KTFA:

Samson:  The end of the oil age ... a report that predicts a bleak future for the Arab world

18th July, 2020

A report by the British "Economist" magazine expected the end of the era of oil in the Arab countries, which is witnessing an unprecedented crisis due to the drop in crude prices caused by the repercussions of the Corona pandemic

The magazine's report, which deals with economic affairs, dealt with the conditions of Arab countries as well as Iran, in light of the decline in demand for crude and the effects of this on the budgets of these countries, which began to shrink by little. The report cited an example in Algeria, which said that its budget needs to reach the price of a barrel of oil to about $ 157 in order to recover, compared to Amman, which is relatively better, but it also needs to reach prices to $ 87 a barrel

As for Kuwait, expectations indicate that the percentage of deficit in its budget for this year may reach 40 percent, while Iraq faces an acute crisis as a result of low revenues and the possibility of the government resorting to reducing employee salaries in order to face the crisis, according to the report. The report notes that the situation is not very different in Saudi Arabia, which was "severely affected" by the drop in oil prices and the Corona pandemic, which forced it to impose new taxes and use part of its financial reserves to cover spending

On the other hand, the impacts are expected to be less severe for Qatar and the UAE, because they have huge sovereign wealth funds. However, the report suggests that the Gulf Cooperation Council countries will deplete their reserves of two trillion dollars by 2034, according to the expectations of the International Monetary Fund

The consequences will not be limited to the oil states, as the Economist magazine report sees that the neighboring Arab countries, such as Egypt, Jordan and Lebanon, will be the most affected by the low imports of the countries of the oil region

. And he confirms that these countries will feel pain as well, because they have long relied on their oil neighbors to operate their citizens. He adds that the value of financial transfers amounts to more than 10 per cent of the gross domestic product in some countries, in addition to that it is one of the largest beneficiaries of trade exchange, tourism and investments coming from oil countries   LINK

Samson:  The Iranian riyal marks a new historical collapse

18th July, 2020

The Iranian riyal recorded a new historical collapse in today's transactions on the black market, with the exchange rate reaching 250 thousand riyals per dollar.

It is noteworthy that the economic repercussions worsened in Iran with the continuation of the US sanctions and the pandemic of the new Corona virus.   LINK

*************

Samson:  Iraq is blacklisted by the European Union - Big problem, such as the accusation of money laundering, cannot be faced with appeals from the Ministry of Foreign Affairs

18th July, 2020

The Central Bank of Iraq is silent and we have not heard of any comment. The file must be dealt with in a professional manner before Iraq requests that its name be removed from the list

 Imposing restrictions on money transfers to and from Iraq, which hinders the flow of funds necessary for investment.  No soft loans from the International Monetary Fund, monitoring all financial transfers to and from Iraq, low investment companies’ business to expose them to extortion.  These are the most prominent "gains" of Iraq, after being placed by the European Union on the list of high-risk countries in money laundering and terrorist financing! How can Iraq get out of this list?

Let's start from the beginning of the story.

We say ... the situation in Iraq has become threatened with economic collapse after being placed by the European Union on the list of countries that lack international standards to prevent money laundering and combat the financing of terrorism. This is not new to Iraq, as the European Union previously put Iraq on this list since 2016, and the European Union has tried to help Iraq out of this list after the Union helped in 2018 lift the sanctions that were imposed on it.  Instead of Iraq benefiting from this positive step to improve its image and economic situation in front of the world, it has been pushed into projects tainted by corruption in addition to the continuation of the currency auction, which the European Union considers a broad window for money laundering, so the European Union renewed Iraq’s fixation in this list within its latest version in July 2020.

It is true that Iraq moved diplomatically in the recent period to remove its name from this list, when the Iraqi Foreign Minister Fuad Hussein called his German counterpart Haikou Maas, who will head the European Union this week, asking him to make efforts to remove Iraq from the list of high-risk countries in money laundering and terrorist financing. But ... such important issues cannot be solved by phone call, as happens in Iraq when a criminal is released by phone call, or when someone is assigned to an important location by phone call as well, since this file must be dealt with in a professional manner, there are specific requirements And fixed standards for Iraq to adhere to before it requests the competent authorities to remove its name from this list.

