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

Developing news on CNN ... President Bush has postponed new plan until January.. Citing that he needed more time. 4:00pm today.

Originally Posted by DayDream

Ambassador Jackie W. Sanders, U.S. Representative to the UN for Special Political Affairs
Remarks to the Security Council
New York City
December 11, 2006

USUN PRESS RELEASE #391

As requested by the UN Security Council in Resolutions 1546, 1637 and 1723, I am pleased to report to the Security Council on behalf of the 25 countries making up the Multinational Forces-Iraq (MNF-I), on the Force's progress towards fulfilling its mandate.

Mr. President,

There have been a number of important developments in this reporting period. We welcome the Security Council's unanimous adoption of Resolution 1723 to extend the Multinational Force-Iraqi (MNF-I) mandate and the arrangements for the Development Fund for Iraq and the International Advisory and Monitoring Board. The MNF-I continues to play a vital role in the security and stability of Iraq and to work in partnership with Iraqi authorities to support the transition of security responsibility to Iraqi Security Forces. As noted in the Secretary of State's November 17 letter to the Council President in support of the MNF-I mandate, the Government of Iraq and MNF-I have three common goals: Iraqi assumption of recruiting, training, equipping and arming of the Iraqi security forces; Iraqi assumption of command and control over Iraqi forces; and transferring responsibility for security to the Government of Iraq.

The Iraqi Government has made progress on its ambitious reform agenda. On October 10, the Iraqi Council of Representatives (CoR) adopted a new foreign investment law. The CoR also passed a federal regions law on October 11 that will allow Iraq's provinces to hold referenda to merge themselves into larger federal regions. This law is to come into effect in 2008. In addition, a Constitutional Review Committee was established on September 25 to explore options for amending the Iraqi constitution.

Progress continues as well on the International Compact with Iraq, an Iraqi initiative to create a new partnership with the international community and build a strong framework for Iraq's continued political, security and economic transformation and integration into the regional and global economy. The final Preparatory meeting took place in Kuwait on October 31, and the Compact was endorsed unanimously by the Iraqi Council of Ministers on November 26. This Compact is expected to be finalized by early next year, we hope, with broad and active international support.

Despite progress on these fronts, security remains a grave concern. Sunni insurgent attacks against the Iraqi Security Forces and MNF-I remain at high levels, and the forces continue to experience attacks from armed Shia groups, especially in the Baghdad region. At the same time, sectarian violence, much of it directed toward civilians, has increased.

Security Situation

Mr. President, insurgents, extremists and terrorists continue their attacks. The ongoing violence continues to take a toll on the country and its people. The number of attacks increased 22 percent over this reporting period, attributed in part to a spike in violence during Ramadan. Fifty-four percent of all attacks occurred in 2 of Iraq's 18 provinces, Baghdad and Anbar, although violence was significant in Diyala province and in the cities of Kirkuk, Mosul, Basrah, Al-Amarah, and Balad. MNF-I and Iraqi Security Forces continued joint efforts to address security in Baghdad and Basra.

More Iraqi units are taking the lead in combat operations against the insurgency. In October the 4th Iraqi Army division planned, coordinated and executed an Iraqi*-controlled, division-level operation in Kirkuk in response to the spike of vehicle-borne improvised explosive devise attacks just prior to and during Ramadan. The operation was the first division-level plan executed under control of the Iraqi Ground Forces Command headquarters.

The rise of sectarian violence has become the greatest threat to security and stability in Iraq. Approximately 80 percent of the sectarian violence in Iraq happens within a 35-mile radius of Baghdad. In response to the worsening situation, Iraqi Prime Minister Maliki announced a four-point plan on October 2 to unite Shia and Sunni parties in his government behind the drive to stop sectarian killings that have plagued the country. The Iraqi Government has also sponsored a series of four reconciliation conferences across Iraq aimed at promoting a national dialogue and soliciting recommendations for action.


Two meetings of tribal leaders and civil society have already taken place. In October, the Organisation for the Islamic Conference hosted a gathering of Sunni and Shiite religious leaders in Mecca, which called for the end to sectarian bloodshed in Iraq.


While infrastructure attacks have decreased, they average one per week and hamper the provision of essential services, such as electrical power, water, and fuel. These ongoing attacks and the difficult security environment are impediments to improving the supply of these essential services. The Iraqi infrastructure will continue to be a high-value target for disruptive elements.

