Saturday, March 1, 2025
Iraq agrees to supply Lebanon with crude oil, provided that payment is made in cash and immediately, 1 march
Iraq agrees to supply Lebanon with crude oil, provided that payment is made in cash and immediately
Independent / – Lebanese media sources quoted informed sources as saying that the Lebanese delegation to Iraq (composed of the Chairman of the Board of Directors of Idal Mazen Swaid and Brigadier General Hassan Shuqair) agreed with Iraqi officials to renew the contract for the supply of fuel to operate the laboratories of the Lebanese Electricity Corporation with some amendments to the mechanism of its implementation.
The sources indicated that Iraq will supply about 2 million tons of crude oil after it was supplying the fuel, in exchange for paying for the shipments in cash and immediately, unlike the previous three versions of the contract, which included Lebanon paying for shipments through services provided in Lebanon to Iraqis, provided that the previous arrears of $2 billion are treated through the platform between the two countries to provide agreed services.
Until the end of 2024 and until the formation of the new government, a huge amount has accumulated on Lebanon for the price of fuel shipments. Lebanon has paid only $118 million out of $2 billion. This accumulated amount is the fruit of three copies of the renewed contracts between the parties.
The fourth version of the contract includes the supply of 2 million tons of crude oil and payment in cash
These renovations took place with “montar” and “tatef” although Lebanon did not pay the consequent price of the shipments. Despite the Iraqi facilities, Lebanon could not pay the bills.
These facilities required Lebanon to pay for fuel in Lebanese pounds, provided that the amounts are placed in the account of the Iraqi government in the Bank of Lebanon and will be spent on special services for Iraqis (including hospitality and medicine for Iraqis in Lebanon) in Lebanon exclusively.
The Lebanese “Al-Akhbar” quoted the sources as saying that the platform for these services is nearing completion and will be put into practice soon, and therefore Lebanon can no longer search for justifications and pretexts for default. This default was reflected in the renewal of the contract for the fourth time.
She pointed out that Lebanon’s representatives faced great difficulty in the negotiations, as the Iraqi government needed to prove Lebanon’s good faith in paying, especially after all these facilities and delays. Therefore, it was agreed that the payment of the price of shipments this time would be in cash and immediately, not on the platform, that is, the payment will be in dollars via transfer from the Bank of Lebanon abroad.
Lebanon’s dependence on Iraqi shipments is very vital. In the past four years, Lebanon has been producing electricity mainly by Iraqi fuel, along with water plants and some shipments purchased by the Ministry of Energy recently.
The contract with Iraq is a mutual contract, under which Lebanon obtains unusable fuels in electricity plants but exchanges it with a foreign company in usable quantities in the plants. On average, he received a usable ton for every 2 tons of Iraqi cargo. The equation changes with the change in prices and quality. In this sense, the price of shipments is not the only amount incurred by Lebanon, as he had to pay for the exchange as well, but the payment mechanism was also in ways that did not impose a direct price on it, that is, he was paying the cost from the quantities of crude oil that he did not pay for.
The amount paid by Lebanon to Iraq in the amount of $118 million was in 2023, as in that period the Central Bank of Lebanon stopped transferring the funds due for four shipments worth $132 million for 2023, and the implementation of transfers required the issuance of a law by the House of Representatives to cover them, and the inclusion of the necessary appropriations to cover the price of shipments in the 2024 budget, noting that the number of shipments received and due for payment for 2023 reached 8 shipments and there are 12 other shipments for 2024 that arrived all.
Now, Lebanon renewed the contract after an adjustment in the quality of the quantity that became crude oil instead of Feol, and after an adjustment in the payment mechanism. The matter is a challenge to the Lebanese government, as the price of shipments must be paid through the Bank of Lebanon, knowing that the Electricity Corporation of Lebanon has about $300 million of the leves it retains to purchase the necessary fuel for the laboratories under public tenders that take place periodically.
The newspaper wondered if the Bank of Lebanon would agree to pay for the accumulated shipments and the following shipments, or whether it would say that this would create a cash problem because it arranged a pump in the lira in the market?
Or will he inform officials that there are no appropriations in the budget that cover the payment of these shipments, and that he does not lend to the state to pay them? Noting that this joint has always been the main joint in dealing with the electricity problem in the past five years, that is, since the monetary and banking collapse at the end of 2019 until today. Everyone who claims that the options available are otherwise, is the most important.
The problem is that Lebanon is not able to operate the existing electricity plants, that is, the problem is not in the regulatory bodies nor in investing in the sector.
NADER FROM MID EAST CC HIGHLIGHTS NOTES, 1 MARCH
NADER FROM MID EAST CC HIGHLIGHTS NOTES
Highlights
Summary
The Central Bank of Iraq has announced its plans to launch a digital currency, a move highlighted by International Economic Affairs expert N. Aladi.
This initiative is poised to bring several significant benefits to the Iraqi economy, including more efficient and transparent electronic payment systems, a reduction in reliance on paper money, and improved financial inclusion for a large segment of the population that remains outside the formal banking system.
However, the transition to digital currency is not without its challenges and risks. Concerns include the potential for misuse in smuggling operations, pressures on the traditional banking system, and vulnerabilities to cyber attacks.
To mitigate these risks, a carefully crafted policy framework and infrastructure enhancements are essential. The central bank is committed to gradually implementing this transformation, aiming to modernize the financial landscape of Iraq and enhance economic openness.
- 💳 Transition to Digital Payments: The Central Bank of Iraq plans to launch its digital currency, moving towards a more efficient electronic payment system.