But a lord of questioner says what does it mean to place Iraq on this list. We say that this does not only mean placing restrictions and monitoring financial transfers to and from Iraq, but also the difficulty in obtaining financial grants and soft loans from the International Monetary Fund, at a time when Iraq became in great need For such loans to pay the salaries of his employees is nothing but.

It is true that the foreign and finance ministries moved "a little" to end this file, except that specialists confirm that this file can be resolved through the Central Bank of Iraq, which has remained silent about this file and we have not heard any comment from it, especially since the European Union considers the Central Bank not to adhere to professional standards in dealing with the currency auction that allows money laundering Significantly, as the European Union knows very well that Iraq imports annually about $ 60 billion worth of goods, and knows that the volume of import from Turkey is about $ 19 billion, and from Iran it is about $ 18 billion and much smaller amounts are imported by it from China, Jordan, the Emirates and Saudi Arabia, so The European Union is asking about the rest of the sums that go out of Iraq under the pretext of import, but they disappear in Arab and foreign banks without entering any imported goods, which is considered an indication of money laundering, especially since the Lebanese financial crisis revealed the existence of billions of dollars resulting from the sale of oil. Kurdistan region in the Lebanese banks without knowing it the federal government in Baghdad!

Putting Iraq on this list will reduce many investment opportunities, especially as investment companies are exposed to multifaceted blackmail by militias that take royalties from companies that the European Union considers unprotected as a result of this blackmail.

It can also be said that the position of the European Union in Iraq on this list is not a punishment as much as it is imposing restrictions on financial transfers to and from Iraq, which will disrupt the flow of funds necessary to develop investment within the country! As per the laws of the European Union, banks, other financial companies and tax companies are obligated to have more careful scrutiny towards their customers who have dealings with the countries on the list, and as a result of Iraq’s inclusion in the list, banks and other entities covered by the EU’s anti-money laundering rules will have to apply Increased checks on financial operations that include customers and financial institutions from these “high-risk” countries in order to identify any “suspicious” financial flows.

Placing Iraq on this list will seriously damage its financial and political reputation, as it will affect its current credit rating from B- to C- or C + or other lower ratings and this will entail significant costs, as it will be difficult for Iraq to obtain credit or international loans or From international institutions granting concessional terms.

Also, according to this European decision, the conditions will be harsh for the loan requested by Iraq and approved by Parliament from international institutions, and it is expected that the interest rates and guarantees required will increase and the grace period for repayment will be reduced, as it will be difficult for Iraq to schedule its debts, all of these matters will result from a lowering of the credit rating.

We say that the Iraqi Foreign Minister’s appeals to his German counterpart to make efforts and remove Iraq from this list will not help, as the European Union has for years been Iraq is the largest country that laundered money abroad, and money laundering operations that have been carried out during the past years can be estimated between 250 to 350 billion almost dollars, and this rounding in numbers is due to the lack of information or transparency.

Iraq must take effective and positive steps if it wants to get out of this list. First, it must take effective measures towards combating the money laundering and terrorist financing process and demonstrate its restriction to the militias they are talking about and neutralize its activity, as the Foreign Ministry’s “objections” will not produce a result, unless The currency auction, which is the largest window for smuggling and money laundering, stops.

And if Iraq wants to get out of this list, we can say that there are specific requirements and fixed standards, which Iraq is required to abide by to get it out of this list, there are periodic legal issues by the European Union that clarify these standards and requirements and this matter requires Iraq to allocate professional and specialized people to follow This matter and communication with the legal and financial authorities in the European Union and their dialogue in detail to identify these requirements and raise Iraqi standards in the financial and legal aspects in order for Iraq to come out of this list.

Prior to that, and as a gesture of goodwill on Iraq, stopping the currency auction and neutralizing the work of the militias that threaten and blackmail investors, and work in all transparency with its financial dealings with countries of the world, and only thus can Iraq get out of this list, will Iraq be able to do that?    LINK

Samson:  Al-Maamouri asks civil aviation: What is the truth about our loss (2) billion dollars annually

18th July, 2020

The head of the Alliance Walkers in Diyala governorate and a member of the Parliamentary Services and Reconstruction Committee, Burhan Al-Maamouri, today, Saturday, addressed a parliamentary question to the President of the Civil Aviation Authority regarding a number of issues, the most important of which is the fact that Iraq lost (2) billion dollars annually due to lack of control over foreign transport funds.

