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Iraqi Dinar News

Here is the latest news regarding Iraq and their growth.  Also check out the new "History of the Dinar" in the About Iraq link!

These resources are provided so you can research for yourself the power and excitement that is being reported about Iraq's growth and increasing stability.

Department of State Weekly Status Reports
The Department of State issues weekly reports on the status of several key areas in Iraq such as essential services, power production and security. Prior to July 2004, the status reports were issued by the Department of Defense. They are available below as Adobe Acrobat PDF files. Most are approximately 200KB but some may exceed 1MB.  If you don't have Adobe Acrobat Reader you can install it for free here.
 Here is what the Department of State says about Investing in Iraq.
Here is a good paper on how the banking system works in Iraq : Payment in Iraq
And a good read about Iraq's request to join the World Trade Organization.
You can find what the going exchange rate for the Dinar is in Iraq by checking out the link to their bank.  They have daily auctions at the Central Bank of Iraq and post their results daily.


Iraqi Natural Resources News:

1.6 million barrels of oil daily: August 10, 2005 Iraq's oil minister Ibrahim Baher al-Oloum said that Iraq is to exporting 1.6 million barrels of oil daily in this phase, besides the local consumption estimated at 600,000 barrels daily.

Largest Ever Oil Revenues: August 8th, 2005 At the beginning of the news conference, the minister makes a statement on the Oil Ministry "recent achievements". "...The average increase in the production of liquefied Gas and gasoline was between seven and 10 per cent. As for gas oil and paraffin, the increase in July was between 18 and 20 per cent..."

Asked finally where the Iraqi oil revenues go, given the huge amount of oil sales and the poor conditions of the Iraqi people, the minister says: "God be praised, after the transfer of sovereignty to the Iraqis on 28 June of last year, I would like to assure you, as a person responsible for the oil sector, that all the revenues of the Iraqi crude oil are handled by Iraqis and go directly to the Iraqi development fund.

Iraqi Political News:

Iraqi Constetution On Track: June 28, 2005 Although Iraqi lawmakers acknowledge that drafting a permanent constitution is one of the biggest challenges facing the country, the team charged with producing the document are cautiously optimistic that they will complete the job on time.

Iraq Clerics Call on Sunni Arab Minority to Vote: July calling on members of Iraq's disaffected Sunni Arab minority to vote in coming elections and participate in the writing of a new constitution, a prominent Sunni leader said Monday.

Iraqi Financial News:

Credit Card's now in Iraq: June 29, 2005 Al Basra province (south of Iraq) has started dealings in commercial markets using Al Fayha credit cards, which is issued for the first time by the Iraqi central bank.

4 New Banks to Open in Iraq: July 7, 2005 - After the establishment of two new banks in Iraq, Iraqi investors announced the formation of two other banks. The four private sector banks have a combined capital of $100 million.

  IRAQ: Successful neighborhood watch in the north


Children in Sulaymaniyah have been learning about neighborhood watch.

BAGHDAD, 30 May house in the northern Iraqi city of Sulaymaniyah when he saw a person in a car acting suspiciously.

He called a public help line for the local security offices, explaining what he had seen. It turned out that his actions had just prevented a car bombing.

The help line is part of a neighborhood watch project initiated a year ago by Sulaymaniyah governance, some 381 km from the capital, Baghdad. Officials say that since the help line started operating, they have seen a 90 percent reduction in crime and attacks in the city.

"I can say it was one of the most efficient programs developed in the north. We are tired of the violence in the country and hope that democracy and peace come to us in its true meaning," Dinar told IRIN in Sulaymaniyah.

Callers can remain anonymous if they wish when asked for details by operators working at the call center which is based at a security center. Officials in the city are surprised at the sheer number of calls the help line is receiving.

"Every day we receive a minimum of 60 phone calls from Sulaymaniyah. Insurgency has decreased in the city as a result. I believe that this project will guarantee peace to our province," Lt. Col. Sagub Muhammad, a senior security officer told IRIN.

The center., equipped with 10 telephone lines, has 20 employees working to answer calls. Muhammad added they occasionally receive phone calls come from outside the city and can encounter difficulties in finding the exact location of the suspected disturbance, but added that they were employing more people to assist them with this.

"We will make Sulaymaniyah to the safest city in Iraq, we promise that," Muhammad stated.

