Mon. PM KTFA News Articles 7-26-21

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KTFA

Samson » July 26th, 2021

After completing the fourth round of negotiations, the Iraqi military delegation returns from Washington

26th July, 2021

A government source reported, on Monday, the return of the Iraqi negotiating delegation headed by National Security Adviser Qassem Al-Araji, and Deputy Commander of Joint Operations Lieutenant-General Abdul Amir Al-Shamri, to the capital, Baghdad, after entering into negotiations with the US military leaders regarding the military withdrawal from the country.

The source said in an interview with “Mawazine News”, that “the delegation was able to complete the fourth and final round of the strategic dialogue between the Republic of Iraq and the United States of America.”

He added, “It is expected that a final statement will be issued on the meetings of the fourth round of the strategic dialogue, which may include a timetable for the withdrawal of US forces from Iraq at the end of this year.”

It is noteworthy that Prime Minister Mustafa Al-Kazemi is visiting the United States, and he is scheduled to meet with US President Joe Biden at the White House today, Monday.   LINK

Al-Furat Center discussed the repercussions of changing the exchange rate on the vulnerable groups in Iraq

24th July, 2021

Al-Furat Center for Development and Strategic Studies held its periodic meeting in its monthly series of forums under the title “The Repercussions of the Exchange Rate Change on Fragile Groups in Iraq” on Saturday 17/7/2021 in the presence of a group of professors, researchers and participants.

The forum began its activities with a research paper presented by Prof. Dr. Haider Hussein Al Tohme, researcher at the Center, which stated:

The financial pressures that the national economy was exposed to in 2020 prompted the Central Bank of Iraq to raise the exchange rate of the US dollar against the dinar from (1,182 = $1) to (1,450 = $1) on December 19, 2020. The Corona pandemic resulted in a sharp decline in the Oil revenues due to the collapse of oil prices to below (20) dollars per barrel in April of last year, and the consequent decline in oil revenues from nearly (6) billion dollars in January to less than (1.5) billion dollars in April, with a decline rate that exceeds (75%) As a result of the high expenditures of the Iraqi government, the government financial deficit widened and the Ministry of Finance was forced to borrow from commercial banks and re-discount loans with the Central Bank, for the purpose of paying salaries and financing other necessary expenses.

The decision to devalue the dinar was not appropriate in terms of timing or amount, as a monetary shock was added to the economic, financial and health shocks that afflicted the poor and fragile classes since late 2019 due to the demonstrations, the stagnation of economic activity, the collapse of oil prices and the outbreak of the Corona virus, especially with weak protection programs necessary to absorb the impact of the exchange rate shock on these classes.

Raising the dollar exchange rate has generated multiple economic and social costs, the most important of which is the loss of monetary stability, speculation on the dinar, and the weak environment incubating investment, as well as the decline in aggregate demand rates and the deepening of the existing economic stagnation as a result of the repercussions of the Corona pandemic. Also, the high exchange rate of the dollar in a country like Iraq that depends on imports to feed the local demand for various types of goods has generated inflationary pressures that reduced the real incomes of the middle and poor classes, especially with weak government control over traders and suppliers of various types of goods imported into Iraqi markets.

In 2020, the economic, social and health pressures on the poor and vulnerable classes in Iraq increased, for several reasons, including:

– Increasing inflation rates in Iraq to nearly 6% per month due to the deterioration of the value of the Iraqi dinar against the dollar.

The expected increase in unemployment rates in the country due to the repercussions of high prices and the suspension of many commercial and service activities in the country.

– Increasing poverty rates and the rate of vulnerability. The World Food Program (FAO) in Iraq, affiliated with the United Nations, revealed that the price of the food basket had risen to 14 percent after devaluing the local currency against the US dollar.

According to UNICEF, the poverty rate reached 31% for the year 2020 due to the Corona pandemic, compared to 20% in 2018, and that 42% of the population is classified as a vulnerable group, especially after the devaluation of the dinar against the dollar, as they face higher risks because they suffer from deprivation in terms of Many dimensions, including: education, health, living conditions, and financial security.

Also, about three million people in Iraq, including 731,000 internally displaced people, did not have enough food during the recent period.

