Iraq’s Balancing Act: Al-Sudani’s Unannounced Visit to Erbil
When Iraqi Prime Minister Mohammad Shia Al-Sudani arrived unannounced in Erbil, it was a stark reminder of the complex political and security landscape that Iraq and the broader Middle East region navigate daily. The Prime Minister’s meeting with Kurdish officials, including leader Masoud Barzani, covered an array of national and regional issues, from the implementation of the government program to security and political developments, and the situation in the Gaza Strip.
Harir Air Base Attack: A Security Challenge
Shortly after Al-Sudani’s visit, the Harir air base in Erbil came under attack by a pro-Iran militia group, an incident that set the base’s fuel storage facility ablaze. This event highlighted the region’s ongoing security challenges, especially amid rising tensions between the United States and Iran-backed militias in Iraq. The fear that Iraq may become a battleground in the broader regional conflict involving Iran and the United States is palpable.
Al-Sudani’s interactions with US Secretary of State Antony Blinken and Iranian leaders, including Supreme Leader Ayatollah Ali Khamenei and President Ebrahim Raisi, underscore Iraq’s delicate diplomatic balancing act. As Iraq attempts to maintain relationships with the United States and Iran, it seeks to avoid entanglement in escalating regional tensions. Iraq’s advocacy for a ceasefire and humanitarian aid for Gaza demonstrates its endeavors to engage with regional stakeholders and promote diplomatic solutions.
Internal Dynamics: Political and Economic Considerations
The influence of Iran-backed militias and the challenges of addressing their activities are central to understanding Iraq’s geopolitical dynamics. The militias’ relationship with Iran and their impact on Iraq’s internal stability and external relations pose significant challenges. Economic dimensions, such as the Kurdistan Region’s share in the federal budget and the fate of the region’s oil exports, underscore the interconnected nature of political and economic considerations. These complexities point to the intricacies of governance and resource management within Iraq.
The broader implications of these developments extend beyond Iraq’s borders, impacting regional stability and the ongoing geopolitical dynamics in the Middle East. The delicate balancing act of Iraqi leaders, the influence of external actors, and the internal complexities of governance and security collectively contribute to the evolving landscape in Iraq and the broader implications for regional stability.
Middle East Crisis: The Declining Influence of the United States
In the past three decades, the United States’ influence in the Middle East has seen a steady decline, despite its economic prowess. The recent attack on Israel by Hamas and the consequential retaliation has amplified this reality, with American diplomatic efforts yielding minimal results. Secretary of State Antony Blinken, referring to the situation, stated it as a ‘work in progress’. The persisting attacks on American targets in Iraq and Syria by Iran’s proxy groups have further mired America into a complex Middle Eastern quagmire.
The ‘Octopus’ Expansion: Iran’s Expanding Influence
The Iranian government’s anti-American and anti-Israeli sentiments have spearheaded its influence throughout the Middle East, creating a situation often referred to as the ‘octopus’. This expansion poses a significant threat to global peace and security, especially when aligned with other rivals of America such as Russia and China. The Iranian government’s unchanging stance of confrontation with the USA underscores the need for a comprehensive strategy to counter it.
The Counter Strategy: An International Coalition
Countering the Iranian government is not solely the responsibility of the United States. The establishment of a strong regional or international mechanism to curb the destructive behaviors of the Islamic Republic is essential. This coalition could focus on political and diplomatic weakening of the Islamic Republic at the regional and global levels, as well as cooperation and pressure on regional governments, including Iraq, to deal more seriously with the Islamic Republic’s proxy groups.
The Gaza War: Diplomatic Challenges for the United States
The situation in the Middle East has further been complicated by Israel’s retaliation to Hamas, with Prime Minister Benjamin Netanyahu rejecting calls for a ceasefire. The crisis has exposed the limited influence of the United States in the region, with minimal support from friendly Arab governments, NATO ally Turkey, and Israel. The American clock is ticking, but skepticism lingers regarding the pace of diplomacy to give Israel the time to rout Hamas.
The Biden Administration: A Passive Observer?
