Friday Morning Iraq Economic News Highlights 2-17-23

Friday Morning Iraq Economic News Highlights 2-17-23

The Iraqi Government In The Face Of Money Laundering And Terrorist Financing.. Who Will Prevail?

Money laundering operations devoured much of Iraq's financial imports throughout the post-2003 years (Al-Jazeera)

Salah Hassan Baban  2/16/2023  During the past days, Iraqi Foreign Minister Fuad Hussein headed a high-ranking economic and banking delegation on an official visit to Washington, during which he discussed a number of files that were described as "important", including those related to the development and reform of monetary policy, and facing current challenges at the monetary and banking levels. What these measures reflect in terms of reforming the banking system by combating corruption and money laundering.

The United States also welcomed these moves on the sidelines of a meeting between Brian Nelson, Assistant Secretary of the US Treasury, and the Governor of the Central Bank of Iraq, Ali Al-Alaq, in Istanbul earlier this month.

The US official acknowledged Iraq's "unwavering" dedication to improving compliance standards to combat money laundering and terrorist financing, and offered continued cooperation in modernizing the banking sector.

Regarding his meeting with Al-Alaq, Nelson said in press statements that he came to discuss reforms in the banking sector, and ways to fulfill the mutual commitment to combating money laundering, and confronting the financing of terrorism.

Join Egmont

Among those positive steps is Iraq's recent accession to the membership of the "Egmont" group of financial investigation units, to enhance efforts to combat corruption and money laundering.

The group includes 167 countries, and works to facilitate the exchange of information on criminal records, money laundering and terrorist financing at the international level, by providing the office with a secure communications network with countries of the world, which contributes to following up the movement of funds internationally and strengthening financial investigation procedures, leading to the recovery of funds and assets.

Iraq's recent moves came after its local currency reached the brink of collapse, reaching its lowest record level against the dollar in 18 years, and its decline to about 1,700 dinars against one dollar in informal market exchanges early this month, due to the US sanctions imposed on it, which prompted the prime minister's government. Minister Muhammad Shayaa al-Sudani took an urgent decision to raise the value of the dinar to 1,300 against the dollar and approve it in the financial budget for the current year 2023.

Government Optimism

Optimistic that Iraq will join that group, Mazhar Muhammad Salih, economic advisor to the Iraqi prime minister, acknowledges that the country is in dire need of joining the Egmont membership.

He explained that it is "an international network that works to enhance communication and interaction between the financial investigation units in the world, which are represented at the national level by the Anti-Money Laundering and Terrorist Financing Office."

The Governor of the Central Bank of Iraq heads the Supreme Committee for Combating Money Laundering and Terrorist Funds, which issues regulatory regulations and related instructions, based on the Anti-Money Laundering and Terrorist Financing Law adopted by Iraq in 2015.

According to Saleh's statement to Al-Jazeera Net, the strengthening of cooperation ties between Baghdad and international compliance institutions requires that Iraq be an active member of the "Egmont" to create better international cooperation for the benefit of the country and the world in combating money laundering and related activities.

Iraq is an active member of the Financial Action Organization for the Middle East and North Africa region since 2004, which qualifies it - according to Saleh - to join the international group "Egmont", which is relevant and effective in combating money laundering.

Before 2003, Iraq did not know many money laundering operations, which began to intensify after the American occupation, and reached very high levels, especially with its association with “ illegal” activities that contributed to smuggling money outside the borders to be laundered and returned again in a “legitimate form” such as real estate. Or other in-kind holdings such as gold.

On the ground, Iraq's first steps to reduce this phenomenon came through the establishment of the Anti-Money Laundering Office in April 2007, whose tasks are summarized in collecting and analyzing information related to financial transactions, and creating channels of cooperation and interaction with the relevant local and international authorities to combat it.

The Iraqi government in the face of money laundering and terrorist financing.. Who will prevail? 44-3Mazhar Muhammad Salih believes that Iraq is in dire need to join the "Egmont" (social networking sites)

Iraq Losses

Money laundering operations devoured much of Iraq's financial revenues throughout the post-2003 years, but the scandal known as the "theft of the century", which wasted $2.5 billion illegally from a bank account of the Iraqi government and was laundered through private banks, is considered the largest case of corruption through money laundering in the country.

According to previous annual reports, international and local remittances were considered one of the most used tools for money laundering for the years 2019, 2020 and 2021. These figures appear to be somewhat identical with what a member of the Parliamentary Integrity Committee in the Iraqi Parliament, Representative Hadi al-Salami, spoke about Iraq's losses from money laundering operations.

And the Iraqi representative refers to one of those cases, which is that in 2020 only the Central Bank sold 40 billion US dollars in the currency auction, which is supposed to be matched by the same value of imports at 40 billion dollars, but its value amounted to only 14 billion dollars, and this means that the value of Corruption operations were estimated at $23 billion in the aforementioned year.

In 2021, the volume of the currency sold at the auction amounted to 30 billion US dollars, while the value of imports amounted to only 13 billion dollars, and the difference between them - according to Al-Salami - represents what Iraq loses in terms of money laundering and terrorist financing.