In order to understand more about the repercussions of the devaluation of the Iraqi dinar and the possible solutions to alleviate the financial and economic pressures on the poor and fragile classes in Iraq, the following two questions were put to the audience:

The first question // Were the returns achieved from the devaluation of the dinar worth the repercussions that the exchange rate had on the fragile classes in Iraq?

The second question // What are the steps required to reduce the adverse effects of devaluing the dinar on the vulnerable classes in Iraq?

Interventions

Sheikh Mortada Maash:

Sheikh Murtada Maash identified a set of factors that were behind the reduction of the Iraqi dinar exchange rate in return for raising the price of the dollar, which are:

The first factor: oil, as its prices fell to the lowest levels at a time when the budget depends on oil revenues by a very large percentage, which caused a major financial crisis that prompted Iraq to borrow from the International Monetary Fund and local banks to fill the deficit in the budget.

Iraq has been under pressure from the International Monetary Fund to reform the Iraqi economy, in particular raising the price of the dollar and reducing government support for fuel and the ration card since 2014, and due to the ISIS war, it was postponed until the recent oil crisis that prompted Iraq to implement the fund’s policy (lowering the exchange rate) and to provide the necessary funds to cover the budget deficit Especially employee salaries.

Maash goes on to say that the IMF’s policy is a long and broad policy that includes combating corruption, governance, transparency and integrity and encouraging the private sector, but it focuses only on two things: raising government support and decreasing the exchange rate without paying attention to other issues, which indicates the Fund’s lack of credibility in its reform policy towards the Iraqi economy.

The second factor: corruption, is the main problem that affects people, as it has led to the erosion of the Iraqi economy, and this is what the International Monetary Fund has not met.

The third factor: monopoly, which leads to a violation of the principle of equal opportunities and the latter leads to production, movement and work, and given the control of a group of forces in the arena that turned into large fiefdoms over all the joints of the economy, and the result prevents any second party from the private sector and internal and external investments from working.

The fourth factor: consumption, as Iraq has become sharply consuming and unproductive, and all goods are imported from abroad, and this means a decrease in production, massive import and the presence of large unemployment.

The conclusion reached by Sheikh Maash is: The devaluation of the dinar due to the rise in the price of the dollar led to an increase in prices without a corresponding increase in the citizen’s income, causing great harm, while the government, parties and privileged owners made small gains from this decision. And after listing the reasons and the result, he mentions a set of steps related to the second question, as follows:

There must be a private sector capable of containing unemployment, and security stability is very important to attract domestic and foreign investments.

It has been noted that foreign companies, especially Western ones, have begun to leave Iraq, which means that Iraq may be heading towards the Lebanese model. There is a similarity in terms of conditions and circumstances to Lebanon in terms of the internal crisis of fiefdoms, quotas, monopoly, dominance, rent and regional dependency.

Author Ali Hussein Obaid: 

He believes that decreasing the exchange rate is a wrong procedure because of the disadvantages that it left on the simple citizen, and it is an escape from a primary responsibility of the government and it was supposed to take the correct decision, and he justifies the escape by the fact that the state did not take alternative policies that contribute to maximizing resources such as fighting corruption, recovering looted money and maximizing the outlets’ resources border, taxes, etc.

The devaluation of the dinar led to two types of theft, the first from the employees’ salary and the second theft is the price hike. This decision raised the prices of important goods to 100% or 75% at best, while the dollar rose by 20-30%.

Researcher Basem Al-Zaidi:

 He believes that politics and the economy are two sides of the same coin. Whenever the state’s policy is a balanced, rational policy based on firm foundations, the economy will recover and take its place, whether the private sector or the public sector. And given the confusion in the political, economic, social and other decisions since the establishment of the Iraqi state, it led to the bad results we are experiencing today, which are negatively reflected on the citizen.

Where it became the only one affected, whether the exchange rate was raised or reduced, and the evidence is that the dinar was strong during the seventies and weak in the nineties, and in both cases the citizen is the one who is affected.

Researcher Haider Al-Jarrah:

 In his intervention, he asks: Was the change in the exchange rate the result of an external factor, the International Monetary Fund, or was it the result of an internal factor, the government? What are the conditions that must be met in order for the exchange rate to return or can the exchange rate return to its condition? Are there any chances that the dollar price will rise to a higher price if the government continues its economic illiteracy?

