This is going to be a very long RV Update commentary today so I encourage everyone to please take the time to settle down, relax, get a hot cup of coffee or tea and just slowly read it.
This is going to be a very long RV Update commentary today so I encourage everyone to please take the time to settle down, relax, get a hot cup of coffee or tea and just slowly read it.
First, we know that Iraq has de-dollarized the country. We read tons of articles on this. The Federal Reserves came into the country and is even now parked the US Treasury itself in the CBI building occupying an entire floor. We also know the banks are no longer allowed to exchange dinar for US dollars to citizens and this is reserved mostly now for travelers and even travelers have to show an airline ticket and proof of where they intend to go and the necessity for the dollars.
So then why in hell would the banks force them to exchange dinars to dollars is my first question and why would the banks disregard the CBI monetary policy so blatantly. Next there is the issue of the rate. Why in hell would a bank then exchange for $4.91 when the “official” CBI rate is still 1310? Aren’t they trying to enforce the “official” rate. The bank would therefore once again violate the CBI policy on currency exchange and lose money on this deal in a drastic way. This would set the bank up for funneling dollars to the black market, which the CBI is now trying to get under control to move to the next stage.
So, now let’s go on with the current juicy stuff from Iraq. Yes, real “factual” information.
As you know there is usually one article that stands out from the rest and the title of the article today is “CENTRAL BANK: CLOSING THE ELECTRONIC PLATFORM ENHANCES FINANCIAL STABILITY”. Let’s exam this article today. What are they trying to tell us?
First, I need to lay some groundwork, a bit of history, about the strategy to get Iraq to where it is today. Then we will fit this strategy into where the current news.
If you recall there were two conflicting strategies for developing Iraq from the past. One was from the president G.W. Bush era and the other one from the president Obama era. The Bush era wanted to move quickly and get the Iraqi currency back to the global markets, if even a low rate, then as the economy grew stronger, watch the rate rise as speculators joined in. This strategy knew the repercussions of lingering this objective and what might happen in the long term if not done sooner than later. Yes, as investors in the Dinar we all could have made millions even at a lower rate if on FOREX. Can you remember those days when we all thought even a 10 cent IQD was going to make us rich? This strategy was made possible under the tutelage of Dr. Sinai Shabibi and his financial expertise. Over this past decade we witnessed these repercussions too.
So, Bush left the Whitehouse and Obama took over. This is where the conspiracies took place. This is when all the corruption began. In December of 2012, the Central Bank of Iraq was allowed to be raided to end the Bush/Dr. Shabibi strategy for the Iraqi Dinar. Instead, Obama wanted to continue using the dollar for payments of imports and actually promoted the money laundering to Iran. This situation worsened as the years rolled on. As investors we followed the news and so we learned of what was going on and witnessed trillions of dollars of the Iraqi oil wealth being stolen, yet the Obama treasury did nothing to stop it then. It was just all words and no real action. We witnessed early exchanges of the dinar for dollars by Obamas buddies, senators and even friends of friends. Finally, it stopped in early 2013 but left a scar of corruption on the Obama administration when it comes to Iraq. This corruption has not yet been widely exposed, but it will and this is going to be huge news of exactly what happened back then. Trust me on this one…..
So, under the Obama era for Iraq the strategy changed and so it was mandated that Iraq first rebuild its economy then we could think about moving the Dinar to global markets. There were no realistic set of goals or measurements set by the Obama administration to say to Iraq when enough is enough. Meanwhile, Iraq also did not have the benefit of its currency to help rebuild Iraq and accomplish these goals. The constant corruption with the dollar left a stain on future investors. This strategy only hurt Iraq yet even more. Was this all intentional to delay any real progress for Iraq and allow this corruption to continue? One has to wonder…. I believe it was.
Okay so this new Obama era strategy was implemented and enforced now since 2012. There was not going to be any major RV or Reinstatement until Iraq first rebuilt it’s economy, so what was said. You remember this mantra – get out of the rentier oil based economy…bla, bla, bla. But what about the value already in the Dinar? After all it was at around $3.22 when the 1991 attack into Kuwait began? Iraq then finally got rid of the 8 years of Nori Al Maliki and struggled to find a new prime minister who could lead the country out of this dilemma. Tell me Nori Al- Maliki disaster was not intentional. They also needed a champion to lead the Central Bank of Iraq.
