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

Originally Posted by worf

I agree with your points noted above but I do have some concerns. Better grab a cup of coffee this is going to be a long one.

1. I have been with the dinar gang since early spring of '06 and during this time especially during the summer months and the fall til the present, the concensus has always been "r/v is imminent" and the various slogans "Sept to remember", "Oct surprise" "Remember remember reval in November" etc. These (up to now) have proved to be inaccurate.

2. The cbi seems to be rock solid and the govt is not. To say the area around Bagdad is in shambles is being kind.

3. To say the current govt in Baghdad is inept is being kind. The radicals are in a fierce fight for control and if things don't change dramatically, they might win.



4. Maliki has either got to have an epiphany (life changing religious experience) or has to go. IMO His leadership is far too weak to get the job done.

5. The US elections have changed the balance of power in the US, and now the dems are screaming for us to get out asap! Maliki's time is almost up (probably by the end of the year) IMO. They need a "strong man" who will go after the militias and parliment to get the job done (see previously posted article).

Now to put this together. It appears to me that if I can figure this out and the cbi folks are a lot smarter than me, then they have figured this out as well. So how can they proceed to satisfy the international community and honor their various agreements as well as be well aware of the events going on around them? I am afraid what they are going to do is move the exchange rate to the 1365 dinars = 1.00 by the end of the year as previously stated and agreed upon. Wait for the removal of Maliki and the setting up of a new govt. Then after some stability and control returns to Iraq, then re-address the raising of the dinar to it's rightful value. Unfortunately it appears to me that this is what they think is their logical course of action.

WmKnowles has already stated that bankers aren't concerned about what anybody thinks or might be suffering. So if you can remove your compassion and morals from your thinking process, ignore the crying in the streets, children without parents, food etc., massive poverty, inflation etc., then you might think in those terms. I certainly hope this doesn't happen. And as I stated above, these are some of my fears as what might happen, not what is going to happen necissarily.

My question to all of this is what WmKnowles has stated conerning the auctions, that being pulling out over 1 trillion dinars so far and apparantly continuing on for a while more. To move the exchange rate from 1470 to the stated 1365 by years end, do they need to pull out this much dinar from circulation? Do you think this will moderate inflation or is it going to take a full fledged r/v? Or does this indicate a much large change ie r/v is the more likely course?

As stated above, I agree with Adster's thinking, but facts on the ground seem to disagree with a sudden immediate, immenient r/v by the end of the year IMO.

Finally add to this mix the enormous amounts of spending for next year, the 60% pay raise for parlament, the purchasing of all the aircraft, investment in infastructure etc, they are sending out so many mixed signals what is one to believe? One thing is apparant, the Iraqis and their timelines aren't very trustworthy (remember 10k dinar hand out which still hasn't happened although promised repeatedly) and their comments and commitments to their people don't seem to be either. Imagine if you or I didn't show up to work for no good reason other than to stall impending legislation that would help your fellow citizens, and then vote yourself a 60% payraise!!!

My intention by writing this is not to discourage anyone but rather to bring up another point of view that might help moderate if we don't r/v by years end. Maybe WmKnowles or other currency experts can refute these comments and show why cbi actions indicate a full blown r/v instead of just a exchange rate adjustment. I for one would love to read why my comments are off track and the r/v is going to happen by year's end.

worf

There is general agreement that the currency will rise in value. But, to present both sides, there has always been a group out there that thinks the currency will rise in a gradual way with no bold "adjust". And of course, there are many who site historical precedents that a bold adjust is what is about to happen. So your concerns are not without support. Personnally, I think an adjustment in the exchange rate, enough to increase the iraqi peoples purchasing power is a powerful step in building confidence in the GOI and would surely be a mistake if they should skip that option. An RV seems to solve many of the problems we have discussed. But as I have written before, what we have seen, the removal of the dinar from the economy by the CBI, is a classic economic move to reduce inflation and is exactly what should be done, and expected to be done prior to a reevaluation of the currency. Thank You.

Originally Posted by worf

I agree with your points noted above but I do have some concerns. Better grab a cup of coffee this is going to be a long one.

