Thread: Archive News - Iraqi Dinar Think Tank - 08/09/09 - 09/01/10

Strategy of Monetary Policy and financial

Abu Talib al-Hashemi *

Disclaimer
The investigation, which addressed economic Sabah auction of foreign currencies and interest among professionals, experts and interested parties, which means that the economic page remains open to address this issue for discussion here is the first reaction appeared in the objective analysis that we came across e-mails of economic expert Abu Talib al-Hashemi

Who was fired in his article that in dealing with sensitive aspects of monetary policy, warning of the risks that may occur because of the continued currency auction, highlighting the role of the auction in the successes achieved in the last and most important demands that he stick to international obligations and international agreements that do not allow to restrict the freedom of foreign exchange for pointing out that they does not relieve the central bank to achieve financial control and analysis of external financial flows and in view of the ideas, proposals and important recommendations contained in this study, we publish the letter to inform the owners of jurisdiction as well as the organizers of the monetary and fiscal policy, and keep the page open to economic debate on this vital subject and sensitive in our work to bring the views of the required solutions for the protection of our national economy.

Economic Section

Adopted the strategy of monetary policy of the Central Bank of Iraq on three themes of the most important lower levels of inflation, and raise the value of the Iraqi dinar "modification target the nominal exchange rate", and modify the rates of foreign monetary reserves, to Iraq. In addition to what its participation in the policy of reducing public debt of the State in cooperation with the financial and other official bodies.

And certainly there is a close and reciprocal influences between the major axes above, and the volatility up and down, do not deny that the Central Bank of Iraq has made considerable progress over the past seven years, the overall objectives of the monetary strategy in several areas, where inflation fell from about 35% in 2006 to about 10% annually at the end of 2008. Interest rates have fallen from about 20% annually to about 7% per annum in 2009. The most important element in the achievement of foreign cash reserves located in the Central Bank of Iraq could reach about 40% of the gross domestic product, despite the significant decline in the price of Iraqi oil sales after the recent global crisis.

The oil sector is responsible for generating about 70% of the gross domestic product.

The room has auction of foreign currency, according to the mechanisms adopted by the central bank sales and purchases since 4 / 10 / 2003, and even now rising Iraqi dinar exchange rate against U.S. dollar and, more importantly, they achieved control of the new monetary policy to stabilize the foreign exchange market almost. Has increased the exchange rate of the Iraqi dinar up to 40.

The commitment of the Iraqi Central Bank foreign exchange freely and not be restricted, and he followed this policy without any controls and limits transfers of Foreign Affairs, despite this positive step, but we believe that it has to go to ensure that such transfers and external flows for the importation of goods and services, and prevent the smuggling of capital and surplus cash outflow , where the bank is aware of and clearly this needs to be, financial analysis and sound mechanisms, as well as to the Money Laundering Act, needs to deepen the financial control, especially that of foreign-exchange operators depend a parallel road by the "money changers" and another way is through the gate of a formal room Time and foreign exchange by the central bank, and the role of some financial companies, the role of particular concern in this area despite their limited financial resources.

Clinging to the international obligations and international agreements do not allow to restrict the freedom of foreign exchange, it is true, but that does not absolve the bank to achieve financial control, and analysis of external financial flows and we fear that such transfers of this size may be harmful for purposes other than a positive for the Iraqi economy and serve flows of goods and services , but is the basis for speculation and by "financial institutions and the argument" they have not only to generate income and profits and the mechanisms are inaccurate, which may generate high risk and a great way to Iraq's economy and these financial institutions the first place.

All the positive factors mentioned above the relative stability of the Iraqi dinar exchange rate where he became the CBI is the vector of exchange rates and reduced the "dollarization phenomenon," and reduce the difference between the nominal exchange rate and real, and this led to relative stability and the balance of the money market ..

But we must beware of some negative aspects, mechanisms and study the effects of future and the failure to literally some of the basic principles and commitments generated by international agreements, as detailed implementation mechanisms, may create negative accumulations are small, and the passage of time has achieved a major violation of the banking system, monetary, and most important of these negative indicators Mayati:

1 - not a policy and mechanisms to determine the advantage of flexible interest rates and determined, and to ensure a real budget savings and investment, within the general budget, which aims at increasing the credit and financing to private enterprise.

The reduction of benefits and enforced in a short period is limited and uneven, was born and cons of damage more than the advantages of the new risks and achieved a benefit in addition to the overall risk.

