give you right now a specific date of when we will complete the review, but I can tell you we are in the middle of it. There is no disbursement because this is a precautionary program, so there have not been any disbursements by us.

Transcript of Press Conference by IMF Managing Director Rodrigo de Rato

Originally Posted by DanielJay

How many times does the government have to say 1200 BY MIDDLE OF THE YEAR before anyone understands it? Im not sure I understand where anyone is getting any numbers higher than WHAT THEY SAID IT WILL BE.

Sorry, dont mean to rant. Just frustrated.

even if it doesnt ease your frustration... alot of numbers being floated around, so you may not know what to believe and what to take with a grain of salt, but any way you look at those numbers, they are all better than what we have now, and in light of economic theory, they must go much higher than they are now.

"·· æÞæÏReport : Welcome again Dear viewers, Mr. Minister, the subject of recent talk is the value of the Iraqi dinar against the dollar. It seems that the state insists, or preserve the value of the Iraqi dinar 148 against the dollar but this offset by a significant increase in prices, spending and Asaaaralmwad food and fuel prices ßíÝ ¿How can the government help the Iraqi citizens to these increases?
·· .Zubaidi on this subject : the two split the price and that the financial and talk about the monetary side. Monetary value of the Iraqi dinar must revert to the previous level, or at least to acceptable levels as it is in the Iraqi neighboring states. ·· ¿Report : say there's a statement to Mr. Jabr deleting 0 of currency?

·· åÇ .- Zubaidi : I am stated I am I will propose to my brother the Governor of Central Bank of Egypt is responsible for the monetary policy, Klen for have a delegation with me and Minister of Oil and Governor of the Central Bank we met with the IMF and in one of the meetings, suggested to the the governor's must strengthen the Iraqi dinar and to return dear generous as is the Iraq history and civilization, and at least if not the Iraqi dinar equivalent to about three dollars and little to equate dollars from hand psychological Even when sorrow for hundred dinars "

www.alsharqiya.com%2Fdisplay.asp%3Ffname%3Daboutus %255C2006%255C008.txt%26storyti&langpair=ar%7Cen&h l=en&ie=UTF8" target="_blank">Translated version of http://www.alsharqiya.com/display.asp?fname=aboutus%5C2006%5C008.txt&storyti

