Thread: Archive Latest News - Think Tank - 16/08/07 - 03/11/07

Higher demand for dollar, exchange rate stable

Baghdad, Oct 30, (VOI) – Demand for the dollar was higher in the Iraqi Central Bank’s auction on Tuesday, reaching $99.515 million compared to $64.685 million on Monday.

In its daily statement, the bank said it had covered all bids, including $5.105 million in cash and $94.410 in foreign transfers, at an exchange rate of 1,232 dinars per dollar, unchanged for the twelfth session in a row.
None of the 15 banks that participated in Tuesday's session offered to sell dollars.

In statements to the independent news agency Voices of Iraq (VOI), Ali al-Yasseri, a trader, linked the decline in cash bids to the stability in the exchange rate. "Higher overall demand for the dollar was due to the increase in governmental remittances," he explained.

The Iraqi Central Bank runs a daily auction from Sunday to Thursday.

Aswat Aliraq

Power plants shut due to lack of fuel

Several Iraqi power plants are idle due to shortages in fuel supplies, exacerbating blackouts across the country.

Electricity Minister Kareem Waheed blamed the stoppages on lack of fuel, saying neighboring countries have failed to honor contracts to ship fuel supplies.

Iraq, sleeping on massive oil reserves, currently imports most of its fuel needs and the fuel import bill has surged to hundreds of millions of dollars a year.

Iraqi refineries have the capacity to churn out up to 700,000 barrels a day but they are working much below capacity due to acts of sabotage, lack of maintenance and corruption.

Waheed’s target in Kuwait is to persuade Kuwaiti authorities to sign a new fuel import contract as domestic fuel production is dwindling, electricity ministry officials said.

They said several power plants were idle because there was no fuel to operate them.

Iraq suffered no fuel shortages before the U.S. invasion and the amount of electricity produced now is still less than that under the former regime.

Azzaman in English

Kurdish parliament decides to send delegation to Iraqi government on Turkish threats

Arbil, Oct 30, (VOI) - The Kurdish parliament decided on Tuesday to send a parliamentary delegation to Baghdad to discuss with the federal government the recent Turkish threats to invade northern Iraq after a closed session attended by Kurdistan's President Massoud Barazani, the parliament's speaker said.

Speaking at a joint press conference, with Barazani, in the Kurdish parliament after the session, Adnan al-Mufti said "the parliament decided at the end of its closed session to send a parliamentary delegation to meet Prime Minister Nouri al-Maliki to coordinate with the Iraqi government on Turkish threats on Iraq's Kurdistan region."

"The Iraqi government is the body authorized by the constitution to defend Iraq's territories," he affirmed.

"The delegation will also meet with President Jalal Talabani and a number of Iraqi lawmakers, as well as attend an Iraqi parliament's session to explain the Kurdish position regarding the crisis," al-Mufti said.

On Friday, Iraq and Turkey ended talks on means of defusing the tension between the two countries over attacks allegedly launched by PKK's fighters from bases in northern Iraq against Turkish targets.

The Turkish parliament approved ten days ago a memorandum forwarded by the government allowing the Turkish army to hunt down members of the PKK, or Partiya Karkeren Kurdistan in Kurdish, in northern Iraq. Only 19 out of 555 legislators in the Turkish parliament voted against the proposal.

Aswat Aliraq

Oil sales more than $25B since early this year

Iraqi oil sales in world markets since early this year exceed $25B, while some European and US companies resume at next two days loading the oil quantities through Turkish Cehan harbor that reached to 5 million barrels, as Oil Ministry confirmed that pumping the Iraqi oil through that harbor is continuous de****e recent crisis between the two countries.

Source in the Ministry added that Iraq exports now from southern oil terminals 1.7 million barrels daily besides 5 million barrels through Turkey occasionally.

ÌÑíÏÉ ÇáÕÈÇÍ - Oil sales more than $25B since early this year

British navy watching for Iraq oil pirates

BASRA, Iraq, Oct. 29 British naval forces are training Iraq's navy in the fight against piracy as Iraq's oil terminals sit as targets where a hit could cripple the country.

The International Maritime Bureau, a U.N. service that monitors acts of piracy, said there has been a 14-percent rise in such acts already this year compared with 2006.

On Aug. 2 a Cyprus container vessel was attacked near the Umm Qasr coast. An officer was hurt when pirates boarded, started firing and robbed the crew.

"The pirates operating in Iraq are heavily armed and well trained," IMB Director Pottengal Mukundan told the Sunday Herald. "So far, they have only been motivated by financial gain, but given the security environment and the availability of arms we need to treat this new development very carefully indeed."

Nearly all of Iraq's 1.6 million barrels of oil exports go to market from Persian Gulf ports. Money from those sales bring in more than 90 percent of Iraq's federal budget and account for nearly 70 percent of gross domestic product.