It was supposed to be a more accurate time frames for achieving the pros effective.

2 - The monetary policy adopted by the Central Bank of Iraq has had a number of positive indicators, the most important reduction in inflation but that this policy has so far pursued a special launch transfers and cash flows of Foreign Affairs of Iraq, without any limitations and obligations outside the investigation had resulted in "monetary obligations to pay foreign real" to the operations smuggling and wide, and the importation of goods and services are cheap and most consumer and even productive goods, including old and even old clothes and food damaged and off-specification and international standards.

If some researchers demonstrate that the competence of the organs and organizations of the Ministry of Commerce and quality control, but the root of the problem is the lack of coordination between departments responsible for financial and monetary policy and economic development within administrative circles of the government.

3 - To achieve economic stability and low inflation that he would return with the reasons for sound monetary policies pursued by the Central Bank of Iraq but that these policies are "hard-line policy" as expressed by some professionals and researchers, but this would be reluctant pros in the near future, the lack of effective coordination between the organs of economic, and will not achieve significant economic growth as long as it does not go to the growth of productive sectors and did not go as long as basis for investment, as well as not identifying the needs of foreign exchange in accordance with the actual scientific studies and statistics adopted by the organs of the Department of Statistics and trade.

4 - The announcement of the foreign exchange reserves of more than 44% of the gross domestic product, is a positive phenomenon and good, and the policy is successful, but the lack of information transparency are afraid to go a large part of these reserves to respond to the needs of the local market for the dollar is unstable and real and some is subject to smuggling, speculation and the diversion of cash flows of foreign abroad.

Because the mechanisms of the currently approved without financial control or are subject to formal control is weak, and some of them turned into a purely administrative control is not feasible.

5 - as we strongly support the non-interference in monetary policy, which led the Central Bank and non-intervention management of foreign exchange reserves of the Central Bank of Iraq.

However, we at the same time do not support the isolation of the Iraqi Central Bank on economic management and poor coordination between monetary and fiscal administrations. We are what we read through the comments already worried contradiction and conflict, and the intersection between policies and not Sarhama Bodqp in economic coordination and drawing clear economic policy based on a solid foundation for the development of the Iraqi economy and to achieve reasonable growth rates and achieve the goals of development and economic prosperity

6 - The primary objective of the reduction in benefits approved by the Iraqi Central Bank to increase rates for credit and bank financing, but that the reduction in benefits alone are not enough, the central bank need to take several important steps, including the achievement of a Deposit Insurance Corporation, which is long overdue, as well as reducing the legal reserve up to 5% from the current ratio, and to work diligently to find information in the institution's central bank to achieve a broad base of information to clients and financial efficiency, and control of trusted with their bank in all government and private banks, and the liberalization of interest rates, or seizure in a balanced manner and not be subject to decisions of non-monetary and financial.

7 - It was noted that the cost of production of goods prices have cost the Iraqi High does not compete with those of import, where bears have cost an emergency situation, such as cost and security risks as well as the cost of fuel and transport, has led many investors to withdraw from the Iraqi market production in a large number of activities and areas of industrial and agricultural productivity, This reduced domestic investment and weak from not paid to foreign investors so far for investment as well as double the amount allocated to investment and development in the balances for 2009 and 2010 has led to increasing unemployment and declining living standards, increased poverty and loss of growth effects!

Any claim that there was a decrease high prices does not prove a claim before the statistics field, where prices are still high fuel and transportation, and mandated costs on production, prices are still imported goods consumption and production of high quality compared to standard specifications, including food prices, especially if added to the agenda other family expenses, housing, education, and health.

Hence I personally believe that the effects of declining annual index of consumer prices was very limited.

8 - to conclude from all this that the economic growth, GDP growth depends on by the effectiveness of financial and monetary policies and the extent of their success in achieving the objectives and strategy set for the development of the Iraqi economy and development objectives, and this certainly requires a united vision and strategic one, do not rely on coordination, but proceed from the same foundations and objectives and follow the same paths.

God bless the efforts of workers in this area, and wished them Muwafaqiya, to reach the set objectives.
* Senior Economist

http://www.alsabaah.com/paper.php?so...page&sid=95742

CBI stops currency auction for one day

The Central Bank of Iraq (CBI) has decided to cancel its auction for foreign currency on Sunday due to accounting holiday.

“The auction will be resumed tomorrow,” a media source from the CBI told Aswat al-Iraq news agency.

