Thread: Iraq/Dinar News. 09/05 to 01/14/07

Month old but still interesting....

By Jeff Leys, [email protected]
Voices for Creative Nonviolence
September 18, 2006

This week, the International Monetary Fund will be holding its annual meeting in Singapore. No doubt, the economic restructuring and forced leveraging of Iraq will be a key component of talks surrounding the meeting. In these past few months, free trade zones have been established along the borders with Syria and Iran; foreign investment laws have been vetted and approved; and laws governing investment in the oil sector have been drafted and introduced. Iraq continues to move forward in implementing conditions imposed upon it through the Stand By Arrangement with the International Monetary Fund (IMF) in December of 2005. While the command economy established under Saddam Hussein’s regime was unsustainable, it is also highly probable that the benefits of the economic restructuring under way at present will accrue to the benefit of an elite segment of Iraq and of the international community. It is improbable that ordinary Iraqi citizens will be the beneficiaries of these changes.

The blueprints for this radical restructuring of Iraq’s economy are contained within the parameters of the Stand By Arrangement (S.B.A.) between Iraq and the I.M.F. Implemented in December 2005, this so-called “agreement” was reached between the IMF and Iraq’s transitional government, at the final hour before the first government elected under Iraq’s new constitution assumed office.

The S.B.A. is a condition imposed by the Paris Club [1] when its members opted to reduce their claims of debt against Iraq. Paris Club members claimed some $40 billion in debt against Iraq in December 2003. Other countries and multinational countries claimed some $85 billion in debt against Iraq. This debt was built up under the regime of Saddam Hussein and accrued mostly to the benefit of the regime rather than to the benefit of the Iraqi people as a whole. That is, it was mostly accrued to fund the build up of Hussein’s military, his regime’s internal security apparatus and his regime’s war against Iran rather than to provide for the Common Good in Iraq—schools, health care, jobs, housing, etc.

In December 2004, the Paris Club members determined that they would reduce its claims against Iraq by 30 percent. It further determined that they would reduce their claims against Iraq by an additional 20 percent once Iraq entered into a Stand By Arrangement with the I.M.F. This occurred in December 2004. The Paris Club members further determined they would reduce their claims against Iraq by a final 30 percent when the I.M.F. certifies that Iraq is in full compliance with and completion of the conditions imposed by the I.M.F.

The terms of the I.M.F. arrangement, and its impact upon ordinary Iraqi citizens, is becoming increasingly clear. The economic war against Iraq continues unabated.

Fuel subsidies have steadily declined over this past year, with a concomitant increase in the prices which Iraqi citizens pay for fuel. The I.M.F. requires that the fuel prices paid by Iraqis continue to be increased, as the subsidies are further reduced. By the end of the year, the official price for regular gasoline and diesel fuel is to cost twice as much as it did when the S.B.A. came into effect in December 2005. Kerosene is to cost 4 ½ times as much.

The increase in fuel prices is a driving factor of inflation in Iraq. In June, inflation stood at 58 percent. As noted by the I.M.F.:

“Most of the increase in prices of fuel and electricity, and of the majority of the other inflation components, occurred early n 2006….However, upward pressure on prices appears now to be fanning out to all items….By May 2006, prices of all items were growing in the range of 15 – 30 percent, although fuel and electricity prices were still growing much faster, resulting in a year on year increase of 58 percent.” [2]

Food prices increased by 26.6 percent from May 2005 to May 2006; rent by 37.5%; and transportation / communication by 119.4%. [3]

As fuel and electricity costs escalate, so too do the costs of life’s staples. Without electricity it is not possible to power refrigerators to store food—so the price of ice bars, the alternative to refrigerators, goes up in Anbar province. [4] Increased fuel costs drive up the costs to bring food to market, so food prices increase. Demand for clay jars and jugs increases, along with the price, as people seek other means to store food, given the lack of electricity to power refrigerators. [5]

As Iraqis struggle to make ends meet, spending shifts away from other items. This shift in spending reverberates through the economy, as other trades see the demand for their work and skills decline. Mahmud Tahir is a tailor in Basra whose business, and sustenance for his family, are in decline. He says,

