KTFA:

Samson: Once Again, Oil Prices Have Risen In Global Markets

25th February, 2022

Oil prices jumped nearly 3% on Friday as Russia’s invasion of Ukraine stoked global supply fears as markets brace for the potential impact of trade sanctions on crude-exporting Russia.

Global benchmark Brent crude rose $2.72, or 2.75%, to $101.80 a barrel around 0347 GMT on Friday, after climbing to a high of $101.87. US West Texas Intermediate (WTI) crude touched a high of $95.64, and it last rose $2.70, or 2.9%, to $95.51 a barrel. The attack on Ukraine sent prices above $100 a barrel for the first time since 2014 on Thursday, with Brent crude hitting $105, before paring gains as trade closed.

The massive Russian offensive by land, sea and air was the largest attack on a European nation since World War II, driving tens of thousands of people to flee their homes. “Asian buyers, who were clearly nervous over the weekend, piled into oil today which sent prices up again, aided by reports of explosions in Kiev,” said Jeffrey Haley, senior market analyst at OANDA.

 “The situation in Ukraine will help keep prices high, as well as the threat of disruption, real or imagined, coming in an environment of already strong demand and tight supply globally… I think Brent will now trade in the $90-110 range. over the next few weeks.”

In response to the invasion, US President Joe Biden hit Russia with a wave of sanctions on Thursday, measures that have hampered Russia’s ability to do business in major currencies along with sanctions against banks and state-owned companies. Read more

Britain, Japan, Canada, Australia and the European Union also revealed further sanctions on Moscow, including a move by Germany to halt an $11 billion gas pipeline from Russia. Read more A US official said its sanctions “are not and will not target oil and gas flows”, but oil prices remain high.  LINK

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Samson:  Is “Swift Code” confusing the global financial system?

20th February, 2022 by Ahmed Mostafa

If you go to the bank with your bank account to transfer funds, either within the same country or abroad, you will be asked for a “SWIFT” number. That is the relationship of individuals and companies to this global system

The countries that do not participate in the “SWIFT” system simply cannot deal financially with the outside. This is the basis for the fact that international and US sanctions on Iran made it unable to trade or financially deal with abroad because it was banned from the “SWIFT” regime.

 This is what the United States and the West threaten Russia with if it invades Ukraine, as banning Russia from the “Swift” system will mean its inability to export its oil, gas and other products or to deal financially with the world

What is the SWIFT system, does it have alternatives, and what is its impact on the global financial system and the transactions of individuals, businesses and countries?

SWIFT stands for Society for International Interbank Telecommunications, an encrypted electronic system exclusively used by members to exchange messages for financial transactions and services between banks and financial institutions around the world. The system does not maintain any financial assets and has no capital other than its annual operating budget, which comes from members’ subscriptions and simple fees

The system is a closed computer program developed for the benefit of the founders more than half a century ago and is constantly being developed. The system allocates a code consisting of between 8 and 11 characters, and perhaps letters and numbers that represent an exclusive identification for each bank or financial institution participating in it with its country, and perhaps also its branch in this or that country

History of “Swift”

Before the SWIFT system, banks and financial institutions used telex in their correspondence regarding their dealings with each other and with their customers. But the latter had many drawbacks, including very slowness and complete insecurity, as its dealers had to use detailed messages about each transaction. He also had many problems due to human errors in encoding or decoding messages due to their length and many details

According to the London School of Economics, the code system was not used in the Telex system either, which distinguished the “Swift” system. Regarding the history of “Swift”, the university says, “Supporting a common network of transactions took institutional form when 6 banks in the European Finance Association in Luxembourg and Paris at the end of the 1960s established the letter-exchange project.” In 1973, 239 banks in 15 countries participated in the launch of the “SWIFT” system, and in 1977 the number of subscribers reached 518 banks in 22 countries

The system began as a network with quick messages about payments, that is, money transfers in bank accounts. Then it developed continuously to include almost all financial transactions of different banks and financial institutions, whether between them or from the accounts of individuals and companies in them, in addition to providing other services

There are currently more than 11,000 subscribers to the system from around the world. Swift continues to grow annually, and in 2020, it handled about 35 million messages per day. The volume increased in 2021 to reach 42.5 million messages per day, an increase of 9.8 percent over the previous year

At first, the SWIFT system served mainly currency and treasury departments, but then expanded to include banks, brokerage and trading companies, asset management companies, financial discount institutions and departments, currency companies, corporate transaction institutions, the currency market and treasury, foreign exchanges and stockbroking

The importance of “Swift”

Although it is not the only system for exchanging transaction messages between banks and financial institutions, the “SWIFT” system is completely dominant so far and it is difficult for any country or institution not to be involved in it as long as it deals financially with another.

