Thread: Iraq/Dinar News until 5PM CST May 10,2007

Employment trumps privatisation in Iraq economic plan
The UN-brokered economic compact signed this week with great fanfare aims to create a liberal free market in Iraq, but US officials admit that for now this approach will take a back seat to more statist job creation schemes.

The deal was approved on Wednesday at a conference in the Egyptian resort of Sharm el-Sheikh by the leaders of more than 50 countries, who agreed to fund reconstruction if Iraq meets certain economic benchmarks. (wonder how they'll do that )

The agreement urged Iraqis to set up what the US State Department's pointman on Iraq, David Satterfield, described last month as "the basis for a liberal, investment-friendly, investor-friendly economic regime."

But, while the language echoes Washington's dreams for transforming Iraq before the March 2003 invasion, officials on the ground admit that, in the short term, reviving state-owned industries to create jobs will take priority.

"At this stage in Iraq's situation, I would argue very strongly that profitability is not the key aspect in assessing your state-owned enterprises," a senior US official in Baghdad involved in economic policy said this week.

"Employment in this situation is frankly more important in many ways than profitability," he told reporters.

Observers estimate that around 48 percent of Iraq's workforce is unemployed, creating an army of the dispossessed which is a fertile recruiting ground for the many illegal militias and insurgent gangs fighting in the war.

In March, Paul Brinkley, the US Department of Defence's undersecretary for business announced a plan to reopen dozens of Iraq's old state-owned businesses and initially re-employ 10,000 workers.

"There is a recognition that security and economic prosperity go hand in hand, and that unemployment in Iraq is contributing to the frustrations of people and creating sympathy for insurgents," Brinkley said, at the time.

"The factories served as the engine for the Iraqi economy and must be restarted."

The new US position, contrasts heavily with the neo-conservative influenced policy of early days of the occupation.

In the aftermath of the 2003 invasion, the subsidies and tariffs protecting local industries were lifted, forcing the state-owned industries to close and tossing nearly 100,000 people out of work.

Coming hard on the heels of policies disbanding the army and firing Baath party members from the their jobs, the result was a huge number of disgruntled, unemployed men that went on to swell the ranks of the insurgency.

"There was a lot of foolishness in 2003 and they failed to recognise the realities and be sufficiently practical in dealing with the situation," said the US official.

"The policy balance that is required in this period is rather more sophisticated than what you saw in the enthusiasms of the Coalition Provisional Authority in 2003," he added.

One of the biggest signs of a policy shift was the return of top US diplomat Tim Carney to Baghdad in January to oversee the reconstruction effort.

Carney spent two months in Iraq right after the invasion trying to restore the industrial sector and then resigned in disgust when it became clear they were just being left to close down or be sold off.

There are still hopes that Iraq will be able to sell off industries to private sector and foreign investors -- much to the chagrin of many Iraqis who fear their national patrimony will disappear in a fire sale.

US officials say that the ultimate goal still is a free market system and that privatisation must happen -- but not now, not when lots of unemployed angry young men are turning to violence.

Other efforts to boost employment include a 30-million-dollar micro-loan programme by the Iraqi labour ministry for entrepreneurs to start small businesses like electronics repair shops.
The industry ministry has a 20-million-dollar programme to help businesses hurt by violence.

The US military has a number of initiatives of its own, including the year-old Iraq First programme favouring Iraqi contractors instead of foreign ones.

"For the past 12 months we've made a concerted effort to increase our contracting with Iraqi companies," Major General Darryl Scott, head of military contracting in Iraq and Afghanistan, told reporters recently.

"This has been a true shift in thinking about reconstruction and contracting in Iraq and movement towards developing capacity of Iraqi firms to provide for the needs of their own people," he said.

Now, half of contracts are awarded to Iraqi firms compared to only a fifth a year before, he said.

There is also a plan to create a secure area next to the massive US base at Baghdad airport for Iraqi businesses to provide maintenance and repair services -- something that could be extended to other bases around the country.