“Three months ago, I used to finish five to seven deshdashahs [Arabic gown for men] every day. Now, I can finish one deshdashah every two days. This makes it very difficult for me to manage my family’s needs. Perhaps the reason behind this recession is that Basra citizens are not paying attention to their clothing, because they are more worried about their every day life and their living problems Obviously, the increase in prices of essential foodstuff such as meat, fish and vegetables has drained all their budgets. Perhaps the reason is that people prefer not to go to the markets for shopping because of the deterioration of the security situation and fear of the unknown.” [6]

The I.M.F. report only barely traces upon this harsh economic reality faced by Iraqi citizens. Indeed the I.M.F. report does not even mention the other side of the coin which afflicts Iraq—unemployment.

At the end of June, 59 percent of Iraq’s labor force capable of gainful employment was unemployed. Of those with work, 31 percent held only temporary or seasonal jobs. The circumstances faced by Iraqi women was infinitely worse. 85 percent of Iraqi women are unemployed. [7]

With inflation and unemployment out of control in Iraq, we can toss out the old Phillips Curve we learned in high school economics. The Phillips Curve hypothesizes that inflation and unemployment move in opposite directions—clearly not the case in Iraq.

Earlier this year, Iraq’s Labour and Social Affairs Ministry released a survey that estimates that 20 percent of Iraqis live below the international poverty line. Layla Kazim, Director of the Ministry’s Social Affairs Office, was cited as saying that 2 million families live below the international poverty line of $1 per day per person residing in the household (as defined by the World Bank) [8], the best the I.M.F. (along with its ally at the World Bank) can do in its plan for Iraq is to further undermine the Public Distribution System and gut the wage and pension law.

Iraq is implementing, at the behest of the I.M.F. and World Bank, a new “social protection program” which will likely ultimately replace the Public Distribution System of food rations established under the sanctions regime. In June the new “social protection program” was covering 430,000 families which earn less than $2 per day. The goal is to cover 1 million families by the end of the year. [9] The Public Distribution System of food rations was created under the sanctions regime to provide a modicum level of sustenance for Iraqis, with most Iraqis depending upon the PDS program. As of June 2004, fully 60% of Iraqis depended entirely upon the PDS program for their daily sustenance. Already the basket make-up of goods provided under the PDS has been significantly reduced. As noted by the I.M.F., Iraq “…intends to reform the more expensive Public Distribution System over the medium term (with the help of the World Bank).” [10]

Curious is the different standards of measurement of the international poverty line being applied in Iraq. Note that the program implemented under the I.M.F. strictures provides relief for families with an income of less than $2 per day. The international standard for absolute poverty, as defined by the World Bank, is $1 per day per person. The I.M.F. imposed plan not only will not provide relief for all Iraqis living in abject poverty, let alone poverty, it will also serve to undermine the Public Distribution System by further placing the social safety net on a purely monetary basis.

The pension law in Iraq is also on the chopping block. In November 2005, Iraq passed a new pension law which was never implemented. This law, if implemented, would permit an employee to retire at age 50 if he / she had 25 years of employment history. The maximum pension would have been 80 percent of the worker’s final salary at the time of retirement. Under the strictures of the I.M.F., Iraq is to “reform” the pension law by the end of September 2006. [11]

It is worth noting that the “Rule of 75” contained in Iraq’s pension law is not so much different from that retirement provision provided for many public sector workers in the U.S. as well as for a few private sector workers with strong unions in the U.S. Under the “Rule of 75” in the U.S., a worker is able to retire with full retirement benefits when the sum of the number of years worked with a specific employer plus her / his age adds up to 75.

It should also be noted that in 2004 the average life expectancy in Iraq was approximately 59 years of age. [12] The World Health Organization estimated in 2004 that the average life expectancy for males was 51 while for females it was 61 (while further estimating that in 2002 the average health life expectancy for males was 48.8 and for females 51.5. [13] Only 4.9% of Iraq’s population in 2004 was 60 years old or older. [14] As in the U.S., the refrain in Iraq, under strictures from the I.M.F. and World Bank, seems to be to cut and shred the social compact between generations of citizens.