Iraq

From: US Department Of State

2006 INVESTMENT CLIMATE STATEMENT - IRAQ
INTRODUCTION
Iraq is currently recovering from three decades of oppression and upheaval. The policies of the former Iraqi regime weakened Iraq's international trade relations and infrastructure, impacting Iraq's ability to attract foreign investment. International sanctions also affected legitimate economic activity and international exchange of goods and services. The consequences of these policies can be seen through economic data. Between 1980 and 2003 per capital GDP fell from USD 3600 to around USD 700. Unemployment during this same period increased from 15 percent to as much as 30-50 percent.
Since the fall of the former regime in 2003, Iraq has charted a new course for economic growth. In the World Bank's Doing Business in 2006, Iraq ranked within the bottom 30 percent (114 out of 155 countries) in terms of ease of doing business. Iraq will need to rebuild its trade and economic infrastructure, and establish laws, regulations, and policies that attract foreign investment. Substantial progress has already been made to remove some of the obstacles to open markets and to develop a more "investor-friendly" business environment, but much work remains. In addition, Iraq has made progress in stabilizing the value of its currency and reducing the rate of inflation. Iraq has also adopted an open trade and investment regime with a focus on strengthening the private sector. Already, GDP per capita is estimated at USD 1050 in 2005.
Iraq has made rejoining the international community a key part of its economic development strategy, and investment will play a key role. Iraq's National Development Strategy for 2005-2007 articulates this new direction. Several goals outlined in this strategy include ensuring private sector growth through creation of a favorable legal environment, fostering a transition to a modern free market economy, and integrating Iraq into the global economy.
OPENNESS TO FOREIGN INVESTMENT
Under Saddam Hussein, investment by nationals of non- Arab states was prohibited. Several laws that went into effect under the Coalition Provisional Authority (CPA) changed Iraq's legal regime with respect to attracting foreign investment. These include the Iraqi law on Foreign Investment (CPA Order No. 39. as amended by CPA Order No. 46). CPA Order No. 39 states its purpose as, "promoting foreign investment through the protection of the rights and property of foreign investors in Iraq and the regulation through transparent process of matters relating to foreign investment in Iraq." Order No. 39 guarantees foreign investors national treatment with regard to their investments, unless prescribed otherwise. It also allows an unlimited amount of foreign participation in newly formed or existing business entities as well as permitting foreign investors to open trade representation and branches in Iraq. Investments may take place in all geographic areas and economic sectors of Iraq, although ownership in the natural resources sector involving primary extraction and initial processing is not permitted.
In addition, CPA Order No. 64, which amends the Iraqi Company Law 21 of 1997, eased the registration process for foreign and domestic companies by giving foreign nationals the right to acquire membership in a company as founder, shareholder, or partner. Iraqi law requires insurance, re-insurance, and financial investment firms to be joint stock companies (Article 10). These companies are governed by the Company Law as any other joint stock company and operations are supervised by the Central Bank of Iraq in accordance with the Iraqi Central Bank Law (CPA Order No. 56).
According to these laws (CPA Order No. 39, the Company Law 21 of 1997) and instructions set out by the Office of Company Registration (OCR) at the Ministry of Trade (MOT), foreigners may invest, register companies and trade representation offices/branches, and operate in Iraq. Specifically, the Ministry of Trade has written relevant instructions No. 196 (regarding the registration of national companies) and No. 149 of 2004 (regarding the registration of branches and trade representation offices of foreign companies). Some of the key provisions of these instructions include entitlement of foreign investors to equal treatment with Iraq investors, unless prescribed otherwise by CPA Order No. 39. Foreign investors are also allowed to invest anywhere in the country. In addition, the amount and proportion of an investment is unlimited unless otherwise governed or restricted by law. It also requires that branch offices and trade representation offices of foreign companies to register with the OCR at the MOT.
Iraq ranks favorably in comparison to its neighbors with regard to minimal capital requirements. Article 28 of Company Law No. 21 specifies minimum capital requirements for various types of companies: Joint Stock Company - (US $1,362); Limited Company - (US $680); other types of companies (US $340). Iraq ranks favorably compared to regional competitors, such as Egypt, Jordan, Kuwait, Saudi Arabia, Syria, the UAE, and the West Bank and Gaza. Foreign banks with a majority of foreign capital must obtain special permission from the Central Bank of Iraq to operate. Branches of foreign banks must maintain an unspecified positive balance of assets over liabilities and have $25 million in capital ($5 million for Iraqi banks).
Foreign investors are not allowed to engage in retail sales activities before fulfilling the following requirements: 1) depositing a USD 100,000 surety in a non-interest-bearing account with an authorized bank in Iraq 30 days prior to registration; and 2) obtaining a certificate of authorization from the Ministry of Trade.
CURRENCY CONVERSION AND TRANSFER POLICIES
The currency of Iraq is the Dinar (ID - sometimes referred to as the New Iraqi Dinar). Iraq's current exchange system is characterized as a free foreign exchange system, with no restrictions on purchases or sales of foreign currencies. The Iraqi currency is fully convertible and can be exchanged freely with any other currency. In addition, there is free movement of capital without restrictions on capital inflows and outflows. Iraq's foreign exchange regime is also a multi-currency system in which foreign currencies circulate in the market and are accessible to everyone.
The exchange rate is generally determined on the basis of supply and demand conditions in the foreign exchange market. Banks may engage in spot transactions in any currency, but are not allowed to engage in forward transactions in Iraqi Dinar for speculative purposes. The Central Bank of Iraq (CBI) also can intervene, when necessary, in order to maintain stability in the foreign exchange market. In addition, there are no taxes or subsidies on purchases or sales of foreign exchange.
The Government of Iraq's monetary policy since 2003 has focused on maintaining price stability and a stable exchange rate. In addition, the Central Bank of Iraq conducts daily foreign exchange auctions to limit the impact on base money growth of the sale of the government's oil export earnings.