Local people in the city said they have started to feel a difference in their lives and that everyone in the family joins in keeping a watchful eye.

"Every time a stranger's car stops near our house, my five-year-old daughter runs to the telephone telling me that we should call the security for our protection before the car explodes. Although she doesn't really understand entirely what this is about she is aware of keeping safe," Sulana Omar told IRIN.

According to Diller Mula, a senior official from the Ministry of Interior (MoI) in northern Iraq, officers taking part in the security programmer are being trained by specialized forces.

"At our check points which surround the city, anyone entering Sulaymaniyah receives information about this project and is suspicious incident. This city is turning out to be the safest in Iraq, free from the bloodshed that has taken place countrywide," Mula added.

A similar system was implemented in the capital, Baghdad in December 2004. However, people were too afraid of revenge attacks by insurgents and the scheme had not been as successful, officials said.


Trading Brisk at Iraqi Stock Exchange

Friday, May 20, 2005

BAGHDAD - It's not Wall Street, but it does have its moments. If the concept of buying low and selling high ever excited people, it excites them in Baghdad.

In less than one year, the newly formed Iraqi Stock Exchange has tripled its trading volume, with growth rates unheard of nearly anywhere else.

"The market since it's opening last year is doing very, very well," said Talab Tabuy, a trader. "Excellent, actually."

Tabuy is betting on companies like Baghdad Soda, Hader Marble and Thesar Agriculture. But the real excitement is over Iraq's banking sector, especially Basra Bank.

"When we choose to start our business here, demand was very high so we began just with 15 companies ... now we have about 88," said Taha Abdul Salam, CEO of the exchange.

In just the first seven months, nearly 14 billion shares have been traded, and the number is growing amid hopes foreign investment could drive the market even higher.

The trading frenzy has prompted key upgrades. A new facility is currently under construction about a block from the current location, and magic markers will be replaced by an electronic ticker and a much larger trading floor.



Iraq's First Democratic Government Sworn In

May 09,

Prime Minister Ibrahim al-Jaafari pledged to unite Iraq's ethnic and religious factions and fight terrorism during swearing-in ceremony of the nation's first democratically elected government. A listing of the Iraqi Transitional Government (ITG) Cabinet is available. For additional curricula vitae of ITG cabinet members Download this document in PDF format (PDF only).

Bush Welcomes Formation of New Iraqi Government

Created: 28 Apr 2005 Updated: 28 Apr
President says United States will continue to support Iraq's progress

President Bush congratulated the Iraqi Transitional National Assembly on its April 28 vote to confirm the proposed government of Prime Minister Ibrahim Ja?afari and expressed his confidence in the new government?s ability to meet the challenges of ensuring security, providing citizen services and drafting a new constitution.

?They ? have approved a list of Cabinet Ministers who will represent the unity and diversity of Iraq in the months ahead,? Bush said in an April 28 statement.

The Assembly approved Ja?afari?s 32-member Cabinet with 180 of the 185 members present voting in favor of the government.

The vote brings an end to nearly three months of political haggling between the parties that earned Assembly seats in Iraq?s January 30 elections.  Those elections gave Iraq its first democratic government in over half a century.

?Iraqi voters faced danger on January 30 in hopes of establishing a government that represents all Iraqis. Their hopes are now being realized,? Secretary of State Condoleezza Rice said in an April 28 statement.

Rice said it was not surprising that the process of forming a government had taken so long.

?The Iraqis haven't had what I would call horizontal conversations in many, many years because it has been a dictatorship,? she told NBC News? Rosalind Jordan April 27.  Rice said it was a ?helpful sign? that Iraqis were engaged in this sort of give and take over the distribution of government positions.

U.N. Secretary-General Kofi Annan?s Special Representative for Iraq, Ashraf Qazi, also welcomed the formation of the government and urged the Iraqis to unite behind the government?s work.

?The UN encourages all Iraqis to come together and to make the success of Iraq's historic transition to a united and prosperous constitutional democracy their highest priority,? he said in an April 28 statement.

President Bush affirmed that the United States would continue to stand by Iraq as it works to build a stable, peaceful and democratic country.