The CBI regularly holds five auction sessions for foreign currency every week.

http://en.aswataliraq.info/?p=124620

Borrowing from the IMF is a threat to the interests of Iraq

MP Nassar al-Rubaie on Sadr's proposal to borrow from the IMF as "a serious matter, the interests of Iraq over the long term, indicating the threat to the future of Iraq and the interests of the people.

The proposal is based splendor in the general budget for the year 2010 to borrow from the International Monetary Fund.

He said al-Rubaie told the independent press (Iba), the World Bank when giving loans to countries within the framework of the restructuring of the economy of these countries and, therefore, is the long-term intervention in the affairs of these countries even amount to interference in its sovereignty.

Rubaie confirmed his refusal not to pass the federal budget for 2010 until the next parliamentary session, noting they relate to the interests of the people.

He stressed the need to separate the budget for the elections and political history.

http://www.ipairaq.com/index.php?nam...onomy&id=19451

Central Bank sets up committee to consider the issues of dismissed Alsasien

Form of the CBI committee of Bank staff to consider issues of dismissed politicians in the bank.

And Zkrmsdr official in the Iraqi Central Bank's correspondent, It's based on the decision issued by the Prime Minister's Special Bamufsolin politicians Committee was formed consisting of five members of the re-separated and adjust the salaries of those affected in the bank and that the commission has been going on two months preparing an integrated plan to consider all issues related to Bank staff and today Astonav work to consider the transaction before before the committee.

http://al-iraqnews.net/new/iconomi/48886.html

House of Representatives fails to pass 2010 budget

Failed the House of Representatives at a meeting Sunday in the passage of the 2010 budget, which is one of the important issues and which is still pending due to the different opinions of politicians and parliamentary blocs in the Council, and also lies the importance of approving the budget, the fact that the projects and reconstruction in the country dependent on them.

http://translate.googleusercontent.c...OCFNJrQ5jXWjiA

Odierno: Iraq drawdown is on schedule

The nearly two-month delay in holding Iraq's nationwide elections will not keep American combat troops from leaving the country as scheduled by the end of August, the top U.S. commander in Iraq said in an interview yesterday.

"The plan that I put together originally gave me plenty of flexibility, and part of that flexibility was that the election would be delayed, so I built flexibility into our plan," Gen. Ray Odierno said at a military base in Iraq's Diyala Province. "I feel comfortable that we're on track."

Iraq was originally scheduled to have key elections in January that will determine who will lead the country as American forces go home, but political wrangling over how to apportion votes in a law needed to carry out the balloting delayed the vote until March 7.

Under a U.S. plan, all combat troops are scheduled to leave Iraq by the end of August. The remaining 50,000 U.S. forces will be doing noncombat operations such as training.

Around early May, if the country is on stable footing, Odierno will begin moving troops out of Iraq. There are currently about 110,000 U.S. forces in Iraq, and Odierno said that by March 7 there will be about 100,000 troops here.

"We have it well planned out. They have excess equipment that is leaving now ahead of time.... It's four months, and what we really plan on doing is 12,500 (troops) a month, and that should see us through," he said.

When asked why the U.S. needs to keep 100,000 troops -- more than the number of U.S. forces in Afghanistan -- in a country that has seen such an improvement in security, Odierno said the U.S. troop presence would provide psychological and physical support for Iraq as it goes through what he described as vital elections.

"This is in my opinion the most important election that has been held to date in Iraq," Odierno said. "We want to come down in such a way that it is deliberate, and in such a way that Iraqis are gaining confidence in themselves to provide their own security."

The United States has been consolidating bases around the country as it draws down forces. Under a security pact signed with the government of Iraq, all U.S. forces are to be out of the country by the end of 2011.

The general said he would be looking at whether there is a significant increase in violence after the election or major problems seating a new government when he makes his decisions about whether to continue with the drawdown as scheduled.

However, he did say he did not expect the Iraqi government to actually be seated by May. No single party or political bloc is expected to gain an outright majority in the March vote, so there will likely be a prolonged period of negotiation to determine who will become prime minister and who will hold positions in the Cabinet.

Speaking about the recent temporary seizure by Iran of an oil well along the disputed Iran-Iraq border, Odierno said Iran appeared to be stepping up its provocations in what has been a continuing area of concern between the two countries. In addition to moving troops in when they seized well No. 4 in the Fakkah oil field, Odierno said, the Iranians also established fighting positions closer than they had before.