Iraqi Security Forces

Mr. President, the Multinational Force in Iraq continues to train, develop, and contribute to the capabilities and readiness of Iraqi Security Forces. Iraq is making progress in building security forces that are capable of independently combating insurgents and fighting terrorists. The security forces of the Ministry of Defense and Interior continue to increase in size and capability, and are increasingly taking over leadership roles in fighting insurgents and terrorists. On September 21, MNF-I transferred Dhi Qar Province to provincial Iraqi control, putting security responsibility in the hands of the Provincial Governor and his local police force of 10,000. MNF-I continues to support and assist the Iraqi Security Forces as they move toward conducting fully independent operations and achieving security self-reliance.

The number of counter-insurgency operations conducted independently by Iraqi forces as a percentage of total combat operations continues to increase steadily. One hundred and six Iraqi Army and Special Operations battalions and 11 Strategic Infrastructure Battalions are now conducting counter-insurgency operations, with 98 battalions assessed as capable of taking the lead in operations or operating independently.

The Iraqi government, alongside MNF-I, has identified a force structure to maintain a security environment that will provide a basis for transitioning Iraq to security self-reliance. The authorized end-strength force structure of the Armed Forces is 137,500 personnel, including one Iraqi Ground Forces Command, 10 divisions and 36 brigade headquarters, 114 Army and Special Operations Battalions, 17 Strategic Infrastructure Battalions, six Air Force squadrons, three navy squadrons, and 19 combat support battalions.

The Iraq Ministry of Interior, with the assistance of the MNF-I, has begun a multi-phased National Transformation Plan to assess National Police Battalions' current capabilities, reinforce police training, and establish practices for continuing education of the police forces. The end-strength force structure for all Ministry of Interior forces is 188,200 trained and equipped personnel manning two division headquarters, nine brigade headquarters, and 27 combat battalions. The force structure plan is designed to enable a stable civil-security environment that leads to a democratic and representative government, and a prosperous economy.

As of November 13, six Iraqi Army division headquarters, 30 brigade headquarters and 91 battalions have the security lead in their areas of operation. These numbers reflect approximately 70 percent of the Iraqi Army. The MNF-I has transferred 55 of the 110 forward operating bases to Iraqi control.

Mr. President, the United Nations continues to play a crucial role in Iraq's stability and development. The UN Assistance Mission in Iraq (UNAMI) is providing important expertise under its mandate, which was extended in August 2006 for another year (UNSCR 1700). Due to security concerns, the UN has recently decided to temporarily reduce staff positions in Baghdad. A robust UNAMI presence remains essential to supporting Iraqi efforts, including on national reconciliation, Constitutional Review and future provincial elections. Also, a UNAMI presence will be crucial in taking forward work on the International Compact, jointly with the Government of Iraq. In addition to Baghdad, the UN has limited representation in Irbil and Basra. MNF-I continues to assist UNAMI and to help UNAMI achieve its goal for a full, robust and secure presence in Iraq.

Multinational Forces, notably the Georgian, Romanian, and South Korean contingents, continue to provide security for the United Nations in Baghdad, Basra, and Irbil, respectively. These troops provide static site security, reconnaissance, security patrols, convoy escorts, checkpoints, and, when necessary, MEDEVAC and emergency evacuation. Contributions to the UN Distinct Entity Trust Fund will ensure continued support for this critical security function. Under a separate UN agreement, Fijian troops also provide static and close-in protection for UN personnel and facilities in Baghdad.

Conclusion

Mr. President, the implementation of Iraq's National Reconciliation Plan will be an important component in the government's efforts to build a united country. Concerted efforts to control the sectarian violence and confront the insurgency remain critically important to Iraq's future. Training and equipping of the Iraqi Security Forces continues, and we anticipate a continued process of transferring security responsibility for specific areas from MNF-I to the Iraqi authorities. MNF-I continues to support the Iraqi government as it prepares to assume full responsibility for the country's security.
Iraq's stability and security is a regional issue, as well as an international issue, and Iraq's neighbors have an important role to play. We call on the entire international community to support Iraq's sovereign government and assist efforts for a democratic, united and prosperous Iraq.