The Assembly will now turn to its primary task, that of drafting a permanent constitution to serve as a foundation for Iraq?s political institutions.  According to the provisions of the Transitional Administrative Law, the assembly has until August 15 to propose such a document, which will then be submitted for approval in a national referendum October 15.  If approved, the constitution will serve as the basis for a new round of national elections on December 15.

Following are the texts of the Bush and Rice statements:

Office of the Press Secretary
April 28, 2005


Iraq's Transitional National Assembly has voted by an overwhelming margin to confirm Ibrahim Ja'afari as Iraq's next Prime Minister.  They also have approved a list of Cabinet Ministers who will represent the unity and diversity of Iraq in the months ahead.  I join with all Americans in congratulating Iraq's new leaders and in wishing them well as they begin to serve their country in this new government.  I appreciate the dedicated work of the outgoing interim government, which has governed Iraq for the last ten months.

The Iraqi Transitional Government will confront important challenges in fighting terrorists and enemies of democracy, training the Iraqi Security Forces, and providing basic services to its citizens.  It will also lead the difficult and essential work of drafting a new constitution for a free and democratic Iraq.  The United States is confident that the new government will meet these challenges in the months ahead, and America will stand by Iraq, its leaders, and the Iraqi people as they continue their work to establish a stable, peaceful, and democratic Iraq.

(end text)

(begin text)

Office of the Spokesman
(Santiago, Chile)
April 28, 2005

Statement By Secretary Of State Condoleezza Rice

Iraqi Transitional Government

I congratulate Prime Minister Ibrahim al Ja?afari and his Council of Ministers on the vote of confidence they received today from Iraq?s Transitional National Assembly.  I also offer my sincere congratulations to the people of Iraq at this historic moment ? for the first time in generations, they have a democratically-elected government.  Iraqi voters faced danger on January 30 in hopes of establishing a government that represents all Iraqis. Their hopes are now being realized.

Iraqis now turn to the next stage in the transitional political process envisioned in U.N. Security Council Resolution 1546 and spelled out in the Transitional Administrative Law, the drafting of a permanent constitution that meets the needs of all Iraqis. Iraqis have our continuing admiration and full support as they begin this vital work, to produce a draft constitution by August 15, a referendum on the draft constitution by October 15, and an election for a new government by December 15, 2005.

The United States remains committed to doing all it can to support the Iraqi people, the Transitional National Assembly, and the Transitional government in their efforts to ensure democracy, prosperity, security and the rule of law.

Created: 28 Apr 2005 Updated: 28 Apr
Iraq wireless carrier Asiacell CEO to speak at Wireless Communications Association conference

Story Date: Monday, April 25th 2005
Human Abuamara -- CEO of Asiacell, a major wireless service provider in Iraq -- will deliver an address on June 30 at Wireless Communications Associaton (WCA) 2005, the annual conference and exhibition of the Wireless Communications Association International in Washington, D.C.

Abuamara's topic will be the business roadmap to success in Iraq, and its forthcoming transitions from narrowband to wireless broadband.

Asiacell, one of three licensees for wireless services in Iraq, has the highest rate of new subscriptions of any of the three. The company has added about 1,000 customers per day in 2004.

According to Asiacell, the company has succeeded in a challenging environment for both businesses and government officials, who frequently advocate wireless communications as vital to improving the Iraqi economy.

Asiacell's motto is: "To create the best customer service experience in Iraq. Once we have them, customers will 'stay connected.'"

WCA 2005 will focus on the presentation Wireless As Key To Modernizing Iraq: Public Safety As First Step To Broadband's Benefits.

Among other participants previously announced is Dr. Arno J. Kosko, based in Baghdad as the Senior Consultant for the Office of Communications in the Iraqi Reconstruction Management Office within the U.S. Department of State.

WCA President Andrew Kreig believes that "the courage and capability of the Asiacell team provides an inspiring illustration of the personal commitment of an industry advocate -- and exemplifies the strengths of the wireless platform. The company's current business is largely mobile cellular, but it is well-positioned for the next generation of wireless broadband services vitally needed in Iraq to foster economic development and community services."

Asiacell was established in 1999 by Iraqi businessman Faruk Rasool. In 2003, Asiacell partnered with Wataniya Telecom of Kuwait and the United Gulf Bank to launch a successful bid for the Northern License in Iraq.
 Reconstruction efforts in Salah ad Din province boost Iraqi economy

Monday, April 25th 2005
Reconstruction efforts in the Salah ad Din province continue to return big dividends to the Iraqis, according to Multi-National Forces - Iraq. Visible signs of progress are everywhere ?- most notably the Bayji gas turbine upgrade, renovated schools, transportation projects and new health clinics.