"Those are things that are a bit different than they've done in the past," he said. "It's hard to understand why they would do that."

http://pukmedia.com/english/index.ph...15433&Itemid=1

Interview - President Jalal Talabani Talks to Asharq Al-Awsat

Baghdad, Asharq Al-Awsat- Iraqi President Jalal Talabani has said that his personal wish is not to nominate himself for another presidential term unless he is commissioned to do so by the main Iraqi political blocs, because he wants to dedicate himself to the Patriotic Union of Kurdistan [PUK] and to writing his memoirs. Talabani adds: "However, I will relinquish my personal wishes for the sake of public interests, as I have done all my life."

President Talabani, who will move to Al-Sulaymaniyah to start his partisan duties as secretary general of the PUK as soon as he concludes his political work as president of Iraq in Baghdad, has favored Asharq Al-Awsat with a political interview, which is the first of its kind to an Arab newspaper before the end of his duties as president of Iraq and after his bilateral meeting with Masud Barzani, president of Kurdistan, in Dukan resort near Al-Sulaymaniyah last week.

President Talabani talks about his experience in the presidency, and about the Iraqi Government. He also talks in detail about the split of Nawshirwan Mustafa, the former leading member of the PUK, and describes him as "hostile to the PUK, and hostile to and opposing the Kurdistan Province Government."

The following is the text of the interview:

[Asharq Al-Awsat] How do you assess your presidential term as it approaches its end?

[Talabani] I believe that it was successful. In this term, we have played the role of coordinator and reconciliatory in the Iraqi political process, and we have been able to establish good foreign relations. We have consolidated our relations with our brethren in the Arab world, especially our greater sister Egypt, and with our brother, His Excellency President Muhammad Hosni Mubarak, as we have established strategic relations. We have done the same with fraternal Saudi Arabia, Jordan, Kuwait, the UAE, and with our neighbor Turkey, as we have laid down the foundation of the strategic alliance between the two countries. We have developed our relations with the important countries we visited, such as China, France, Britain, and the United States. We also have given momentum to the continuation of these relations through our monthly meetings, which I used to convene with the Arab and foreign ambassadors accredited to Iraq. We have worked to facilitate the affairs of the state, whose government is presided over by brother Nuri al-Maliki.

[Asharq Al-Awsat] Do you think that your role would have been more effective if you had more extensive powers?

[Talabani] Let me correct something important for you. The powers of the president are already extensive, as ratified by the Iraqi Constitution. They are influential and significant powers. It seems that there is a misunderstanding, or lack of in depth knowledge of these powers, or it could be that the people have heard some media statements promoted by some people saying that the powers of the president are ceremonial; however this is not true.

[Asharq Al-Awsat] On the basis of what you said, have you used your complete powers, which the Constitution has allocated to you?

[Talabani] Yes, we have used them in everything related to the protection of the higher interests of Iraq and the Iraqis, and in everything related to the higher policies and the foreign policies. We have had a decisive decision to be the guardians of the safety and implementation of the Constitution. The government might not have appreciated the role of the presidency, and disagreements have occurred as a result of this; however, we do not deny that the prime minister has consulted the president about many issues, and has been trying to coordinate with us, Nevertheless, when there are disagreements between the prime minister's office and the Presidency Council, everyone goes his own way.

[Asharq Al-Awsat] Have you found the experiment of the Presidency Council to be successful?

[Talabani] I will be frank with you. The experiment of the Presidency Council has been both, a success and a failure; it is like all aspects of life, they have their negative and positive sides. Its positive sides include that it materializes the wish of all the major entities that constitute the Iraqi society, namely the Sunni Arabs, the Shiite Arabs, and the Kurds. This is important at the stage through which we are going until our democracy and constitutional institutions become well established, until the situation settles in Iraq, and until we reach the stage in which the parliamentary majority governs the country. At this stage - let us call it interim stage - we consider the experiment to be successful. On the other hand, the negative aspects include that the objection by one member of the Presidency Council can hinder the smooth running of the situation, and the necessary laws and proposals; this hindering from one member of the council could hinder the issues of the state.

[Asharq Al-Awsat] Will the experiment of the Presidency Council be repeated in the upcoming stage after the parliamentary elections?