As an ominous warning of what may further await Iraqi citizens, the I.M.F. calls for further monetary action to combat the rampant inflation, saying:

“The ongoing insurgency and shortages of goods, as well as supply disruptions generally in the non-oil economy, will continue to put upward pressure on prices. But it remains important that the C.B.I. [Central Bank of Iraq] take decisive measures to contain it before inflationary expectations become entrenched, either by an effective tightening of monetary conditions and / or by exchange rate action. The C.B.I. will need to tighten monetary conditions further if inflation does not start to come down soon. The government can help by keeping public sector wages and pensions in line with the absorptive capacity of the small, albeit growing, non-oil economy, and by making every effort to prevent supply bottlenecks (especially in the petroleum product market) from destabilizing prices further.” [15]

In other words: cut pensions of retirees; limit the wages of public employees; take no action to combat unemployment through public works and other projects; “liberalize” the law to drop all barriers to the private import of gasoline (an already accomplished action); and exercise “fiscal discipline” at all costs.

Indeed, the I.M.F. tips its hand on the potential use of monetary policy to advance its objectives in Iraq when it writes that: “The monetary transmission mechanism, however, is weak. The effectiveness of interest rate changes in influencing inflation is thus very limited. Economic activity is dominated by cash transactions, and the banking system is largely inert. Few loans are extended and the deposit base is not very active. Raising interest rates will nonetheless signal the authorities determination to deal with inflation.” [16]

Iraq’s Central Bank and government is not able to influence the economy through manipulations of the money supply through, for example, changes in interest rates. Given the lack of a fully developed tax structure in Iraq, the government also cannot manipulate tax rates to impact upon the economy. Because of these two key factors, the only recourse left to Iraq’s government is to attempt to manipulate the economy through budgetary measures. The I.M.F. strictures are that Iraq must exercise “fiscal discipline” at all costs. Imagine the tremendous difficulty, if not impossibility, of breaking out of recessions and depressions in the U.S. if the government was forced to exercise “fiscal discipline” at all costs—never being permitted to spend on the Civilian Conservation Corps, the Works Progress Administration, the Tennessee Valley Authority or the Boulder / Hoover Dam project during the Great Depression.

Despite the fact that Iraq operated with a surplus in 2005 (mainly due to a lower than anticipated level of government investment), the I.M.F. is requiring Iraq to operate strictly within its budget for 2006. As noted by the I.M.F., “The determination to contain recurrent spending, and particularly wages and pensions, to the original budget allocations, is an important signal of the government’s respect for fiscal discipline.” [17]

Indeed, the I.M.F. notes with approval that Iraq is “…committed to resist calls for an increase in the wage bill (from additional hiring), and will resist the practice of granting large Eid bonuses.” [18] (Eid al-Fitr and Eid al-Adha are religious celebrations). That is, there will be no additional hiring of the unemployed (no Civilian Conservation Corps of Great Depression era United States) and an actual cutting of income by the elimination of holiday wage bonuses.

The I.M.F. seems to be conceding that monetary policy will not be useful in combating inflation in Iraq. At the same time, it is removing fiscal policy as a tool to address unemployment by not allowing Iraq to exceed allocations in its 2006 budget. The U.S. saw a version of this happening in the 1970’s and through the Reagan Depression when both inflation and unemployment were high, though not nearly to the levels of unemployment seen in Iraq. We had a word for it then—stagflation. And wage-and-price control efforts did little to correct the underlying economic malaise of the country. Why should it be expected that wage controls in Iraq would serve any useful purpose at this time?

All of this brings us back to the issue of the odious debt incurred by Saddam Hussein’s regime in the 1980’s. It is this debt which creates the economic leverage of the international community—led by the U.S. and its allies in the Paris Club—to force the economic restructuring of Iraq. While the debt claimed against Iraq is now reduced by 50%, Iraq must comply with the strictures of the I.M.F. before the claims are reduced by an additional 20%.