Researcher Muhammad Al-Safi:

 He wonders: Was the price of the dinar a realistic price before the exchange rate devaluation and a real one representing the Iraqi economy? He answers: In fact, a strong currency always harms the local product, as all countries whose currency appreciates against the dollar are non-producing countries that do not have production.

Regarding the low exchange rate, we note there are countries, especially after the Corona pandemic, their currencies decreased, such as Turkey and Iran, which are semi-industrialized countries, but the Gulf countries relied on their sovereign funds and continued to support their currency without reducing it. Many studies indicate that the future of these countries will be greatly affected by the drop in oil prices because they do not have Economic infrastructure that qualifies it to at least compete with neighboring countries such as Turkey, Iran, India, Pakistan and others.

Therefore, the high currency harms the local product, while the low currency harms the local consumer, as is the case in Iraq today, because our society is consumer and was affected by the currency’s decline against the dollar.

The voices of reform always rise with the drop in oil prices, and as soon as oil prices return to the rise, those voices calling for reform, whether governmental or popular, disappear, and this will put us in a real problem in the face of achieving predictions about alternative energy sources, and Iraq will become like the case of Lebanon and worse than it.

The human rights defender, Ahmed Juweed

 He finds in his intervention that the decline of the dinar and the rise of the dollar is one of the many problems that the Iraqi state suffers from, and that the main cause is the failure to formulate the general policies of the state, which is the government’s responsibility.

All successive governments of the Iraqi state from 2003 until now have failed to draw up an economic policy and give a certain identity to the Iraqi economy, as the economic policy was an improvised and unstudied policy.

There are two interests in Iraq: the interest of influential parties that include politicians and economists, and the interest of a citizen, and the victim is always in the interest of the citizen in any issue and its solution is at the expense of the citizen.

The state was supposed to study this step and its repercussions before taking it, especially since this step of raising the dollar price from 1190 to 1450 is a big step, and the only beneficiary is the banks that buy and sell the dollar from the outlets.

The result is that raising the price of the dollar against the dinar has caused harm to the citizen, whether he is an employee, a consumer or a private sector, and the beneficiary is the political and influential class and the owners of international relations.

Hussein Ali Hussein:

 It is believed that there are two sides to the issue:

The first: raising the price of the dollar is a precautionary measure by the state to avoid the collapse of the economy, but it affected those with limited incomes.

Second: There are many alternatives that could have been resorted to before raising the dollar, which is activating tourism.

Dr. Hussain Ahmed Al Sarhan:

 He goes on to say that there is a set of economic policies (financial, monetary, commercial) and that the exchange rate is one of the branches of monetary policy, it must be carefully synthesized to avoid conflict between them to achieve a goal of decreasing the exchange rate in Iraq.

Most countries seek to reduce the price of their local currency and raise the price of the dollar, in order to increase the economy’s ability to attract investments by virtue of the low cost of production for the foreign investor, and to maximize tourism revenues by virtue of low prices for foreign tourists, to preserve the local currency, and to strengthen the local product, meaning that the devaluation of the currency it means more export.

What happened in Iraq is the lack of control over the border crossings and the exit of the dollar strongly due to the dependence of consumption on imports, which requires the dollar to achieve in addition to the smuggling of the dollar. The goal of the government was to raise the price of the dollar to avoid the smuggling of the dollar and to preserve the foreign reserve, which decreased from 80 billion dollars to 38 billion dollars. dollar.

The returns achieved from raising the price of the dollar were not worth the costs involved, and it can be returned to its previous position because it is a political decision, and the White Paper is a good strategic plan that needs a political decision that works to implement it, and what was stated in the 2021 budget is contrary to what was stated in the White Paper.   LINK

Iraq is at the center of the storm.. “Future wars will be fought over water instead of oil”

26th July, 2021

The British newspaper “The Independent” warned of the dangers of water crises in the Middle East, including in Iraq, Lebanon, Iran and Syria, which are causing a nightmare of social unrest and tensions between countries.

And the British newspaper said in a report translated by Shafaq News Agency, that “future wars will be fought over water instead of oil,” adding that this saying “appears as an increasingly terrifying fact with each passing year, especially across the Middle East and North Africa, which are regions located on frontline of the world’s climate crises.

But this year in particular, the paper said, water has become an alarmingly scarcer resource as wars, crumbling infrastructure and an unparalleled economic collapse have led to a catastrophic outburst of anger linked to record-high temperatures.