The move comes after observers noted that, in contrast to other countries hosting US forces, Iraqis derive almost no economic benefit from the bases in their midst, which import nearly all their food and labour from abroad.

Egypt exempts Iraq from debts of $ 800 million

06 May 2007 (Iraq Directory)

Iraqi Minister of Finance said on Thursday that Egypt has agreed to cancel all debts owed to it by Iraq, amounting to $ 800 million, at an international conference in support of Iraqi institutions.

The Minister of Finance, Bayan Jabr, made his statement while the Ministers of more than ten countries and international organizations are meeting for one day at the resort of Sharm el-Sheikh on the Red Sea to agree on an international covenant to Iraq; this International Covenant document is a five-year plan offers financial, political and technical support to Iraqi institutions in return for political, security and economic reforms.

Jabr said that three countries of Eastern Europe: Slovenia, Bulgaria and Poland have also approved to exempt Iraq from 80% of the debts owed to them, but he did not disclose the value of these canceled debts.

He added that the European Union would give Iraq 200 million dollars and that he expects donations from some Asian countries as well.

Iraq, which has the third largest oil reserves in the world, is struggling to rebuild its faltering economy after four years of violence following the invasion led by the United States in 2003.

Sharm conferences: Iraqi economists forecast positive implications for Iraqi economy
By Dergham Mohammed Ali

Baghdad, 06 May 2007 (Voices of Iraq)

A number of Iraqi economists on Saturday gave their forecasts about the implications of the resolutions adopted by the Sharm al-Sheikh conferences, held last Thursday and Friday, for the Iraqi economy. Positive impacts for the Iraqi economy, a boost to Iraq's participation in the World Trade Organization (WTO) and potential benefits for the Iraqi people were predicted by many economic experts.
Some economists indicated that in order for the conferences to yield benefits for the Iraqi people, high-quality governmental performance in banking activities and investment projects has to be ensured first.
Samir Zedan, an economic expert who works for the U.S. Agency for International Development (USAID) in Iraq told the independent news agency Voices of Iraq (VOI) today, "The huge reduction of Iraqi debts will ease the burden on the Iraqi economy. This will consequently return Iraq to its normal position in the international community and boost its active participation in WTO, considering its economic potential and resources."According to Zedan, the reduction of debts will also help Iraq import raw material, which he said will help bring deactivated industries back to life and turn Iraq from an oil-producing country to a multi-resource country that has an industrial base.

Zahid Jihad, a media and economic expert, said "The reduction of Iraq's debts by many countries, led by Saudi Arabia, will enormously benefit the Iraqi people if it is accompanied by a distinguished technocratic governmental performance."
According to Jihad, the activities of Iraqi banks are currently suspended because of such debts. Creditors have the right to halt all financial transactions by Iraqi state banks that have branches outside Iraqi, including the banks of al-Rafideen (The Two Rivers, in reference to the Tigris and Euphrates rivers), al-Rasheed and the central Bank of Iraq.

Citing Malaysia and South Korea as examples, Jihad indicated that the Iraqi government should pursue a wise policy by activating the banking sectors and rebuilding the country.
Jihad explained that the next task will be assigned to the private sector, which he said was compelled to move its capital to neighboring countries to benefit from their openness to the world economy. "After the cancellation of debts and activation of the banking sector, openness to the world economy will also be attainable from within Iraq," Jihad added.

Economic and industrial expert Abdul Razzaq Al-Abayachi told VOI, "The cancellation or reduction of debts will rid Iraq of bills that were not its fault and which hinder the wheel of sustainable development."

The International Compact for Iraq Conference, hosted by the Egyptian Red Sea resort of Sharm al-Sheikh on Thursday, produced a document bearing its name, which specified all forms of assistance to be provided by the international community to help Iraq reconstruct its economic and military institutions. Iraq's Neighboring Countries' Conference, held on Friday with the participation of Egypt, Bahrain, representatives from the G8, the UN Security Council's five permanent members, the United Nations, the Organization of Islamic Conference (OIC) and the Arab League, also vowed to back the Iraqi government.