The third stage of debt claim reduction should take place in 2008, but only if Iraq complies with the strictures of the I.M.F. If Iraq acquiesces and complies, the outstanding debt claimed against Iraq will be reduced from $53.4 billion to $29.5 billion. Repayment of debt claims is not being required until 2011, though interest will continue to accrue and be capitalized prior to the start of repayment. As a result in 2010, debt claimed against Iraq will be $59 billion without compliance with the I.M.F. strictures or $33.7 billion with compliance with the I.M.F. strictures. This does not include the $32 billion in outstanding war reparations charges imposed against Iraq by the U.N. following Hussein’s invasion and occupation of Iraq in 1990-91. When combined, Iraq will be paying at least $5.9 billion per year as debt claims repayment and war reparations payments.

The question is: how much longer will the international community be permitted to punish the Iraqi people?

While much work must be done to secure the end of the military occupation of Iraq, we who oppose this war must not lose sight of the economic warfare which is being waged against the Iraqi people. We must demand not only an end to the military occupation and withdrawal of all military forces from Iraq, we must also demand the unconditional cancellation of all the odious debt incurred by Saddam Hussein’s regime. Such an unconditional cancellation of necessity means that all of the conditions being imposed against Iraq by the I.M.F. must be cancelled. Only in this way might the Iraqi people have any chance at owning their own country.


Cheers!
DayDream

Originally Posted by spice12

SGS,

When do the banks open again?

warkaa isnt opening until the 30th. state banks were to be closed until after the eid holiday. so im assuming they will be back open by wednesday??

Originally Posted by spice12

SGS,

When do the banks open again?

what he\she said

(Voice of Iraq) - 10-23-2006 | This issue was sent to a friend

Baghdad-d b a : in spite of the impending dangers due to the escalating violence in Iraq, however, hundreds of Iraqi families brought their children to the centers and commercial complexes to buy clothes and new types of sweets to be distributed during the morning of Eid al-Fitr ceremonies exchange congratulations among relatives and neighbors ·
The Office of the Sunni stay in Iraq is that today, Monday, the first day of Eid al-Fitr, in line with a large number of Arab countries awaiting decision audience Shiite supreme authority to determine the date of the first day of Eid · For its part, the Iraqi authorities announced that it will apply strict security measures near places of entertainment and Amega Barr and the holy shrines in Baghdad and other governorates, which will witness a large influx of Iraqis, especially in the first day of Eid ·
The authorities deployed dozens of Iraqi police and soldiers near the business premises and public squares to maintain security and to give some measure of safety for shoppers ·
He said the official spokesman of the Iraqi Interior Ministry said "the ministry will implement a security plan during the days of Eid al-Fitr is an extension of the security plan that had been applied during the holy month of Ramadan," added · Brigadier Abdel-Karim al-Ubaydi : "The Iraqi police presence at the 100th% in areas experiencing a significant influx of citizens, such as parks and places children's toys · In cemeteries," he said, "and that the Interior Ministry will oversee the implementation of security plans in Baghdad was entrusted with the responsibility to the governors of all the security plans put in his governorate" ·
Iraqis are keen on the first day of Eid to go after the Eid prayers at the cemetery in Najaf, Karbala and Baghdad, and other areas of the country, then begin after the exchange congratulations with friends and family, said Amal · Ibrahim, a clerk : "Be careful first to visit the grave of my father in the Karkh cemetery who died two years ago by gunmen in front of our house in the Ghazaliya and the distribution of foodstuffs in tribute to the spirit of" ·
In the last days of Ramadan saw business premises in Baghdad's suburbs, especially the famous and the al-Mansour, Palestine Street, Al Bai'aa and Alcheorgh Baghdad, and hung a large influx of new residents to buy new clothes for children and other family members, as well as the purchase of a distinct types of sweets on top of the "Sama" And Baklava, chocolates and other types of juice ·
The packed major markets and craft docks quantities of garments imported from several countries including Syria, China, Iran, Turkey, Thailand ·
Mason said Abdul Hadi, the teacher works : "I came today to this shopping mall to buy new clothes for my daughter only Despite fears of bombings and armed attacks" ·
The prayer is rational homemaker has pointed out that "there is an abundance of goods, especially children's clothing, women's clothing but prices were very high compared with the past years," ·
It was the decision of the Iraqi government to pay an amount of 10 thousand dinars grant to every Iraqi citizen good effect in increasing purchasing power of families with low incomes ·
He hopes that the Iraqis day of Id al-Fitr, an outlet for them to allay fears that surround them by the escalating violence and the breadth of forced displacement that has been sweeping the country, especially after having signed 29 senior clerics from the Sunni and Shiite early this week on a document in Mecca auspices of the Organization of the Islamic Conference to proscribe · Iraqi bloodshed
The Emirates