1. I have been with the dinar gang since early spring of '06 and during this time especially during the summer months and the fall til the present, the concensus has always been "r/v is imminent" and the various slogans "Sept to remember", "Oct surprise" "Remember remember reval in November" etc. These (up to now) have proved to be inaccurate.

2. The cbi seems to be rock solid and the govt is not. To say the area around Bagdad is in shambles is being kind.

3. To say the current govt in Baghdad is inept is being kind. The radicals are in a fierce fight for control and if things don't change dramatically, they might win.

4. Maliki has either got to have an epiphany (life changing religious experience) or has to go. IMO His leadership is far too weak to get the job done.

5. The US elections have changed the balance of power in the US, and now the dems are screaming for us to get out asap! Maliki's time is almost up (probably by the end of the year) IMO. They need a "strong man" who will go after the militias and parliment to get the job done (see previously posted article).

Now to put this together. It appears to me that if I can figure this out and the cbi folks are a lot smarter than me, then they have figured this out as well. So how can they proceed to satisfy the international community and honor their various agreements as well as be well aware of the events going on around them? I am afraid what they are going to do is move the exchange rate to the 1365 dinars = 1.00 by the end of the year as previously stated and agreed upon. Wait for the removal of Maliki and the setting up of a new govt. Then after some stability and control returns to Iraq, then re-address the raising of the dinar to it's rightful value. Unfortunately it appears to me that this is what they think is their logical course of action.

WmKnowles has already stated that bankers aren't concerned about what anybody thinks or might be suffering. So if you can remove your compassion and morals from your thinking process, ignore the crying in the streets, children without parents, food etc., massive poverty, inflation etc., then you might think in those terms. I certainly hope this doesn't happen. And as I stated above, these are some of my fears as what might happen, not what is going to happen necissarily.

My question to all of this is what WmKnowles has stated conerning the auctions, that being pulling out over 1 trillion dinars so far and apparantly continuing on for a while more. To move the exchange rate from 1470 to the stated 1365 by years end, do they need to pull out this much dinar from circulation? Do you think this will moderate inflation or is it going to take a full fledged r/v? Or does this indicate a much large change ie r/v is the more likely course?

As stated above, I agree with Adster's thinking, but facts on the ground seem to disagree with a sudden immediate, immenient r/v by the end of the year IMO.

Finally add to this mix the enormous amounts of spending for next year, the 60% pay raise for parlament, the purchasing of all the aircraft, investment in infastructure etc, they are sending out so many mixed signals what is one to believe? One thing is apparant, the Iraqis and their timelines aren't very trustworthy (remember 10k dinar hand out which still hasn't happened although promised repeatedly) and their comments and commitments to their people don't seem to be either. Imagine if you or I didn't show up to work for no good reason other than to stall impending legislation that would help your fellow citizens, and then vote yourself a 60% payraise!!!

My intention by writing this is not to discourage anyone but rather to bring up another point of view that might help moderate if we don't r/v by years end. Maybe WmKnowles or other currency experts can refute these comments and show why cbi actions indicate a full blown r/v instead of just a exchange rate adjustment. I for one would love to read why my comments are off track and the r/v is going to happen by year's end.

worf

Good Post!!

20 November 2006 (Iraq Directory)

U.S. Treasury official said that the donor countries that seek to help Iraq to rebuild its economy, plans to hold a ministerial meeting in December to work out the details of the aid pledges and debt reduction.

Robert Kimmitt, Deputy Secretary of the U.S. Treasury, said that the meeting likely to be held in the Gulf would be an important step towards defining "the International Charter with Iraq", which is an international initiative sponsored by the United Nations to provide aid for the reconstruction of Iraq in return for economic reforms.

But he added that it was not yet clear whether the donors are ready to sign pledges under the Charter.

Officials from donor countries met in September, for the first time, then representatives of 75 countries and international organization met once again last Monday at the United Nations to discuss the draft Charter and plans to ensure the provision of aid.

An official in the Iraqi government said last month that the country needs about 100 billion dollars over the coming four or five years for the rehabilitation of its infrastructure which has deteriorated after years of sanctions and wars in the era of the former President Saddam Hussein, in addition to the invasion which was led by the United States in 2003 and the continuous violence since then.

