KTFA:

Samson:  An economist explains the importance of the Belt and Road Initiative for Iraq

4th July, 2022

The researcher in economic affairs, Nabil Jabbar Al-Ali, confirmed, on Monday, that the Chinese agreement is not related to the Silk Road project or the Al-Faw port project, indicating that the Chinese agreement is a contract on credit.  Iraq pays 20% in the form of oil payments, and Chinese institutions lend Iraq 80%. And its companies implement projects inside Iraq without competition.

Al-Ali said in a statement to "Al-Maalouma", that "Al-Faw port is a maritime transport project at a cost of approximately $3 billion, and it is a commercial port that cannot generate revenues of more than $1 billion annually, which is equivalent to approximately 1.5 percent of Iraq's oil revenues in working in conditions for its ultimate success.

He added that "the Chinese Belt and Road Initiative, or what is known as the Silk Road, is a large Chinese international investment project to implement Chinese investments in the field of international transport to achieve Chinese goals related to quick and less expensive access to goods manufactured in China to various parts of the world."

Al-Ali pointed out that “Iraq can be classified as a country that falls within the American and British influence, and China is trying to approach cautiously with Iraq, and China cannot rely on an international line under pure American control, as is the case in Iraq.”

He pointed out that "the Silk Road can create multiple commercial interests in Iraq, as well as in the field of transportation, transit and shipping. It can enhance opportunities for industry, storage, free trade, and free industrial zones, provided that the political will, a clear vision and policies are available."    LINK

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Samson:  Iraq tracks down traffickers with "black gold" to control millions of smuggled liters

3rd July, 2022

The Oil Products Distribution Company announced, on Sunday, the actual pursuit of fuel smugglers in all governorates of Iraq, in addition to following up and inspecting gas stations and monitoring cases of storage and smuggling carried out by the weak.

The assistant general manager of the company, director of the Inspection Authority, Ihsan Mousa Ghanem, told Shafak News Agency, "The concerned authorities (inspection, national security and the Joint Operations Command) have actually started the operation."

Ghanem added, "The smuggling operations took place in more than one governorate, including the Khamisiya area, the village of Ghazaliya, southwest of Babil, where a smuggling den was seized in which cars containing tanks with a capacity of five thousand to seven thousand liters and cars loaded with oil drums."

In Karbala, the official indicated that there are "joint duties in the province between the National Security Agency and the Ministry of Oil, represented by inspecting the province, where a smuggling den was seized in which tanks with a capacity of 1,000 liters contain gas oil in unknown quantities."

He explained that "the ministry approached all security authorities with the aim of cooperating with the ministry/oil products distribution company, to monitor the movement of petroleum products and prevent smuggling operations outside the stations or exploiting the quotas set for non-governmental stations."

Ghanem stressed that there was "great cooperation and work on the part of the security authorities, which led to the arrest of many traffickers, smugglers and the weak-hearted, and the seizure of dens selling and storing fuel outside the controls, whether in Baghdad or the provinces."

He added that "the inspection and security authorities are arresting the owners of tankers who violate the instructions for transportation and distribution and change the route of the vehicle," pointing out that strict measures are taken against anyone who tries to tamper with the national economy, as the ministry began implementing procedures to track fuel smuggling operations, especially that 6-7 million Liters go daily for smuggling.

Earlier, the National Security Agency had carried out a campaign to chase fuel smugglers and dealers, which resulted in the arrest of a number of oil derivatives smugglers and the seizure of violating stations in a number of governorates as part of a campaign it is currently waging to address the fuel crisis, while taking pledges from the owners of other stations within the mechanisms of dismantling the current crisis.   LINK

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Samson:  Iran lowers oil prices to compete with Russia in China

4th July, 2022

Bloomberg Agency reported, in a report published today, that Iran has begun reducing prices for its crude oil, which is already cheap, in order to compete with Russia in the market of China, one of the largest importers of oil in the world.

The agency said in the report that "China has become an important destination for Russian oil in light of the repercussions of the situation related to Ukraine, and this has led to increased competition with Iran in one of the few remaining markets for Iranian crude oil shipments, which has been significantly reduced due to US sanctions."

Russian exports to China jumped to a record level last May, as Saudi exports to this market exceeded, and in the mentioned month Russia topped the largest oil exporters to China.

In light of this, Iran has lowered oil prices to remain competitive in the Chinese market, but it is still maintaining strong flows to China, likely due to increased demand as China eases severe restrictions related to the virus, which has crushed consumption.  LINK

Samson:  Is Venezuelan oil flowing to the market in light of the energy crisis?