Sotaliraq.com

Originally Posted by shotgunsusie

no, that involves big banks coming in and buying the existing banks up. not personal accounts.

THANK GOODNESS!!!! not to doubt you as I find you a wealth of info on this investment but have you seen that clearly stated anywhere? I only ask because didnt HSBC buy 70% of Dar Al-Salam Investment Bank? Once again Thank You for all your help and info after working crazy hours I appreciate all your news articles

(Voice of Iraq) - 10-23-2006 | This issue was sent to a friend

Washington required Maliki to a timetable for the Eradication

The militias and threatened with "punishment" if he failed


Washington-London-Baghdad-agencies : The great American official in the Ministry of Foreign Affairs Alberto Fernandez said that the United States had shown "arrogance and stupidity" in Iraq. He said that the situation in Iraq can be summed up in the "tears. blood. murder. despair. frustration. " calling his country and the Iraqi government and the neighboring countries of the need to focus on how to save Iraq and liberate them from the cycle of violence which claimed the lives of many of his sons. With Washington decided to offer a timetable for dealing with acts of violence and sectarian security situation of the Iraqi government, with the threat of penalties has not been implemented, and the framework of a plan to pave the way for setting a timetable for the withdrawal of American and the payment of government Nuri al-Maliki to deal with sectarian divisions and play a greater role in securing the country.
Asked spokesman for the Ministry of Foreign Affairs about the statements made by the American Alberto Fernandez Foreign Ministry official said that they transfer, The space on the island Fernandez director of public diplomacy in the Office of the Ministry of Foreign Affairs for the Near East, said "we tried to do our best in Iraq, I believe that there is ample room for criticism of that there was no doubt there was arrogance and stupidity of the United States in Iraq." commented Shawn Mccormak spokesman for the Foreign Ministry, stressing "what Fernandez is that this is not an accurate quote," Mccormak Asked whether he thought he would be judged on the United States of arrogance answered no.
The transfer of Fernandez also said that Washington is willing to talk to any Iraqi group to end the violence with the exception of Al Qaeda, It said Al-Jazeera spokesperson for the Iraqi Baath Party said earlier that the United States is seeking to get out of Iraq in a manner that would preserve its dignity and that the gunmen are ready to negotiate but they will not lay down their arms. He cited the spokesman Abu Mohammed said a series of conditions that must be met before the talks with the Americans. Among the demands the return of the army of former Iraqi President Saddam Hussein of service and the repeal of all laws enacted since the overthrow of the groups of combatants and the recognition of a single actor of the Iraqi people and setting a timetable for the withdrawal of foreign troops, She said that the island Fernandez refused conditions Baath Party. It quoted him as saying that there is an element seen in that statement is that far from reality.
It quoted by the "New York Times" quoted senior officials as saying that details of the program which will be presented to the American Iraqi Prime Minister Nuri al-Maliki before the end of the current year, still under development, The officials stated that the program includes for the first time specific demands on the Iraqi government and implemented, such as the disarmament of the militias, and sectarian The points of political, economic military is supposed to lead to stabilization in this country. The newspaper added that the program does not contain a threat to the government of Maliki withdraw American forces from Iraq. But several officials said that the administration of President George W. Bush could be studied changes in Stratijitha military and other sanctions if Iraq's failure to adopt the program or failure in the implementation of the points contained therein, An official in the American Ministry of Defense participate in a program that he was an Iraqi officials during the development of this plan and call for signing before the end of the current year. The paper quoted an American official as saying "if the Iraqis failed to do so, we will review "in the strategic outlook of American in Iraq The preparation of the General George Phen and Ambassador Zalmay Khalilzad, the two places are top military and civilian personnel in Iraq. in addition to officials at the Pentagon.
