All is calm in Iraq. There are no new revelations occurring. NO RV, NO reinstatement to FOREX. But we (you and I) together have been following this RV saga for a long time.
We know the banking reforms are all completed, enough to meet the White Paper reforms. Also remember what I told you. There is new sheriff in town and his name is Donald Trump. What will his policy be towards the Iraqi financial system.
Four years have passed since his last administration and there has been way too much progress in the banking and financial reforms to turn back to the days of the prior Trump administration laden with sanctions. I am told by my CBI contact that Al-Sudani is hoping for an invite to visit the new President in Washington, or better yet have him come to Iraq. Let’s see how this plays out.
Meanwhile the Committee for the Project to Delete the Zeros still waits for further orders. My contact was surprised about the new three zero notes for the visually impaired. I was told these were replacement notes from the damaged notes taken out of circulation and burned. The monetary mass did not change due to this action. This was NOT a measure to regulate inflation.
I am going to continue my commentary today for our RV Status with an article titled “HANTOUSH: ELECTRONIC PAYMENT REDUCES THE COST OF PAPER CURRENCY AND SUPPORTS ECONOMIC TRANSPARENCY”.
If you remember that “the government has formed a special committee in cooperation with the Central Bank to support this electronic system. We read today that the electronic payment in Iraq witnessed a huge leap, as it did not exceed 300 billion dinars during the years 2020-2021, but today it has reached 10 trillion dinars,” indicating that “this development was accompanied by a significant expansion in the use of financial technology. It adds that “The number of point-of-sale (POS) devices has witnessed remarkable growth, jumping from 8,000 devices to more than 40,000 devices” and the best part is they just told us that and I quote “the government has succeeded in marketing the culture of electronic payment”. If you remember in early January 2023, the Finance Committee told us this was their goal to market the electronic payment process and do it in a BIG way. Sounds like their goal was accomplished. I know from my CBI contact that this had to be accomplished to conduct the Project to Delete the Zeros. Dr Shabibi also in 2011 told us this was an integral part of this plan to withdraw nearly 2/3 of the monetary mass in circulation and to conduct the Project to Delete the Zeros. Well… they are telling us now this is successful and done.
Next, we see three articles about the importance of getting the Oil and Gas Law passed. Many ask me if this is still important and necessary prior to the RV happening. I encourage everyone to take a look at the following articles and make this judgement call for yourself. All I can say is I was informed way back in 2011 that all constitutional articles of the new Iraqi 2005 constitution had to be implemented prior to Iraq regaining its full sovereignty. Okay, so you say that Iraq is fully out of Chapter VII and thus is now a fully sovereign again. Yes and No! You would be right too in words but in practice are they really sovereign or still digging themselves out this sanctioned-like mode. It’s sad that the elitist has such a stronghold still on Iraq. Remember also they are on the last year of a three-year budget (2023, 2024, 2025).
“AZM ALLIANCE: IRAQI ECONOMY IS “BLEEDING” DUE TO HALTING THE REGION’S OIL EXPORTS”
“PARLIAMENTARY FINANCE COMMITTEE MEMBER IDENTIFIES ‘MOST DANGEROUS ISSUE’ IN 2025 BUDGET”
So, let’s take a look at the theme and main points in these three articles and what they tell us about the Oil and Gas Law and the protection of the Oil revenues in general for Iraq and it’s economy.
Here is the problem:
“Oil expert Kovind Shirwani commented on Tuesday (January 21, 2025) on amending Paragraph 12 related to the export of Kurdistan Region oil. Sherwani told Baghdad Today, “The amendment was submitted by the Federal Government Presidency in consultation with the Ministry of Oil, and it addresses a major dispute over calculating the region’s oil production fees.” He added, “Because of the dispute, the region’s oil exports were halted for 22 months, and the losses to the Iraqi economy due to the halt of 400,000 barrels of oil per day reached 18 billion dollars.” It appears the holdup is that many members of parliament do not like the way the budget is calculating the profit margin from the oil sales. They feel the amendment in article 12 of the budget law is not taking into account the ACTUAL cost of production for each well. Instead it uses a generic method for all wells that do not apply to all wells.