3rd July, 2022

It seems that the West's abandonment of Russian energy sources may constitute an opportunity for Venezuela, a member of the "OPEC Plus" alliance, to return to international energy markets, but it is still subject to US sanctions so far.

OANDA expert Edward Moya considers this a golden opportunity for Caracas to turn the page on its differences with the West, according to Agence France-Presse. "It is in Venezuela's interest to benefit from tougher sanctions against energy imported from Russia," the West's number one new enemy, Moya said.

On the sidelines of the Group of Seven summit in Germany, France called for "diversification of supplies" in order to limit the rise in energy prices due to the Ukraine crisis.

The price of a barrel of Brent North Sea, the benchmark for black gold in Europe, has jumped by 20 percent since the start of the Ukraine crisis on February 24, while the price of a barrel of West Texas Intermediate crude has risen by 22 percent.

Among the main factors for the rise is the Western embargo on Russian fuel, especially after the US embargo in March and a similar European decision in early June.

Craig Erlam of OANDA confirms that Venezuela can pump "a large amount of oil to the market fairly quickly", as it can quickly produce up to one million barrels, according to estimates by the "Swisscoat" company.   LINK

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Samson:  Russia accuses the United States of theft

4th July, 2022

Russian Foreign Minister Sergei Lavrov said on Monday that Moscow and Caracas agreed that freezing the foreign assets of various countries by the United States is outright theft.

Lavrov said during a joint press conference with his Venezuelan counterpart Carlos Faria after their talks in Moscow: "We have agreed that the US measures to freeze the assets of sovereign countries deposited in foreign accounts, is not an outright theft in the spirit of the Wild West, targeting regimes they do not like only, but it is also a flagrant violation." of the social and economic rights of citizens. 

He added that Moscow and Caracas "know how serious Washington is in its attempts, which it is still making, to undermine the foundations of the Venezuelan economy."

The Russian minister indicated that "it is already clear that these plans will not come true," explaining that "Russia will help Venezuela to resist this kind of pressure, and stressed Russia's readiness to support the efforts of the Venezuelan authorities to restore the situation inside and around the country to its normal course, as well as its readiness to continue cooperation with Caracas in the international arena.

For his part, the Venezuelan Foreign Minister affirmed his government's support for Moscow in the special military operation it is carrying out in Ukraine.  LINK

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Samson:  They continued to print currency until the state collapsed.. the worst case of inflation in history

4th July, 2022

Since man started using money, inflation has also been around; The currency fluctuates and prices rise and fall for several reasons, and in most cases this matter is controlled in one way or another.

But in some cases when the wrong economic conditions occur, things can spiral out of control very quickly and a country loses its ability to fully protect its currency.

Severe hypertrophy

Hyperinflation or hyperinflation is the term for extremely high and often rapidly accelerating inflation.

It usually occurs as a result of an increased supply of currency (ie printing more banknotes) in exchange for a significantly higher cost of basic goods. As the value of money becomes less, the goods become more and more expensive.

Fortunately, severe inflation is a relatively rare case, because the more stable currencies, such as the British pound, the US dollar and the Japanese yen, are seen as the most desirable currencies; Because it has historically held a record value relative to its value. However, the currencies of other countries were not so lucky. Here are the most serious cases of hyperinflation, how it began in the first place, and how it ended and the affected countries managed to recover.

1- The Great Inflation in Greece in 1944

In the fifth worst case of inflation ever, Greece in 1944 saw prices and the value of goods and materials double roughly every 4 and a quarter days.

Hyperinflation in Greece practically began in October 1943, during the German occupation of the country during World War II. However, the fastest rate of inflation occurred when the Greek government-in-exile regained control of Athens in October 1944; Prices rose 13,800% that month, and another 1,600% in November, according to CNBC News.

In 1942, the highest denomination of the Greek currency was 50,000 drachmas, but by 1944 the highest denomination was 100 trillion drachmas.

On November 11 of the same year, the government issued a renaming of the currency, converting the old drachma into a new one at a rate of 50 billion to one, yet citizens continued to use the British pound as de facto currency until mid-1945.

After the civil war in Greece from January to December. Britain intervened during 1945 and 1946 with a plan to stabilize the country.

The plan included increasing revenue through the sale of aid goods, adjusting set tax rates, improving tax collection methods, and creating a currency commission (made up of three ministers, Greek, British and American) to take on fiscal responsibility. By the beginning of 1947, prices had stabilized, public confidence had returned and national income had risen, extricating Greece from the spiral of hyperinflation.

The main cause of inflation in Greece was World War II, which burdened the country with debt, canceled its trade and resulted in four years of occupation by the Axis powers.

2. Germany's sharp inflation of 1923

In November 1922, Germany defaulted on its reparations payments. In response, Allied forces invaded the Ruhr Valley, one of the country's main industrial regions, and confiscated productive goods.