That's why the British navy stationed in the Persian Gulf is on a special lookout for pirates and is training Iraq's young navy in anti-pirate operations.

"A successful attack would have a huge effect on attempts to develop the country," said a British navy spokesman. "We are working to try and establish who the good guys are, and monitoring all sea traffic -- working out what the pattern of legitimate traffic is -- so we can spot the odd man out should they turn up to carry out acts of piracy or terrorism."

British navy watching for Iraq oil pirates : World

Iraq development lags expectations de****e success

Iraq's electricity output has reached a new high but the country's reconstruction effort lags in most areas including oil production, manufacturing and basic services, a U.S. report said on Tuesday.

The report by the Special Inspector General for Iraq Reconstruction said total relief and reconstruction investment has reached $103.9 billion -- with about $45 billion from the United States -- through the third quarter of 2007 as violence declined with the U.S. troop buildup in and around Baghdad.

The report to Congress also criticized U.S. involvement in Iraq's development for lacking a central plan for helping to deliver essential services, manage programs or implement budgets.

Iraq's unemployment was running as high as 40 percent and the government's inability to craft an oil law to distribute wealth from the world's third-largest oil reserves was dampening prospects for economic improvement, it said.

The report cited improvements in Iraq's electricity sector, where power output set a postwar record of 4,550 megawatts per day because of additional generation units, a drop in attacks on infrastructure, and improvements in operations.

But power production, which surpassed prewar levels by about 500 megawatts, still met only 60 percent of national demand and remained well below a 6,000-megawatt production goal set in 2003 by the former U.S.-led Coalition Provisional Authority, the report said.

The quarterly report, coming more than six weeks after a Bush administration progress report on security and political progress, showed stubborn challenges remaining for Iraq from infrastructure to water, health and basic services.

Oil output, which accounts for 65 percent of Iraq's gross domestic product, remained below the prewar average of 2.58 million barrels a day, averaging 2.16 million barrels of crude a day.

Refining production for gasoline and diesel continued to decline, dropping to 36 percent and 28 percent below prewar levels respectively, as a result of aging equipment, theft, maintenance shortfalls and shortages of spare parts, manpower and electricity, the report said.

A U.S.-funded program to boost Iraq's manufacturing sector has restarted 17 factories with about 5,000 total employees, the report said.

But it said the current state of the manufacturing sector -- 175 factories running at production levels of 10 percent to 30 percent -- remains far behind the 240 prewar factories that operated at 70-80 percent of capacity.

Iraq development lags expectations despite success | News | Bonds News | Reuters

Opinion Piece

Why the next three months will be seismic and lethal Pakistan and Turkey drawn into the American imbroglio in Iraq

Has Iraq, with its crises and political problems, begun to influence Iranian political affairs and to break up Turkey from within? The signals indicate that Turkey has, in a special way, entered the red cycle. The challenge of Kurdish separatism looms before it, with the threat of a military hemorrhage. The generals’ folly could push them into invading Northern Iraq and to remain there until they have established a Turkmen canton and taken control of Kirkuk, with its oil riches. The result may be to hasten the fragmentation of the land of the two rivers. Hubert Védrine, a former French foreign minister, does not rule that possibility out, while the editorialist of L’Humanité wonders how Erdogan, the Turkish prime minister of Islamic tendencies, can maintain his strategic relationship with Israel while Ankara, because of its political and human capacities and its geostrategic position, plays an axial role in the maintenance of balances in the Middle East. But Turkey lives on the edge of lethal dualisms: Islam and secularism, military officers and civilians, Asia and Europe. But the gates of the European Union, with its 27 states, are closed to Turkey even though it has been knocking for more than 20 years! The arrival of Nicolas Sarkozy at the Elysée Palace has done nothing to open a breach; indeed, one of his election campaign slogans was: “No to the entry of Turkey into the EU”.

No one knows why the Turks consider entry into the European paradise a magical key to resolve their problems. A German politician well-acquainted with the historical sensitivities of the region advised President Abdallah Gül and his prime minister, Erdogan, not to venture into Northern Iraq as far as Kirkuk because, he said, the Kurds of today are different from those of pre-2003.

But the generals are not ready to heed advice, and they are wagering on two things at once: an invasion of Northern Iraq, with a push southwards to Kirkuk; and popular disaffection with the Erdogan government. We recall that Turkey witnessed two military coups, in 1960 and 1980, the first led by General Cemal Gürsel, the second by General Kenan Evren. And we must not forget that the first military putsch in the Middle East was the one in 1909 that overthrew Sultan Abdelhamid II.

Like many Arab and Islamic countries, Turkey appears to be the hostage of a difficult situation, of fragile stability and booby-trapped antagonisms.