The Biden administration’s response to the crisis has been marked by attempts at face-saving measures and compromise, but with limited success. The administration’s portrayal as a passive observer of war crimes has been met with skepticism. The U.S. has significant leverage in weapons sales and diplomatic cover, but these are yet to be seriously considered.
The crisis in the Middle East has underlined the complexities and challenges of American diplomacy in the region. The diminished influence of the United States, the entanglement with Iran’s proxy groups, and the resistance to American efforts to prevent further escalation in the region call for a comprehensive and strategic approach. As the crisis continues to unfold, the resolution lies within the Biden administration’s diplomatic dexterity in the Middle East.
There is some really good news...out of Iraq... Article: "The central bank allows Iraqi banks to import foreign currency..."
Of course everybody's...talking about how great it is but what they're not doing is explaining to you why it's great...The move...is really going to open the doors for them economically and strengthen the dinar...This article is a biggie...not just good but very good.Why is this such a big deal Pimpy? Oh it's a very big deal. Iraq is now allowed to import foreign exchanges.
There's a difference between an RV and an RI. The revaluation we seen happen a couple of times. We seen it go from 1,190 - It was devalued and it dropped to 1450. Then it revalued back up to 1320. So revalue we see quite often. RI is a reinstatement. If we remove the sanctions and the currency is reinstated that rate would be $3.22. ..
One year report card...Al-Sudani and his cabinet...Given all the circumstances I would give Sudani definitely a B- . To be honest I thought it was going to be a lot worse than this.
But like I said once the budget is passed we're going to start to see people's true colors. The second year is going to tell us a whole lot about Al-Sudani. Just when you think you got the right guy in there who seems to be getting everybody on the right path we have another election coming up again. That's going to tell us everything we need to know...
Iraqi Prime Minister and Kurdistan Region President discuss national issues and elections, 9 NOV
Shafaq News/ Iraqi Prime Minister Mohammed Shia Al-Sudani visited Erbil Governorate and held discussions with the Kurdistan Region of Iraq President, Nechirvan Barzani. The meeting, which took place against the backdrop of critical national developments, addressed a range of financial, political, and security matters crucial to the future of Iraq.
A key focus of the discussion was coordinating efforts between the central government and the Kurdistan Region authorities to support the effective execution of the government's program. Prime Minister Al-Sudani emphasized the primary goal of enhancing public services and improving economic conditions across all regions of Iraq.
Elevating living standards for Iraqi citizens remains at the forefront of the government's agenda, and collaborative efforts between the central government and regional authorities are deemed essential in achieving this objective.
Both sides also discussed the forthcoming parliamentary elections in the Kurdistan Region of Iraq, scheduled for February. The two leaders underscored the importance of supporting the Independent High Electoral Commission in conducting fair, transparent, and credible elections. Ensuring that the electoral process aligns with the aspirations and desires of the citizens in the Kurdistan Region was a shared commitment during the meeting.
The discussion delved into the multifaceted challenges faced by the region, particularly in terms of security and economics. Both leaders emphasized the shared objective of enhancing and sustaining stability in the Kurdistan Region and, by extension, throughout Iraq. Addressing these challenges is vital to fostering a secure environment, economic growth, and prosperity.
Between speculation and smuggling...the rise in the dollar paralyzes the markets with an “imaginary recession”
11/9/2023
The country’s foreign currency reserve is the largest in Iraq’s financial history, exceeding 100 billion dollars, and at the same time constitutes Iraq’s central reserve wallet, and most of the market demand to finance foreign exchanges for the private sector is done through those official reserves, which are offered by the monetary authority. , through its platform at the official exchange rate of 1,320 dinars per dollar.
This was reported by the Prime Minister’s Advisor for Financial Affairs, Mazhar Muhammad Saleh, who indicated a demand for cash dollars to finance commercial operations of very specific commodities, usually no more than five commodities.
Saleh explained during his talk to Shafaq News Agency, “Forces from within the market are trying to purchase it from outside the official commercial mechanisms, by resorting to obtaining cash dollars from the parallel market (a market that constitutes only 10 percent of the market’s need for foreign currency) to finance their trade.” ".
He stressed that these are “commercial actions that are not legally recognized by the financial, commercial and banking departments, and are carried out for many reasons, including tax or customs evasion or quality control.”