- 📉 Reducing Reliance on Cash: The digital currency aims to limit dependence on paper money, thereby streamlining financial transactions.
- 🌍 Enhancing Financial Inclusion: A significant goal of the digital currency is to facilitate access to banking services for those outside the formal financial system.
- 🏦 Cost Savings: By transitioning to a digital currency, the Central Bank could significantly reduce costs associated with printing and managing paper currency.
- ⚖️ Combating Corruption: The implementation of a digital currency could improve oversight of cash flows, helping to combat corruption and money laundering.
- 🔒 Cybersecurity Risks: There are concerns regarding the security of digital transactions, with risks of cyber attacks if the infrastructure is not robust.
- 📊 Need for a Gradual Approach: Experts stress the importance of a well-thought-out policy and gradual implementation to ensure economic stability during this transition.
Key Insights
📈 Digital Currency as a Catalyst for Economic Modernization: The introduction of a digital currency could serve as a catalyst for modernization in Iraq’s financial system. By adopting a digital currency, Iraq could align itself with global trends, fostering an environment conducive to innovation and attracting foreign investments. This shift could potentially lead to a more dynamic economy, one that is less reliant on outdated practices and more integrated into the global financial landscape.
💡 Potential for Increased Efficiency: The move to digital currency promises to enhance transaction efficiency significantly. Digital payments can be processed faster than traditional methods, thus reducing wait times for consumers and businesses alike. This increased efficiency can lead to higher productivity levels within the economy, as transactions that once took days to settle can occur in real-time, improving cash flow for businesses.
🌐 Challenges of Informal Economies: One of the major hurdles Iraq faces is the prevalence of informal economies. The digital currency initiative seeks to reduce this reliance on informal channels by integrating more individuals into the formal banking system. However, without stringent monitoring mechanisms, there is a risk that digital currency could be exploited for illegal activities, including smuggling. Addressing these challenges will be crucial to ensure the effective implementation of the digital currency.
🏦 Impact on Traditional Banking Structures: The transition to a digital currency raises questions about the future role of traditional banks in Iraq. If the digital currency is widely adopted, there could be significant pressures on these institutions, especially if they are not adequately prepared for such a shift. Banks must enhance their technological capabilities to compete effectively in a landscape increasingly dominated by digital transactions.
🔒 Cybersecurity and Infrastructure Preparedness: The successful introduction of a digital currency hinges on robust cybersecurity measures and a well-prepared digital infrastructure. Any flaws in these systems could expose the financial sector to cyber threats, potentially undermining public confidence in the new currency. Therefore, investments in cybersecurity and infrastructure development are paramount to safeguard against potential vulnerabilities.
📜 Necessity for a Comprehensive Legal Framework: A clear legal framework is essential for governing the use of digital currency. This framework should address issues such as consumer protection, data privacy, and regulatory compliance. By establishing a comprehensive legal framework, the Central Bank can create a safe and secure environment for users, fostering trust and encouraging adoption of the digital currency.
🔄 Gradual Implementation Strategy: Experts emphasize the importance of a gradual approach to implementing the digital currency. A phased rollout allows for adjustments based on feedback and emerging challenges, minimizing the risk of economic disruption. By carefully monitoring the initial phases of implementation, the Central Bank can refine its strategies and ensure a smoother transition for all stakeholders involved.
In conclusion, while the Central Bank of Iraq’s initiative to launch a digital currency presents numerous opportunities for economic advancement and modernization, it also poses significant challenges that must be addressed. A balanced approach that emphasizes careful planning, robust legal frameworks, and infrastructure development will be crucial in ensuring the success of this transformative effort. By navigating these complexities effectively, Iraq can pave the way for a more inclusive, efficient, and resilient financial system.
Central Bank of Iraq signs agreement with Emirates Islamic Bank, 1 MARCH
Central Bank of Iraq signs agreement with Emirates Islamic Bank
The Central Bank of Iraq announced the signing of a banking agreement with Emirates Islamic Bank, which is considered one of the highest-rated Islamic banks, and is rated (A+) according to the international Fitch agency.
Thus, Emirates Islamic Bank is a distinctive addition to the banking relations that the Central Bank of Iraq has established with advanced regional and international banks in recent years.
The agreement includes joint cooperation on several axes, the most important of which are:
Exchange of experiences in the field of developing the Islamic banking sector.
Providing payment services in UAE Dirhams to Iraqi banks and expanding their correspondent accounts network.
Cooperation between Iraqi banks and Emirates Islamic Bank, under the supervision and support of the Central Bank of Iraq, to formulate a mechanism that will allow individual customers of Iraqi banks in the near future to invest (partially) in Islamic bonds issued by Emirates Islamic Bank or other issuers with a similar credit rating in the United Arab Emirates.
It is noteworthy that the Central Bank of Iraq announced in August of last year the start of a new phase of foreign transfer operations in a step aimed at enhancing the diversity of currencies and facilitating international transfer operations. This announcement came after reaching an agreement on the mechanisms for regulating dealings in the euro, the Chinese yuan, the Indian rupee, the UAE dirham, and other global currencies.
Central Bank of Iraq
Media Office
February 27, 2025 link
TIDBIT FROM FRANK26, 29 FEB
Frank26
Article: "Confirming Shafaq News.. Trump is heading to impose sanctions on Iraqi groups"
Notice that you didn't say Iraqi banks no no no. Is he going to put sanctions on Iraqi government?
No. No. No.
Is he going to put sanctions on the CBI ?
No. No. no.
Who's he putting sanctions on? Iraqi groups, Framework...Maliki's militia...Iranian politicians in parliament...
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