EXPROPRIATION AND COMPENSATION
Iraqi law affords some protection to foreign investors from expropriation. Article 23 (Second) of the new Constitution prohibits expropriation in Iraq, unless it is "for the purpose of public benefit in return for just compensation." The constitutional provision further stipulates that this standard shall be regulated by law. Although this standard may offer some protection to foreign investments, the provision is fairly skeletal. As a result, whether foreign investors will enjoy protection from expropriation that meets international standards likely will depend on domestic implementing legislation and/or future bilateral treaty obligations with the investor states in this area. The United States does not have a Bilateral Investment Treaty (BIT) with the GOI at present.
DISPUTE SETTLEMENT
While the law of domestic arbitration is fairly well developed in Iraq, international arbitration is not well supported by Iraqi law. Iraq is a signatory to the Arab League Convention on Commercial Arbitration (1987) and the Riyadh Convention on Judicial Cooperation (1983), but it has not signed or adopted the two most important legal instruments for international commercial arbitration. These are the United Nations New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958) (commonly called the New York Convention) and the attendant rules and procedures established by the UN Commission on International Trade Law (UNCITRAL).
Domestic arbitration is provided for in Articles 251- 276 of the Civil Procedure Code. Arbitration agreements must be in writing. Panels of arbitrators are available through the Iraqi Union of Engineers, the Iraqi Federation of industries, and through private arbitrators. Under the previous regime, Iraq established a specialized arbitration system for construction contracts modeled on the International Federation of Consulting Engineers (FIDIC: Federation Internationale des Ingenieurs-Conseils) standards and procedures, but not governed or administered by FIDIC. Sharia' based arbitration is also reportedly possible, using the Qur'an and Sunna as rules of decision. (Note: Sharia' is the code of law derived from the Qur'an and from the teachings and example of Mohammed. Sunna is the body of practices undertaken or approved by Mohammed which are considered as legally binding precedents. End note.)
PERFORMANCE REQUIREMENTS AND INCENTIVES
Both domestic and foreign investors qualify for incentives equally. However, since many of the CPA laws on investment are not fully implemented, foreign investors may not receive equal treatment. The Government of Iraq offers a number of investment incentives, including tax and customs duties holidays, based on the type of economic activity and sector. Investment incentives offered to investors in the manufacturing sector include exemptions from:
-- income tax and other taxes for five years starting from the date of the registration certificate;
-- customs duties on raw materials and machinery for five years starting from the date of the registration certificate;
-- provision of raw materials at subsidized prices if available and owned by the Government of Iraq;
-- allocation of land, according to the investor's needs, at subsidized rates;
-- supply of electricity, fuel, water, and sewage system services at subsidized rates; and
-- credit facilitation, if needed.
Foreign tax credits can be an incentive for foreign investors. Under CPA Order No. 49, any income paid by Iraqi or foreign firms, in or to, a foreign country on income earned in that country may be credited against taxes paid to Iraq on that same income. In other words, the foreign tax credit is intended to alleviate double taxation, not reduce Iraqi tax liabilities on profits earned within Iraq. As a result, the foreign tax credit is limited to Iraqi tax liability on income earned in the foreign country. The amount of the credit may not exceed the amount of tax generated in Iraq on the income earned in the foreign country at the rate in effect in Iraq. If taxes paid to a foreign country exceed the amount of this limitation, then the excess taxes may be carried forward as a credit in five consecutive years subject to the limitation in those years. To be credited, the amount of foreign tax paid to the foreign country must be confirmed by either a copy of the tax paid receipt or a confirmation of the amount of tax paid from the tax collection agency of the foreign country.
In addition to the foreign tax credit, other parts of the Iraqi tax regime provide tax incentives. For instance, the tax applied on the income earned by all corporations after April 1, 2004 is a flat rate of 15 percent. As provided for in Income Tax Law 113 of 1982, the rate is levied on the income of all private sector companies, including the income of foreign companies operating in Iraq. Iraqi tax law also allows for deductions relating to depreciation. Under Article 8 of
Income Tax Law No. 113 of 1982 and the System of Depreciation and Elimination for Private, Mixed and Cooperative Sectors No. 9 of 1994, taxpayers are entitled to take deductions for deprecation of buildings and other tangible assets and for amortization of intangible assets.
There is an annual tax of two percent of the land value determined annually by a Valuation Committee of the Real Estate Department of the Ministry of Finance. The Lease Land Tax is only payable for 15 years, after which no additional tax payments are due. Despite these tax incentives, however, U.S. investors should be aware that the Iraqi tax system is not fully functional at present.
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT
According to CPA Order No. 39 on Foreign Investment and CPA Order No. 64, which amends Company Law No. 21 of 1997, foreigners can now own 100 percent of an Iraqi company and hold exclusive management rights, unless prescribed otherwise. However, foreign ownership, either direct or indirect in the natural resource sector and involving primary extraction and initial processing is prohibited. CPA Order No. 39, however, does not apply to banks and insurance companies.
The current legal regime does not provide sufficient clarity regarding foreign ownership of private property. Revolutionary Command Council Decree No. 23 of 1994 prohibited foreign ownership of real estate and CPA Order No. 39 does not appear to have lifted this particular ban. However, CPA Order No. 39 enables relatively unrestricted foreign investment and does permit foreigners to obtain a license to use property for an initial term of up to 40 years, with the opportunity to renew after this term expires. In addition, CPA Order No. 39, grants broad leeway to foreign investors to acquire partial to full ownership of existing or new business entities, with some limited exceptions. Pursuant to this provision, some foreign investors allegedly have acquired real property indirectly by purchasing all of the shares of a domestic concern, and with such purchase, the real property owned by that company.
