Abu Shams could not believe that his name appeared on the list of names sent by the National Investment Commission to one of the branches of Rafidain Bank and that finally, after years of waiting, he will own his own home. Instead of the monthly rent that he had been paying to the landlord for many years, he will turn into paying the rent for himself. The monthly installment for the apartment that he will pay to the bank is ultimately part of paying the total amount of his apartment. However, his joy was not complete, but he was surprised by what he called “the exorbitant usury” imposed by “the state, not the usurers” on the citizen.
“Abu Shams” – a pseudonym because he fears that if his name appears in this report, his bank transaction will be obstructed and he will be deprived of his dream apartment – tells Shafaq News Agency, “In the nineties of the last century, my father, may God have mercy on him, was forced to sell our house due to the deterioration of the economic situation and opened a simple project that barely provided for our daily needs. In the end, the project lost, and since then we have been moving from one house to another.”
Dream under the whizz of bullets
Abu Shams is an employee of the Ministry of Interior. He fought battles with terrorist organizations, starting with Al-Qaeda and ending with ISIS. He was in the city of Mosul until June 9, 2014, before he and his colleagues withdrew from the city, which had collapsed dramatically.
“The threat of ISIS distracted us from everything else, but despite that, the dream of owning a house never left me, as did my colleagues who suffer from the problem of rent. After the opening of the Bismayah complex, I was not encouraged to live in it. My dream is a house with a garden, no matter how small, and a garage, even if it is only large enough for a motorcycle. But the days began to pass in vain, and my dream remained in place.”
Abu Shams points out that, “After searching, making an effort, and using connections, I obtained an exception – an exception is a special approval from a government or parliamentary official – for a 120-square-meter apartment late last year. I began the procedures, and after many arduous reviews, my name reached one of the branches of Rafidain Bank. I paid the down payment and completed the procedures in a hurry, not believing that the dream would come true.”
Unprecedented government interest
“But after my joy subsided, I went back to the transaction papers and the bank instructions I had copied, flipping through them to believe that I would finally own a home. Here, I was shocked by something I had not expected and had not paid attention to while conducting the transaction, as if I had not read it even though I had photographed it with my phone. It was the bank interest, which turned out to be approximately 50% of the original loan amount, and not 4% as the Rafidain Bank management claims,” Abu Shams added.
He points out that “some people and exchange offices deal with usury, but they impose interest on the principal amount not exceeding 30%, but what the government banks do, the usurers did not do, even the Western banks whose greed we hear about and about which we watch some movies did not impose such interest, 50% on government money that is basically the people’s money?!”
“In addition to that, I found that I was forced to pay a monthly insurance amount of 42 thousand dinars, which is approximately four million and 500 thousand dinars annually, even though I did not request insurance for my apartment, and I was not even asked if I wanted it or not. It was imposed on me, and everyone knows that Iraqi insurance companies merely steal the citizen’s money without providing any compensation. Dozens of apartments burned down in the Bismayah complex and their owners were not compensated,” Abu Shams concluded.
According to the instructions of the General Administration of Rafidain Bank, which Abu Shams photographed on the bulletin board in the bank branch where he promoted his transaction:
Apartment price: 85,680 dollars = 113 million, 97 thousand, 600 dinars – according to the official dollar exchange rate of 1,320 dinars for every dollar.
The down payment to the bank from the total price of the apartment: 11 million, 309 thousand, and 760 dinars, so the remaining amount from the price of the apartment is 101 million, 787 thousand, and 840 dinars, which is the amount of the bank loan.
Monthly bank interest: 170 thousand 212 dinars.
Loan repayment period: 25 years = 300 months.
Total amount of bank interest: 300 months loan repayment period multiplied by 170,212 dinars monthly interest on the loan = 51 million, 63 thousand, and 600 dinars, i.e. 50% and not 4% as claimed by the General Administration of Rafidain Bank.
“I was fooled once and that’s it”
In turn, Haifa Hadi, a government employee, explained to Shafaq News Agency, “In the last quarter of 2019, I applied for a twenty million dinars advance, as my husband intended to open a simple project that would help us secure our daily needs. At the end of the same year, I got the advance, but they gave us 19 million and 440 thousand dinars. When I asked why, the bank employee said that this was the sponsor’s fee, so I told her, why didn’t you tell me that you wanted a sponsor, and I basically have a MasterCard issued by you? She replied that these are the procedures.”
She continued, “This was the first surprise, and it is simple compared to the bank interest. Although the interest, according to the instructions of the General Administration, is 8% of the principal amount, the truth is that the interest is 50%. For four years, I have been paying installments of 30 million dinars, and when I asked about that, they said that the interest is multiplied by the number of years of repayment, which is six years.”
Hadi points out, “The biggest problem is that due to the spread of the Corona pandemic and the accompanying curfew that lasted for nearly a year, my husband was unable to start his project, and we were forced to withdraw from the advance amount to secure our needs, and the amount decreased to a point that it was no longer useful for any project, and my salary is still deficient because of this ill-fated advance.”
Hadi concludes by saying, “I was once taken advantage of by the government and its banks, and thank God the amount was somewhat affordable, and there was only a year and a half left to pay it off. Therefore, neither my husband nor I will allow the banks to take advantage of us again for 25 years. One bite is enough.”
Only the needy will borrow.
An employee at Rafidain Bank, who preferred not to mention her name, told Shafaq News Agency, “Since the government banks launched advances and loans more than 15 years ago, we, the employees at the banks, have not applied for them except when we are forced to do so due to the high bank interest.”