[Talabani] I do not know, because this is one of the powers of the parliament. According to the Constitution, the Presidency Council has concluded its mission, and was installed for one time only; the appendix of the Constitution says that the Presidency Council is for one parliamentary term, and this term has ended; "the expression Presidency Council replaces the expression president wherever it is found in this Constitution, and the rulings of the president are restored after one parliamentary term." This means that in the next parliamentary term there ought to be a president, and the role of the Presidency Council ends.

[Asharq Al-Awsat] On the basis of your experience, will you nominate yourself as a presidential candidate in the next term?

[Talabani] Let me be frank with you. If it is up to my personal wish, the answer is no, I will not nominate myself for the presidency again, because I need to dedicate myself to doing more work at the PUK, being with my family, and to resting and writing my memoirs. However, if the main parliamentary and political blocs in Iraq commission me, I will not disappoint them, and I will not reject this commission.

[Asharq Al-Awsat] Will you relinquish your personal wish?

[Talabani] By God, I will. The same as I have relinquished my personal wishes all my life for the benefit of the public interests, Iraq, and the Iraqis.

[Asharq Al-Awsat] Do you think that the political equation will change if the president is chosen from the Shiite or Sunni Arabs?

[Talabani] No, it will not change, because the Constitution is there, and there will be no changes.

http://pukmedia.com/english/index.ph...15442&Itemid=1

Continued......

Asharq Al-Awsat] Do you think that for the Kurds the post of the speaker of parliament is better than that of the president?

[Talabani] This depends on the circumstances. Under the current circumstances, the post of the president is better for the Kurds than the post of the speaker of parliament. As for the normal circumstances, the post of the speaker is best for the Kurds. Do not forget that under normal circumstances there will be no quotas, and hence it will not be that this post is for the Kurds and that for the Shiite or Sunni Arabs, because the Constitution will not grant any privileges to any constituent group of the Iraqi people.

[Asharq Al-Awsat] Have you felt from the Iraqis support for Jalal Talabani as president of Iraq because of his personal qualities, or because he is a Kurd?

[Talabani] All my life I have struggled within the ranks of the Kurdish revolution and the Iraqi cause for a democratic Iraq, and I have defended the Kurdish rights within this Iraq. I am proud that my relations with the Iraqi and Arab progressive powers always have been good. Since I was a student at the Faculty of Law at Baghdad University, I have exerted good efforts so that there would be good relations between the Kurdistan Democratic Party [KDP] - I was a member of its leadership - and all the Iraqi national parties, such as the Communist Party, the Democratic National Party, the Independence Party, Baath Party, and others. As for the Arab arena, I am also proud that I was the first leading member of the KDP to travel to Syria and to establish relations with the then Syrian parties, as I met Akram al-Hurani, Michel Aflaq, and others; I was the first Kurd to contact President Jamal Abdul -Nasser, I met him several times, and I established good relations with the Nasirites. This qualifies me to be a good Iraqi. Before I was commissioned to be the president of Iraq I met all the main political blocs in Iraq, and they were unanimous in their agreement to this commission. I said to the brethren in the PUK Political Bureau that when I go to Baghdad as a president, I will take off the Kurdish dress, and wear the Iraqi cloak in order to behave as an Iraqi and as a president of all Iraqis.

[Asharq Al-Awsat] But the Iraqis reproach their president - perhaps a reproach stemming from love - for the fact that President Talabani has not visited them in their southern governorates, such as Basra, Al-Amarah, or Al-Nasiriyah. Is this for health or political reasons?

[Asharq Al-Awsat] Despite my love for all Iraqis, this is only partly true, because I have visited Karbala, Al-Najaf, Al-Hillah, and Al-Samawah. I have not visited the other cities for many reasons, including the fact that the Sunni Arab regions were disturbed, their security was unstable, and they could not be visited, and I had to balance my visits to the Sunni and Shiite Arab regions, otherwise my visits would have been interpreted incorrectly in one way or another. The other reason is that when the security situation improved in Southern Iraq, for instance in Basra, this (security situation) did not improve in Mosul, and if I paid a visit to Basra, I should visit Mosul, because the two cities constitute two important poles in Iraq. This reproach is only partly true, and I accept it.

[Asharq Al-Awsat] How do you assess the security situation in the light of the latest explosions in Baghdad and other places, and the work of the security organizations?