Released on December 11, 2006

Statement on the Situation Concerning Iraq

Cheers!
DayDream

So what is the mandate of the MNF-I, to guard the UN embassy?

Originally Posted by DayDream

Nope...Won't work with a photo of the page and thats how they post it.

Cheers!
DayDream

Crap, i forgot, LOL.....ok we need an arabic speaking member in here

Central Bank Denies Attempts to Fix Dollar Exchange Rate
(Noozz Editorial) Dec 12 2006

Noozz.com | IRAQ

This article is a few years old but it is very informative as to how the CBI works....

Middle East Economic Survey

VOL. XLVII

No 36

6-September-2004

Oil Revenues And The Foreign Exchange Regime In Iraq

By Sabri Zire al-Saadi

The following article was written for MEES by economic adviser Sabri Zire al-Saadi, an ex-UN employee who worked in a number of Arab countries as Chief Technical Advisor, Macroeconomist and Investment Programmer, and held senior economic planning and policies posts in Iraq. Email: [email protected]

Economic mismanagement and misuse of oil revenues were among the major pitfalls of the former regime of Saddam Husain. Since then, however, the macroeconomic policies and financial management of the country’s oil revenues produced very little difference. Although terrorist attacks and political instability have contributed to the present economic deterioration and slow reconstruction of the public infrastructure and basic services, the economic policy and management of the disbanded Coalition Provisional Authority (CPA), the Iraqi Governing Council (GC), the previous Government, and the present Interim Government (IG), were also a major factor.

This article highlights the ambiguity surrounding the Central Bank of Iraq (CBI) practice in regulating foreign exchange regime, which constitutes a strategic factor in the macroeconomic management of the country. Since the CBI law provides no public process to review decisions or actions concerning monetary policy and exchange rate policy, serious concern arises of how the exchange rate policy can be monitored to avoid possible misuse of oil revenues (foreign currency). The given argument may also be applied to analyze the criteria for determining interest rates as an instrument of the monetary policy.

The Role Of CBI

The CPA considered the independence of the CBI at the center of its radical liberalization policies.

1 The aim was to suspend the authority of the CBI to lend government ministries and gave the CBI authority to determine and influence monetary and credit policy without the approval of the ministry. Modernizing the CBI as part of the effort to build a market-based economy was considered as one of its main accomplishments in Iraq.

2 As defined by the CBI law, “the primary objectives of the CBI shall be to achieve and maintain domestic price stability and to foster and maintain a stable competitive market-based financial system.”

3 With the deposits of oil revenue – the only source of foreign currency – the CBI extends its control to determine the foreign exchange rates, in addition to controlling the credit system through interest rates and money supply so as to maintain internal and external economic stability. This unique and powerful authority given to the CBI may not be necessary in view of the strategic role of the state-owned oil sector. In regulating the foreign exchange rates – without links to GDP growth and inflation – the CBI becomes a central player in the country’s economic and financial management, regardless of the aims and effectiveness of the macroeconomic and fiscal policies and the structural reforms required for establishing an efficient free market economy that would maximize economic growth and employment. However, with such huge power, the actual performance of the CBI, as reflected by its foreign exchange practice, is rather alarming. Indeed, it is a practice where neither its criteria are transparent, nor the authority to provide the economic reasoning behind the applied economic, fiscal and monetary policies.

Basic Facts

The post-war economic experience has resulted so far in sluggish domestic non-oil economic activities, low income, low consumption, low indigenous investment, low productivity, and high unemployment. Robert Looney has concluded that the difficulties encountered by the US neo-liberal approach stem from the way it was perceived, and put part of the blame on non-economists neo-liberals for failing to form a coherent strategy aimed at job creation and economic recovery.

4 Another US writer, however, stated that “Progress toward a stable peace in Iraq and the withdrawal of US troops begins with the painful recognition that America’s recent troubles are largely self-inflicted. This is due principally to the adoption of mission objectives that far exceed what is necessary or pragmatic,” adding that “market and trade liberalization is not a prerequisite of representative governance; indeed, even a more comprehensive democratization would not obviously require the extent or pace of economic liberalization envisaged by the Bush administration blueprint.”