PROTECTION OF PROPERTY RIGHTS
Iraq is a member of several international intellectual property conventions and of regional or bilateral arrangements which include:
-- Paris Convention for the Protection of Industrial Property (1967 Act) ratified by Law No. 212 of 1975.
-- World Intellectual Property Organizations (WIPO) Convention; ratified by Law No. 212 of 1975. Iraq became a member of the WIPO in January 1976.
-- Arab Agreement for the Protection of Copyrights; ratified by Law No. 41 of 1985.
-- Arab Intellectual Property Rights Treaty(Law No. 41 of 1985).
Iraq is also evaluating its membership with respect to additional international conventions in the field of intellectual property protection. Despite Iraq's progressive laws on intellectual property rights, however, the Government of Iraq's capacity to enforce intellectual property rights in the existing business environment is weak.
Patents: Patent matters are currently spread across three ministries. CPA Order No. 81 amended the Patent and Industrial Design Laws and Regulations, Law 65 of 1970, and provides broad protection to all types of scientific, technical and design-related intellectual property. There are three registries created by CPA Order No. 81. These include a patent registry and an industrial design registry at the Ministry of Industry and Minerals, and a plant variety registry at the Ministry of Agriculture. However, the Iraqis have not implemented CPA Order No. 81. As a result, the patent registry and industrial design registry remain a part of the Central Office for Standards and Quality Control (COSQC), an agency of the Ministry of Planning and Development Cooperation.
Copyrights: CPA Order No. 83 amended Law of Copyright l3 of 1971, adding major protections to recorded music and film works. This was the weakest area of pre-war Iraqi law in the area of intellectual property protection, since Iraq never adhered or adopted all the protections of the Berne Convention on copyrighted works. The Ministry of Culture and Directorate of Cultural Affairs implement the copyright law. This copyright law includes harsh penalties, although there is no minimum mandatory term of imprisonment for first offenders, only a fine of not less than 5,000,000 Iraqi Dinars (about USD 3600). Second offenses carry a minimum mandatory term of imprisonment of five years and a fine of not less than 100,000,000 Iraqi Dinars (about USD 77,000). Despite these severe penalties, there is little enforcement of violations such as production or sale of counterfeit DVDs.
Trademarks: CPA Order No. 80 amended Law 21 of 1957 in Trademarks and Descriptions and renamed it the "Trademark and Geographical Descriptions Law." The law is comprehensive in its treatment of trademark and service mark issues, as well as appellations of geographical origin. The law also protects registered trademarks for ten years, and provides for trademark renewals for ten years. Trademarks are implemented by an office in the Ministry of Industry and Minerals.
TRANSPARENCY OF THE REGULATORY SYSTEM
Potential investors in Iraq face a significant legal problem in understanding the basic steps of starting and operating a business, given the complexity of Iraq's existing laws, regulations, and administrative procedures. Many Iraqi ministries involved in the investment process lack written guidelines. In addition, gaining access to legislation or specific regulations is difficult. The investment process is further complicated by the fact that government officials who often exercise substantial discretion in issuing approvals and granting incentives. Different procedures also may be used depending on local custom, and existing procedures may also be disregarded or circumvented. This lack of administrative clarity and consistency in regulating the private sector increases both risk and opportunity costs for foreign investors.
Iraq's cumbersome registration requirements also create confusion for foreign investors in Iraq. Investors are required to go through eleven procedures to start a business in Iraq. Steps include, but are not limited to, requesting a name search at the local Chamber of Commerce, obtaining relevant ministry approvals, depositing capital in an authorized bank in Iraq, registering with the Office of Company Registration (OCR) at the Ministry of Trade (MOT), obtaining a registration certificate, and then also registering with the Commercial Record with the local Chamber of Commerce. The estimated amount of time that an investor needs to complete all steps is approximately two months for a joint stock company or 20-25 days for other types of companies.
Regional laws within Iraq also create a lack of clarity for foreign investors. The Kurdistan Regional Government (KRG) has investment laws separate from the central Government of Iraq. Although investment is not expressly mentioned as a federal exclusive authority under the constitution, the federal government does have exclusive authority to regulate commercial policy across boundaries, suggesting a possible basis on which the GOI could assert authority to provide uniform rules for foreign investment in Iraq. Regardless of the permissibility of a separate KRG law, separate investment laws can be confusing for companies that want to be compliant with both KRG and Iraq central government laws.
The absence of laws in areas concerning foreign investors also creates ambiguity. This absence includes competition and consumer protection laws that are critical for leveling the business playing field in the market. A competition law could help cut down on unfair business practices such as price-fixing by competitors, bid rigging and abuse of dominant position in the market. A consumer protection law could offer protection against unfair business practices directed against consumers. Iraqis also do not have a building code, making Iraq's construction industry potentially unsafe. Until these laws and regulations are drafted and enacted, foreign investors may encounter problems.
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT
The Central Bank of Iraq (CBI) is responsible for conducting monetary policy in Iraq. The CBI was re-organized by new legislation introduced in 2004 (CPA Order No. 56) as a legal public entity that has financial and administrative independence. The CBI's role and responsibility, as set out in this legislation, include: issuing notes and coins; safeguarding the national currency; providing banking services to the public sector and settlement services; monitoring and safeguarding the soundness of the banking system; developing the money and financial markets; and maintaining economic stability.