Iraq was expecting the influx of billions of dollars of foreign funds after the overthrow of Saddam, but foreign companies have eschewed in order to avoid the shelling and shooting incidents and the kidnapping as well as the affected oil production by the repeated sabotage attacks.

Iraq is a major producer of oil and has the third largest oil reserves in the world; therefore, reviving its economy, which is dominated by oil, is necessary to create job opportunities and reduce the unemployment rate which stood at 50%, according to some estimates, that officials believed it is behind the increasing numbers of those who join the gunmen.

Kimmitt said that although Iraq's obligations under the Charter were not declared, one of its main components is a law to regulate the oil and gas industry and the equitable distribution of oil revenues on the parts of the country on the basis of population density.

Most of Iraqi oil reserves are concentrated in areas dominated by Shiites in the south and Kurds in the north, and the aim of the draft Charter is to ensure that the Sunni areas, which are concentrated in central Iraq, gets its share of oil wealth.

The draft is still under discussion within the Iraqi government. Kimmitt said that it was also expected to establish rules for contracting with foreign investors to modernize the country's oil industry.

American Treasury: the donor countries will meet in December | Iraq Updates

and a tendency for gas investment in Western Desert
20 November 2006 (Iraq Directory)

A media spokesman for the Ministry of Oil, Assem Jihad, declared that the ministry will establish (Maysan oil) Company, similar to the South Oil Company in Basra, due to the large oil fields possessed by the province.

Jihad added that the formation of the company came within the Ministry's desire for development and oil investment. The company would be rallying to the sectors of the Ministry of Oil under its full supervision. Jihad stressed that the ministry is considering the foundation of other companies in provinces, which possesses oil fields.

The media spokesman expected that the Ministry will establish a similar company in the province of Kirkuk, for possessing oil fields, as well as in Wasit governorate, noting that there is a great tendency to invest natural gas in the province of Western province which possesses huge quantities of non-invested gas in the Western Desert, according to studies in the ministry. In Amman, the Jordanian Minister of Transport, Eng. Saud Al-Nusseirat, denied news yesterday about starting to provide his country with Iraqi oil at preferential prices up to 18 dollars per barrel.

Al-Nusseirat commented on the news that the fleet tank for the transport of Iraqi oil is ready for action "for about two months, but the technical aspects of the Iraqi side are still hindering the process of the actual transportation".

He expressed his hope that the amounts of oil transported to Jordan will be up to 30 thousand barrels per day. One of the news agencies reported yesterday that the Iraqi oil minister, Hussein Shahrastani, said: "Iraq started supplying Jordan with ten thousand barrels of crude oil at preferential prices up to 18 dollars.

" At the same time, secretary general of the Ministry of Energy and Mineral Resources, Eng. Khaldoun Kutaishat, expected "that the Jordanian side completed all the procedures for transfer through the Jordanian-Iraqi Company for Land Transport, which provides security for the transport of oil through its relations in Iraq," stressing that some of the technical obstacles from the Iraqi side "are still preventing the start of the transfer".

Ministry of Oil: Establishing (Maysan oil) company | Iraq Updates

I have to believe that these government salary increases are a 3 way disaster. 1) they will undercut the CBI plan to remove cash from the economy so 2) they will actually make inflation worse, maybe a lot worse, and finally 3) they will allow the overpaid govenment employees to avoid the pain caused by inflation so they will be less motivated to do anything about it.

I can only hope that the CBI is able to counteract this crazy move.

20 November 2006 (Al-Sabaah)

Babil province council prepared the suggested balance sheet investment for the coming year in the fields of municipality and services within a finance amount 75 billion dinar.

A source at the finance committee Raja'a Naji said that the council organized with the cooperation local sides towards preparing a mechanism technical and scientific balance plan for the coming year, showing the real need in the municipality, pointing that the suggested balance need 75 billion dinar including paving, cities numbering, establishing gardens and parks besides other cleaning works for the various districts and streets.

Babil Province Council Prepares Investment Plan Projects | Iraq Updates

20 November 2006 (Al-Sabaah)

Engineering and technical staffs in Baghdad municipality intend fulfilling Baghdad metro project according to international technical standards.