5 Even the accomplishment report of the former CPA for the period put the emphasis on the assistance rendered for the government institutional building practices. No solid quantitative indicators (GDP, growth rates, employment and inflation rates) were given; so and apart from the issuing of radical liberalization laws and regulations and provision of limited institutional capacity building, it seems that the CPA may share the opinion of the Iraqi public that the economic conditions have worsened.

6 There is a political price for all of this, as witnessed by the strength of the Mahdi Army. All participants are poor, unemployed, and have very low living standards. Together with the majority of citizens, they are loosing hope for a better life after so many broken promises. Given the rise in the number of terrorist attacks, insecurity and political instability, economic success is essential for the survival of the new democratic Iraq.

In assessing the impact of Iraqi economic policies, including the monetary policy, four main assumptions should be considered. First, Iraq needs to maximize its oil revenues (exports) in order to finance reconstruction of the infrastructure and maintain the government current expenditures. Secondly, economic liberalization and reforms, especially the law for free foreign trade, free foreign capital, and tax strategy undertaken by the CPA are still in operation in accordance with the Law of Administration for the State of Iraq for the Transitional Period. The CPA Order (Law) No 18 confirmed and expanded by Law No 56 gives the CBI full independence and authority to regulate foreign exchange rates of the NID and determine the interest rates, is at the center of our concern. Thirdly, past experience has shown that oil revenues always financed the deficit. The present experience has also shown that under the pressure of the deteriorating economic and social conditions as well as political instability, the government has no option in the short term, but to increase oil production and exports (revenues) in order to finance its increasing expenditures.

7 In the first half period of the 2004 budget, the then CPA, GC, and the government have increased its revenues from NID20,322,600mn ($13.548bn) to NID30,235,300mn ($20.157bn). Expenditures were also increased from NID20,145,100mn ($13.430bn) to NID29,890,900mn ($19.927bn).

8 It is our belief that the revision was made as a result of increasing oil revenues as well as the pressure exerted by the Iraqi people demanding more public expenditures. Therefore, since taxes on profit that have to be generated by non-oil activities, individual incomes, and imports are very low, the pressure of the prevailing difficult conditions would enforce the government to increase oil production and exports. In the present circumstances, where oil revenues are the only source of public finance and foreign currency earnings required for imports, the independence of CBI from the influence of the ministry of finance to loan funds to Iraqi ministries would serve no sound economic purpose. Also, the financing of imports through the sale auction of buying foreign currency has little to do with the process of establishing an efficient free market economy as long as the structural economic reforms – the banking system, the financial market, and privatization – are not yet successfully carried out. The difference was made, however, to give unnecessary economic and political power to the CBI instead of other government economic and financial institutions. This is not the way to reduce the political power of the government arising from oil revenues. Nor is it consistent with the projected institutional democracy. Iraq’s economic strategy should put emphasis on the means by which the government could reduce gradually its high dependence on oil and simultaneously increase the contribution of non-oil activities of the private business in public finance. Four, in the process of preparing the government annual Budget for 2003 (for six months July-December 2003) and 2004 and the future strategy frameworks of 2005 and 2006 Budgets, it was assumed that the exchange rate of the NID is equivalent to $1=NID1,500. (hmmm we've seen that figure bounced around recently ) Neither the CBI nor the CPA gave any explanation or justification to that assumed rate. Also, the MoF and MoP failed to clarify in their published Budget any clue or comment on such an important decision. Indeed, it was arbitrarily determined, and may be a mere personal judgment. In effect, it reduced the then real purchasing power of the Iraqi Dinar (income) by about 25% without clear economic reason.

Foreign Exchange Regime

The present Foreign Exchange Regime (FER) and the resulted Foreign Exchange Rates (FeR) are controlled by the CBI and are directly manipulated through the daily auction which maintains the rate stable at about NID1,460 for one US dollar even when the dollar has been devalued against major foreign currencies. The stability of FeR may give the impression that the Iraqi economy is enjoying genuine stability as a result of the CBI policy. However, it is rather misleading to relate the FeR to the effectiveness of the monetary policy designed by the former CPA and implemented by CBI. Also, it is not realistic to conclude that the independence of the monetary policy (CBI) from the fiscal and reconstruction policies of the government is necessary to ensure macroeconomic stability. More important, such an assumption may give a false indication that the rapid and radical economic liberalization strategy of the CPA is workable. Unfortunately, this is not the case and the current stabilization of FeR has the same bases of the former fixed rate regime, ie oil revenues, government expenditures, and availability of foreign currency for imports. There are some differences of less significance, however. The CBI – not the government – has the political power to utilize the oil power in determining the FeR in the context of the implemented free foreign trade and free flow of foreign capital policy.

