Evening News with MarkZ. 08/26/2024

DINAR REVALUATION UPDATE: The Significance of Exchange Rate Stability, 27 AUGUST

 The Significance of Exchange Rate Stability

Al Alaq's Speech on New Currency Rate and Lower Denominations in Iraq (August 2024)

In a recent speech, Ali Al-Alaq, the Governor of the Central Bank of Iraq (CBI), provided assurance to the Iraqi public regarding the future of the country's currency. Addressing concerns over the dinar's value and the introduction of lower denominations, Al-Alaq urged citizens to remain patient, promising that a new rate and lower denominations would be implemented soon. 

Al-Alaq emphasized the importance of maintaining the stability of the dinar's exchange rate against the US dollar. 6 He highlighted that this stability is essential for the Iraqi trade system and financial transactions, requiring changes and restructuring within the country's trade and foreign exchange systems.

Commitment to International Standards

The CBI Governor also underscored the need to adhere to international practices and standards, particularly those outlined in the Anti-Money Laundering and Terrorism Financing Law No. 39 of 2018.  6 This commitment is crucial for protecting Iraq's financial system from risks and ensuring transparency and the safety of financial operations.

The Process of Monetary Stability

Al-Alaq explained that the process of achieving monetary and exchange rate stability is a significant undertaking that necessitates a series of changes and the restructuring of the Iraqi trade system and foreign transfer system. 6 The CBI is actively engaged in this process, working on daily details to reach a proper path that opens new avenues for facilitating and expediting the necessary reforms.

The Road Ahead

While the specifics of the new rate and the introduction of lower denominations have not been disclosed, Al-Alaq's speech signals a clear commitment from the CBI to address the dinar's value and improve the financial landscape in Iraq. 1  6The CBI's efforts are expected to contribute to economic stability and strengthen the country's financial credibility on the international stage.

Closing Remarks

Ali Al-Alaq's speech reflects the CBI's proactive approach to managing the dinar's value and ensuring the stability of Iraq's financial system. The introduction of a new currency rate and lower denominations, once implemented, will mark a significant step in Iraq's ongoing financial reforms. 1  6

" AL -ALAQ GUARANTEED THE CITIZENS A NEW RATE OF THE IQD AND LOWER DENOMS" BY BIRDIEORBUST VIA GINGER TELEGRAM ROOM, 27 AUGUST

  Important update from Birdieorbust, Liberty Lounger Extraordinaire 💥 4.22.24 

💢 Birdie: Well now I can say a bit about what I could not before since Frank told it - but Al Alaq made another speech where he guaranteed the citizens they would be getting a new rate and lower denoms soon to just be patient...

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Al-Alaq takes files of sanctioned banks to New York and meets with US Treasury and Federal Reserve officials

The central bank governor left Baghdad last Saturday to meet with US Treasury and Federal Reserve officials.

The central bank governor was accompanied by an executive specializing in supervision and funds transfer issues

The central bank governor has in his possession a report compiled by an international auditing firm on the dollar-stripped banks.

The report includes an assessment of the risk, creditworthiness and ability of the sanctioned banks to comply with banking regulations.

During his visit, Al-Alaq is trying to negotiate with some American banks to open accounts in banks that have not been dollar-stripped.

Prime Minister Al-Sudani's Strategic Washington Visit: Economic and Security Goals

DINAR REVALUATION UPDATE: IRAQ'S INTENTIONS TO LIBERALIZE THE IRAQI DINAR IN 2024, 27 AUGUST

 Prime Minister Al-Sudani's Washington Visit: Aims for Dinar Liberalization and Economic Stabilization

In August 2024, Iraqi Prime Minister Muhammad Shia Al-Sudani embarked on a pivotal visit to Washington, D.C., with the intent to liberalize the Iraqi dinar and stabilize the country's economy. 1 This move comes amidst broader efforts to diversify Iraq's economy and modernize its financial and banking sectors, which have been hindered by political dynamics in the country. 1

A Delegation Focused on Economic and Strategic Relations

Accompanied by key ministers and Iraqi businessmen, Al-Sudani's visit aimed to discuss bilateral security, trade, economic, energy, and cultural ties with the United States. 2 The agenda included pressing issues such as the US military presence in Iraq and the impact of US Treasury sanctions on Iraqi financial networks. 2 The Shia Coordination Framework, including Shia political and militia groups, pressured Al-Sudani to prioritize these topics due to their antagonism toward the US and its allies.  2

Economic and Security Concerns

During Al-Sudani's visit, the US and Iraq convened the Higher Coordinating Committee of the 2008 Strategic Framework Agreement. 3 The symbolism of the visit, including the delegation's size and itinerary, underscored Baghdad's desire to shift focus to economic, educational, and people-to-people domains. 3Al-Sudani sought to manage domestic and Iranian pressure to reduce the US military presence in Iraq while not detracting from his broader political and economic agenda. 3