In response, the German government ordered a policy of "passive resistance", in which employees refuse to work or cooperate with foreign forces in exchange for the government continuing to pay their salaries. This payment was made by printing more money.

According to the Sky History website, this was initially supposed to be a temporary measure, as the occupation continued and with it more and more newly printed cash circulated.

Central banks used more than 30 paper mills and 133 companies to print bank notes. As a result, prices have skyrocketed.

For example, the price of a loaf of bread rose from 250 Reichsmarks in January 1923 to 200,000 million by November 1923. Also, the speed of the price hike led to workers receiving their salaries twice a day to keep up with that.

To appreciate that disaster more, the price of 500 billion eggs in 1918 in Germany was the same amount of cash needed to buy just one egg in 1923.

Rapid inflation caused the government to rename the country's currency, replacing it with a paper mark, at a value of 4.2 per US dollar. Although the reissue of the banknote effectively stabilized the Weimar Republic until 1933, hyperinflation and the resulting economic pressures contributed to the rise of the Nazi Party and Adolf Hitler.

3- Zimbabwe inflation between 2007 and 2008

Zimbabwe's economic system was in trouble long before the start of the period of hyperinflation in 2007; The country's annual inflation rate reached 47% in 1998, and it continued to collapse almost relentlessly until Zimbabwe's hyperinflation began.

By the end of the period of inflation, the value of the Zimbabwean dollar had eroded to the point that it had to be exchanged for various foreign currencies.

The problem began after Zimbabwe gained independence from Great Britain in 1980, when the government initially decided to pursue a series of economic policies characterized by fiscal prudence and disciplined spending.

This improvement did not last. By late 1997, profligate government spending began to cause problems for its economy. Politicians faced a growing number of challenges, including protests against high taxes and large payments to veterans.

The government has also faced resistance to its plan to take over white-owned farms to redistribute them to the country's black majority, Insider reports.

Consequently, the exchange rate depreciated, which led to a rise in import prices, which in turn led to hyperinflation. The country suffered from cost-push inflation, a critical economic condition caused by rising prices for labor or raw materials, or both.

Things got worse in 2000 after the government's agrarian reform initiatives hit the economy. Implementation of the initiative was weak and agricultural production suffered severely for several years. Food supplies were low, which led to higher prices.

The government's next step was to implement a tight monetary policy. At first it was considered successful; Because it slowed inflation, however, the plan had unintended consequences.

It caused an imbalance in the supply and demand for goods in the country, generating a different type of inflation called demand-pull inflation, which is the upward pressure on prices caused by a lack of supply.

Zimbabwe's central bank has continued to experiment with various ways to undo the destabilizing effects of its tight monetary policy. These policies were largely unsuccessful. By March 2007, the country was experiencing overall hyperinflation. Only after Zimbabwe abandoned its currency and began using foreign currency as a medium of exchange did the country's economic disaster diminish and gradually recover.

4- Greater Hungary inflation in 1945 and 1946

In 1944, the country became a battleground between German and Russian forces, destroying 90% of its industrial capacity. The Nazis plundered much of the kingdom's capabilities and returned it to Germany, or the Russians confiscated it as reparations.

With this total collapse of production capacities, prices have risen dramatically. In an effort to reduce this, the Hungarian authorities intensified the circulation of the bingo currency. As with Germany, prices skyrocketed as a result of that move, doubling roughly every 15 hours.

According to the History Hit, something that cost 379 pingos in September 1945 had become a trillion bingo by July 1946. As a result, the government had to effectively stop collecting taxes; Because the delay of one day in the collection wiped out the value of the revenue completely.

At the height of inflation in the Kingdom of Hungary, a study published by the aforementioned website estimated that the daily inflation rate was 195%, with prices doubling approximately every 15.6 hours, to reach a monthly inflation rate of 13.6 quadrillion percent.

The situation was so dire that the government adopted a special currency that was created expressly for tax and postal payments and whose value was adjusted every day by radio.

The bingo was eventually replaced later that year in a currency revaluation, but it is estimated that when the currency was replaced in August 1946, the total of all Hungarian banknotes in circulation was equal to one thousandth of a US dollar. Rather than trying to curb inflation by reducing the money supply and increasing interest rates—policies that would have burdened an already deteriorating economy—the government decided to channel new money through the banking sector toward entrepreneurial activities. The hope was that this would help restore productive capacity, infrastructure and economic activity.

According to Investopedia, the plan appears to have worked; Hungary had regained much of its pre-war industrial capacity by the time price stability finally returned with the introduction of the forint, the new Hungarian currency, in August 1946.  LINK