In his interview with Al-Jazeera Net, MP Al-Salami calls on the Iraqi government and the Central Bank to abide by the terms and laws of the international community to prevent smuggling of currency to prevent it from colliding with it in ways that it considers "inappropriate" in order to achieve the interests of the people.

Regarding the most prominent mechanisms that must be taken to amputate or limit money laundering operations, the member of Parliamentary Integrity stresses the need for a monetary policy for the Central Bank, and a financial policy for the Ministry of Finance, calling on the Central Bank to withdraw the licenses of banks involved in currency smuggling or money laundering through speculation. The same applies to some offices and companies.

The Iraqi government in the face of money laundering and terrorist financing.. Who will prevail? 22-5Representative Hadi Al-Salami calls on the Iraqi government and the Central Bank to abide by international laws to prevent currency smuggling (Al-Jazeera)

Modest Steps

On the possibility that the recent steps of the Iraqi government and the central bank to combat money laundering and terrorist financing operations will pave the way for more dollars to flow into the country, economist Dr. Kovind Sherwani says that these steps are "modest", and that they are still in their infancy, and may not rise to the level of ambition. required to achieve the expected results.

Sherwani infers his opinion from the continuation of the smuggling of hard currency, with a scarcity of it in the market, and this is what reinforced the unprecedented rise in its prices against the local currency.

And the economist indicates - in his speech to Al-Jazeera Net - that most of the money laundering and smuggling operations do not take place through transfers, which decreased by 70%, but rather take place in cash.

Regarding the impact of this on the stability of the local currency against the US dollar, Sherwani warns that the continuation of money laundering and smuggling abroad will increase the decline of the Iraqi dinar against the dollar, with its impact on the existing quantities of hard currency in the parallel markets with the continued demand for it.

Source : Al Jazeera   LINK

A Trip To Washington.. What Did The Iraqi Delegation Achieve By Visiting America?

Ahmed Al-Dabbagh  2/17/2023  Baghdad - Many questions are being raised about what the Iraqi delegation, headed by Iraqi Foreign Minister Fuad Hussein, went to the United States of America, accompanied by a high-ranking delegation that included the governor of the Central Bank and many officials.

The visit, which the Iraqi delegation began on the ninth of February, lasted more than 6 days and was marred by a lot of ambiguity, especially since the American Middle East Institute made it clear in a report that the administration of US President Joe Biden pressured the Iraqi delegation that visited Washington to push Baghdad towards Redirecting the Iraqi energy sector away from Iran, and dealing with accusations against the Iraqi banking sector that it is helping the Iranian regime to evade Western sanctions.

A trip to Washington.. What did the Iraqi delegation achieve by visiting America? 04-2The Iraqi Central Bank announced a few days ago the adjustment of the exchange rate of the dollar against the dinar to control the exchange rate in parallel markets (Al-Jazeera Net)

Mysterious Visit

About 3 months ago, Iraq witnessed a significant rise in the exchange rate of the dollar against the Iraqi dinar in the parallel markets, which prompted the Iraqi government to officially reduce the exchange rate of the dollar from 1460 to 1310 dinars per dollar to control the economic situation and avoid popular protests, which appears to be the Iraqi government It did not fully succeed in it, especially since the exchange rate of the dollar in the parallel markets is still around 1,530 dinars per dollar.

The ambiguity of the Iraqi delegation's visit to Washington was exacerbated by the press conference held by Iraqi Foreign Minister Fuad Hussein with his American counterpart Anthony Blinken, where the two parties in Washington talked about the importance of continuing the American-Iraqi relationship at all levels without going into details.

While the statement of the Iraqi Ministry of Foreign Affairs referred to the Iraqi minister's emphasis during the conference on the need to strengthen bilateral relations and joint coordination, as he said, "During the meeting, common views were exchanged on the most important issues related to bilateral relations, and the Iraqi foreign minister praised the United States' support for Iraq."

Yesterday, Wednesday, the Iraqi and American governments issued a joint statement of the US-Iraqi Higher Coordination Committee, which included a number of agreements and understandings, in which it stated that the Iraqi Foreign Minister and his American counterpart chaired a meeting of the Higher Coordination Committee, in accordance with the strategic framework agreement for the relationship of friendship and cooperation between the two countries signed in 2008. .

The statement touched on the support provided by Washington to Baghdad with regard to the financial and banking sectors, combating money laundering, climate change, Baghdad's relationship with the Gulf countries, and electrical interconnection, without addressing the details of the talks that brought the two parties together regarding the conditions of the US Federal Reserve and the application of the Swift system.

According to a report published by the American Middle East Institute, the Iraqi government was betting that Fouad Hussein and the Governor of the Central Bank of Iraq, Ali Al-Alaq, would be able to persuade the US administration to freeze or postpone the restrictions imposed by the US Federal Reserve on dollar transfers to Iraq, then the report returned and confirmed that Washington had not No promises are made in this regard.