During the conference, some of Iraq's debts were canceled by a number of creditor countries, while others were reduced. A $5 billion grant was also awarded to Iraq.

Row over Iraq oil law
By Ahmed Janabi

06 May 2007 (Aljazeera)

A draft law being considered by the Iraqi parliament would enable US companies to take control of Iraq's oil industry, oil experts in the country say.The proposed bill, approved by the Iraqi government in February after months of wrangling, opens the country's oil sector to foreign investors 35 years after it was nationalised.

"The law is designed for the benefit of US oil companies," Ramzy Salman, an Iraqi economist who worked for the Iraqi oil ministry for 30 years, said.

"If approved, it would take things back to where they were before the nationalisation of Iraq's oil in 1972." But he said the situation would be reversed when Iraqis regained their "true sovereignty".

'Serious gaps'

Salman said: "If there is something that should be worked on, it is the [Iraqi] constitution.

"The constitution contains serious gaps in terms of who is in charge of the oil and its revenues ... [despite the] oil in Iraq being under every Iraqi river, desert, marsh and farm."

PSAs are normally ideal for poorer countries exploring virgin lands or wanting to extract oil from fields where the resource is well below the surface and are designed to protect investors from the risks involved in such exploration projects.

'Completely inappropriate'

But Iraqi oil experts say investors face virtually no risk, as the country's oil is the cheapest to extract worldwide, and is of such a high quality that it sells at a premium on world markets.

Issam al-Chalabi, Iraq's former oil minister, said PSAs were completely inappropriate for Iraq.

He said: "An oil barrel in most of Iraq’s oilfields costs between 50 cents and one dollar to extract. Iraq's fields are also proven, and investing in them is risk-free.

"These kinds of agreements are normally given when there is a risk, as the case in Sudan, Yemen and several other countries, where companies invest money with great risk that they would not find oil, or they find difficult to extract oil."

Political motives

Al-Chalabi said PSAs were a highly profitable formula for oil companies and in many cases they were granted for "political reasons".

"Under no circumstances would Iraq relinquish its authority, its responsibility and its control over Iraq's natural resources"

Hussein Shahristani

"In the 1990s, the government of Saddam Hussein gave PSAs to Russian and Chinese oil companies, but it was more of a political decision than economic," al-Chalabi said.

"The US and its allies lobbied in the 1990s against Iraq in order to tighten UN sanctions, while Iraq was betting on Russia and China to help remove or at least ease the sanctions."

He said the contracted Russian and Chinese oil companies were mostly government-owned.

The 12.5 per cent profit protected by the new law is also disputed by many as being too high.

Al-Chalabi said the percentage was excessive given current oil prices.

"Iraq's PSA with the Chinese and Russians gave a profit percentage less than 10 per cent when the oil barrel price was around $25, but now the barrel is over $60 which means the percentage of 12.5 per cent is too high," he said.

Break-up of Iraq

The draft law would give Iraq's provinces a free hand in giving exploration and production contracts, which some fear will lead to a decline in the authority of the central government over the country's main resource.

Observers say that if the new law is approved, it will also encourage separatists in the oil-rich provinces to split off.

Eventually the break-up of Iraq would be impossible to prevent.

Iraq's constitution allows governorates to form a semi-independent regions, which enjoy full rights in controlling natural resources.

Dhafir al-Ani, an Iraqi member of parliament, said: "The proposed oil law is the best possible in the current situation.

"However, if there are some gaps in it, then the reason is the constitution, which contains several controversial issues and needs to reconsidered."

Government denial

Iraqi officials insisted in a forum held in Dubai last month that the bill due to be submitted to parliament will keep the country's oil wealth in Iraqi hands and benefit all of its warring communities.

"Under no circumstances would Iraq relinquish its authority, its responsibility and its control over Iraq's natural resources," Hussein Shahristani, the country's oil minister, told reporters in the United Arab Emirates.