The Bayji project places an additional 260 megawatts of electrical power on the national grid. The rehabilitation project totaled $54 million.

School renovations top the list of reconstruction efforts in Salah ad Din. Last month, 31 schools were completed, with 10 of those in the Samarra District. April projections are for another 44 schools to be completed.

The renovation projects in Salah ad Din will affect over 13,000 Iraqi students and boost the local economy in the form of labor, materials and subcontracts. The use of local contractors and local labor has been instrumental in inspiring pride in the local communities and injecting money into the local economies, according to Multi-National Forces.

Two transportation projects, the train stations in Heliwat and Al?Fat?ha, were completed last month. The transportation kilometers of village roads in remote areas of the province, creating all-weather roads to support the reliable transportation and delivery of goods and services to hundreds of local Iraqis. The projects include replacement of failed drainage structures, repair to the road sub-base and placement of an asphalt concrete road surface.

Two primary health clinics in Salah ad Din province were started in March. Seven additional planned clinics are nearing their start date. The clinics are being sited in local cities and villages to provide Iraqis with direct access to health care.

Two electrical substation projects have started in the province, the beginning of a $20 million contract for five substations and one feeder line. These projects will upgrade the existing distribution network of power throughout the province.

There are more than 475 projects in progress, with over 180 projects forecast completed, and 99 projects forecast to begin this month. 
 Iraq reconstruction projects having an 'enormous' impact on Iraqi economy and employment, official says
Monday, April 25th 2005
The Iraq Project and Contracting Office (PCO) has announced that in less than one year, over 2,100 Iraq reconstruction projects have started -- 349 of which are now complete.

"On the employment side of the house, reconstruction is helping Iraq's economy by pumping financial resources into communities where work is taking place and, even more importantly, into the pockets of Iraqi workers," a PCO report states.

"The reconstruction effort is making an enormous economic impact in the lives of tens of thousands of Iraqis," PCO Director Major General Daniel Long said.

Regarding employment, Long added: "Although employment numbers fluctuate from week to week, employment directly tied to PCO construction is 40,416 men and women right now. These employment numbers will continue to increase as we get more and more of the remaining 2,900 plus projects started."

Of the 40,000 direct hires by PCO contractors and subcontractors on reconstruction projects, secondary economic impact can be felt much deeper, according to the PCO. Nearly 170,000 Iraqis are working on reconstruction projects funded collectively by U.S. funded efforts.

The PCO added that although economists' theories may vary, most believe that an influx of financial capitol from salaries for employment and construction materials purchased, for example, has a compounding effect five to seven times in the community.
The Ministry of Agriculture (MOA) and the United States Agency for International Development (USAID) Agriculture Reconstruction and Development for Iraq (ARDI) program are working to improve productivity in Iraqi orchards.

Preparation has begun on 24 farms in Dahuk governorate participating in an olive orchard improvement project aimed at enhancing olive production and improving the skills and income of beneficiary farmers.

To increase earning potential, MOA/ARDI will provide seedlings from nurseries in the region, using popular varieties that have a large domestic market. When field preparation is complete, each farmer will receive 300 olive seedlings.

MOA/ARDI has awarded a grant to a local non-government organization (NGO) to provide practical training in orchard establishment and management, which USAID believes will increase farmers? technical knowledge and improve peach production. One hundred farmers in Dahuk have been invited to participate in the first field day in April that will focus on practical training for peach orchard maintenance.

Farmers have begun preparing fields in two villages in Dahuk that will be used for 20 demonstration apple orchards. So far, an estimated four hectares have been prepared for the 2,100 seedlings that are superior genotypes from local rootstock and will be planted in the coming months. Participating farmers received production tools this week and will receive training in orchard production and management once the seedlings have been planted.


Repairs at Fallujah school completed
Story Date: Monday, April 25th 2005
Children at the Palestine Primary School now play and study on school grounds cleared of rubble and broken glass and have access to a renovated restroom due to the work of local Iraqi contractors and the aid of a U.S. military civil affairs team.