In the former fixed FeR, oil revenues (in US$) were deposited in the government account at the CBI. The CBI considered government expenditures and oil revenues allocated to the annual budget and the annual investment program – main variable of the aggregate demand – in determining the money supply. Also, the CBI provided the foreign currency (oil revenues) for imports. Since the former government used imports as a variable to keep inflation under control, the availability of oil revenues enabled it to keep the fixed FeR under control as well. Obviously the efficiency of utilizing the available foreign currency can not be assured. Added to which there is the harm caused by not allowing the private sector and individuals to use foreign currency earnings for their own needs. For a free market economy, the shortcomings of such a government mechanism are clear.

In the new FER, the CBI receives oil revenues in the government account.

9 Also, the CBI considers government expenditures, for current and capital operations, as factors in determining money supply. The CBI will provide the foreign currency at stable (fixed) rates to the private sector and individuals through regular auctions for selling the dollar. It is beyond dispute that the use of the available foreign currency by the private sector for domestic production, investment, and consumption activities is necessary for promoting economic growth. However, it is questionable whether foreign currency generated by public oil exports should be used to maintain the policy that led the domestic market being inundated by foreign products while indigenous production and investment activities are sluggish.

Obviously, the main difference here is that the indigenous private sector and foreign concerns should replace the government institutions and public sector in the process of financing imports; ie, the free market mechanism assumed to replace the government foreign trade monopoly in ensuring import supply when necessary.

Conclusions

While the apparent stability of FeR in Iraq is a healthy indicator, it is not related to the effects of the hasty and radical economic liberalization policies of the disbanded CPA. Moreover, it is not a product of sustainable economic growth generated by indigenous industrial activities. Government expenditures financed by oil revenues still play a major role in stimulating economic activities as well as maintaining FeR stability.

In Iraq, where government spending should be increased in order to boost demand, stimulate investment and create jobs at a time when indigenous private sector and foreign corporate demand is falling, this spending is inflationary if financed by borrowing and/or by new money. Also, increasing private consumption and credit indebtedness would lead to the same consequences. Since non-oil production, private consumption and investment are low, the availability of oil revenues, if rationally allocated, would promote economic growth and stability as well as develop the public infrastructure.

The CBI role can not be superior to the macroeconomic and fiscal policies and government investment in infrastructure as long as oil revenues are the only source of foreign currency earnings. Therefore, the FeR should be directly linked to GDP growth and inflation criteria; otherwise it is no more than a flawed practice. Such a conclusion may extend to consider these criteria in determining interest rates.

Since the economic situation is not improving and the cost of fixing the exchange rate is not certain, ie economic efficiency can not be ensured, there should be a serious review of the extent of the CBI’s authority. Certainly, at this stage of development, the independence of a CBI that is empowered by oil revenues is not essential. Such a powerful role would be necessary only when the requirements for free and efficient market economy were fulfilled and democracy was widely practiced. This is a longer-term perspective proposition.


1. On 7 July 2003, the CPA rushed to issue a law for ensuring the CBI independence from the authority of the government. The Law entitled “Measures to Ensure the Independence of the Central Bank of Iraq”. After nine months, the CPA issued a new “Central Bank Law” for the modernization of the bank’s objectives and operations.

2. CPA, An Historical Review of CPA Accomplishments (2003-04), June 2004, Baghdad, Iraq. www. cpa-iraq.org.

3. CPA, “Central Bank Law” No 56 of 1 March 2004, Article 3.

4. Robert Looney, Neo-liberalism In A Conflict State: The Viability Of Economic Shock Therapy In Iraq”, and: A Return To Baathist Economics: “ Strategic Insights, Vol 3, Issue 6, June 2004 and Issue 7, July 2004, Center for Contemporary Conflict at the Naval Postgraduate School in Monterey, California, US.

5. Carl Conetta, “Radical Departure: Toward A Practical Peace in Iraq”, Project on Defense Alternatives Briefing Report No 16, The Commonwealth Institute, Cambridge, MA, US, 7 July 2004. p1 and p14.