Spokesman of municipality said project fulfilling will be in three steps first of which will witness extending two lines each one with length of 18 kilometers. First line will have 20 stations, while second line will be 14 kilometers length. Structural speed of the metro will be 90 kilometer per hour and with operating capacity of 80 kilometers per hour.Metro capacity of passengers in the first phase will be one million passengers per day. Construction method will be fulfilled underground with depth of 18 meters without damaging buildings and roads that metro passes under them.

Baghdad metro project to be fulfilled | Iraq Updates

EU set for trade talks with Iraq

EU officials have insisted that the start of talks on a new trade agreement with Iraq is not premature, despite the escalating violence there.

Negotiations will begin on Monday over a deal designed to strengthen relations between the EU and Iraq and that fulfils a pledge made to the new administration in Baghdad by the European commission.

“This agreement will be important in cementing relations between the EU and the new Iraq and in helping Iraq come into the international community,” said a spokeswoman for EU foreign relations commissioner Benita Ferrero-Waldner.

“The reason why it is happening now is that we believe the process of negotiation will be a very valuable one.”

“[The Iraqi] government doesn’t have experience of international negotiations or of working with international partners on complex agreements of this kind.”

“We hope that the talks will be useful for the Iraqi government in familiarising itself with these kinds of procedures.”

And she added that the nature of the talks meant that there was likely to be plenty of time for the political situation in Iraq to improve before the agreement was implemented.

“Such talks take quite a while, and we should not expect them to be completed within weeks or months… but we have to hope that by the time they are complete we will be looking at a security situation that is more favourable than what we see today,” she said.

The “broad based” agreement covers a wide range of issues, from trade in goods and services and intellectual property rights to environmental protection, culture, education and customs cooperation.

But there will also be discussion on how the EU can help Iraq reduce poverty, improve the human rights situation and combat terrorism.

The commission has given more than €720m for the reconstruction of Iraq since 2003, although the focus has been on the rather more urgent issues such as the provision of basic services such as power, water and healthcare.

Speaking after the official start of negotiations, Ferrero-Waldner said that the agreement would be “of rel benefit to both sides”.

“Iraq is a wealthy country, but we need to bring it back to its full capacity in order for its people to benefit.”

Trade commissioner Peter Mandelson went further, saying that he fully expected Iraq to take its place as a full member of the WTO in due course and that the EU “stood behind the Iraqi people every step of the way”.

Barham Saleh, Iraqi vice-prime minister, said that the start of negotiations showed that his country was “no longer a pariah” and that Iraq was now a “fully-fledged member of the international community”.

“Building a democracy at the heart of the Middle East will take time,” he said. “But these negotiations show that the days of dictatorship and tyranny are over and that Iraq wants to be a country at peace with itself and with its neighbours.”

theparliament.com - EU set for trade talks with Iraq

Baghdad, 20 November 2006 (NINA)
The exchange rate of Iraqi Dinar kept increasing in the Central Bank’s auction on Monday. The exchange rate on Monday was 1449 Iraqi Dinars per US Dollar, whereas it was 1452 on Sunday. The total sales on Monday were 56,765,000 US Dollars

ID exchange rate keeps increasing | Iraq Updates

Originally Posted by Wm.Knowles

There is general agreement that the currency will rise in value. But, to present both sides, there has always been a group out there that thinks the currency will rise in a gradual way with no bold "adjust". And of course, there are many who site historical precedents that a bold adjust is what is about to happen. So your concerns are not without support. Personnally, I think an adjustment in the exchange rate, enough to increase the iraqi peoples purchasing power is a powerful step in building confidence in the GOI and would surely be a mistake if they should skip that option. An RV seems to solve many of the problems we have discussed. But as I have written before, what we have seen, the removal of the dinar from the economy by the CBI, is a classic economic move to reduce inflation and is exactly what should be done, and expected to be done prior to a reevaluation of the currency. Thank You.

From this post, as well as others you have posted, indicate to me that the RV will not be a one-time shot nor a slow raising process BUT rather a combination of the two.

After catching up on my reading; I would say I agree with this view. What you have been posting makes logical sense AND it seems to me that this is indeed what we are seeing happen right now.

Am I correct in this assumption?