Member of the Parliamentary Finance Committee, Mustafa Al Karawi, “revealed the most prominent challenges facing the 2025 budget, while indicating that the “most dangerous thing” is the halting of investment projects. ” Remember these projects cannot continue without money and if the oil in not pumping then there is no money to support them. Since they have delayed these projects long enough, Al-Sudani does not want any delays in progress. It is apparent he has a timetable of some sort he is aiming for. It just could be his mandates and completing them prior to the next elections. Remember that one of his mandates has been to raise the rate of the dinar. He has said this many times. His re-election is in 2026.
Al-Karaawi said, during his hosting on the {Free Talk} program broadcast on Al-Furat satellite channel this evening, that “securing salaries is a talk directed at the people, but the biggest challenge in the 2025 budget is the suspension of investment projects that will be directly affected, followed by operational projects,” stressing that “this delay will leave major economic repercussions.”
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This amended budget (THE AMENDMENT TO ARTICLE 12) is necessary to support the implementation of the approved budget items, especially the items related to oil imports, in light of the increase in public expenditures and the worsening financial deficit.”
The head of the Azm Alliance pointed out that “the oil export mechanism, stipulated in the budget law, was carried out through the Iraqi Oil Marketing Company (SOMO), in accordance with the constitution and the decisions of the esteemed Federal Court.” If this is correct than what’s the problem?
Why was oil production cut off? I quote from the article “this halt was the result of accurate or inaccurate price estimates of the costs of oil extracted from the region’s fields, as production costs vary according to the nature of the land and the depth of the oil wells”.
So, it appears they can not get a quorum in parliament to vote on this amended budget piece due to many Kurdistan representatives feeling that actual cost of production is not the same for every well and thus there needs to be a better method in place. Seems reasonable to me. I will tell you that I believe that what they want in this amended budget is in the Oil and Gas Law that is still sitting in the cabinet ready for a second reading. It would solve this problem.
Here is the Solution:
He added that “the subject of the oil and gas law represents a radical solution to end the oil file with the Kurdistan Region and regulate financial relations between the two sides, but the region has not yet committed to delivering any financial revenues to Baghdad, although the Ministry of Finance has proven the delivery of all salaries of the region’s employees with official documents, while the Kurdistan government has not provided evidence of the delivery of its oil revenues to the federal government.” This is the same old, same old. Baghdad holds up the salaries to Kurdistan and then Kurdistan holds up legislation until it get what it wants. But it appears this is not the case this time around. Instead Kurdistan simply wants a more accurate why of estimating the cost of production so it can then accurately deduct the costs from gross profits and then send the net profits over to Baghdad.
Are we waiting for this amended budget to get the RV process started again? I do not believe this is at the heart of the issue(s) holding up the process. Instead, the CBI is being very cautious to see how the U.S. Trump administration is going to play out. Remember that Iraq is ditching the dollar but Trump has vowed to keep the USD as “the” reserve currency around the world. Remember Iraq just de-dollarized and would luv to get off the Petro-dollar and find another peg or basket of currencies to peg to. I know for a FACT the IMF has been working on this new basket of six currencies for this purpose. Will the US Treasury under the Trump administration accept it?
According to recent news channels in Iraq in article titled “AL-SUDANI IN A TELEGRAM TO TRUMP: WE ARE COMMITTED TO STRATEGIC RELATIONS UNDER THE UMBRELLA OF RESPECT FOR SOVEREIGNTY AND NON-INTERFERENCE”
The Prime Minister Mohammed Shia Al-Sudani sent a congratulatory telegram on, Tuesday, to US President Donald Trump, on the occasion of his assumption of office as President of the United States of America. Al-Sudani indicated in the telegram, according to a statement from his office, a copy of which was received by {Euphrates News}, that Iraq aspires to strengthen the bonds of cooperation and partnership with the United States, within the framework of the strategic agreement and the common interests of the two countries, stressing the importance of working to support the foundations of stability, security and development regionally and internationally. Opps there’s the STABILITY and SECURITY again…..
Anyone who tells you that this investment in the Iraqi dinar is just a pipe dream, then refer them to my advice. Maybe they were just listening to the wrong people…..