The $28,000 project started in March. Repairs were made to the damaged walls, doors and classrooms and electrical wiring. The money also went toward new doors, exhaust fans, six water tanks, a water pump and toilets for a student bathroom.

Although the school remained open during the renovations, the headmaster and students held an opening ceremony last week.

?The kids did a presentation and recited their studies,? said Sergeant First Class Gregg Reinbold, civil affairs team sergeant, B Company, 445th Civil Affairs Battalion attached to the 5th Civil Affairs Group.

The project was slated to finish at the end of this month, but the contractor completed work early.

In addition to the renovations at the Palestine School, the following is a list of recently completed school projects:

� The Aabid and Nahda Schools also were refurbished for $28,000 in early April. The repairs included installing new doors, water tanks and a water pump and repairing electrical wiring and removing of broken glass.

� Repairs to the Mina Primary School for Girls and the Janeen Secondary School for Girls were completed in March for $24,000.

April 2, 2005 

The successful United States led invasion and overthrow of former President Saddam Hussein in spring 2003 has turned this nation of Iraq to a possible future of great wealth and stability in the long term. Under former President Hussein?s regime, Iraq was a country of two societies, one that was very wealthy living in opulence and the other where the majority of Iraq?s people were fighting for survival. At the end of Gulf War I in 1991, the implementation of economic sanctions by the world community further crippled Iraq both economically and socially following a brutal 8 year bloody war with Iran during the 1980?s. After Gulf War II in spring Western monies are now in due process for rebuilding. However, violent insurgencies and coalition deaths still prevail in a current time of disarray and war under way. Below is a detailed discussion of our findings and its relation to the Iraqi currency, the ?dinar?.

The war with Iran cost Iraq in excess of $100 billion USD while an economic embargo sponsored by the United Nations (?UN?) from 1991-2003 have had a further net cost of $150 billion USD in lost oil revenues to Iraq. It is no surprise that today Iraq remains in default of its huge net external sovereign debt estimated at $122 billion USD ($40 billion USD to Paris Club and $82 billion USD to sovereign nations). resulting in a collapse of the Iraqi dinar with very little global purchasing power parity although the previous official exchange Iraqi exchange rate is an illusion to the real economic situation that took place in Iraq during Mr. Hussein?s rule. Iraq funded its war with Iran by borrowing from foreign markets abroad, particularly Kuwait. In the early 1990?s when Kuwait called in their loans coupled with a disputed oil border, Iraq invaded. Since 1989, the Iraqi economy collapsed and by the mid to late 1990?s GDP was down 60 percent with sanctions. However, by the late 1990?s, Iraq implemented a massive contraband oil smuggling operation of which brought in billions of US-dollars into then Mr. Hussein?s regime.

POLITICS: on June 28, 2004, the United States transferred self rule power to Iraq to transitional Prime Minister Ayad Allawi, a Shia Muslim to run an interim government until free elections. Former President Hussein, 67, was the leader of the Baath Socialist Party and Revolutionary Command Council where he ruled Iraq that of a police state and crushed all opposition. Mr. Hussein was President of Iraq from 1979- April 2003 although basically a strongman leader since 1968, widely guarded as brutal dictator. Those tied to former President Hussein? rule lived well, if not lavishly. Mr. Hussein was well known for his extravagance, building 21 palatial lavish palaces. Mr. Hussein?s regime was that of a Sunni minority clan like clique, former President Hussein who was caught is now awaiting trial in Iraq along with some of his closest confidents for crimes against humanity. Prior to Mr. Hussein?s helm at power, Iraq has had a volatile history of unstable governments, coups and minimal democracy, formal country independence took place in 1958.

The difficulty with Iraq that it is similar to Afghanistan, it is made up of different ethnic factions consisting approximately of 150 tribes. In the south, Iranian Shiite brethren make up 60 percent of Iraq?s population which could possibly rejoin Iran thus giving it more oil reserves and power. In the north, the Kurds who represent 20 percent of Iraq?s total population are in the majority of which they may want their own independent Kurdish state. In the middle of the country, the Sunni Muslims are predominant but with only 20 percent of the population.

It may take upwards of 10 years to get Iraq to that of a functioning democracy and stable economy. It is quite possible the coalition forces led by the United States will have a military presence in Iraq for years to come. However, good things have taken place in Iraq with a large quiet economic revolution underway and the resurgence of the Iraqi middle class as reconstruction funds are driving the economy.