According to Hubert Védrine, the next three months will be lethal in the region. Those who observe developments of the situation on the banks of the Tigris and the Euphrates can ascertain the curious ambiguity surrounding the hanging of Saddam. If Washington’s former ambassador of Afghan origin in Baghdad, Zalmay Khalilzad, hastened to exculpate his mission of any responsibility, those in the know affirm that the decisions on the preparations and timing of Saddam’s execution were taken in the White House during a meeting with Abdelaziz Hakim, leader of the “Supreme Council”, and Tarek al-Hashemi, head of an Islamic party. The timing was imposed on the Iraqi premier, Nouri al-Maliki, who at first hesitated to support it, though he eventually signed it.

George Bush knows perfectly well what he is doing in Iraq, and his forces will not leave the country until it has been partitioned on a sectarian basis. This policy of dislocation is designed particularly to serve Israeli interests. It is as if Henry Kissinger had found his way into the heads of the American decision-makers. Kissinger is the maestro who dreamt of rising to the White House, but his luck was not commensurate with his genius and his machiavelism, since the American Constitution bars from the Presidency anyone who is not “a natural born citizen of the United States”.

The bet is undoubtedly for the worst, for the Iraqi disaster will have its implications in all parts of the Arab world. History may be dead, as Francis Fukuyama declared, but all the devils that infested it are still alive. In Afghanistan the war has killed tens of thousands without finding either Ossama bin Laden or Ayman al-Zawahiri. Whom would Bush fight if these two were to die?

Israeli planners and the Israelophiles in the US Administration, (principally Douglas Feith and Paul Wolfowitz) led the push for war, using the Goebbelsian propaganda tactic of the big lie. They considered that the fall of the dictator would set all to rights, ignoring the facts that Iraq has a complex communal and sectarian structure, that ill-will between Shiites and Sunnites had been smouldering under the ashes since 1921, and that the Soviet empire found its end in the mountains of Afghanistan before its demise was announced in 1989 after the collapse of the Berlin Wall and the volatilization of the system established at the Yalta summit in 1945.

The New Yorker has revealed that 90 percent of the American service personnel in Iraq want to return home. Naturally Youssef al-Dayri, the heir of Abu-Musaab al-Zarkawi, in no way resembles Ho Chi Minh, hero of the Vietnam struggle, nor is Izzat Ibrahim al-Douri, the former ice-cream seller metamorphosed into a seller of weapons, like General Giap, who confronted the rockets with scythes. Nevertheless, the errors made from Paul Bremer to Ryan Crocker have engendered an indescribable hate!

Yes, the sects and the ethnic groups are joining hands to destroy the mosaic instead of working to create a propitious atmosphere for creation of a national solidarity in order to give society a cultural, sociological and human dynamic developing towards a unified state. We are now present at the beginning of an overflow of the Iraqi disaster into a neighboring country, Turkey. The dominoes may not stop falling until they reach Pakistan.

Why the next three months will be seismic and lethal Pakistan and Turkey drawn into the American imbroglio in Iraq

Total, Exxon purchase 4.6m barrels of Iraqi oil

A spokesman at the Iraqi Oil Ministry announced that Iraq has sold approximately five million barrels of Kirkuk crude to buyers in Europe and the United States, Iraq Directory reported.

He also mentioned that the companies Total and Exxon or M.V. Winy bought a total of 4.6 million barrels.

It is noteworthy that Iraq will announce on a new auction for the sale of another six million barrels of Kirkuk crude in the near future.

MENAFN - Middle East North Africa . Financial Network News: Total, Exxon purchase 4.6m barrels of Iraqi oil

Australia regains foothold in Iraqi wheat market

The Iraqi Grain Board says it is back in the market for Australian wheat, more than a year after it suspended trade with exporter AWB.

Iraq was once Australia's most valuable export market with millions of tonnes of wheat traded each year.

Grains analyst Lloyd George says although there is not much wheat to export because of the drought, Iraq's move is significant.

"It's a welcome event. I guess we're yet to see the detail and so forth on that, their greivance was with AWB, they're probably somewhat comfortable that there's been a process out of Australia that's gone through and had conclusions," he says.

"But also, in the market sense, I would have thought Iraq would be keen to resume wheat trade with Australia, to have access to the likes of Australia would be pretty important".

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‘Interest rate reduction depends on inflation’

With turmoil in global financial markets, increasing oil prices, the inflation reduction program and rising tensions in the Middle East -- along Turkey’s Iraqi border in particular -- on the one hand, and the expectations of exporters, industrialists and politicians on the other, the board of the Turkish central bank has its hands full.

