Many people say the HCL could technically function at the current 1300 IQD exchange rate, but when you look deeper into Iraq’s monetary reforms, that argument becomes harder to defend.
Iraq has spent years trying to reduce physical cash in the streets, strengthen the banking sector, expand digital payments, control inflation, reduce dollar dependency, and maintain single-digit inflation. Flooding the economy with massive amounts of dinars — even digitally through HCL oil revenue distributions — would still expand the money supply and risk inflationary pressure, directly conflicting with the CBI’s long-term goals of monetary stability and stronger purchasing power.
This is why many believe Iraq ultimately needs a stronger and more efficient dinar before fully implementing the HCL in a meaningful way. A higher-valued currency would allow Iraq to distribute real purchasing power without injecting enormous volumes of currency into the system. It would also align with the CBI’s long-discussed “delete the zeros” project, banking modernization, de-dollarization efforts, and the push toward a more internationally integrated financial system.
At some point, the question becomes:
How can Iraq simultaneously reduce cash circulation, control inflation, modernize the banking system, and distribute meaningful oil revenues to citizens using a weak 3-zero currency without creating contradictions inside its own monetary policy? 👀💵🇮🇶
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Iraq’s Proposed Federal Council Remains Sidelined by 19-Year Legislative Impasse over Draft Oil and Gas Law
The 2007 Draft Oil and Gas Law outlines the foundational principles for establishing a Federal Council to govern Iraq's energy sector and distribute management powers between central and regional authorities. However, the comprehensive framework has never been formally enacted due to a 19-year political deadlock over revenue-sharing and the legislative control of lucrative oil fields.
The draft prepared by the Council of Ministers' Oil and Energy Committee on February 15, 2007, never became law due to nearly two decades of disagreements between the Kurdistan Regional Government and the federal government.
Draft Oil Law Enshrines Iraq’s Constitutional Energy Rights
The draft explicitly incorporates Article 111 of the 2005 Constitution, affirming that "Oil and gas are owned by all the people of Iraq in all the regions and governorates."
Furthermore, the draft accurately references Articles 110, 112, 114, and 115 to outline the legal distribution of authority and residual powers between federal and regional governments regarding resource management.
Proposed Federal Council to Dictate Iraq’s Energy Policy
The Federal Council is mandated with approving general energy policies and hydrocarbon strategies developed by the Ministry of Oil in coordination with producing regions.
The Council issues regulatory directives for exploration and production contracts, oversees the development of domestic oil fields and transit pipelines, and retains veto authority over any substantive modifications to these plans.
Additionally, the regulatory body is empowered to review active licensing contracts, endorse standardized development and production templates, select specific field models, and establish pre-qualification criteria for foreign energy firms, provided that any contractual revisions preserve Iraq's national equity share.
Council Authorized to Oversee Oil Exploration and Development
The Council is tasked with guaranteeing the exploration and development of oil resources in the best possible way for the public interest and in accordance with international standards. To facilitate its work, it is authorized to resort to the services of an office of independent consultants and local and international experts.
It can also establish a new internal department and regulations to organize its work, and its members have the right to propose oil-related legislative and policy projects.
Creation of Independent National Oil Company
To shift the state's energy role from active operation to high-level policy and regulation, the 2007 framework mandates a massive structural reorganization of the country's energy infrastructure. It orders the transfer of all technical and commercial oil activities away from the exclusive control of the Ministry of Oil to specialized entities.
Most notably, the draft dictates the creation of an independent Iraq National Oil Company (INOC) to spearhead operational duties while granting distinct management authorities to regional governments and producing governorates.
Draft Oil and Gas Law Grants Kurdistan Region Authority
According to the draft, the Kurdistan Region has several authorities, the most important of which is proposing an energy investment plan to the federal authorities.
Kurdistan has the right to license the development of new energy fields and must have representation in the federal council. It is also the region's duty to cooperate and coordinate with the federal authority in implementing the general plans of the energy sector.
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