ECONOMY: the Iraqi economy currently remains dependent on United States and foreign grants as the nation rebuilds from the fall of former President Hussein?s regime. Essentially, the international community is providing the bridge financing up until Iraq is self-dependent from its oil production, this may take 5 years to achieve this goal. Many global multi-national corporations are now in Iraq taking advantage of post Gulf War II redevelopment contracts from the petroleum industry to infrastructure. Prior to Gulf War II, GDP/Capita was 10 percent higher than it was in 1990. On the whole, Iraq is a wealthy nation with immense oil wealth where Iraq?s petroleum industries represent 95 percent of foreign exchange. Some sort of civility is returning to Iraq with commercial flights now arriving at Baghdad International airport. The country is now flooded with many Western consumer goods from around the world including new BMW?s and Japanese automobiles are evident, satellite television, etc. However, the overall economy is presently in disarray from the fallout of Gulf War II with upwards of 2 million Iraqis? remain unemployed out of a 7 million labor force.

Now with a new regime, support of the international community, better times lie ahead. Under Mr. Hussein?s regime, the Iraqi economy was based upon a centralized model of extensive state planning. Today, modern Western free market principles are now being implemented with the support of the international community. The future economy for Iraq is quite bullish assuming political stability and prudent political management. Investors can expect Iraq to operate with a low tax economy, access to foreign investment and aid in the near term as required, trade liberalization, privatization of state-run industries and a reduction in sovereign debt levels. Recently, the governments of Japan, Canada, Kuwait announced that they will forgive part of Iraqi debts owed to them. Other countries are expected to follow suit at the Paris Club (19 countries) debt meetings in addition to the World Bank debt forgiveness. And there are also plans to set up a stock exchange in Baghdad. At present, there is approximately $8 billion USD available to Iraq from funds held within the UN oil-for-food policy. The United States has pledged $18.4 billion USD over the next 3 years. The World Bank estimated that Iraq will need upwards of $55 billion USD over the next 4 years for rebuilding infrastructure to provide the necessary foundation for economic growth.

Economic Statistics
GDP 2000 at $57 billion USD as measured by purchasing power parity, GDP measurement for 2003 was at $39 billion USD reflecting the economic disruption during the period of March - April 2003. Market GDP is at $26.5 billion USD with corresponding GDP/Capita at $1,100 USD. Iraq?s GDP growth for 2000-01 at 15 percent, year 2003 fell 20 percent, year 2004 to grow at a spectacular rate 50 to 60 percent of GDP. Inflation during year 2003 at 28 percent, year 2000 at over 100 percent, year 1999 at 135 percent, from 1995-2000 inflation averaged percent of GDP, year 2001 came in at 2.7 percent, year 2000 surplus at
POSITIVE: massive oil wealth, AIDS disease is very rare, Iraq is opening up the economy to foreigners except in oil, real estate and natural resources. CONCERN: environmental, security concerns include assassinations & kidnappings, massive electrical energy shortfall, domestic security with continued insurgencies terrorist attacks, disease is making a reappearance including cholera & typhoid, hospitals are in bad shape, water quality is poor, prevalent, agricultural - major irrigation problems and high infant mortality rate.

BANKING SYSTEM: Iraqi citizens are now able to bring foreign currency into Iraq, no restrictions to the amount. Iraqi banks are allowed to lend hard currency with foreign banks now given permission to operate and in invest in Iraqi banks up to 100 percent ownership. Most Iraqi assets remain frozen overseas. Although Central Bank of Iraq (CBI) was established in 1947, it is being restructured to reflect more of a modern Western style monetary system including management of the currency, holding of foreign exchange reserves, liberalizing of interest rates, price stability, etc. Iraq?s banking system presently remains for the most part on a cash basis. There is basically no electronic banking including no ATM?s, credit cards, etc. The banking system under former regime of Mr. Hussein, most Iraqis during this time kept dinars as mattress money rather than depositing at state banks. The banking system consists of 17 private banks, 6 state-owned banks that are considered insolvent plus banking licenses granted to United Kingdom?s HSBC & Standard Chartered and the National Bank of Kuwait of which these 3 banks have yet to open up branch offices.

