Iraq rejects free trade proposal with Iran, reveals special trade representative
Shafaq News/ On Monday, Iran's Special Trade Representative in Iraq, Farzad Piltan, disclosed that Iraq has declined to establish free trade relations with Iran.
Piltan, as reported by Mehr News Agency, highlighted the trade capacity between the two nations at $20 billion. However, due to the substantial gap between exports and imports with Iraq, the country hesitates to enter a free trade agreement.
During the first half of this year, Iran exported approximately $4.5 billion worth of goods to Iraq while importing around $150 million in goods from Iraq.
Piltan, the former West Asia Department of Iran's Trade Promotion Organization (TPO) director general, emphasized the potential for increased trade relations, covering goods, services, electricity, and gas.
Despite the significant trade capacity, Iraq is reluctant to negotiate for a free trade agreement or preferential tariffs. He expressed that the Iraqi government has not been receptive to discussions in these areas, pointing out that Iran faces stiff competition from China and Turkey in the Iraqi markets.
Piltan identified challenges in trade infrastructure, such as one-way transportation of goods, customs clearance at border crossings, and standards. He emphasized that resolving these issues could pave the way for stronger trade relations between the two countries.
There was a content creator who absolutely misinterpreted an article we need to clarify the mistakes that were made so people don't panic... Article "We are not thinking of returning the dollar to its previous price and the problem began under Saddam - Central Bank" When they say return it to the precious price, for some reason the individual thought that meant returning to the $3.22 rate. That's not what they're talking about. Nowhere in the article does it say the $3.22 rate. It just says return it to its previous price...that means the one before this one. That would be 1450 dinar. He's talking about they're not going to devalue the Iraq dinar.
If you are being forced to rely on the US dollar that strengthens the US dollar. Think supply and demand. If the US keeps going around forcing these countries to have a dual currency and to take the US dollar, people will rather have the US dollars.
They believe those dollars to be stronger but as people start to de-dollarize and get away from using the US dollars and start using their currencies that strengthens their currency and weakens the US dollar..
[Response to Guru Nader below]
What I'm about to talk about proves Iraq has potential to be much much richer than Kuwait and could have much more valuable currency than a Kuwait dinar ... [Guru] Nader is stating Iraq is 100, no, 1000 times richer than Kuwait. I've done a side-by-side comprising...
What makes Kuwait such a rich nation, Iraq absolutely has a lot more. But what's keeping Iraq behind is the following - ...Nader is right, when it comes to oil. Iraq has so much more than Kuwait does and Kuwait relies on their export of oil to make their country rich. The difference between Kuwait and Iraq is Kuwait has other things bringing money into their country besides oil.
They have things they can fall back on...GDP per capita...according to World Bank data Kuwait had a GDP per capita of approximately $29,000 in 2019 while Iraq was $5,000...Kuwait does share the wealth with the citizens, Iraq was not doing that. This substantial difference in GDP per capita clearly indicates Kuwait is wealthier on a person basis than Iraq.
Even thought that's true it doesn't mean Iraq can't turn around get their crap together because if they did they would easily smash Kuwait...Once the Iraqi people are becoming prosperous as well you're going see Iraq pass up Kuwait as far as being a rich nation...Kuwait's got their act together. We need Iraq to do the same thing.
The dinar will recover.. Iraq is approaching an “imminent end” to the dollar crisis before the end of 2023
Today, Monday (November 27, 2023), the Parliamentary Finance Committee commented on the possibility of the Iraqi government succeeding in controlling the dollar by the end of the current year.
Committee member Moeen Al-Kazemi told Baghdad Al-Youm, “The government and the central bank are working to end the dollar crisis once and for all, and there is great progress in this file and there is control over the market, as well as a gradual decline in exchange rates in the parallel market.”
Al-Kadhimi added, "We expect that the new year will witness a significant decline in dollar prices with the rise in the value of the Iraqi dinar, especially with the presence of government decisions and directives to address all the causes of the dollar crisis, and we expect that economic and financial stability will be strongly present at the beginning of next year."
Earlier, a senior official in the Central Bank of Iraq told Reuters that the country will ban cash withdrawals and transactions in dollars as of January 1, 2024, in the latest effort to limit the misuse of the country’s hard currency reserves in financial crimes and evade US sanctions on Iran. .
Mazen Ahmed, Director General of the Investment and Transfer Department at the Central Bank of Iraq, told Reuters that the aim of the step is to stop the illegal use of about 50 percent of the $10 billion cash amount that Iraq imports annually from the Federal Reserve Bank in New York.
This step comes as part of a broader campaign to stop the economy's dependence on the dollar after residents began to prefer the US currency over the dinar.
Ahmed said that people who deposit dollars in banks before the end of 2023 will be able to withdraw money in dollars in 2024. But dollars deposited in 2024 can only be withdrawn in the local currency at the official rate of 1,320 dinars to the dollar.