The Delicate Balance: Security and Economic Engagement

The visit took place against a backdrop of heightened regional tensions, including Iran's aerial assault on Israel, which further complicated the US-Iraq relationship. 4 Despite this, Al-Sudani and President Biden aimed to focus on economic cooperation and strategic relations, reinforcing the commitment to a comprehensive partnership. 4

A Strategic Engagement with Challenges

Al-Sudani's visit was meticulously planned to strengthen US-Iraq relations post-Gaza war. 5 However, Iran's direct attack on Israel, involving drones and missiles flying over Iraqi airspace, threatened to overshadow the meeting's objectives. 5The challenge for both leaders was to find a way to restrain Iranian-backed Iraqi militias while addressing regional security concerns. 5

Economic Collaboration and Security Cooperation

Iraq's Prime Minister emphasized the importance of expanding economic and diplomatic ties with the US. 6 He sought to boost US investment in Iraq's economy and broaden the relationship beyond security concerns. 6 Al-Sudani's visit to Washington was a strategic move to liberalize the dinar and stabilize Iraq's economy, reflecting the country's aspirations for economic diversification and financial sector modernization amidst regional turmoil. 1

NEWS RECAP : Prime Minister Sudani's Pivotal US Visit and Its Implications for Iraq's Future, 27 AUGUST

 Iraqi Prime Minister Sudani's White House visit will discuss US forces in Iraq, sanctions, and bilateral relations. Amid pro-Iranian pressures, the visit seeks to balance diplomatic and economic interests with the US, highlighting the complex US-Iraq dynamics and regional geopolitical implications.

Iraqi Prime Minister Mohamed Shia Sudani will lead a prominent delegation to Washington, DC in mid-April, marking his first visit to the White House since assuming office in October 2022. The delegation includes key ministers of oil, finance, trade, and electricity, as well as the president of the central bank, accompanied by five Iraqi businessmen. Sudani’s seven-day trip to the United States will include a meeting with President Joe Biden on April 15 at the Oval Office. He plans to talk with American businesses, the Iraqi community, and think tanks in Washington before heading to Houston to engage with US energy companies.

Agenda of Sudani’s Visit

The delegation will focus on the US military presence in Iraq and the US Treasury sanctions and discuss bilateral security, trade, economic, energy, and cultural ties. These talks are anticipated to be primarily centered on military and sanctions issues.

The Shia Coordination Framework, which includes Shia political and militia groups with strong animosity toward the US and its allies, has pressured Prime Minister Sudani to prioritize these issues. They perceive the US military as a threat, and the Treasury’s sanctions have severely impacted the  financial networks of these anti-American factions. 

The US sanctions were triggered by the misappropriation of US dollars by Iraqi banks and individuals linked to the Coordination Framework. These entities have significantly aided Washington’s opponents, such as Iran, Syria, and Russia, by channeling vast sums of money from Iraq to the aforementioned countries, thereby circumventing sanctions.

If negotiations are successful, Baghdad and Washington are expected to establish a timetable for the withdrawal of US combat forces from Iraq or agree on a new framework for the US military’s mission in the country, addressing the demands of the pro-Iranian groups. However, such agreements may come at a cost, potentially involving easing sanctions on blacklisted banks in exchange for flexibility regarding a controlled US military presence. However, this will mean granting more financial power to these groups, which will translate into growing political and military influence, posing long-term threats to US strategic interests and its allies.

However, the failure of the Biden administration to address the persistent onslaught by the Coordination Framework on the post-2003 Iraqi political framework to re-centralize political and economic power in Baghdad could re-drag the US into the country. 

Iraqi Divisions

The Kurdistan Region, once a prominent political, diplomatic, economic, and energy force, is now in a state of paralysis. It has faced multiple crises, stemming partly from Baghdad’s detrimental policies and the Iraqi Supreme Court’s rulings, sometimes compounded by the international community’s indifference, greatly affecting the welfare of ordinary Kurds.

The Coordination Framework has consistently pursued power re-centralization at the expense of Washington’s partners under the watchful eye of Prime Minister Sudani’s government. Baghdad’s highest court rulings against the Kurdistan Regional Government’s (KRG) oil exports have already resulted in over $11 billion in financial losses for Erbil and international oil companies, plunging Kurdistan into unprecedented economic turmoil. Additionally, the Iraqi court dissolved the Kurdish parliament and the provincial councils, revoked parliamentary seats held by minorities in Kurdistan since 1992, invalidated the Kurdistan Region’s high election commission’s authority to oversee parliamentary elections, and most recently, interfered in the administrative and budgetary affairs of the Kurdish region by instructing the Iraqi finance ministry to cover KRG employee salaries, again another measure to undermine the KRG’s legitimacy in the eye of the Kurds. 

The Sunni community has also become another victim of the Iraqi judiciary. Last November, the Federal Supreme Court oustedSpeaker Mohammed al-Halbousi, a Sunni, from Parliament on fraud allegations. Despite Halbousi deeming the ruling unconstitutional, he resigned. Many attribute the action to pro-Iranian factions in the Iraqi government who perceived Halbousi as a threat. Sunni attempts to replace Halbousi have been hindered by internal divisions worsened by Shia interference. The Coordination Framework's systematic approach shows no intent to cede legislative control to Sunnis. With Shias now dominating all branches of government, Sunnis and Kurds are increasingly marginalized.