The paper quoted one of these officials, "trying to find ways to push the Iraqis to the search for solutions and push them to move because the time is approaching." He stressed that the Americans "can not stay there forever." and this brings management plan also calls for the idea of a large number of Democrats who have called for setting a date for the start of a phased withdrawal of American troops from Iraq to push the Iraqi government to resolve its internal divisions and handed over more responsibilities.
The American President George W. Bush on Saturday held consultations with American military commanders on ways in the face of the serious deterioration of the security situation in Iraq which has become a pressure for change. The spokeswoman said the White House Nicolas Geomar that the military continued to the 90th minute, but did not refer to any specific decisions, It added that consultations on "the nature of the enemy, the challenges in Iraq and the best means of the application and Stratijitena bets for success for the region and for the security of Americans."
For his part, Brigadier General Qasim al-Musawi, the spokesman for the commander-in-chief of the Iraqi armed forces, that the American administration is to set a timetable for the Iraqi government would improve the security situation, Regarding the features of this timetable said Musawi We were able to receive security responsibilities in the three locations, and also the successes we have been able to eliminate many of the terrorists and find caches of weapons.
On the British side announced the British Secretary of State for Foreign Affairs, Kim Hoelz Saturday that soldiers and police elements Iraqis would be ready to take over security affairs in their country instead of the coalition forces. within a year, The Hoelz the British Broadcasting Corporation "Bi. Bi. CNN, "It surprised if Iraqi forces had handed security affairs within this period, Hoelz said, "We do not know how the situation would be in the field next month. as well as during the year. " He added that "people want immediate results but I do not think that these results are on the verge arrived in Iraq. The Sirak also further bloodshed. " also criticized former British army commander General Peter Laing strongly British military operations in Afghanistan and Iraq and also criticized the current Army Commander, It said that the British forces should leave Iraq soon because their presence there is exacerbating security problems. " Laing added that the government would talk about what will do in Afghanistan, but did not talk about the strategic outlook.

Policy

Sotaliraq.com

Originally Posted by shotgunsusie

warkaa isnt opening until the 30th. state banks were to be closed until after the eid holiday. so im assuming they will be back open by wednesday??

welcome back sgs...now if the banks open on the 30th/eid...when can we expect to see a r/v post?

I posted this yesterday, and the thread was closed/moved and I want to make sure everyone was able to read it. I might just post it next week lol

Add to that today's clarification and further information to those interested, as has been frozen Iraqi assets or funds have also been freezing all Iraqi property abroad (embassies and consulates and the headquarters of Iraqi diplomatic missions and houses, which had bought the Iraqi government in the countries of the world and all of Ka Net belonging to the Iraqi Ministry of Foreign Affairs) and the freezing of Iraqi gold subject secretariat in Switzerland, which is estimated at hundreds of billions of dollars, Here I note that the gold is to cover the value of the Iraqi currency in circulation, Remember also that most if not all countries in the world have gold reserves insured in Switzerland to cover their currencies in circulation,

Translated version of http://al-moharer.net/moh198/fouad198a.htm
FROM OCTOBER 2004

Originally Posted by shotgunsusie

I SEE IT!!!

I see it as well....now if they don't r/v money soon so will a lot more people...some with much more money than u and i....can you see a r/v in the very near future...I can....or i am getting to the bank tomorrow and getting some more dinar

was in translated by a arabic speaking / reading person yet??