 There are other financial message exchange systems such as Fedwire, the Federal Reserve Network, Ripple and CHIPS, the interbank discount management payment system. However, the use of these systems remains limited compared to the “Swift” system

Half of the operations that take place through “Swift” are still related to payments and remittances, and the proportion of “Swift” daily messages is about 50 percent. And 47 percent of transactions through the system are related to insurance and credit guarantees. The rest is for services and other transactions such as currency exchange, trade transactions and system related matters

It can be said that, currently, a financial transaction cannot take place around the world without the use of the “SWIFT” code, and therefore no country can be outside the system, otherwise it will not be able to trade, borrow, invest and other financial transactions in the international financial system

As a result of the long history of transaction messages around the world, the system has a huge archive of information and data that it is impossible for any subscriber (even if it is a country and not just a bank or financial company) to deal with it on paper or even handle its storage and operation manually

The operation of the system is funded mainly from the subscriptions of its members, as the member pays a one-time subscription fee in the beginning, in addition to an annual fee to support the continuation of the system. Subscribers are classified according to their share in the system, and fees are calculated based on the volume of their transactions that use it. Swift also receives a small fee for each transaction, which is also determined according to the volume of transactions of the participating bank or institution and its use of the system

With the increase in the volume of the system’s information and data for a long historical period, “Swift” developed to provide services to its members such as information, financial data and analyzes, as well as the service of estimating the subscriber’s status and his commitment to the rules and regulations  LINK

Samson:  Zain Cash announces the provision of money transfer services to more than 200 countries soon

24th February, 2022

Zain Cash announced the signing of an agreement with the international company Western Union, which specializes in transferring money around the world and in various currencies, to provide international money transfer services to Iraqis, enabling them to transfer and receive money through a global network that extends across more than 200 countries. around the world.    

The company said in a statement, of which “Nass” received a copy (February 24, 2022), that “Zain Cash is the first electronic wallet that allows its current and new customers to benefit from Western Union services in its application on mobile phones in Iraq.”  

The statement added, “Zain Cash is currently processing more than one million financial transactions per month, and this process is witnessing a significant increase. Zain Cash provides money transfer services, bill payment, physical and virtual MasterCard and Visa cards, government bill payment, in addition to digital goods and payments. Online, and now, you will provide international money transfer services through Western Union.”  

The statement indicated, “With the addition of Western Union transfer services, Zain Cash will have the opportunity to fulfill subscribers’ requests regarding the service of transferring and receiving money to and from their loved ones and friends through a secure, easy and fully digital experience. Users will be able to access this service through an application Zain Cash on the mobile phone available on iOS and Android.  

The statement continued, “Zain Cash, the leading mobile payment company in Iraq, is distinguished by its network of more than 8000 cash deposit and withdrawal agents, which spreads and serves in various regions and governorates of Iraq and is constantly growing.”  

According to the statement, Yazan Al-Tamimi, CEO of Zain Cash Iraq, stated that “Zain Cash has always adopted an innovative and creative approach to promoting financial inclusion and developing simple solutions that provide the Iraqi community with access to financial services in a fast, efficient and easy way. Through this agreement with Western Union, this complex process has now become much easier for millions of Iraqis, as through a simple process on the Zain Cash app, they can send and receive international money transfers instantly in a secure manner.”  

Hatem Suleiman, Western Union Regional Head for the Middle East, Pakistan and Afghanistan said: “We are proud to collaborate with Zain Cash, to provide users with the speed, security and ease of transactions they expect to transfer money across borders. We are also pleased to achieve our goal and help users move money in different currencies and across borders.”

The statement continued, “Existing Zain Cash users after the completion of the technical interconnection between the systems in the second half of 2022, or new users who can register for a Zain Cash account within minutes, will be able to immediately make international transfers. The Zain Cash wallet will provide subscribers with the ability to check the status of their remittances through the app.  

The statement pointed out that “the Zain Cash application is useful not only for individual users, but also for small and medium enterprises, companies, public sector bodies and non-governmental organizations. They will be able to conduct their financial transactions on the Zain Cash application with ease and transparency.”  

Al-Tamimi concluded: “Zain Cash is firmly and firmly committed to the Iraqi society, and we focus on providing an important role in the social and economic development of Iraqi society and leading the process of comprehensive adoption of electronic payment solutions.”  

The company indicated that “Zain Cash” won the “Best Innovation in the Telecommunications Sector” award and was nominated for the “GLOMO” Global Mobile Awards 2020, presented by the Global System for Mobile Communications (GSMA), for “Best mobile innovation that supports emergency or humanitarian situations.”  LINK

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Samson:  Iraqi optimism about economic gains after exiting from Chapter VII

25th February, 2022 Muayyad Al-Terfi (an Iraqi reporter)

Iraq succeeded in turning the last page of the UN Security Council resolutions related to the invasion of Kuwait in August 1990, which consisted in closing the compensation file and removing it from Chapter VII of the United Nations Charter after paying more than 52 billion dollars

Removing Iraq from the list of Item VII represents an important step for the return of the Iraqi file to Iraqi sovereignty again after it was subject to the United Nations and the international community in managing its financial revenues, in addition to starting soon to cancel the procedures for freezing Iraqi funds, whether they were seized after the invasion of Kuwait or after the fall of the regime. Saddam Hussein