REGIONAL and GLOBAL ANALYSIS: Saudia Arabia, Iran, United States The threat of a political collapse in Saudia Arabia is real as the Saudi Royal Family is now under increased pressure from many opposition groups including al Qaeda terror organization. America?s military presence in Iraq will further help to maintain this regional stability and ensure protection of much of the Middle East oil reserves. The political implosion of Saudi Arabia will not derail Iraq?s rebirth as a stable sovereign nation in BI.C?s view. With respect to Iran, growing influence of many of Iraqi?s Shiites in the south for closer political ties to Iran while Iran?s politicians have taken notice of the regime change threat that may possibly lie ahead for them. Iran is considered to be a long time enemy of Iraq although relations are now improving with Mr. Hussein out of power. There has been discussion in financial circles that the real ambition for the United States during Gulf War II was not about the weapons of mass destruction threat, but more about protecting the value of the USD as the world?s reserve currency. With the United States now with security presence in the Gulf Region, America is sending a strong signal to OPEC and other oil producing countries to keep using the USD as the world?s reserve currency instead of pricing in EUR or another currency. This currency pricing of the USD for oil will help the United States maintain its lofty standard of living.

KNOWLEDGE: Iraq holds the second largest proven oil reserves in the world behind Saudia Arabia with Iraq holding 113 billion barrels of economically viable proven reserves and another 215 billion barrels of probable & possible reserves. Since February 2000, the Iraq-Syria oil pipeline of Kirkuk-Barias opened of which Syria profited handsomely from re-selling Iraqi oil at a profit for their export industry particulary with Iraq like Saudi Arabia having very low production costs that average at $1 USD/barrel of oil. Tremendous wealth potential exists with the future development of the Qurna oil field located in southern Iraq. It is one of the world?s largest with determined by the level of foreign investment. It is estimated that upwards of $50 to $100 billion USD will be required for redevelopment in capital investment, production and exploration to get to full Iraqi oil potential to similar levels of that of Saudia Arabia. Since the end of Gulf War II in April 2003, Iraqi crude oil sales have reached $10 billion USD over the last year as reported by the Coalition Provisional Authority with the monies then deposited into the development fund for Iraq. Oil sales for 2005 for Iraq is estimated at $20 billion USD, year 2000 recorded sales of $16 billion USD.

Iraqi crude oil production as of June 29, 2004 are in the range of southern terminals. Output was temporarily scaled back 800,000 bpd from recent sabotage from domestic insurgencies on the Kirkuk pipeline in northern Iraq (home to 40 percent of Iraq?s oil reserves) to Turkey. In the last 7 months alone, there have been 130 terror attacks on Iraqi oil infrastructure which consists of 260 oil facilities and bpd which represented 95 percent of national earnings for Iraq. Pre-Gulf War II oil production at 2.7 million bpd. The goal by the authorities is to increase production by another 500,000 bpd by year-end 2004. Iraq is a member of OPEC but does not have a quota since its membership is in a holding pattern until stability and normality returns. Natural gas reserves for Iraq are impressive at
CURRENCY: ISO symbol ?NID?, formerly IQD prior to January 22, 2004, New Iraqi Dinar. At time of review on July 1, 2004, the Iraqi dinar had an exchange valuation of 1456 IQD to the US-dollar (?USD?). As of January 2004, Iraq has a new unified Iraqi dinar with a then high valuation of 1,000 NID to the USD. Formerly, Iraq had two dinars in circulation, a perceived stronger currency in the largely autonomous Kurdish north ?Swiss dinar? (printed in Switzerland) and the other ?Saddam dinar? circulating in the rest of the country ?IQD?. On October 15, 2003, the New Iraqi dinar was launched with a 3-month deadline to swap the old dinars currency notes to the NID which expired on January 15, 2004. The New Iraqi dinar has appreciated by approximately 25 percent to the USD since its inception 9 months ago in October 2003. The Swiss printed dinar during the 3-month conversion time was converted at a rate of 150 to the USD, valuations for the Swiss dinar have included March 2003 at 10 to the USD. It should also be stated that there is no plans to fixed the NID to the USD due to America?s impression, the NID is a Hussein-free dinar note.