Meanwhile, in Iraq, the judiciary seems to show significant leniency towards Shia individuals linked with the Coordination Framework.

Meanwhile, in Iraq, the judiciary seems to show significant leniency towards Shia individuals linked with the Coordination Framework. Specifically, the Court of Cassation in Baghdad, seemingly under political influence, acquitted and reinstated Ahmed Hamdawi al-Kinani, a former police officer within the Iraqi Interior Ministry. Al-Kinani had previously been convicted and sentenced to death in 2023 for the murder of the prominent academic and security expert Hisham al-Hishami in 2020, known for his outspoken criticism of Shia militia groups. 

While Sudani has aimed to portray himself as a leader capable of making decisions independently for the good of Iraq, he finds his political and popular support not as strong as needed to confidently navigate the challenges posed by influential leaders within the Coordination Framework. Thus, he is more vulnerable to political pressures.

The dynamics of intra-Shia competition, alongside the need for a somewhat independent and internationally appealing technocratic figure who can uphold Iraq's relations with the West and promote its interests, often pave the way for lesser-known Shia politicians to step into this role. Sudani, following in the footsteps of his predecessors, was chosen as a consensus candidate and supported by the Coordination Framework to reflect their interests. This support is rooted in the less favorable perception of the coalition's true power players, who are seen as less appealing, particularly by Western standards.

Some positive qualities make Prime Minister Sudani a standout leader in post-2003 Iraq. Unlike his predecessors, he has spent his entire life in Iraq. His journey to power began as the mayor of Amara, providing him with an organic and close understanding of Iraq’s political and social landscape. His government’s agenda has prioritized service delivery to ordinary citizens and has shown commitment to addressing critical issues, including finance and oil, with the KRG.

On the foreign policy front, Sudani has maintained balanced relations with neighboring countries, including the Arab Gulf states, with increased diplomatic and trade relations. Probably most notable has been his firm stance on Iran, condemning Tehran’s missile attack on Erbil. Thus, it’s no surprise that a recent Gallup poll rates him as the most favorable prime minister in a decade.

Long-term Prospects and Challenges

Sudani’s positive traits have ignited a wave of euphoria in Washington and among his advisors, reinforcing the optimism surrounding his political trajectory. Privately, confidence in his prospects is steadily rising. They seek to transform the upcoming White House trip into a state-of-the-art publicity campaign, portraying Sudani as a respected Iraqi statesman on the global stage. The goal is to make this trip a pivotal moment, laying the groundwork for his campaign in the 2025 legislative elections.

While Washington might view this as a strategic move to reduce the influence of pro-Tehran actors in Iraq, freeing Sudani from pressure, the blueprint is not merely ill-advised; it poses a direct threat to US strategic interests. While this approach may offer an illusion of relief and success in the short term, it ultimately sets the stage for instability.

By investing heavily in a single figure, Sudani, the US inadvertently alienates its allies and emboldens its adversaries.

By investing heavily in a single figure, Sudani, the US inadvertently alienates its allies and emboldens its adversaries. The once-celebrated strategy, championed for former Prime Minister Haider al-Abadi in 2018, portrayed him as a hero—a beacon of hope for Iraq and a staunch ally of the West. However, despite these grandiose projections, the harsh reality emerged when Abadi’s electoral defeat shattered these illusions, leaving Washington disappointed. Even worse, it had unintended consequences by empowering anti-American forces, fueling their determination to gain control of Iraqi institutions. Subsequent elections have only reinforced anti-American sentiment, consolidating power among traditional, Western-hostile factions in Baghdad. 

For Iraq to achieve stability, it necessitates the support of a foreign patron. Washington is in a favorable position to fulfill this role with a pragmatic strategy requiring a minimal footprint. This entails prioritizing investment in actors aligned with US values and objectives. Such an approach involves strengthening alliances with Kurds, Sunnis, and certain Shia moderates who prioritize Iraq’s interests. Doing so can help restore a much-needed balance of power in Baghdad, safeguarding against the emergence of a tyrannical centralized authority. 

While no political system is flawless, the post-2003 consensus governance model and a balanced political climate in Baghdad deserve credit for preventing Iraq from becoming a disruptive force in the region and a source of menace for its people. However, the recent trend toward centralization in Iraq carries significant risks and has far-reaching implications. It could exacerbate Iraq’s authoritarian tendencies, posing substantial threats to its citizens and regional stability. Moreover, this development may divert crucial Western strategic resources from areas like Ukraine and East Asia, potentially benefiting US rivals. Washington should take these developments seriously.

https://www.wilsoncenter.org/article/prime-minister-sudanis-pivotal-us-visit-and-its-implications-iraqs-future

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