They must navigate all these conflicts and disputes and decide how to steer the economy. The board is in the hot seat during tough times like these, and they inevitably face many criticisms. Turkish Central Bank Governor Durmu‏ Y‎lmaz and his deputies Erdem Ba‏ç‎, Burhan Gِklemez and فbrahim Turhan held a meeting on Sunday with economy journalists. Y‎lmaz commented on numerous issues, from the exporters’ newspaper ads last week expressing their desire to sharply cut interest rates to the economic impact of a probable military intervention in northern Iraq.

Y‎lmaz said they know interest rates are high and that they will reduce them when they see a decline in the rate of inflation. He emphasized that the data -- especially analyses of consumer loan statistics -- compel them to avoid cutting interest rates in haste. Y‎lmaz said fiscal tightening was needed after the financial turbulences in May and June of 2006 and that that was why the central bank increased the short term benchmark interests to 17.5 percent from 13.25 percent. “Now some circles are asking why we don’t reduce at the same rate, but the upward and downward changes in the interest rates are never symmetrical,” he said. He added that they had to control demand to achieve the middle-term inflation target. He said housing loans had hit YTL 28 billion, which is 4 percent of gross national product (GNP). He pointed out that they would not be able to control demand if they did not raise rates.

Y‎lmaz said the board was not angry about the exporters’ ads. He said they question themselves every night before they go to sleep about whether there were people who lost their jobs because of a decision at the central bank; however, he stressed that they believe they were doing the right thing but added, “We monitor the reactions to our decisions and analyze them.” He pointed out that their decisions had been criticized as “financial terrorism.” “We are not terrorists,” he said and added that they will continue to do what they believe is right. Y‎lmaz said they intended to speak with Turkish Exporters’ Assembly (TفM) President Oًuz Sat‎c‎, who played the leading role in the campaign for rate cuts. “At least we will agree to disagree,” he said.

Y‎lmaz observed that people would act in favor of their own economic interests, which is precisely what they should do. He said the board could understand the bank owners, exporters and industrialists’ differing views on exchange rates and interest rates. “However, we cannot ignore that Turkey experienced high inflation rates for 35 years and paid for it painfully during the 2001 economic crisis,” he said and added that shortsightedness would result in the loss of everything the country had gained since then.

Commenting on relations with the government, Y‎lmaz said they have observed the Cabinet’s determination to sustain the economic program. He stressed that nothing would go well without fiscal discipline. “However, there may be differences between the Cabinet’s determination and its practices,” he said, adding that the Cabinet members should not make statements on exchange rates and interest. “The coherence between the central bank and the Cabinet is better than it was before but it is still not at an optimal level,” he said. Y‎lmaz made very clear that they were not making decisions according to politics but according to the data at their disposal.

He said the ultimate goal is to increase wealth and living conditions in Turkey, to create jobs for the jobless and to provide food for the poor. “Price stability and fiscal discipline are only tools to reach that goal,” he said. He explained that if price stability were to become an end in itself, the economy would go into recession. He added that they were not ignoring growth but that the law did not give them a growth target.

Y‎lmaz said revisions in inflation rate goals were not at issue. He said it was easy to reduce the high inflation rate down to a certain point but that it becomes much harder when you try to go below that point. He said it was useless to discuss the 4 percent inflation rate target, the officially announced inflation rate goal for 2007. He pointed out that it can be revised when necessary but that there is no need for that currently. He said: “A credibility problem may arise if we do. It can be said this was revised once and can be revised again.” This may harden the struggle against inflation rates and increase the risk factors, according to Y‎lmaz. He added, “Although we are behind in our inflation rate goals this year, we will reach 4 percent at the end of 2008.”

IMF is not happy

The central bank governor said the 6.5 percent primary surplus goal will not be achieved. This is why the International Monetary Fund (IMF) is not happy, he said. “But 6.5 is not a miracle number,” he said. He pointed out that the board had predicted and taken the ease in fiscal policy into account. He explained, “We have benefited from fiscal discipline until now, however the need for awareness of excessive government spending is not yet fully settled.”

About exchange rates, Y‎lmaz said they were a factor in the board’s analyses. However, he said they would not use the low exchange rate as a tool in the program to fight against inflation. According to him, they never say “we do not care too much the about exchange rate,” recalling that their second responsibility was to work towards financial stability. He said the board has the ability to intervene in the exchange rate by injecting money into the markets or by direct intervention. “However, this is not efficient,” he said and added they had tried to intervene in 2005 but that they were only able to increase the exchange rate by YTL 0.01. He said liquidity in the market increased when they intervened and that this made the battle against inflation difficult.

Cross-border operation beyond economic concerns

Y‎lmaz said a probable military intervention in northern Iraq is a matter of security and that it does not have a price tag. He acknowledged that there were risks. Nevertheless, he said, “If it affects the economic parameters and distorts inflation expectations, we will take the necessary steps.” Y‎lmaz said increasing interest rates is not the only solution for effective liquidity management. “There are different tools to control that,” he explained.

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