CURRENCY HISTORY: in April 1932 at the end of the British mandate, the Iraqi currency board opened with the launch of the dinar which was then pegged at par with the British pound and backed by pound reserves. In year 1947, the currency board was then replaced by the central bank system with the dinar quoted at $4.86 USD to the dinar. By 1970, the official exchange rate had the dinar at $2.80 USD, year 1973 at $3.39 USD. By 1982 up until Gulf War II, the official rate devalued by 5 percent to $3.22 USD to the dinar or conversely the peg at at 0.3109 IQD to 1 USD. Black market rate is volatile and fluctuates around 2000 IQD to the USD in 2001 and also in August 2002 of which represents a significantly lower valuation than the irrelevant official rate. However, it should be noted that black market rates differ tremendoulsy from official rates. It was interesting to note that former President Hussein demanded that oil payments from the United Nations be paid in euros rather than US-dollars to further embarrass the United States. Further, it is widely viewed that the official exchange rate policy was for the most part only available to former President Hussein and his associates.

At the height of the Iraq-Iran was in 1986, inflation in Iraq reached shortly after Gulf War I in 1991 the old dinar collapsed to 7,000 IQD to the USD and by 1995 the rate had rallied to 3000 IQD. In 1996 just before the United Nation?s implemented the oil-for-food program, the IQD then rallied to a level of 2400 IQD to the USD, year 1997 at 1530, December 1999 at 1910 IQD, December 2002 at 2330 IQD to the USD, April looted, March-April 2003 traded as low as 4,000 IQD with other reports of trading in the 5000 to 6000 IQD to the USD level, an exchange valuation of 2000 IQD at the time of Mr. Hussein?s regime overthrow in April 2003, July 2003 at 1500, October 15, 2003 at 1970 NID to the USD (currency swap to New Iraqi dinars from old dinars) and May 2004 at brought back memories of its validity as wheelbarrows of paper currency were required to facilitate transactions, the currency almost worthless at that time. In addition, other currencies came into circulation during this time of chaos within Iraq include the Kuwaiti dinar, the USD, Euroland euro, Syrian pound, gold, and the Jordanian dinar.

CURRENCY FORECAST: ultimately in BI.C?s view, a much higher standard of living for the Iraqis will take hold and corresponding stronger exchange valuation for the NID. The short term may continue to be difficult as exchange valuations for the NID will be determined by the level of terrorist insurgencies versus the speed of successful redevelopment. BI.C is very optimistic and bullish for the long term outlook for Iraq and its new currency. The challenge for the new government will be to provide stability, peace, growth and then prosperity may follow. The short term outlook will determine Iraq?s political & domestic stability. Further, higher world oil prices over the last 3 years will help to provide hard currency earnings for rebuilding as new oil Iraqi oil production comes online.

A key decision to the authorities is what kind of currency regime should be in operation for Iraq. Peg to the price of oil? A currency peg to a basket of currencies including the Euroland euro ?EUR?? Or perhaps dollarize completely with another currency such as the EUR as what has taken place with Montenegro, Kosovo in the Balkans. BI.C believes a fluctuating peg to the price of oil and hard currencies including the yen, euro and USD maybe a viable solution for maintaining currency and price stability for Iraq.

There is great speculation in the New Iraqi Dinar by many in the international community as some investors believe what happened to Kuwait during the 1990-91 Iraqi occupation with respect to the Kuwaiti dinar may very well happen to Iraq. Foreign buying of the NID is providing for appreciation pressures as speculators think that the rebuilding of a new Iraqi economy will propel the NID to much stronger valuations. The Kuwaiti dinar collapsed to below 10 cents to the USD before rebounding to significantly higher valuations of $2-3 Kuwaiti dinars to the USD by the end of the 1990?s. Short to medium term volatility may take place with the day to day theatre expected with the trial of former President Hussein in the months ahead. The media event may create enthusiasm amongst his supporters thereby potentially increasing the insurgency attacks.

Iraq should be one of the wealthiest nations in the world today with its huge oil reserves if had responsible management, but this has not been the case for decades and even before Mr. Hussein?s tenure. The risk is that even with a U.S. sponsored puppet government, Iraq has had a very turbulent history of government. The ethnic make-up of Iraq consisting of different factions of tribes and cultures similar to Afghanistan makes Iraq a very difficult country to govern. Overall country risk remains very high for Iraq for at least the next 2 to 3 years.

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