Muhammad Bahr al-Ullom, who laid the early foundations of the current draft oil law when he served as Iraq's first post-war oil minsiter in 2004, has told reporters that he is in favour of the new law. He said it would not put Iraq's oil at the hands of foreign oil companies and it would not devide Iraq.

Al Jazeera.net contacted Bahr al-Uloom in Iraq and agreed with him to call a few hours later for a telephone interview. However, there was no answer to a telephone call at the appointed time or when subsequent attempts to reach him were made.

Kurds and the new law

Ashti Hawrami, oil minister for the Iraqi Kurdish region, said at the Dubai conference that the Kurds would reject any ammendments to the suggested law and that they would go ahead with deals they have already made, whether the law was approved or not.
Al-Ani agreed with Salman that the proposed law was a "political" deal to strengthen US allies in Iraq.

He said: "We are a democratically elected legistlative body, if we would blindly approve anything presented to us, then why are we there?

"I prefer we go home. We have increasing signs that the law is a political deal."

Iraq's Kurdish semi-autonomous region has already given PSAs to foreign oil companies, and is in favour of the proposed oil law.The region may well gain control of the oil-rich governorate of Kirkuk through a referendum due to be held later this year.

If the new law is approved and the Kirkuk referendum came in favour of the Kurds, the Kurdish region would enjoy huge economic power.

Oil exports in April 1.605 million barrels a day-
06 May 2007 (Iraq Directory)

A spokesman for the Iraqi Oil Ministry said on Thursday that Iraq exported 1.605 million barrels of oil a day in April compared with 1.62 million barrels per day in March, and attributed the slight decline to sabotage attacks on the northern oil fields.

April is the second month that witnessed a high level of exports after it has remained up to 1.5 million barrels a day for a period.

The spokesman, Assim Jihad, said the exports in April include 1.594 million barrels a day through the ports in Basrah in south; another 11 thousand barrels were exported daily to Syria through Ein Zalah field near the city of Mosul in the north.

Jihad told Reuters "crude oil exports from Kirkuk in the north continue to stumble because of the continuing sabotage to the oil pipelines in the region".

The level of exports in March which reached 1.62 million barrels a day were the highest since September 2006, according to Jihad.

Iraq intends to automate its general banking sector
06 May 2007 (Iraq Directory)

Director-General of “Rafidein Bank”, Abdul Hussein Al-Yasiri, said that implementing the restructuring of the banking sector will begin soon, by the adoption of a comprehensive electronic system and mechanisms to keep pace with new developments.

He pointed out to the establishment of special training centers of the sector, in addition to external courses and preparation of studies to evaluate the annual performance, using research centers and spe******ts.

He stressed that human resource development is a human long-term investment, leading to upgrade the performance of the banking sector, in addition to the importance of opening branches and offices to provide better banking services for the citizen, in all available areas, pointing out that “Rafidain” (founded in 1941) in about to implement a comprehensive process of development, includes linking all its branches with new techniques that enhance its competitiveness with foreign banks which are expected to open branches in Iraq.

He explained that the role of the banking sector in economic development lies in its ability to mobilize savings and invest them in economic sectors, expanding monetary credit and long-term finance to projects serving the overall development; he added that the investment in this area is the most important factor in the development of the stock market.He pointed to the success of the Central Bank in raising the price of the dinar against the dollar, pointing out that the prices of goods and services remains high, which are reflected negatively on the cost of production.

He explained that the process of controlling interest rates have become vested to the banks since 2004, after being confined to the “Central”, and raising interest rates would cut down the lending rates.

Warnings of big inflation because of the continuing rise in fuel prices

05 May 2007 (Iraq Directory)

Warnings emerged in Iraq of the economic consequences because of the continued rise in fuel prices made by the government of Nuri al-Maliki, similar to the steps taken by the previous Al-Jaafari government which doubled fuel prices more than 5 times by the end of 2005.

The economic expert in the affairs of planning and economic development, Bataa Al-Kubeisi, said that the Iraqi government continuation in raising fuel prices will lead to a rise in the current inflation rates in Iraqi economy because of the direct impact of the drastic increase in prices on the wages of transportation and therefore the result would be an increase in food prices thus raising the prices of materials in all areas.

