Iraqi Dinar News
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
of State Weekly Status Reports
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.
the official Iraq weekly status reports for the week
| June 1, 2005
May 25, 2005
May 18, 2004
May 4, 2004
| April 27, 2004
April 20, 2005
April 13, 2005
April 6, 2005
March 30, 2005
is a good paper on how the banking system works in Iraq : Payment in Iraq
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
Bank of Iraq and post their results daily.
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
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
in Sulaymaniyah have been learning about neighborhood watch.
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
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
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
"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
"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
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
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
Iraq's First Democratic Government Sworn In
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 (PDF only).
Bush Welcomes Formation of New Iraqi
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
President Bush affirmed that the United States would
continue to stand by Iraq as it works to build a stable, peaceful and
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
Following are the texts of the Bush and Rice statements:
THE WHITE HOUSE
Office of the Press Secretary
April 28, 2005
STATEMENT BY THE PRESIDENT
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
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.
U.S. DEPARTMENT OF STATE
Office of the Spokesman
April 28, 2005
Statement By Secretary Of State Condoleezza Rice
Iraqi Transitional Government
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
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
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.
efforts in Salah ad Din province boost Iraqi economy
April 25th 2005
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
The Bayji project places an additional 260 megawatts of electrical
power on the national grid. The rehabilitation project totaled $54
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
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.
reconstruction projects having an 'enormous' impact on Iraqi economy
and employment, official says
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
Date: Monday, April 25th 2005
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
� Repairs to the Mina Primary School for Girls and the Janeen Secondary
School for Girls were completed in March for $24,000.
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
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.
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
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.
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
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