She confirms, “I have been working in banks for nearly 35 years, and I have knowledge of the banking systems in some European countries and America. Even if it is a simple knowledge, it allows me to say with full confidence that the banking interest imposed by our banks is unparalleled in the world.”
“Blackmail in the name of the state”
Banker Aqeel Al-Ansari, an Iraqi resident in London who works in a British bank, said in a phone call with Shafaq News Agency, “Bank interest in Iraq can be described as theft, fraud, or extortion in the name of the state. It is unreasonable and illogical for a government bank to impose an interest of 50% or 60% on a small amount to buy a car, establish a modest project, or buy a house, and for a period of time that is disproportionate to the size of the amount.”
“In Europe and America, which are capitalist countries and their banks are known for their greed and avarice, they are still nothing compared to what is happening in Iraq. A bank in the West, for example, will give you a loan of $10,000 to buy a car with an interest rate of no less than 10%, but the monthly installment you pay will decrease from the total amount and its interest. After a year or two, you can go to the bank and say, ‘I want to buy a newer car and I need an additional amount.’ They will give you what you want and you will have the right to sell the car with ease and simplicity, which is not possible in Iraq. This is strange.”
Al-Ansari stresses, “What is happening in Iraq is an actual blackmail operation practiced by the state against the citizen. It exploits his need for housing, or to start a simple project, or to buy a car, to blackmail him with exorbitant bank interest that causes the project to fail or reduces its profits due to the monthly installment, and leads to raising the prices of real estate and cars. This is a truly strange equation if we want to use diplomatic language, but it is difficult to describe it accurately because it is offensive.”
The Iraqi banker believes that “it seems that those who manage the financial system and set its plans are people who have nothing to do with money or the economy, neither closely nor remotely.”
“Bismaya Complex, and what do you know about Bismayah Complex?” With this sentence, economic expert Nasser Al-Kanani began his conversation with Shafaq News Agency, explaining, “The price of one square meter of an apartment in Bismayah Complex is 630 dollars, while the real value of the meter is 300 dollars, but the state imposed double the price on the citizen to cover the costs of the project’s infrastructure, including streets, water and electricity networks, sewage, schools, and others, in addition to the road linking Bismayah Complex to the city of Baghdad.”
He continues, “The apartment, which is supposed to be 100 square meters according to the contract concluded between the citizen and the Investment Authority, is actually 85 square meters, meaning that all apartments have areas of 100, 120, and 140 square meters, minus 15 square meters, which is the area of the corridor that leads to all the apartments, as well as the area of the elevators and stairs.”
As for whether this matter is considered “fraud and deception by the state against the citizen,” Al-Kanani says, “The problem is not whether it is fraud and deception by the state, but rather the problem lies in the citizen’s silence about it. Why would the citizen remain silent about 15 square meters that the state took from him and turned into a passageway, streets, schools, and other things at the citizen’s expense? Any citizen living in Bismayah can tear off the door of one of the schools and say with full confidence: This door is mine and I am the one who paid for it.”
Al-Kanani points out that, “On the other hand, the citizen is the one who paid the costs of the project’s infrastructure, and the state did not stop there, but rather granted the citizen loans with high interest rates that do not exist in any bank in the world, even in capitalist countries such as Europe and America, as there is no interest that reaches 50% of the original loan amount.”
He stressed, “The state has not provided anything to the citizen in the Bismayah complex. The citizen pays all the costs and on top of that, he pays huge profits to the state, while Article 30 of the Iraqi constitution states that (the state guarantees the citizen the right to housing and a decent life), which means that the state must provide free housing for the citizen with a job opportunity.”
He points out that “the price per square meter in the Bismayah Complex when the Investment Authority started selling was according to the dollar exchange rate at the time 1180 dinars per dollar, but now the state calculates the exchange rate at 1320 dinars, which means that there is a difference estimated at about 140 dinars per dollar, and this difference in exchange is borne by the citizen, while the state is the one that raised the exchange rate and the citizen is not to blame.”
Al-Kanani confirms, “In all countries of the world, even capitalist ones, there are two types of loans. The first is that one country lends to another country, and the interest rate ranges between 1% and 1.5% and does not exceed that. As for the loans that banks grant to citizens to buy a home, they do not exceed 2% of the original loan amount.”
MPs “evade”
Despite Shafaq News’ repeated attempts for two days to obtain a comment from the members of the Parliamentary Finance Committee, it did not receive a response from the representatives. Some of them did not respond to the calls, and others apologized for making a statement under the pretext that they had no information on the subject, although the increase in the bank interest rate was raised several times before the parliament by a number of representatives.
One of the representatives was more daring than others and said during his conversation with Shafaq News Agency correspondent, “The interest imposed by Iraqi banks is unparalleled in any bank in the world.” However, he preferred not to mention his name, despite the fact that the issue does not include any political sensitivity, but he promised our correspondent to raise the issue in one of the upcoming parliamentary sessions.
Rafidain holds the Investment Authority responsible
A responsible source in the General Administration of Rafidain Bank told Shafaq News Agency, “We are an executive body and we have no relation to determining the prices of housing units and the bank interest due on housing loans. These matters are set in agreement with the National Investment Authority,” he said.
It is worth noting that government and private banks are more like independent bodies and no authority over them except for the Central Bank of Iraq. All their procedures and instructions, the advances and financial loans they grant, and the banking interest they impose are completely independent of the government, its ministries, and its institutions, according to many statements and declarations issued by the Central Bank of Iraq, the banks themselves, government officials, and representatives, at previous times.
shafaq.com