Official price
Ahmed said, "You want to transfer money? To do so. You want a card in dollars? Here you are. You can use the card inside Iraq at the official rate, or if you want to withdraw cash, you can at the official rate in dinars... but don't talk to me about dollars in cash anymore."
Iraq has already created a platform to organize bank transfers that make up the bulk of demand for dollars, and which has served as a hotbed for counterfeit receipts and fraudulent transactions that have leaked dollars to Iran and Syria, which are under US sanctions.
Ahmed stated that this system, which was put in place in coordination with the authorities in the United States where Iraq's reserves of $120 billion from oil sales are kept, is now almost airtight and provides dollars at the official rate to those who engage in legitimate trade activities such as importing food and consumer goods.
But he said that the misuse of cash withdrawals continues in ways that include travelers who are officially entitled to $3,000 but are looking for ways to circumvent the system.
Iraq relies heavily on its good relations with Washington to ensure that the country's oil revenues and funds are not subject to American oversight.
Dollar shortage
Many local banks have already limited cash withdrawals in dollars over the past few months, exacerbating shortages that have caused the exchange rate to continue to rise in the parallel market.
Ahmed said that some banks are suffering from a shortage of dollars because many people are trying to withdraw at the same time in light of a feeling of unease about the financial system, while some banks are also suffering from a shortage because they provided loans denominated in dollars that were then repaid in dinars.
He added that the Central Bank of Iraq also limited the amount of dollars it provides as part of an agreement with the US Central Bank to limit cash liquidity and shift to electronic payments.
Ahmed pointed out that the Iraqi Central Bank expects the dinar to lose more of its value as the new measures enter into force, but he added that this is an acceptable side effect of formalizing the financial system, noting that the Iraqi Central Bank provides dollars at the official exchange rate for all legitimate purposes.
He said that the cost that Iraq is bearing today is not compared to the value of achieving this goal.
Ahmed stated that the financing operations that are carried out transparently and legally through the bank and at the official rate are the most important and therefore nothing else matters, even if the exchange rate reaches 1700.
He continued, saying, "The cost we bear now is nothing compared to achieving this goal, in all honesty, as long as the legitimate channels are established. What matters is even if the exchange rate reaches 1,700... because the legitimate purpose is the official price." link
Central Bank Governor: The size of the monetary supply amounts to more than 100 trillion dinars, 70 percent of which is in circulation
Today, Monday, the Governor of the Central Bank of Iraq, Ali Al-Alaq, denied the existence of a scarcity in the stock of the Iraqi dinar, and while determining the size of the dinar’s monetary mass and those in circulation, he revealed a broad strategic plan to expand the transition to electronic payment.
Al-Alaq said in a statement followed by “Earth News” that “the state’s financial situation depends in general on its imports and is currently at a good level as a result of the rise in oil prices,” stressing that “it is important to invest this money in a way that accelerates opportunities for construction, advancement and development.”
He added, “The positive thing about the government’s work is that it is moving in this direction, and there is great emphasis and focus on completing projects,” noting that “there are a large number of projects that were stalled and stalled for many reasons, and there is work to address the situation and accelerate the projects, especially since they are mostly related to infrastructure.” Services, etc., and the government gives this matter great attention, priority, and diligent follow-up by the Prime Minister personally.”
He pointed out that “there is a wide movement regarding the demand for investment projects in the country,” noting that “a large number of companies and countries have begun to conduct studies and have identified some projects to start in Iraq.”
Al-Alaq said, “These are positive indicators that benefit from the state of stability in the country and the stability of the financial and monetary conditions,” pointing out that “the size of the monetary mass or the exported currency amounts to more than 100 trillion dinars, 70 percent of which is in circulati on.”
He denied, “There is a scarcity in the stock of the Iraqi dinar,” adding, “We are responding to the demand for the Iraqi dinar or in relation to the dollar in dinar initiative for the purposes of the Ministry of Finance.”
He stressed that “the trend towards electronic payment aims to reduce the phenomenon of the cash economy, which has major negative effects on the Iraqi economy and consequences and effects with regard to managing liquidity and the costs of this liquidity from printing currency and controlling it,” explaining that “the government’s trend is to switch to electronic payment to reduce This phenomenon".
He stated, “There are trends at many levels in this context, and there is direct coordination between the government and the Central Bank. Electronic payment experiments and tools have begun to be circulated in many areas, and there is a broad and strategic plan at the Central Bank to expand in this field,” calling on citizens to “keep abreast of the developments that have occurred and are occurring.” In all countries of the world, to reduce the phenomenon of using cash.”
He pointed out that “keeping pace with development serves the citizen, the state, and the economy,” pointing out that “holding cash and hoarding only carries risks, and deprives the citizen of having these amounts in his accounts and being able to benefit from them in many areas.”
He noted that “the world is heading towards digital transformation, which is considered the fourth revolution in the world, and we must be close to these transformations to achieve the goals, objectives, benefits and positives that come from them.” link