[Talabani] I believe that the current government has been able to play an important role in imposing security and stability, and in liberating the unstable regions from the terrorists and the militias. A short time ago, Al-Anbar Governorate was under the control of the terrorists, Basra was under the control of the militias, and the main roads linking the Iraqi regions were dangerous and unusable; today, Al-Anbar has been liberated from the terrorists, Basra has been liberated from the militias, the roads between Baghdad and the rest of the cities of Iraq have been secured, and security has been imposed in many regions, such as Baghdad, Karbala, Al-Najaf, Al-Hillah, Samarra, and Tikrit. Yes, there are terrorist cells, but such cells exist also in Pakistan and Algeria. There is a difference between the existence of secret terrorist cells that carry out explosions, and the existence of entire regions that are under the control of terrorists, as is the case in Afghanistan. Therefore, the national unity government has succeeded in this field, but it has not been able to put a complete end to the terrorists. This has its reasons; the security organizations have played an important role, and offered hundreds of martyrs, and we ought to appreciate their role and sacrifices, but are there shortcomings in these organizations? Yes, there are shortcomings in the security organizations, and also there are claims that terrorists and Baathists have infiltrated these organizations and hence facilitate the work of the terrorists. We cannot deny the achievements, but at the same time we do not deny the existence of negative aspects, such as the existence of shortcomings in the security plan and in the people who undertake the implementation of this plan. Nevertheless, huge achievements have been accomplished in this field.

[Asharq Al-Awsat] But after four years of this government, there is deterioration in the security situation, and the economic situation is bad. There is a lack of basic services, such as electricity, water, and municipal services?

[Talabani] Allow me to disagree with you on this. Why do you say deterioration? Look at the map of Iraq; you will find that the security situation in the south is safe, also in Kurdistan Province it is safe, and so it is in most of the regions of the country. There are terrorist activities in Ninawa Governorate, and in Baghdad, while in the past the terrorists had activities in and control over most of the regions of Iraq. Therefore, there is no security deterioration, but there is incomplete implementation of security. Such terrorist operations occur in Algeria, in Saudi Arabia, and in other countries. Therefore, we have to assess the situation realistically.

As far as the economic situation is concerned, there is improvement in this field. The standard of living has improved a great deal since the Saddamist era [the era of former Iraqi President Saddam Hussein]. The economic situation has improved, but we have not reached what we ******d for in this field because of many reasons. These reasons include that terrorism has not been eradicated, no five- or four-year plan has been implemented, and we have not reached the required standard of oil production in order to implement the planned projects.

Continued......

[Asharq Al-Awsat] Does this mean that you are satisfied with the performance of the government?

[Talabani] No, I am satisfied with some aspects, but I have remarks on other aspects of the government performance. However, in general, as the Iraqis say "something covers another thing;" yes, I am satisfied, but there are shortcomings in the five-year plan, and in the oil policy, which has started to improve recently, and it is correct, good, and serves Iraq, and we congratulate those who are administering this step. What has taken place in the issue of contracts with the oil companies should have taken place two or three years ago. Yes, there are achievements and shortcomings, and we ought to mention them all. There is nothing perfect except the work of God Almighty.

[Asharq Al-Awsat] But there are disagreements between you and the prime minister, for instance what happened about the representation of Iraq at the Arab summit, which convened in Qatar, and Al-Maliki's insistence to attend the summit rather than you?

[Talabani] This took place with my agreement. I am the one who told the brother Amir of Qatar that the prime minister will represent Iraq at the Arab summit. This was not because of the insistence of the prime minister; he wished to do so, consulted us about this, and he did not impose himself, but we agreed that he would represent Iraq at the Arab summit.

[Asharq Al-Awsat] What about your contradiction with Al-Maliki in his accusation leveled at Syria of being involved in the latest explosions in Baghdad?

[Talabani] There is an important point; let me explain it. I have a special relationship with Syria and with the Syrian brethren. I have said repeatedly that I owe a national, personal, and moral debt to the honorable Al-Assad family. I cannot forget the help and support given to us by President Hafiz al-Assad under extremely difficult circumstances, circumstances under which many Arab countries were not able to give us entry visas. I am proud of this relationship, and I understand its motives.

Therefore, I have said repeatedly that Syria is my identical primary homeland; Iraq is my primary homeland, and Syria is my identical primary homeland. Moreover, my philosophy in work and solving problems relies on calm diplomacy, and sometimes hidden diplomacy. I do not like to solve problems by means of hard-line statements, media escalations, and altercations; I always prefer to solve the problems between the fraternal Arab countries and the friendly foreign countries in a secret diplomatic amicable manner away from stirring up problems. Therefore, regardless of the claims about Syria, I believe that solving the problems ought to be done through Iraqi-Syrian meetings, whether via a joint security committee or via mediators we commission.