The newspaper pointed out that the water and energy crises have provoked turmoil in a number of countries from Sudan to Iran, and provoked cross-border conflict, and the situation will worsen as the summer and misery continues.

The newspaper stated that it had already sounded the alarm about this situation for a long time, but with the emergence of severe weather events around the world in light of the effects of the “Covid 19” epidemic, the issue has become much more urgent, because people have lost access to potable water. This will make stopping the spread of the virus more difficult. The newspaper warned that with the spread of the second and third waves of the deadly virus worldwide, it is no longer possible to commit to achieving water, sanitation and hygiene programs, as with the delay in giving vaccines for the year 2022, the abundance of water and hygiene will be the only defense they have against the disease.

The newspaper pointed out that Lebanon, which floats on the Mediterranean and is rich in mountains, forests, lakes and streams, is the latest country to now face a water crisis. The United Nations Children’s Fund (UNICEF) warned on Friday that the water supply network in Lebanon is on the verge of complete collapse, and that during In just a few weeks, four million people, including one million refugees, will face the risk of losing access to potable water, as pumping water will gradually stop throughout the country.

In addition to the water crisis in Lebanon, there is the issue of economic collapse, which, according to the World Bank, is among the worst in the world during the past 150 years, as the country is so bankrupt that parts of the country do not have electricity. And she added that Lebanon is not alone on the brink of the water crisis. In Iran, Amnesty International said it had verified footage proving the killing of eight protesters during a crackdown on protests due to severe water shortages in Khuzestan. Iranians have taken to the streets in dozens of towns due to the escalating drought that environmentalists say the state has failed to deal with, with temperatures soaring to about 50 degrees Celsius.

In Iraq, especially in the south of the country, where the historical marshes were increasingly drying up, the lack of water also caused frequent disputes between Iran and Iraq, which depend on the Tigris and Euphrates rivers for almost all of its water. But Iran is building dams to re-divert some of that water, which is causing concern and causing a major water shortage in Iraq. She also referred to similar problems that erupted between Iraq and Turkey on the issue of rivers, and with regard to Syria, the United Nations warned of severe droughts due to the decline in the levels of the Euphrates River, which means that Syria, stricken by war, is currently ranked seventh on the global risk index for The 191 countries most at risk of a “human or natural disaster” are beyond the capacity to deal with.

The British newspaper concluded by saying that “a comprehensive solution to reduce the impact of the climate crisis by settling disputes and ending corruption is the only way out of this nightmare.” And she added that with the Corona virus continuing to haunt the earth, “before it is too late, we need now more than ever to invest in water, sanitation and hygiene programmes.”   LINK

Japan, Britain and America are among the most indebted countries in the world

26th July, 2021

The head of the Center for Investment Analysis and Economic Research in Russia, Daniel Namitkin, said on Monday, July 26, 2021, that the list of the most indebted countries in the world comes at the forefront of Japan, Britain, America and the countries of the euro area.

Namitkin noted that according to the Institute of International Finance (IIF) and the Organization for Economic Co-operation and Development (OECD), at the end of 2020, the total public debt was 105% more than the gross domestic product of the world as a whole. He explained that the highest level of public debt was recorded mainly among the developed countries: Japan – 234%, Britain – 144%, the United States – 160%, the Eurozone – 120.4%.

He stressed that the Corona virus crisis showed that in the event of a deterioration in the global economic conditions, the global regulators are ready to take unprecedented measures to provide liquidity to the markets in order to maintain the stability of the financial system.

He added that in the current circumstances, some concerns may be caused by a noticeable acceleration in inflation in developed countries, as a result of large-scale measures to support the economy during the epidemic.

According to him, despite the huge levels of debt burden in many large countries, debt servicing problems for the foreseeable future are not expected.

It is noteworthy that the total global debt rose to its highest level ever at the end of 2020, to reach 281 trillion dollars, due to the repercussions of the pandemic, which is equivalent to more than 355 percent of global GDP, according to the Institute of International Finance.

Experts believe that the world will have no other choice but to continue borrowing during 2021. Governments with severe budget deficits are expected to increase debt by an additional $10 trillion in 2021, which will exacerbate political and social pressures and will be difficult to resolve.  LINK

Source: Dinar Recaps

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