Iraq then went through some really bad years over ISIS war and Covid events. Oil prices plummeted and the CBI reserves lowered to dangerous levels. All that work of Dr Shabibi was waisted away. As the years rolled on, we read article after article about the Project to Delete the Zeros and it was coming. There were times when they told us they were going to do it and do it now. But these times were short lived and it was always stopped from some excuse or another. So, we know they have the newer lower denominations and coins already printed. This is proof of it.
Then in late 2022 a series of four (4) events took place taking Iraq to a new level. Finally, the dragged out Iraqi elections, concluded and confidence was placed with Al-Sudani to lead the country. Also, Ali Al-Alaq came back to the CBI as proxy governor. Remember he worked under the tutelage of Dr Shabibi. Also, we learned that in fact Chapter VII sanctions were finally lifted, contrary to what we were told years prior. Yes, we learned that all war reparations had to first be repaid to Kuwait. It was done. In December 2022 Iraq was finally “fully” released from all Chapter VII sanctions.
So, you see I don’t know that if all of these events just happening in such a short period were coincidental or not or maybe by design but what I do know is the impact they have had in such a very short period of time in comparison to the Obama nightmare decade long era to the current. So, Obama left office and the Trump era began. Everyone asks why didn’t Trump push the RV when he was in office. It’s not that easy to switch policies such as what was happening in Iraq. Let me explain what happened then.
The new President Trump, of course was briefed on the situation in Iraq. He made a decision to work more on containing Iran (preventing a nuclear war) and working with Israel as his partner to do so. He wanted to prevent exactly what did later happen when Biden took office- a war in the middle east. During the Trump era at this time there was an economic plan devised for the middle east under Jared Kushner, do you remember it? He was an advisor to the president. Jared’s plan basically asked all the countries of the middle east to work towards peace through economics. To pitch his plan, he suggested why not develop peacefully with economic policies rather than fighting through long standing terrorist aggression acts. Why spend so much money and wealth fighting each other? The plan seemed to take root, but it needed a direct second term for Trump to grow, which he did not get. Under president Biden we witnessed yet another disastrous policy for the middle east and war exploded out once again. But the Trump era seeds were planted, remember this…..
However, I have to say that I witnessed God’s Hand at Work in the middle east. Even in spite of all the conflict and mess of the Biden administration as it turned on the middle east. Iraq still seemed to move ahead. Was it God’s design then that instigating these four elements colliding all at once in 2022, as I described above. Was it coincidental? I think not! The progress made in the last two (2) years in comparison to the last decade is enormous. I know it is hard for many to grasp really just how far Iraq has come since 2022. Many in the dinar RV investment community still believe this is going to drag on and on, maybe for years to come.
So, we learned in January 2023 that the CBI implemented the “Electronic Platform”. This platform did not end the currency auctions but instead was just a means to control them and audit them. It allowed the CBI to get handle on just what was going on through these auctions set up by Dr Shabibi. They were meant to be short-term solution to prevent hyper-inflation. So who was purchasing the dollars and why? It was meant for full transparency. Also to prevent the funding of terrorism. Noe of this seemed to work.
Then throughout 2023 we witnessed the final de-dollarization of Iraq. If you want to recall Dr Shabibi tried this also in 2011-2012 and got the dinar rate down to 1166 remember? It was stable and the parallel market was not a problem. The CBI mandated the use of the dinar in place of all dollars in sales and market places. This was driven also by electronic point of sale and electronic banking.
In September 2024, it was announced that the electronic platform would end and dollar sales would be controlled by the Iraq banks with foreign correspondent banks. So, yet the CBI moved to another higher level of dealing with foreign trade. At this point Iraq moved to the normal way of conducting trade on an international level. Like I have said before, they simply moved to the “normal” way, the non-sanctioned way of doing business with the outside world. This is not new. Most countries follow this procedure.
This step that happened just two weeks ago is so critical to what is about to happen next.
This action of the correspondent banks completely took the sales of dollars away from the CBI. The CBI is no longer using is reserves to back the dinar thus fund the payment of imports. In other words, the CBI is no longer backing the Dinar solely by petro-dollars. Get it? Yes, we can summize this is what is happening slowly one step at a time. Many ask me what this means. This means that Iraq is slowly breaking away from the de facto peg which is solely to the U.S. dollar. Get it? The dependency of the dollar alone to pay for imports is going away. In fact as of the move to correspondent banks, it has already gone away. It has to go away in order to go globally and reinstate the dinar back on FOREX. Get it? There is a new peg for the dinar coming shortly. In fact, this sole peg to the US dollar is gone now and the dealing with these correspondent banks already put an end to it since January 1st. Get it? Iraq is now just waiting and monitoring the parallel market. But in today’s news we learn that they are now talking about their next step.