[Asharq Al-Awsat] Today, the talk is about the upcoming parliamentary elections, and that they are decisive and important. Do you think they are?

[Talabani] Yes, I think that they are decisive elections and they are a matter of destiny. These elections will lead either to a setback of the democratic process, or to its continuation.

[Asharq Al-Awsat] What is your prediction of the results of these elections?

[Talabani] Our reading confirms that they will be successful, and will support the continuation and development of the democratic process.

[Asharq Al-Awsat] Do you think that there will be a change in the political process?

[Talabani] There might be a change in the individuals; for instance, a president other than Jalal Talabani might be elected, or another person might be elected as prime minister or as speaker of parliament. We have to be confident that the democratic process will continue. We will work to establish a national front consisting of the main political blocs that won the elections in order to establish compatible, cohesive, and strong national unity, and to form a strong, compatible, and cohesive parliamentary bloc that will help the government in its work and in passing the laws.

[Asharq Al-Awsat] On this basis, will your alliances as "Kurdistan bloc" be the same ones that took place in the previous parliamentary term. Will you form an alliance with the same tendency with which you formed a coalition before?

[Talabani] Our policy always is to form alliances with all. In the past four years we have formed an alliance with the Unified Iraqi Coalition, which is described as Shiite, and with the Islamic Party. We have had good alliances that continued for periods of time with brother Iyad Allawi and the National Accord Movement. Today we have good relations with the Coalition, with the State of Law Coalition, with brother Jawad al-Bulani, with the Iraqi List, with the Islamic Party, and with the Communist Party. We do not restrict our relations and alliances to a single side or a specific direction; our policy is to hold alliances with all.

[Asharq Al-Awsat] There is talk about your participation in the elections with an Iraqi national list. How correct is this?

[Talabani] The current circumstances are not suitable for participating in an Iraqi national list. God willing, we will participate in the next elections with such a list.

[Asharq Al-Awsat] Let us move to the PUK, whose secretary general you are. What do you think of the experiment of Dr Barham Saleh as prime minister of the government of the Kurdistan Province?

[Talabani] I think this is natural. If you go back to the history of Kurdistan federalism, you will find that from the beginning there was an alternation between us and the KDP in the chairmanship of the government and the parliament. The first government was formed with Dr Fouad Masum as prime minister and the speaker of parliament was from the KDP; then the government was formed with brother Nejervan Barzani as prime minister, and the speaker of parliament from the PUK; in the current government the prime minister is Dr Barham Saleh, while the speaker of the parliament is from the KDP. This is a continuation of the alliance between the two principal Kurdish parties.

[Asharq Al-Awsat] Have you felt some dissatisfaction from some leading members of the KDP with Saleh chairing the government?

[Talabani] No, we have not felt that. Today, I have met brother Masud Barzani, president of Kurdistan, and he stressed his complete support for and satisfaction with Dr. Barham Saleh.

[Asharq Al-Awsat] Are you optimistic about Saleh chairing the government?

[Talabani] We are optimistic about this government. Dr Barham is clever, effective, active, and broadminded. He has very good capabilities, and I believe that he will employ them for making the duty now commissioned to him succeed.

[Asharq Al-Awsat] The Kurdistan parliamentary elections resulted in the emergence of tangible opposition represented by the Change Group headed by Nawshirwan Mustafa. What is your assessment of this opposition?

[Talabani] The fact is that this is the result of a split in the PUK. These differences have existed within the PUK for a number of years, differences in policies and stances. However, we were able to preserve the internal unity of the party by offering concessions, privileges, and reconciliations.

However, we reached a stage after which it was not possible to continue, and hence a number of leading members of the PUK split. This has led to the formation of a tendency called the Change Group. In the beginning there was some kind of confusion and reshuffling of the cards, as those who split did not announce that they were outside the PUK, but they claimed that they were the reform wing of the PUK and presented themselves as such. They even wanted to sue me because they were removed from the leadership responsibilities in the PUK, and they issued a statement against me in the name of the reform leadership of the PUK. Thus some of the people who wanted reform became confused, and they believed that if this reform were to come from within the PUK this would be better. This confusion led many members of the PUK to vote for them; however, after it was shown that their claims were not true, hundreds of leadership cadres and thousands of the grassroots, even entire regions, returned in their entirety to the PUK. Other than that, the slogan of change is tempting and desirable. We have not denied the importance of change, but who can undertake it? We believe that the fundamental change ought to be undertaken by the two principal parties (the PUK and KDP); anyone else cannot undertake the change, as he can only shout (scream). This is what time proves clearly every day. Anyway, this is not the first split in the PUK; this is natural, but whoever split has returned to the party.