The Sudanese financial advisor continued by saying, “The main reason for controlling the parallel market is to combat illegal commercial activities above all else.”
Policy package
Saleh pointed out, “The state is currently undertaking a policy of defending economic stability, especially in providing sufficient commodity supply at always moderate prices, in two directions.”
The first, according to Saleh, is “providing additional supporting food and medicine baskets, construction baskets and high-demand spare parts, and purchasing them at the official stable exchange rate, through the cooperation mechanism between the state and the private sector.”
As for the second trend, it is “the monetary authority adopting new mechanisms, by providing liquid foreign currencies in addition to the dollar (and from a basket of various foreign currencies), to meet travel needs according to the traveler’s destination, especially for Hajj, Umrah, and tourism in its various aspects, and for various neighboring and distant countries.” According to Saleh.
He stated, “The aforementioned policy package aims to contain the noise made by foreign currency speculators in the parallel market, in order to profit at the expense of economic stability, and that the basic trends in economic policy are achieved by isolating the effects of the parallel or black market and the limitations of its illegal activities, from the stability of the system.” total price in the country.
Smuggling is organized for two reasons
For his part, the economic expert, Nabil Al-Marsoumi, considered that “what is happening is not a speculation operation with the black dollar in the parallel market and the cash dollar with the aim of making profits by taking advantage of price fluctuations, but rather an organized smuggling operation of the traveler’s dollar or the cash dollar, for two basic reasons.”
Al-Marsoumi stated to the agency, “The first reason is to pay for some goods imported from abroad, which are not included in the electronic platform, including (gold, drugs, alcoholic beverages, cigarettes).”
He pointed out that "some of these goods have a very large value, as Iraq imports cigarettes at about a billion dollars annually, while the value of alcoholic beverages is not less than a quarter of a billion dollars annually."
Regarding the second reason for dollar smuggling, the economic expert attributed it to “the strong demand for the dollar in the parallel market due to the need for the dollar in order to settle commercial exchanges, or Iraq’s imports of Iranian goods, which amount to 10 billion dollars annually.”
He added, "This is because Iran and Syria are also among the countries sanctioned by the United States, so commercial transactions cannot be settled with them through bank transfers. Therefore, the parallel market is resorted to, and the intense demand for a scarce dollar leads to higher prices."
Al-Marsoumi said, “The Central Bank will not be able, no matter what it does, to reduce the size of the gap between the official and parallel prices, as long as trade continues with the countries sanctioned by the United States, and as long as there is also a large segment of travelers to the sanctioned countries, especially Iran.”
He explained, "When travelers do not get the dollar at the official price, they resort to the dollar in the parallel market, and this increases its price," revealing that "Iraqi travelers demand about 3.5 billion dollars annually from the parallel market."
Al-Marsoumi concluded by saying, “All of these reasons have led and will lead to a widening of the gap between the parallel and official prices in the Iraqi market.”
'fake recession'
The rise of the dollar causes “stagnation of market movement, and the merchant stops making payments, buying and selling, despite the presence of a mass or liquidity of cash, and this is called (imaginary recession) as a result of the instability of the exchange rate,” according to the Vice President of the Baghdad Chamber of Commerce, Hassan Al-Sheikh.
As for the real economic stagnation, according to what Al-Sheikh saw to Shafaq News Agency, “it is based on the data of the lack of cash liquidity among the citizen, offset by large commodity dumping, in light of the lack of purchasing power. However, Iraq has strong financial capabilities, but the exchange rate is what Determines market movement.
He noted that "the government's printing of a monetary mass also affects the exchange rate, as whenever a large monetary mass is pumped into the market with no dollar available, the demand for the dollar will increase as it is considered a safe haven for the citizen's savings, and even for transactions," explaining that "the merchant is not a speculator." As some accuse him, he sells in dollars in order to maintain his capabilities.”
The Sheikh confirmed that several strategies were proposed as a matter of consultation to resolve this crisis, but the government did not take them up, calling for “working to create an attractive environment for investment, through stabilizing the exchange rate, so that the merchant and contractor feel that his money is safe and that he can invest within the country.” LINK