So, in the two weeks since the Central Bank of Iraq implemented its decision to close the electronic platform for foreign transfers, opinions differed in economic circles regarding the impact of this measure on the financial situation in Iraq, especially in light of the current economic and political conditions. However, despite the initial criticism the decision sparked, many experts and observers believe it is a “necessary step” to address the economic challenges Iraq is currently facing, especially in terms of reducing pressure on the central bank’s reserves and enhancing the stability of the exchange rate in the local market.
The Central Bank of Iraq confirmed that closing the platform will not affect the movement of remittances at all, as remittances through this platform until 12/23/2024 represent less than 7 percent of total sales, according to a source in the bank.
The source explained to Al-Sabah that “the aim of this step is to control financial operations and work within the international scope in the process of foreign transfers and adopt the method of correspondent banks, which contributes to enhancing the stability of the financial sector in light of the current circumstances.”
Yes, Ali Al-Alaq does know what he is doing…. But what are these “current circumstances that are being referred to here in this article? I will tell you what they are – they are the circumstances are not having the Dinar on the currency markets already, get it. Dr Shabibi wanted to go directly to FOREX and not have to go through all these other steps since we witnessed from Jan 2023.
The Central Bank also indicated that the strengthening of the balances of Iraqi banks that have correspondent banks abroad will continue as is, explaining that this does not mean stopping the “currency sale” operations, but rather a change in their mechanisms within a method followed all over the world.
He added that the “mechanism for strengthening bank balances has changed, as it is now done directly through the accounts of Iraqi banks with correspondent banks, instead of the accounts that were done through the Central Bank”, and that this new mechanism is dedicated to meeting the needs of imports and foreign trade of goods, commodities and services, which “contributes to supporting the financial and economic stability of Iraq”. Did they say the word “stability”? Didn’t the CBI tell us years ago they needed stability and security to conduct the Project to Delete the Zeros? Sounds to me they have it now. We also now know more of what the CBI meant by the use of that term Stability. It has become very clear to us now.
In the article financial and banking researcher Mustafa Hantoush pointed out that the Central Bank has strengthened the dollar accounts of Iraqi banks in foreign correspondent banks, which has “reduced the direct intervention of the Central Bank and allowed a greater role for foreign banks in auditing commercial operations.”
Hantoush also pointed out that “if the Central Bank wanted to reduce the gap in the dollar, it should open the door to competition between banks and rely on a basket of currencies to expand the options available in the market”, calling for amending the criteria for evaluating local banks and raising their financial capabilities, which would contribute to achieving stability and increasing competitiveness, and thus stabilizing the dollar price. Can you see now why reducing the gap in the rate between the parallel market and the CBI official rate is so important and vital to the next step? This objective is not going to change. It has to be done. They must stabilize the dollar price to the official CBI price.
Oh, but here is the juicy part we all need to be paying attention to. Hantoush also suggested the “possibility of transferring the dollar to trading platforms in the stock market, to be sold to those entitled to it through direct transactions instead of sending the dollar exclusively to banks”, “stressing the need to organize these operations by switching to the “Forex” market,” and implementing mechanisms that ensure that funds are not transferred until the goods arrive with the banks’ guarantee. Did they just suggest using the trading platforms in the stock market i.e FOREX…. You gotta luv it… Music to my ears….
Now let’s take a step back to the White Paper. What does it say? Afterall this is the blueprint of how they are going to get back on FOREX, the end result. Let’s read page 50 of the White Paper below:
Then in the article economic expert Nabil Jabbar Al-Tamimi said: “The transfer platform at the Central Bank of Iraq was a mechanism for conducting financial transfers for merchants and importers through local banks, as the platform supervised these operations.” He added to Al-Sabah, saying: “The Central Bank has created the necessary conditions for conducting transfers by establishing direct relations between local banks and international banks through major correspondent banks, which means that transfers can be conducted in accordance with international standards without the need for an electronic platform.”