A trip to Washington.. What did the Iraqi delegation achieve by visiting America?   Al-Shammari: The Iraqi delegation was unable to persuade Washington to stop the electronic platform of the Central Bank of Iraq (Al-Jazeera Net)

Behind The Scenes

It seems that the Iraqi delegation was unable to persuade the United States to stop the electronic platform of the Central Bank of Iraq or to postpone its work, according to what was revealed by the head of the Center for Political Thinking, Ihsan Al-Shammari, to Al-Jazeera Net.

Al-Shammari added that the United States informed the Iraqi delegation that it is ready to cooperate with Baghdad regarding the mechanisms of implementing the electronic platform and delivering the dollar to Iraq according to documents proving the end user of the American currency, in line with the “Swift” system, in addition to the need for the Iraqi government not to contribute to handing over the dollar to the Iraqis subject to it. to US sanctions.

The Iraqi-American talks did not stop at this point, according to Al-Shammari, who said that Washington discussed with the Iraqi delegation many issues related to the strategic framework agreement, and stressed the need to remove tension between Baghdad and the Kurdistan region and settle the oil and gas files between them, attributing the reason for the long stay of the delegation Iraqi in Washington for the thorny files that were discussed.

It is clear from the ambiguity that accompanied the Iraqi delegation's visit to Washington that there are recommendations for the Iraqi delegation to follow what is described as "media silence" and not to reveal the scenes of what was discussed behind closed doors, according to political researcher Raad Hashem.

Speaking to Al-Jazeera Net, Hashem explained that the Iraqi delegation discussed the economic and financial situation with regard to the dollar and the understandings with the US Treasury and the US Federal Reserve, explaining that "there may be a very specific deadline, not exceeding 3 months, for Iraq in order to prevent the smuggling of the dollar to all of Iran."

And Syria, Lebanon and Russia, in return for facilitating the supply of dollars to Iraq, while the electronic platform and the Swift system remain in operation without returning to the old system in the currency auction at all.

A trip to Washington.. What did the Iraqi delegation achieve by visiting America?   AFGhanem Al-Abed: Washington will determine the extent of its satisfaction with the Iraqi government by inviting the Sudanese or not (Al-Jazeera Net)

American Complacency

In the midst of the talk about the Iraqi delegation's visit to the United States, many Iraqi circles are wondering about the extent of American satisfaction with the Iraqi government headed by Muhammad Shia'a al-Sudani, who assumed his duties at the end of last October.

This question is answered by the researcher at the Roaa Institute for Studies, Ghanem Al-Abed, who explained that the United States did not give any hope to Baghdad to postpone work on the electronic platform in exchange for promises to support the Iraqi government in its relations with Jordan and the Gulf countries, indicating that this support will be according to conditions, and otherwise support will not continue. Washington to the Sudanese government, as he put it.

As for Al-Sudani's visit to Washington, which was long talked about, Al-Abed believes - in his interview with Al-Jazeera Net - that it is not known until this moment whether Al-Sudani will visit Washington soon or not, indicating that this visit will be the criterion for knowing the extent of American satisfaction, and that knowledge of this needs For more time, which may not exceed one month only, he said.

A trip to Washington.. What did the Iraqi delegation achieve by visiting America? A621cf8c-f782-4cdf-bae2-6aea3eab2b6fAl-Mashhadani saw that Washington's imposition of the Swift system is an opportunity for Baghdad to control dollar smuggling (Al-Jazeera Net)

Iraqi Opportunity

On the other hand, Professor of Economics at the Iraqi University in Baghdad, Abd al-Rahman al-Mashhadani, considered that Washington's imposition of implementing the Swift system on Iraq is an opportunity for the Iraqi government to control the file of dollar smuggling outside the country, which previous Iraqi governments did not succeed in.

In his speech to Al-Jazeera Net, Al-Mashhadani revealed that the Iraqi delegation did not intend to ask Washington to postpone work on the electronic platform, knowing that this was impossible, and that what happened with the US Treasury and the Federal Bank does not go beyond how to organize cash payments, monitoring and auditing, and how the Federal Reserve helps the Iraqi Central Bank to achieve stability.

Cash inside Iraq, leaving the determination of the exchange rate for the dollar in the custody of the Iraqi government, which undertakes the tasks of controlling the exchange rate and determining the value of the Iraqi currency.

Economically, Al-Mashhadani says, "The currency auction sales at the Central Bank of Iraq are now proceeding according to the normal situation, and that the continued reduction of the cash sale of the dollar will dry up the sources of smuggling, although it will lead to an increase in the exchange rate of the dollar in the parallel markets, taking into account that smuggling is still continuing in cash through Iraqi borders with neighboring countries.

Al-Mashhadani holds the Central Bank and Iraqi governments responsible for the monetary situation related to the dollar, especially since the US Federal Reserve had informed Baghdad about the necessity of working on the electronic platform about two years ago.

Attempts by the Al-Jazeera Net correspondent to communicate with officials of the Central Bank and the Iraqi government to comment on the visit and the understandings that resulted in it did not succeed.

Source : Al Jazeera   LINK