The Iraqi banking system includes seven state-owned banks, the two largest being Rafidain and Rasheed, which account for over 90 percent of banking sector assets). The vast majority of banking transactions, however, are confined to basic consumer ttransactions rather than business loans. There are also 20 private banks which account for six percent of the banking sector. An important development in the banking system was the establishment in 2003 of the Trade Bank of Iraq (TBI) as an independent government entity (under CPA Order No. 20). TBI's main purpose is to provide financial and related services to facilitate the importation and exportation of goods and services to and from Iraq. There is limited extension of credit to the private sector and asset composition is heavily tilted toward treasury bills. The credit culture in Iraq is limited. However, the initial stage of an electronic national payment system is scheduled to begin operation in 2006.
New financial sector legislation has paved the way to create a modern financial sector in Iraq. A new commercial banking law in line with international standards was adopted in October 2003. Since then, three foreign banks have been licensed to begin operations, and 18 more are in some stage of the process for approval. Commercial banks have also been required to strengthen their capital base. In addition, 17 new domestic private banks are in some stage of the approval process.
Iraq also has regulations in place relating to the stock market, CPA Order No. 74 and Amendment No. 100. Only joint stock companies, mixed or private, can issue publicly traded stock. The founders of a mixed joint stock company can only subscribe to not less than 30 percent and not more than 55 percent of its nominal capital, and it must include a minimum of 25 percent for the state (public) sector. Ownership of shares in joint stock companies that are trading on the Iraq Stock Exchange (ISX) shall be transferred in accordance with the relevant by-laws and guidelines. Presently, foreigners are not permitted to purchase shares in the ISX. While it is within the power of the newly created Iraq Securities Commission to do so, permission has not been granted. Trading transactions, buy and sell orders, are presently noted by hand on grease boards in trading sessions. This does not always allow for full transparency in terms of timing of market participants or knowledge of who has placed the bid. The coming automation of the ISX, with completion expected during the third quarter of 2006, will provide much greater transparency as well as pave the way for foreign investment on the exchange. In addition, a new permanent securities law is being drafted as well as rules and regulations for the Iraq Securities Commission.
POLITICAL VIOLENCE
Security continues to be the number one concern of the Iraqi Government and interested businesses. The security situation in Iraq remains serious. Theft and violent crime persist in Iraq, and the potential for attacks against U.S. citizens and facilities remains high. In addition, roads and other public areas can be dangerous for conspicuous foreign travelers. Law enforcement is limited, although Iraqi police units continue to be trained and deployed. Attacks against military and civilian targets throughout Iraq continue, including in the International (or "Green") Zone.
Targets include convoys en-route to venues, hotels, restaurants, police stations, checkpoints, foreign diplomatic missions, international organizations and other locations with expatriate personnel. In addition, there have been planned and random killings, as well as extortions and kidnappings. U.S. citizens have been kidnapped and several were subsequently murdered by terrorists in Iraq. U.S. citizens and other foreigners continue to be targeted by insurgent groups and opportunistic criminals for kidnapping and murder. The U.S. Department of State issues up-to-date travel warnings for countries throughout the world, and U.S. companies and visitors are advised to carefully assess the situation in Iraq.
State Department's Iraq Travel Warning (Iraq) and Consular Information Sheet (Iraq) contain the essential security and safety information on travel to Iraq.
CORRUPTION
Corruption in all areas remains a significant problem. Under Saddam's regime, corruption was a fact of life for every Iraqi and touched upon every economic transaction. The former regime's control of the economy left a legacy of heavy state procurement and subsidies distorting market prices. During Iraq's period of change and transition, the Commission on Public Integrity (CPI) has investigated and publicly reported ministry allegations of corruption, including that of the Iraqi Ministry of Defense misuse of up to USD 1 billion or more in Iraqi funds.
The CPI is an independent, autonomous Iraqi governmental office, established by CPA Order No. 55, responsible for anti-corruption, law enforcement and crime prevention, as well as public education on these topics. CPI investigates nationwide allegations of corruption within the government and refers cases to the Iraqi judiciary. It acts as an enforcement arm of Iraq's anti-corruption laws and performs its duties in conjunction with the Board of Supreme Audit (BSA) and the ministry Inspectors General (IGs). There is a need to impose and enforce credible penalties for government corruption, specifically adherence to laws related to government contracts, procurement and allegations of bribery. Notably, the number of corruption cases brought to a successful conclusion remains quite small.
BILATERAL INVESTMENT AGREEMENTS AND REGIONAL COOPERATION
Iraq is a signatory to thirty-two bilateral, and nine multilateral agreements within the Arab League arrangements on Investments Promotion and Protection (IPPA). Some of the bilateral agreements with other countries include Afghanistan, Bangladesh, India, Iran, Japan, Jordan, Kuwait, Mauritania, Republic of Korea, Sri Lanka, Syria, Tunisia, Turkey, the United Kingdom, Vietnam and Yemen. These agreements include general provisions on promoting and protecting investments, including clauses on profit repatriation, access to arbitration and dispute settlements, fair expropriation rules and compensation for losses. Most IPPA contain Most-Favored National (MFN) clauses, as well as a national treatment clause.
In addition, Iraq has bilateral free trade area (FTA) agreements with the following eleven countries: Algeria, Egypt, Jordan, Lebanon, Oman, Qatar, Sudan, Syria, Tunisia, Yemen, and the United Arab Emirates. Iraq is also a signatory to several multilateral agreements, including the "Taysir" agreement with Arab countries dated February 27, 1982, and ratified in January 11, 1982.
In July 11, 2005, Iraq and the U.S. signed a Trade and Investment Framework Agreement (TIFA) as a first step toward creating liberalized trade and increasing investment flows between the U.S. and Iraq.
OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
OPIC finances a variety of investment projects with substantial U.S. participation in Iraq. Some of OPIC's basic programs include structured finance projects, political risk insurance, investment funds and financing for small and medium-sized enterprises. In addition, OPIC and the Government of Iraq have executed an Investment Incentive Agreement (IIA.