[Asharq Al-Awsat] Did you meet Nawshirwan Mustafa and talk to him before the elections?

[Talabani] Yes I met him, and I said to him at the penultimate meeting: If you want to form a party or a tendency, we are prepared to help and support you; this is your right, and if you want the situation to end in a good way, as we have worked together for long years, and if you want the split to take place in an amicable way, you may withdraw and form your own organization. He said: No, I do not want to form a party, but I want reform; and you alone (Talabani) can undertake the reform. I said: I alone am the one who can undertake reform?! He said: Yes. I said: Then, I will begin the reform, and I want your support for this process. He said: Yes, I support you.

We sent him the first plan of reform, he added to it, amended it, and returned it to us after he approved it. We presented the plan to the Political Bureau, and waited for the convening of the political conference, and he supported these steps. Unfortunately, at the end they split in a hostile way, and focused their attack on the PUK. Through their miscalculations, they tried to destroy the PUK, but our party was not destroyed. Despite all this, we consider this split as a natural occurrence that takes place in political organizations.

[Asharq Al-Awsat] As the secretary general of the PUK, do you consider Nawshirwan Mustafa as someone who opposes or as someone hostile?

[Talabani] He is hostile to the PUK, and he opposes the government of the province and is hostile to it. Nawshirwan Mustafa does not believe in the concept of coalition; he wants an independent Al-Sulaymaniyah Governorate, an independent Dahuk Governorate, and also an independent Arbil Governorate that are linked in a sort of decentralized way to Baghdad.

[Asharq Al-Awsat] You have said that leading members had split from the PUK, and then returned. Do you think that Mustafa will return to the PUK?

[Talabani] In the last conference we decided that they should not return, and we severed the link with them, because we suffered a great deal because of them and their disputes for long years.

[Asharq Al-Awsat] It is well known about your wife, Mrs. Hirokhan, that she does not appear as a leading member, and she prefers to work behind the scenes in her charities for children and women. This is despite the fact that she struggled with you in the mountains all along the years of the Kurdish revolution. How was she chosen an official in charge of the party organization in Al-Sulaymaniyah?

[Talabani] I have not intervened at all in this issue, and I did not discuss it with her. However, the comrades at the party's Political Bureau - especially brethren Mullah Bakhtiyar, Dalir Sayyid Majid, and others in the leadership - talked to her and convinced her to accept this mission despite her reluctance. She became convinced after they talked to her; therefore, she accepted this mission on the basis of the circumstances of the PUK. Our party presented, and still presents female leading members; we are at the forefront of the parties that appoint female ministers, and we have a minister in Baghdad, Minister of Environment Nirmin Khan.

[Asharq Al-Awsat] How do you assess your relations with the KDP?

[Talabani] Our relations with the KDP are more than distinguished, and my relations with brother Masud Barzani are more than excellent. We are pursuing the consolidation of these relations, and their transfer from the leadership to the grassroots of both parties; Together with brother Barzani we have decided to form a committee soon to undertake this mission.

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Ismail thanked: the Finance Committee did not reach a final decision on the public budget

Vice President of the Finance Committee Ismail thanked the Kurdistan Alliance, "said the Finance Committee in the Iraqi parliament failed to reach a final decision on the general budget for the current year."

It was due to the House resumes its discussions on the budget in a meeting on Sunday but it turned into a consultative meeting for lack of a quorum for such meetings.

He thanked in contact with the agency and the independent press (Iba) today, "said the parliament had Iqrw the second reading of the draft budget, but this will then be taking notes from before the House and find some transfers from door to door and then the final decision on approval."

Some blame the House of Representatives and through press statements, the delay in approval of the draft budget due to the failure of the government of sending the project since the period of time sufficient.

He thanked the "there are many important laws the Board completed the discussion and need to vote, stressing that the delay due to the lack of a quorum of the many special occasions." He said.

Some of the House of Representatives and through press statements, have declared that the question of approving the budget, Assembly will be during the next two weeks before the end of this month."

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