6. Aside from increasing oil production to a pre-war level, increasing the number of families receiving cash assistance benefits, restoration of food reserves and other details related to the performed functions of the CBI and Ministries of Planning, Finance, Oil, Agriculture and Labor, no concrete macroeconomic indicators were given. See, CPA Accomplishments 2003-04, ibid.

7. In October 2003, the government issued the 2004 Budget, which was revised in March 2004, see: Republic of Iraq, “2004 Budget”, Minister of Finance and Minister of Planning, October 2003 and "Revisions To 2004 Budget", Ministry of Finance and Ministry of Planning and Development, March 2004. Published on the CPA Internet website: www.cpa-Iraq. org .

8. The given values in US dollars are based on the exchange rate of $1= NID1,500 assumed in the budget.

9. At present the Iraq Development Fund operates under the control of the UN, IMF, World Bank and Coalition forces, playing the role of treasury for both the government and the CBI. Iraq is also a full member of the IDF board of directors.

Cheers!
DayDream

Originally Posted by rvalreadydang

Crap, i forgot, LOL.....ok we need an arabic speaking member in here

Maybe Inscrutable's translator will help out when the time comes?

Cheers!
DayDream

Originally Posted by Mike5200

Well as late as yesterday no one told the Bush Administration about this!


denial from White House of Iraqi move to oust al-Maliki
Posted: 12/11/2006 4:02:38 PM



WHITE HOUSE (AP) - The White House is flatly denying a report that key Shiite leaders are maneuvering to oust Iraq's prime minister.

Press Secretary Tony Snow tells reporters there's no move afoot to "dump" Nouri al-Maliki.

An Associated Press dispatch from Baghdad quotes Iraqi lawmakers as saying Shiites are holding talks on a new alliance because al-Maliki has been unable to end sectarian bloodshed.

The alliance reportedly would be led by Abdul-Aziz al-Hakim, who met with President Bush last week, though someone else would likely be prime minister. The AP report quotes a senior aide to al-Maliki as saying, "We know what's going on and we will sabotage it."

Asked what's wrong in the story, Snow said, "Basically, everything."

Snow adds the president has full confidence in al-Maliki. Earlier this month, at a meeting in Jordan, Bush called al-Maliki "the right man for Iraq".

Interesting,

The White House never seems to know what is going on, just ask Bush. Why would al-Hakin, and relative unknown prior to this meeting go all the way to Capital without Maliki if it wasn't to discuss being a backed replacement. We already know the Kurd's are pushing for removal of Maliki, but don't expect this to be talked about, yet it is, so we all know what denial means, it is a done deal. LOL

Happy Holiday Season to all, Mike

Hey OSW...Whats the deal with the HCL being enacted Sunday?

Cheers!
DayDream

Oil and Gas International Legal Advisor
Published 19 October 2006 - by OGEL

The United States Department of Commerce (DOC) requires expertise to help define, implement and evaluate a program of technical assistance conducted in close coordination with several other USG agencies. The objective of this program is to help contribute to the creation of a legal and tax environment conducive to domestic and foreign investment in Iraq's key economic sectors, starting with the mineral resources sector.

DOC's technical assistance arm, the Commercial Law Development Program (CLDP) will manage the program and share expertise with other USG agencies.

As detailed in task orders, the Contractor shall provide to CLDP support in providing expertise to DOC, to other USG agencies, or to Iraqi authorities on creating a legal and tax environment conducive to domestic and foreign investment in Iraq's oil and gas sector.

Cheers!
DayDream

Originally Posted by Wm.Knowles

I have been reading some of the other (brand X) forums. It seems many are having a hard time buying dinar from banks that they did so in the past and that they are only getting 25000 notes. This includes Chase Banks. Interesting Hmmm.

For what it may be worth to everybody, here in "small town Iowa" banks with Dinar are very few.

BUT I just made my last buy from "Safe Dinar" this morning and they had 25,000 10,000 and even offered 1,000 Dinar notes to me.

Got my confirmation emails and I will have it this Wednesday.

Yup my 17 year old son wanted to buy some so I explained to him the risk and he said " I would rather lose my money trying than to not take the risk and wish I had"

Not bad for 17 ?

(chip off the ol block?)