The Iraq Middle Market Development Foundation (IMMDF) is a program offering investment financing. This program began operations in October 2004 with $130 million committed debt capital from OPIC, commercial banks, and a grant from the Coalition Provisional Authority. In the initial phase of this program, IMMDF is making direct loans to Iraqi businesses. OPIC is currently evaluating how to expand this program.
OPIC Investment Fund: The Iraq Fund is a new program approved in late 2005, managed by Rathnam, Hayat, MacGuire & Khalifa, Inc. (RHMK), an emerging markets private equity investment firm with offices in New York City and Boston, Massachusetts. The Fund has a ten-year life and will invest exclusively in Iraq and Iraq-related businesses that may be located in adjacent, OPIC-eligible countries. The fund will target total capital of USD 75 million to USD 90 million, including an OPIC Investment Guaranty of up to USD 45 million.
OPIC and Trade Bank of Iraq: OPIC approved USD 150 million in financing for a US trust to support the letter of credit activities of the Trade Bank of Iraq (TBI). The financing is being undertaken in two phases with OPIC providing guarantees of up to USD 52.5 million for the first phase and commercial lenders, including Citibank, N.A., providing commercial financing of up to USD 17.5 million. This program will result in the US trust supporting TBI reimbursement obligations for letters of credit with maturities of up to 270 days. Specifically, the trust will only guarantee reimbursement obligations on TBI letters of credit, which are not, or not entirely, supported by export credit agency cover. Consequently, the project is designed to increase the availability of financing for Iraqi trade transactions and to enable Iraqi funds to be leveraged in a more efficient manner. The trust represents the first time that commercial lenders, such as Citibank, N.A., are able to confirm Trade Bank of Iraq (TBI) letters of credit that are not fully collateralized.
LABOR
Iraqi labor law remains weak in promoting a flexible, business-friendly employment environment. The current labor law, passed in 1984 and amended in 1987, includes regulations that require revisions, including: benefit clauses, conditions for foreign expatriate workers, and rules governing working hours. In 2005, a new modern labor code was approved in draft by the Council of Ministers; the next government will debate this code in 2006.
CPA Order No. 89 limits working hours for under 18- year old workers and prohibits their employment in dangerous occupations. Iraq is a party to both International Labor Organization (ILO) Conventions related to youth employment, including child labor abuse. The Ministry of Labor and Social Affairs (MOLSA) also sets a minimum monthly wage for unskilled workers. In addition, according to Iraqi law, all employers must provide some level of transport, accommodation, and food allowances for each employee. The law does not fix allowance amounts.
There are also requirements for foreign companies employing Iraqi or foreign workers. Once a foreign investor employs any individual in Iraq, whether Iraqi or a foreigner, he must inform MOLSA's Employment Bureau. The investor must also notify the bureau when every position ends, and when a foreign investor has vacancies. In addition, all Iraqis and foreigners wishing to work in Iraq must report to the Employment Bureau to complete a registration form that includes name, qualifications, and the type of work sought.
There are also work permit requirements for hiring expatriate employees. MOLSA approves or rejects expatriate work permit applications. Work permits may be granted for a maximum of six years, but employers must renew the employee's permit at the end of each year for the following year. The government can also cancel a foreigner's work permit if he leaves the country for more than two months in a year without reasonable cause. Exceptions include study, medical treatment, or work- related reasons. Investors wishing to employ an individual who is located outside Iraq most provide a prospective employee with an employment contract, but the employee must complete the application process himself. This work permit application process occurs in tandem with the process for obtaining an ordinary visa to enter the country.
In addition to the work permit requirements, once an expatriate has accepted an offer of employment, passed the health and security checks, and received a work permit, the Government of Iraq will convert his entry visa into a residency permit. The term of the residency permit corresponds to the period of the work permit. According to Iraqi law, an expatriate with a valid work permit must convert his work permit into a residency permit within 15 days of arriving in Iraq or within 15 days of receiving his work permit if he is already in Iraq.
FOREIGN TRADE ZONES AND PORTS
The Free Zone Authority Law No. 3/1998 (FZL) permitted investment in Free Zones through industrial, commercial, and service projects. This law operates under the Instructions for Free Zone Management and the Regulation of Investors' Business No. 4/1999. Under the Free Zone Authority Law, goods imported and exported from the FZ are exempt from all taxes and duties, unless imported into Iraq. However, this exemption does not apply to the Reconstruction Levy (CPA Order No. 54). Capital, profits, and investment income from projects in the FZ are exempt from all taxes and fees throughout the life of the project, including in the foundation and construction phases. The application process for an investor involves submitting an application and USD 100 fee to the Free Zone Authority. The investor must sign a lease within 30 days of lease approval.
Activities permitted in Free Zones include: (a) industrial activities (both production and consumer), assembly, installation, sorting and refilling processes; (b) storage, re-export and trading operations; (c) service and storage projects and transport of all kinds; (d) banking, insurance and reinsurance activities; and (e) supplementary and auxiliary professional and service activities. Prohibited activities include actions disallowed by other laws in force, such as weapons manufacture, environmentally-polluting industries and those banned by the place of origin.
Current FZ locations include: (a) Basrah/Khor al- Zubair Free Zone: This one million square mile zone is located 40 miles southwest of Basrah on the Arab Gulf at the Khor al-Zubair seaport. This has been operational since June 2004; (b) Ninewa/Falafel Free Zone: this 400,000 square mile zone is located in the north, near roads and railways that reach Turkey, Syria, Jordan and the Basrah ports; (c) Sulaymaniyah Free Zone: this zone is located in northern Iraq, in the Kurdish area; (d) al- Quaymen Free Zone; this zone has two phases located near the Iraqi-Syrian border. It is close to roads and railways that reach Turkey, Basrah, and Jordan. The zone's first phase is limited to commercial and service activities.
FOREIGN DIRECT INVESTMENT STATISTICS
FDI Statistics (in USD):
Year 2002 2003 2004
U.S. FDI in Iraq 0 53 million 137 million
FDI into U.S. from Iraq 0 1 million 2 million
June 7, 2006

