IRAQ'S BOLD MOVE: DINAR PEGGED TO A CURRENCY BASKET

DINAR REVALUATION UPDATE: Iraq Seeks Release of Funds from US Banks in August 2024, 23 AUGUST

Iraq Seeks Release of Funds from US Banks in August 2024

Iraq's efforts to regain control over its funds held in US banks have escalated in August 2024, reflecting a growing frustration with the limitations imposed by the United States on the use of Iraq's own financial resources. 2

Background: Iraq's Funds in US Banks

Since the end of sanctions, Iraq's oil revenues have been stored in an escrow fund managed by the US Treasury. This arrangement was initially intended to ensure the funds would be used for humanitarian purposes and to prevent any misuse by the Iraqi government.  1

Current Situation: Talks with US Treasury

Iraq is now engaged in talks with the US Treasury regarding its banks and the restrictions on dollar transactions. These negotiations are crucial as they aim to address the issues surrounding the use of Iraq's funds held in US banks. 2

Iraq's Motivation: Independence and Control

The Iraqi government is eager to gain full control over its financial resources, particularly as it is no longer subject to sanctions. The desire to manage its own funds stems from a wish to reduce dependency on US financial oversight and to use the money for domestic development and economic stability. 1

Challenges: Terrorist Financing Concerns

One significant hurdle in Iraq's quest for financial autonomy is the US Treasury's concerns over potential terrorist financing. An Iraqi bank, Al-Huda Bank, has been cited by the Treasury Department's Financial Crimes Enforcement Network (FinCEN) for its role in facilitating funds for foreign terrorist organizations, including Iran's Islamic Revolutionary Guard and its Quds Force, as well as Iran-aligned Iraqi militias.  3

Impact on Iraq-China Financial Transactions

In a related development, Iraq has been compelled to halt financial transactions in Chinese yuan under US pressure. The US Federal Reserve has directed Iraq to cease dealing in the Chinese currency, citing issues with some transfers. This directive has implications for Iraq's trade with China, which has been growing in recent years. 4

Conclusion: Iraq's Financial Autonomy

Iraq's push for the release of its funds from US banks in August 2024 is a clear indication of its desire to assert financial independence. The ongoing talks with the US Treasury, along with concerns over terrorist financing and restrictions on transactions in foreign currencies, underscore the complex challenges Iraq faces in its quest for control over its national wealth. 2 As of August 22, 2024, the outcome of these negotiations remains uncertain, with both sides working to find a mutually acceptable solution that addresses Iraq's financial autonomy while also safeguarding against illicit activities.

DINAR REVALUATION : ADOPT A "BASKET" OF CURRENCIES FOR THE NEW DINAR PEG TO STABILIZE AND DIVERSIFY IRAQ'S ECONOMY, 23 AUGUST

Iraq's Shift Towards a Currency Basket for Dinar Peg

In August 2024, Iraqi economics advisors are exerting pressure on the government to adopt a "basket" of currencies for the new dinar peg. 1 This move aligns with the International Monetary Fund's (IMF) plan from 2011, indicating a long-term strategy to stabilize and diversify Iraq's economy.

The IMF Plan and its Implications

The IMF's proposal to use a currency basket for the dinar peg aims to reduce Iraq's dependency on a single foreign currency, typically the US dollar, and to insulate the country from fluctuations in global oil prices. By linking the dinar to a basket of currencies, Iraq can achieve greater economic stability and reduce its vulnerability to external shocks. 1

Why a Currency Basket?

1. Diversification of Risks

A currency basket can include major currencies such as the US dollar, euro, Japanese yen, and Chinese renminbi. This diversification helps to spread risk and lower the impact of any single currency's volatility on Iraq's economy. 1

2. Enhanced Economic Stability

By pegging the dinar to a basket of currencies, Iraq can create a more stable economic environment. This stability is crucial for attracting foreign investment and promoting business confidence, both of which are essential for economic growth.  2

3. Encouraging Economic Diversification

A diversified currency peg can incentivize Iraq to move away from its heavy reliance on oil revenues. By stabilizing the dinar, the government can foster a more conducive environment for non-oil sectors, encouraging diversification and reducing the country's exposure to oil price volatility. 1

Challenges and Considerations

1. Political and Economic Factors

The transition to a currency basket will require careful planning and coordination among Iraq's central bank, government, and international financial institutions. Political stability and economic conditions will play critical roles in the success of such a move. 2

2. International Relations

Iraq will need to consider its relationships with countries whose currencies are included in the basket. This could influence diplomatic and trade relations, requiring a nuanced approach to balance economic benefits with geopolitical considerations.

3. Implementation Strategies

The government must develop a clear roadmap for implementing the currency basket, including technical adjustments, public education, and measures to mitigate any short-term economic disruptions. 1

Conclusion

The shift towards a currency basket for the new dinar peg represents a strategic move by Iraq to stabilize its economy and reduce its reliance on oil revenues. While challenges remain, the potential benefits of enhanced economic stability and diversification make this a significant step forward for Iraq's long-term economic health. 2

LATEST FROM FRANK26, 23 AUGUST

 Frank26 

 The goal is what?  Retrieve those [Three zero notes].  

How? 

As soon as we raise the value, give them purchasing power, as soon as we drop the 3 zeros, they're going to bring in all that 80 something percent [still in Iraqi mattresses]...The monetary reform plan is brilliant...It is moving at a very fast pace.