Al-Mamouri said in a statement that "based on the constitutional powers under Article (61 / VII / A) and Articles (۲۷ / Second and ۲۹) of the House of Representatives Law and its Formations No. (۱۳) for the year ۲۰۱۸ and Articles (50 and 51) of the internal system of the House of Representatives we directed A parliamentary question to the President of the Civil Aviation Authority, indicating that "an official letter has been sent to inquire about the measures taken on a number of issues."

He added that "the parliamentary question included inquiring about the procedures of the Civil Aviation Authority about the fact of losing more than (مليار) billion dollars annually as a result of not controlling Iraq’s share of travelers," calling for "clarification of the reasons for these funds going to foreign carriers with the country's urgent need to boost revenue To support the state treasury. "

Al-Maamouri explained that "the parliamentary question came to inquire about the reasons for the failure of the European urbanization imposed on Iraqi Airways for many safety issues that are the responsibility of the Civil Aviation Authority as it is the one that gives licenses to air carriers and is responsible for safety conditions." He asked, "Why is this failure in this The file, which led to a great loss as a result of the suspension of the lines, as well as the result of contracting with a carrier from outside Iraq to be allowed to enter Europe? What are the procedures followed regarding contracts with the foreign carrier?

He pointed out, "The necessity of explaining the reasons for transferring the Rafha Line to Saudi Arabia, and the second line that was transferred to Kuwait, and these lines generate great resources for the country in great need," and asked about "the reason for the failure of the Civil Aviation Authority to open the door for negotiation for the purpose of returning them."

Al-Maamouri called for "the disclosure of the controls on which contracting and referral to the VIP lounge and parking garage at Baghdad International Airport and NAS Company for Ground Services and land contract for the southern Baghdad airport" were made, stressing "the importance of sending the answer within a period of two weeks from the date of notification of the parliamentary question". LINK

**************

Don961:  The new cash version

Saturday 18 July 2020  Dr.. In the name of Brahimi

Some have recently circulated a proposal to print the new currency or monetary issue, as it is called, in terms of possible solutions to address the financial crisis the government is going through as a result of the Corona pandemic, so can this proposal be implemented? What are the possible consequences if applied? .

In order to clarify the merits of the matter, we point out that the government, through the Ministry of Finance, has two main accounts (in addition to other accounts), the first in dollars in which its external revenues (from oil) are deposited, which constitute up to (95 percent), and the second in dinars, in which its local revenues are deposited (from taxes and fees And other returns) which are within (5 percent).

Thus, when the government wants to pay internal dues, it requests the central bank to transfer from its balance in dollars to its account in dinars, meaning that it buys the dinar from the central bank. The question is what if the financial balance is not sufficient to meet its requirements?

Before the issuance of the Central Bank Law No. 56 of 2004, one of the main solutions was to borrow directly from the Central Bank (overdraft) without the latter having the right to object, but after the issuance of the aforementioned law, this mechanism stopped, and the reason is that the law has prevented The central bank is able to provide direct debt to the government while allowing it to provide indirect debt by re-deducting government bonds in the secondary market, i.e. buying them from banks and not from the government, 

And that is within the framework of the independence granted by this law to the monetary authority, which aims to define the government borrowing process and not to use the latter this policy for political purposes and the issuance of more currency and consequently lower its value as a result of inflation resulting from the increase in issuance, meaning that the law was aimed mainly To prevent the improper use of religion.

Accordingly, the new monetary issuance process cannot be implemented before amending the law first, but if this is done, Iraq will lose one of the important achievements after the year 2003 which is the independence of the central bank, and this has a negative impact on the confidence of international institutions and organizations, and its consequences On the credit rating of Iraq, as well as dealing with those institutions and the ability to obtain financial and technical support, as this measure has negative consequences for the process of attracting foreign capital that we aspire to.

Away from all of that, the results that the cash issuance process can achieve do not differ from the indirect lending process initiated by the Central Bank a few days ago by re-deducting government bonds worth eight trillion dinars, but this process remains subject to the approval of the monetary authority and its appreciation of the actual need The size of the crisis and the need for government spending, which calls on us not to compromise the independence of the Central Bank, which is an important economic safety valve and the need to use specialists to deal with the crisis.    LINK