Iraqi cops take lead with a little help
Tuesday, 16 January 2007
By Megan McCloskeyThis email address is being protected from spam bots, you need Javascript enabled to view it

Stars and Stripes



An Iraqi translator working for the Army and Iraqi policemen read a ragged, water-damaged insurgent notebook found stashed with a weapons cache during an Iraqi police patrol in Albu Faraj. The notebook contains an inventory list, positions for roadside bomb emplacement and names of insurgents. About 10 mortars along with TNT in plastic bags with a detonator cord and boxes of ammunition were found in the cache.ALBU FARAJ — In a way, the soldiers who live, eat and work at the Albu Faraj Iraqi police station are like older brothers to the newly minted policemen.

The Police Transition Team is there for guidance — to back up the Iraqis and teach them a few things. And much like a younger brother hanging out with his older, more experienced sibling, the policemen want to prove themselves to the soldiers.

The ultimate goal being, for both parties, a functioning, independent police force.

As sheiks join together with coalition forces to fight insurgents in Jazeera, which is just across the Euphrates from Ramadi proper, Iraqi police stations get set up in the tribal neighborhoods, complete with transition teams to help the police get started.

At Albu Faraj, the team is originally an artillery platoon with Task Force 2-37.

When the 2nd Battalion, 37th Armor Regiment, 1st Armored Division moved from Tal Afar to Ramadi in October, the platoon became police advisers and moved into the old stone house that is the station.

The soldiers live in two rooms, one upstairs and one down, crammed with bunk beds. The living conditions are sparse, cold and fairly dark. But the upstairs room has a large television hooked up to a satellite.

Piled next to the fridge are stacks of Gatorade and juice boxes, and they often microwave mini frozen pizzas for lunch. They can get take-out dinners down the street at Forward Operating Base Blue Diamond.

Last week, in the hallway outside the soldiers’ room upstairs, an Iraqi police lieutenant was angrily talking to a policeman whose pistol wasn’t working. The lieutenant wanted to fire him.

Sgt. Jason Taylor, 28, had to intercede. He showed the lieutenant that the gun had just malfunctioned and explained it happened every once in a while with that type of pistol.

Also in the curriculum: how to fill out police reports and have an efficient filing system.

“Before it was ‘I have it in my head, and if you need to know something you have to come find me,’” said Taylor, of Roswell, N.M.

When not on patrol, the police transition team often becomes the complaint department.

The colonel of the Albu Faraj station goes to 1st Lt. Victor Somnuck, 24, of Miami, who heads up the transition team, with his gripes about pay, ammunition and supplies.

Before getting paid for the first time four months after the station opened, the police officers would hound the soldiers.

“When you go down the stairs the second your feet hit the floor a group of guys surrounds you. ‘Mister, mister! Money, money!’” Taylor said.

Before going on a patrol, the police check in with the soldiers, showing them on the map where they’ll be. Some of the soldiers accompany them to provide security and guidance — but the Iraqis take the lead.

“The community would rather see them lead than coalition forces,” Taylor said.

On a recent patrol, the police and the soldiers searched a house and questioned the owner, who lied about how many weapons he had. The soldiers’ first instinct was to detain the man, but the Iraqi police said he wasn’t causing any trouble in the neighborhood

“The IPs said no, and we follow what they say,” said Staff Sgt. Kevin McKeithan, 39, of New York City.

So the officers just confiscated the man’s weapons instead.

The Iraqis know the culture, the customs, who belongs and who doesn’t, said Lt. Col. John Tien, commanding officer of the task force, which is out of Giessen and Friedberg, Germany.

During the patrol the police found a weapons cache hidden under hay in little huts near a large field where cows graze. It was filled with mortars, TNT and boxes of ammunition.

When an Iraqi police lieutenant came into the room, a smiling Somnuck congratulated him on the cache find and then proudly gave him a high five.

(Used with permission from Stars and Stripes. © 2006 Stars and Stripes. Stars & Stripes.)

Oil Protection Forces guard vital pipelines
Tuesday, 16 January 2007
By Sgt. Michael Tuttle
5th Mobile Public Affairs Detachment
KIRKUK — Artillery Soldiers visited two oil-gas separation plants in Janbar Thursday to check the progress of the Oil Protection Forces guarding pipelines south of here.

The OPF, funded by the Iraqi Ministry of Oil, guard the infrastructure that keeps the oil flowing in the area.