At a time when Al-Maliki government brought the price per liter of gasoline to 400 dinars a month ago after raising its price from 250 to 350 dinars under their endeavors to bring it to 750 dinars by the end of this year, the Iraqi Ministry of Planning indicated that the inflation rate in Iraqi economy exceeded 70%.
In case the Iraqi government achieved its aim and brought the price per liter of gasoline to 750 dinars by the end of this year after it was only 20 dinars two years ago (before Al-Jaafari government increased its price from 20 to 250 all at once, promising to grant financial returns to the poor but have not been paid yet) the price of petrol in Iraq will come much closer to the one in the United States and Europe.

Crediting Basrah farmers 58 million dinars during last March

05 May 2007 (Iraq Directory)

The loans provided by the Farmers Lending Fund in the Ministry of Agriculture for the farmers in Basrah last March were nearly 58 million dinars covering five different activities. The director of Basrah Cultivation, engineer Amir Salman Abdul-Hussein, said in a statement that during his presence at the Ministry: The loans granted within the new budget to the Fund, which increased from 25 billion to 50 billion dinars for the current year, will provide great opportunities to serve a wide spectrum of farmers and the various activities of the Fund, which included 17 different specialties.

He expressed confidence that the numbers of farmers applying for loans from the fund will increasing during the coming period. He said loans granted to farmers in central Basrah and Qurnah district were distributed as 37 million dinars for the first, and 20 million dinars for the second to cover the purchase of trailers at the cost of ten million dinars, drilling wells at 37 million dinars, four millions for the cultivation of wheat, three million for orchards, and 2 million and 500 thousand dinars to develop Apiaries.

Conference on Higher Education in IraqHeld in Irbil on 4- 6 September, 2007


05 May 2007 (Iraq Directory)

The Ministry of Higher Education and Scientific Research in Kurdistan and in cooperation and participation of the Organizing Committee for Higher Education in Iraq, located in London, and the Ministry of Higher Education and Scientific Research in Baghdad as well as all Iraqi universities are holding a World Conference on Higher Education in Iraq in Erbil on 4- 6 September, 2007.

The Conference aims to improve higher education and keep up with the global developments in the field of higher education and scientific research to be able to participate actively in the community and meet the needs of the country and its development. And some of the most prominent themes covered by the conference include:

Modern and efficient university administration

The adoption of modern administrative systems using contemporary technology with adoption of effective administrative structure away from bureaucracy and routine, learning how to take decisions, resolve outstanding problems and adopt the best way to distribute the cadres with characterizing their duties according to their specializations.

Human resources and building abilities for university leadership

Building abilities of the administrative, technical and academic cadres to keep up with the contemporary managerial and technological developments in the world.

The curricula and the modern teaching methods and their technologies

How to design curricula in line with the technological developments and link them to teaching and the use of modern technology.

The evaluation and supervision, quality assurance and evaluating activities of the members of the teaching staff

Evaluating scientific departments, teachers and students, research, various educational activities and the use of modern technology in the school system

(Quality Assurance, Assessment and Evaluation)

Higher studies systems and scientific research

The university and community (its role, the labor market)

Different patterns of Higher Education (the private, the open, by corresponding ........ etc.).

Ministry Carries out Campaign for Jobless Rehabilitation


Baghdad, 30 April 2007 (Al-Sabaah)

Scientific Research & High Education Ministry would carry out in coming month a big campaign for rehabilitating the jobless youth and those of especial needs as a supporting of law enforcing plan and building the society.

A source at the ministry said that, the ministry would soon starting of a big campaign for rehabilitating the jobless youth which would participating in achieving safety and stability besides the social steady by offering a big service for the government in the new plan.

Worth mentioning that the minister Dr. Abd Thiab A'ajeely declared during his meeting with the technique education institution dean, that the ministry would participate in advancing the security new plan by employing the jobless cadre of the youth in different places of the ministry