The Central Bank had announced in December of 2021 that the last remaining installment of the State of Kuwait’s compensation, amounting to 44 million dollars, had been paid, so that Iraq would complete the payment of the full amount of compensation approved by the United Nations Compensation Committee of the UN Security Council, pursuant to Resolution 687 of 1991

Resolution No. 705 obliges Baghdad to pay $52.4 billion to individuals, companies, governmental organizations and others, who have suffered direct losses as a result of the invasion and occupation of Kuwait, and by paying this amount, Iraq fulfilled its most important international obligations that qualify it to exit from Chapter VII of the Charter of the United Nations, which stipulates taking Coercive measures” in the event that peace is threatened, ranging from economic sanctions to resorting to force, and Chapter VII allows exerting pressure on a country to compel it to abide by the goals set by the Security Council, before coercive measures are applied

Exit after 31 years

Iraqi Foreign Minister Fouad Hussein announced his country’s exit from Chapter VII procedures, after paying all of its financial obligations, and confirmed that Iraq is no longer required to pay any additional financial sums in the future. United Compensation said, “Iraq today turns an important page of its history that lasted more than 30 years,” noting that “Iraq seeks to strengthen cooperation frameworks with the international community,” and Hussein added that “Iraq has paid the last payment in accordance with its financial obligations and paid the full amount of compensation.” obligatory,” stressing that “it is no longer required to pay any additional sums of money in the future,” and explained that “the government considers the full fulfillment of its international obligations towards the international community and the sisterly State of Kuwait as a major development,” noting that “Iraq sought to complete this unique model to remove Iraq from Chapter VII procedures

Fulfilled his obligations

Adviser to the Prime Minister for Economic Affairs, Mazhar Muhammad Salih, said, “Iraq has ended the file of compensation for the Kuwait war,” noting that “with this, Iraq paid all its obligations imposed on it under Chapter VII of the Charter of the United Nations and relevant Security Council resolutions in 1991,” Salih added. That “the compensation file cost Iraq from the gross domestic product and the efforts of its economy about 52.4 billion dollars,” explaining that “this amount is not small, and it cost the Iraqi daily from six to seven million dollars,” and Saleh pointed out that “the value of these funds from Iraq’s exports. The current amount of more than two billion dollars annually will be added to the budget of the Republic of Iraq and will block one of the exchange doors

Multiple benefits

For his part, the researcher in political affairs, Aziz Jabr, said that Iraq’s fulfillment of its obligations towards the United Nations resolutions to compensate Kuwait helped to remove Iraq from Chapter VII, which would bring political and economic benefits to Iraq and would cancel the international trusteeship of its money, and Jabr added that as a result of a commitment Iraq pays compensation, it was removed from Chapter VII, as the state that is within this charter is weak towards the international community and has no value, pointing out that the sovereignty of states under Chapter VII is broken and at any time someone can claim that he has been subjected to some kind of pressure and aggression

Jabr indicated that Iraq’s fulfillment of its obligations to Kuwait’s compensation and its exit from the penalty of the seventh country will mean a better future for relations with the countries of the world, in which there is a kind of equality and mutual respect, pointing out that this matter opens wide doors for investment and the development of Iraq’s international status, and the Iraqi passport will enjoy an advanced sequence, and he added that the decision the UN was issued with the cooperation of three powers: Iraq, Kuwait, and the United Nations, and it is an exemplary cooperation, and therefore the money that was placed in the Kuwait Compensation Fund can be invested inside Iraq, and this will be the responsibility of the government, stressing that the UN resolution has cut off all claims for new compensation

Debt file

The head of the “Future” Foundation for Economic Studies, Manar Al-Obaidi, pointed out that Iraq will reap the fruits of ending its international obligations in liberalizing the restrictions of Iraqi banks.

From the cause of the seventh item,” pointing out that Iraq has debts estimated at $28 billion, part of which was in the eighties of the last century and other new debts, including in 2014, as well as bonds due for payment in 2023, and Al-Obaidi explained that Iraq’s exit from the seventh item will have clear results in the recovery of the banking sector after the lifting of sanctions on this sector, which will lead to the stability of the monetary situation, especially in light of the high reserves and banking transactions with foreign banks, pointing out that dealing with these banks will be easier, which will contribute to the development of the banking sector, and thus the development of the economic sector

The assets of the Central Bank of Iraq until the end of 2021, according to a report by the bank, amounted to more than 150 trillion Iraqi dinars, up to (100 billion dollars), including the cash reserve, which amounted to about 64 billion dollars, an increase of 19 percent compared to the end of 2020. The highest central bank since 2005, rising from 30 trillion Iraqi dinars in 2005 to 150 trillion Iraqi dinars at the end of 2021

Oil sales

Al-Obaidi added that the cash for selling oil will be transferred through Iraqi banks instead of the US Federal Bank, and since the launch of the Oil-for-Food Program in 1997, Iraqi oil revenues have been subject to international monitoring before this monitoring was lifted after the fall of the previous regime and placed in an account with the US Federal Bank.

He is protected by the US administration from continuous compensation claims from various parties that talk about its damages due to the invasion of Kuwait  LINK