Soldiers from Headquarters and Headquarters Battery, 3rd Battalion, 7th Field Artillery Regiment, 25th Infantry Division, met with the OPF to learn how they can better support the Iraqi Forces and ensure they continue to receive the tools they need for success. The 3-7 Soldiers make themselves available to assist with training, supplies and guidance on a variety of issues.

“If they need anything, we help them get it and get it to them,” said Staff Sgt. Cedric Stevenson, platoon sergeant.

In response to previous discussions with the OPF, a guard tower funded by Coalition Forces was built at one of the plants. At another, Soldiers helped build a kitchen, improving conditions for the protection forces guarding the plants 24-hours a day.

“The OPF are the ones out here every day guarding these plants,” Stevenson said. “We’ll do anything we can to help make them stronger.”

The economic benefits of the gas-oil separation plants are imperative to the region’s success, said Stevenson. And with the insurgent threat to the local infrastructure, the OPF’s ability to guard the plants is vital. Insurgents and terrorists typically attempt to destroy anything providing stability or hope to the Iraqi people.

“Anything we can offer to help these guys, anything to help them get better at what they do, we’re willing to do that,” Stevenson said.

Thousands benefiting from first primary healthcare clinic in Salah Al Den
Tuesday, 16 January 2007
By Lana Aziz
Gulf Region North
TIKRIT — More than 112,000 people in the Salah Al Den Province are receiving healthcare from the first completed PrimaryHealthcare Center in the north.

Built by local construction companies with quality assurance managed by the U.S. Army Corps of Engineers, this $3.35 million dollar facility provides routine and initial emergency care to patients including X-ray, laboratories and dentistry. Medical supplies and laboratory equipment were included in the contract to make this facility complete and operational.

Currently, there are 47 Primary Healthcare Centers under construction in the northern region of Iraq. Seven of those are located in the Salah Al Den Province and are scheduled to open later this year.

“The … clinics in the program are either replacing existing rundown facilities or are being constructed in areas where there is a lack of health services,” said Marilyn Kwentus, a construction project manager for the U.S. Army Corps of Engineers. “The new … clinics will provide enhanced health-care services to the people of Iraq, which is greatly needed.”

This facility is result of the U.S Army Corps of Engineers Gulf Region North and local Iraqi government working together to make healthcare clinics available to as many Iraqis as possible.

Originally Posted by laurenr

Why is it that ALL of the negative stuff comes from those who have posted the least, usually less than 20 posts ?

When you have been here a while you will get a better ' rounded out ' appreciation of whats really going on and not just a ' snap shot ' version which causes a ' knee jerk ' reaction which we see time n' time again from the newbies.

There's nothing wrong with being new here, but please try to bite your tongue until you have at least read a few posts..

Just another way to get dianr back to the CBI . . .send out little worker bees into the world with negative press and hidden agendas to scare away the weak hearted investors. Has anyone been paying attention to the general mood on ALL the different forums regarding dinar SINCE they exchange rate started moving in our direction . . . pissy and bitter and negative!

To much negativity to be a conincidence in my mind . . .I love a good conspiracy, but the bad vibes are everywhere . . .even here at RC the bastian of positivity. Enuf said

Turkish army gathered on the Kurdistan’s boarder ready for attack

1/16/2007 KurdishMedia.com
London (KurdishMedia.com) 16 January 2007: The Turkish army have gathered and intensified its forces on the Kurdistan’s boarder ready for attack, reported local sources on Tuesday.

While Turkey is holding a conference on Kirkuk without the participation of the Kurdistan Regional Government or any Kurdish political party, Turkey has intensified its forces on the Kurdistan’s border. Some Turkmens, Arabs and a high number of Turkish MP’s have participated in the conference. It was revealed by local sources that only Turkish flag displayed in the conference.

Radio Nawa stated that the Turkish army ready for zero o’clock to attack Kurdistan.

The speaker of Kurdistan Parliament, Adnan Mufti, condemned the meeting and dismissed it as the interferences on Kurdistan’s affairs.

The Kurdistan Presidential Council led by Massuad Barzani has not made any statement regarding the Turkish conference on Kirkuk or the Turkish army’s gathering on the Kurdistan’s border.

Transcript of Press Conference by IMF Managing Director Rodrigo de Rato

QUESTIONER: Thank you. A little over a year ago, the IMF approved a $685 million loan for Iraq. I was wondering what the status of that loan, how much of it has been dispersed at this point, the status of any programs you have in Iraq, and with the ongoing violence and the hopes going forward if this could have any chance of being successful.

MR. DE RATO: Let me say that the discussions between us and the Iraqi Authorities toward completing the next review under the stand-by arrangement are right now going. So we are in the middle of seeing that review, and I cannot give you a specific date when that review will be completed.

We see as positive steps the strengthening of the dinar and certainly a more effective use of monetary policy because inflation has reached very high inflations in 2006 as you all know, and in that respect we were urging the authorities to move into tighter monetary policy. Nevertheless, of course, security considerations in Iraq are crucial. As I said before, I can't give you right now a specific date of when we will complete the review, but I can tell you we are in the middle of it. There is no disbursement because this is a precautionary program, so there have not been any disbursements by us.