MY RECENT CONVERSATION WITH MY CBI CONTACT
So, in today’s Newsletter commentary I want to bring you news of my latest conversation with my CBI contact. Her information combined with news from the articles can give us the BEST picture of the situation in Iraq. My contact is not just some idiot off the street or some contractor looking for attention. She works directly in the CBI and attends many of the ongoing meetings. All the information she brings is not secretive or sensitive in nature.
In my last Newsletter dated 08/06 I asked that everyone look at this current situation as a short-term saga. It is actually a very good situation and will help Iraq move to the next step of the currency reform process much, much sooner. Is this not what we want? In the recent news from Iraq we hear from the results of the interrogation of Ali Al-Alaq (the CBI director) before the Integrity Commission. Once again, he says that everything is going according to plan. Really?
So, I asked my CBI contact on Wednesday that if everything is “going according to plan” as Ali Al-Alaq said then why has the Project to Delete the Zeros not been started in mid-June that the plan called for?
Her response to my question was that the CBI has a plan for banking and currency reforms and that the plan did call to roll out the project in mid-June but it was the Federal Reserve (Feds) the stopped it . Again she told me that the plan can not move ahead without written agreements for assurances the US Treasury would continue the process once started.
She said that the Feds do not agree with the CBI plan as new developments are occurring since the plan was devised.
She said the CBI must now be flexible and move more aggressively on the reforms due to these new developments in the region.
She then explained the obvious to me as she told me about the corruption still lingering with the currency auctions and the dollar.
She explained again to me, that there are two views as to how to handle the crisis with the dollar.
1- The Feds want the process to move a certain way and the CBI, under the direction of Ali Al-Alaq, want it to go another way.
2- The Feds feel that taking much more risk in the Ali Al-Alaq plan is not suitable and they sent in the US Treasury to fix it.
So, you can read Ali Al-Alaq’s testimony in the article today with the Integrity Committee as he covers a lot of issues. He sounds confident. But reality is what it is and the corruption continues.
Of course, he is going to paint a rosy picture of successes not failures.
The CBI had been warned many times about this corruption with the dollar and so my contact told me the Feds simply have had enough and it is time to step in and fix it.
It is that simple.
But I have to ask myself then why didn’t Ali Al-Alaq do it. Yes, just do it if it was required by the Feds and he knew it was required a long time ago. Isn’t this also what you are thinking?
Then my contact reviewed the new developments with the Israeli war on terrorism and this issue could explode the middle east if not handled correctly.
She felt the reason why the Feds moved in so fast was that these dollars from Iraq are being laundered or funneled to Iran, Syria and Lebanon to fund these terrorist groups. This is the urgency and why they want to expedite the reforms and stop the flow of dollars now. She emphasized the word “NOW” not some months down the road.
As the conversation with my CBI contact in Iraq continued I could not help but remember the phrase “the best laid plans of mice and men” is a proverb that means that no matter how well prepared one may feel, their plans may still fall apart due to circumstances outside of their control.
My CBI contact could not give a more certain timeframe when her committee would be able to rollout the Project to Delete the Zeros.
It seems the Feds want the parallel market rate to come down to match much more closely to the official CBI rate.
Also the currency auctions must also come down to the amount to support the economy at about 250 million per day .
Funny how Ali al-Alaq will tell the Feds that is at this amount, but when the Feds look at the audit they see double the amount almost each day.
The director then explains what that extra is and that it is “under control”.
Basically, telling the Feds don’t worry about it. But the Feds do worry about it and it is an issue that needs a resolution. Are you see a conflict yet with the CBI and the Feds?
She said this is one example of the conflict in managing the dollar with the CBI vs the Feds.
Both the CBI and the Finance Committee agree that there are ample dollars in the reserves to handle these differences.
Oil sales are high and so the risk is low.
However, the Feds are more worried about who is receiving these dollars from the money laundering taking place through the parallel black market and auctions. This is the issue.
So, to me it all stems about what side of the fence are you on? Are you more about managing the banking in Iraq or policing the situation of sanctions with these terrorist countries.
Obviously, the Iraqi Central Bank cares more about managing Iraq and the Feds care about the sanctions.
It is also a case of national sovereignty as Iraq is supposed to be a sovereign nation.
The attitude is that if dollars do flow out, it the property of Iraq as it is the oil revenues.
It is not the property of the Feds and so why do they care so much?
The reserves are high and can absorb the loss. It is also felt there will be some levels of corruption as long as it is controlled to levels that are manageable.
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