DINAR REVALUATION 

ANALYSIS OF WHAT EDDIE TOLD TO FRANK26: 

" Then Saleh talking about oil being sold in dinars instead of dollars." 

 Economist back on tv saying it’s time to drop the zeros."

---It sounds like there's a couple of interesting economic discussions happening in Iraq right now!

1. Saleh and Oil Sales in Dinars: Saleh's suggestion to sell oil in dinars instead of dollars could be aimed at strengthening the Iraqi dinar and reducing dependence on the US dollar. This move could potentially stabilize the local economy and improve national financial sovereignty. However, it would also require significant adjustments in international trade agreements and currency exchange systems.

2. Dropping Zeros from the Dinar: The economist's call to drop zeros from the dinar is a common monetary policy strategy known as "currency redenomination." This involves introducing a new unit of currency that is worth a thousand or more times the old unit. It's often done to simplify transactions and improve the currency’s image after periods of high inflation or economic instability. For Iraq, this could be a step towards stabilizing the currency and restoring confidence in its value.

Both of these measures reflect efforts to address economic challenges and enhance the stability of Iraq's financial system. The success of these strategies will depend on how they are implemented and their impact on the broader economy.

SEEMS THAT WE ARE REALLY CLOSE TO OUR DESIRED RV!!!

https://dinarevaluation.blogspot.com/2024/08/dinar-revaluation-update-seems-that-we.html

IRAN -US AGREEMENT : KEEPING IRAQ OUT OF MIDDLE EAST TENSIONS

DINAR REVALUATION UPDATE: IRAN -US AGREEMENT : KEEPING IRAQ OUT OF MIDDLE EAST TENSIONS, 23 AUGUST

 Iranian-American Agreement to Keep Iraq Neutral in Middle East Events (2024)

In the tumultuous landscape of the Middle East, Iraq has emerged as a pivotal player in regional dynamics, often caught between the influences of Iran and the United States. As of August 22, 2024, the relationship between Iran and the United States has led to an agreement aimed at keeping Iraq away from the region's escalating conflicts. 1

The Background of the Agreement

The war in Gaza, which began in October 2023, has intensified the existing tensions between Iran and its proxies on one side, and the United States and Israel on the other. 1 This cycle of tit-for-tat attacks across the region, involving the Israeli bombing of the Iranian consulate in Syria and Iran's direct retaliation against Israel, threatens to escalate into a broader regional war. The conflict has also drawn Iraq into the fray, with Iranian-backed paramilitaries attacking U.S. forces stationed in the country.  1

Iraq's Strategic Position

Iraq's role in this complex equation is not that of a mere pawn. Its strategic position and the nature of its relationship with Iran have evolved significantly since the U.S. invasion in 2003. While Iran's influence in Iraq has grown, it is not a simple agent-proxy arrangement. Iran wields significant power through its paramilitaries' presence in Iraq's security apparatus, but Iraq has also shown political independence, maintaining a degree of leverage over Iran. 1

The Agreement's Objectives

In light of the escalating tensions, the Iranian-American agreement seeks to ensure Iraq's neutrality, preserving the relative stability the country has enjoyed in recent years and safeguarding its role as a regional mediator.  1 The accord is designed to prevent Iraq from being drawn further into the conflict, which could destabilize the region and undermine efforts to resolve the ongoing war in Gaza and the broader Israeli-Palestinian conflict. 1

European Engagement

Europeans have a role to play in supporting Iraq's autonomy and stability. By strengthening Iraq's financial institutions through global integration and digitization, European countries can help increase Iraq's economic independence. 1Furthermore, European nations can collaborate with Gulf states to broaden ties with Iraq, moving away from a development or humanitarian aid framework towards normal bilateral relations. 1

Conclusion

The Iranian-American agreement to keep Iraq out of the Middle East's conflicts is a critical step toward maintaining regional stability. However, its success hinges on broader efforts to resolve the Gaza conflict and the Israeli-Palestinian dispute. European involvement in supporting Iraq's autonomy and economic resilience is essential for any policy to be effective in this volatile region. 

Iranian-American agreement to keep Iraq away from Middle East events, 23 AUGUST

  Iranian-American agreement to keep Iraq away from Middle East events

The Israeli newspaper, The Jerusalem Post, revealed on Wednesday that there is an Iranian-American agreement to keep Iraq away from the current conflict, noting that the Iraqi Prime Minister intervened to prevent the American response to the recent bombing of Ain al-Assad.

The newspaper said in a report, which was followed by Al-Mutalaa, that: “There is news circulating in intelligence circles about instructions reaching armed factions inside Iraq to stop attacks against American forces and their bases to prevent the country from sliding into open war,” indicating that: “The Iranian authorities decided to stop attacks against American bases in Iraq as a result of the escalation of tension to unprecedented levels and the increasing risk of Iraq turning into a war zone.”

She added that: "Prime Minister Mohammed Shia al-Sudani was able to convince the Americans not to respond to the recent targeting of Ain al-Assad base and to cancel any plans to target armed factions inside the country," stressing to the Americans that: "Iraq is committed to maintaining its security and preventing its lands from turning into a battlefield between the American and Iranian parties."

The newspaper pointed out that: "The Iranian instructions do not include any mention of the attacks carried out by the factions inside Iraq against Israeli targets, including the continuous bombing of the port of Eilat," explaining that: "The cessation of attacks is limited so far to American bases and interests only, according to its description."   link