In other words, economic expert Nabil Jabbar Al-Tamimi is saying they are ready for FOREX after implementing all these banking and financial reforms. The White Paper reforms have been successful. It is time to move to the next stage which is….? Well folks financial and banking researcher Mustafa Hantoush just pointed out to us what the next stage should be. Yes, I mean FOREX! Did you hear me I said FOREX! Seems to me they are at the point of meeting the Obama era requirements and beyond as needed to go to this next stage. But remember this too, that just as the rules changed from the Bush era to Obama era they will most likely change from Obama era to Trump era in 2025. I do not see the Trump era administration not seeing the necessity for going to FOREX with all the progress of the reforms to move to the next stage. I am sure the US Treasury will agree. I am told by they CBI contact on Wednesday that they do agree and are giving Iraq a “thumbs up” to move ahead. So they agree too.
So, this next statement made by Al-Tamimi is also all telling in what the next stage is going to be and what they need to get there. I believe she is saying this because they are ready already for the next stage. She explained that the Central Bank has replaced the electronic platform “with regular and natural transfer mechanisms”, through solid local banks, which provides merchants with direct ways to transfer money, stressing that these mechanisms contribute to their obtaining the dollar at the official price, which helps in gradually reducing inflation as a result of the stability of the official dollar price.
Oh … but here is the juicy part of Al-Tamimi’s commentary in this article. He also stressed that “with this measure, the need to deal in the unofficial dollar on the black market is reduced, which enhances the stability of the financial market in Iraq.” So here it is said again. How many more times must we hear this before it sinks in what is holding up going to FOREX, the next stage?
Today is Thursday and I did have a conversation with my CBI contact yesterday. I could hardly believe that now the economic experts have finally turned to the mantra. The new mantra is – LETS GO TO FOREX! This was the same tone in my conversation. My contact sounded VERY excited and anticipatory.
There is another article that I want to address the title is “ADVISOR TO THE PRIME MINISTER: IRAQ IS WITNESSING AN EXPECTED INVESTMENT BOOM IN 2025”
The article says that advisor to the Prime Minister for Financial Affairs, Mazhar Muhammad Salih, confirmed today, Wednesday, that the Iraqi economic path is moving in the right development direction for the coming years, while indicating that economic growth in 2024 constitutes an incentive to expand economic activities in Iraq.
Saleh said, in a statement to the Iraqi News Agency (INA): “There is a principle in the economy called the economic accelerator, which means that the growth in the non-oil GDP, which reached 6% in 2024, will be positively reflected in the strength of national investment in 2025.” He added, “The Iraqi economy will witness a high investment boom in 2025 thanks to the economic accelerator factor in the investment field, in addition to the high positive growth effects of national income in 2024.”
Okay so what does this all “accelerator” stuff mean?
This means that when you get to a point in your growing economy, with the right policies and laws in place it is ready for takeoff, like an airplane that is all gassed-up, the pilots have conducted their sequence of flight checks and all passengers are seated and buckled up. Like the airplane, the economy can then take off. For the economy its “exponentially”. Like an airplane that has to use the bulk of its power just on takeoff to get off the ground, the same applies to an economy’s growth. But once the plane is in the air it can stay up in the with less force and glide through the air with its engines and so will the Iraq economy. That is what is going to happen in 2025. Through 2023 and 2024, the right policies and laws were put in place. The right measures needed for this growth and takeoff are finally attracting investors and we even see it in three (3) of today’s other articles too for this period titled:
“AL-SUDANI: IRAQ IS AMONG THE MOST ATTRACTIVE COUNTRIES FOR INVESTMENT DURING THE PAST TWO YEARS”
“SHELL OIL COMPANY ANNOUNCES ITS READINESS TO INCREASE ITS INVESTMENTS IN IRAQ”
Are you listening to what Saleh is telling us?
The news today is mind blowing and I hope everyone shares this passion too. It seems now that Iraq is moving into the BIG TIME and I mean major plays are flocking to Iraq to invest their money. This is not Mnt Goat over exaggerating this notion. It is Iraq themselves showing us proof.
The news is NO LONGER all about putting measures in place, such as the banking and financial reforms we have been reading about, but the “next step”. But what will the next stage look like? Will it be what we expect and want as Dinar holders and investors? I also do not want to downplay any more reforms either as they will be ongoing too. But the question I pose is has Iraq finally reached this turning point we all have been waiting for? Is it time?