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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Report: The dollar crisis in Iraq puts the framework on a hot plate

    rocky
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    Report: The dollar crisis in Iraq puts the framework on a hot plate Empty Report: The dollar crisis in Iraq puts the framework on a hot plate

    Post by rocky Sun 05 Feb 2023, 5:35 am

    [size=30]Report: The dollar crisis in Iraq puts the framework on a hot plate
    [ltr]2023.02.05 - 10:13[/ltr]
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    A press report shed light on the dollar crisis in Iraq, while noting that it puts the coordination framework "on a hot plate."  
      
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    The report, published by "Al-Arab" newspaper, followed by "Nass" (February 5, 2023), says, "The complaints of the Sudanese coordination framework groups centered on the fact that he did not stick to the demand to postpone compliance with the American controls until local equipment and expertise are available to deal with them."  
      
    The following is the text of the report:  
      
    The coordination framework groups whose factions and affiliated banks lead dollar smuggling operations to Iran are facing an unprecedented situation, between Iranian pressure urging them to continue these operations to support Iran's steadfastness, and the protests of Iraqis who suffer from high prices due to the depreciation of their currency against the dollar.  
      
    Observers say that some of the framework's leaders, who met with Prime Minister Muhammad Shia' al-Sudani on Saturday, blamed him for providing hasty responses to American pressures that called on Iraq to control the "currency auctions" organized by the Iraqi Central Bank to curb smuggling.  
      
    But Al-Sudani responded to these leaders by saying that the crisis could explode further if it ends up tightening restrictions imposed by the Federal Reserve on dollar transfers to Iraq, or even starting a series of sanctions on banks that are active in smuggling.  
      
    And the Central Bank of Iraq has been organizing auctions to sell dollars, ranging between 100 and 300 million dollars a day. Al-Sudani himself revealed that this money was sent abroad based on fake invoices to buy goods at tens of times their price.  
      
    The bank’s procedures oblige everyone to fill out a digital form for each dollar transfer and to specify the transfer authority and documents proving its authenticity  
      
    The meeting held by representatives of the Central Bank of Iraq with representatives of the Federal Reserve in Istanbul on Friday ended until the Iraqi Bank issued a new regulation for transfer controls, requiring banks to provide auditable statements about the reason for their needs for dollars and the destination to which they go.  
      
    While the meeting focused on the fact that the Federal Reserve is ready to “show flexibility as long as the Iraqi Bank adheres to common goals,” those goals mean combating smuggling and money laundering exclusively.  
      
    According to the statement issued by the White House on the phone conversations between President Joe Biden and Al-Sudani last Friday, they dealt with “the prime minister’s economic agenda and his plans to ensure that he serves the Iraqi economy and the Iraqi people, which are plans that the United States has expressed that it is ready to fully support.”  
      
    The focus on “serving the Iraqi economy and the Iraqi people” is a clear indication that Iraq’s money should not be in the service of another party.  
      
    The “facilitation” package announced by the Central Bank provided dollars at the announced official price (1450 dinars to the dollar) for a list of legitimate purposes, for individuals, government companies and foreign companies operating in Iraq.  
      
    However, the bank's procedures obligated everyone to fill out a digital form for each dollar transfer, including specifying the transfer authority, its reasons, and documents proving its authenticity. The Federal Reserve also created an electronic platform within the central bank to monitor transfers and audit import invoices.  
      
    Under the new restrictions, the coordination framework groups concerned with smuggling dollars into Iran will have to suck dollars out of free markets, leading to a further drop in the dinar's price.  
      
    Although about 20 “private” banks complied with the platform’s conditions, dozens of other banks took the other path, which is to buy dollars from merchants and individual dealers by paying larger amounts in exchange for the dollar. This led to an increase in its price, and the return of the Iraqi dinar to a decline until it exceeded the amount of 1750 dinars to the dollar, that is, a difference of about 300 dinars from the official price.  
      
      
    And although the former Governor of the Central Bank of Iraq, Mustafa Ghaleb Makhaif, called for the postponement, the Federal Reserve insisted on the immediate implementation after the expiry of the qualification period that was previously agreed upon. This was one of the reasons that prompted the appointment of Ali Mohsen Al-Alaq, who is close to Nuri al-Maliki, the leader of State of Law, as governor of the bank.  
      
    The dilemma is embodied in the fact that the coordination framework groups concerned with smuggling dollars into Iran, which demanded the continuation of its flow to it “by land and air” in an official statement, will be forced, in light of the new restrictions, to absorb dollars from free markets, which leads to a further decline in the price of the dinar and fueling protests against it and against Sudanese government.  
      
    One of the exits before it is to return to the way that prevailed during the era of the Maliki government between 2006 and 2014, which is contracting for the implementation of fake government projects implemented by companies affiliated with the Iranian Revolutionary Guard, and transferring funds through them to Iran.  
      
    This way allowed the smuggling of a large part of the $400 billion that was said, after the end of that government's term, to have disappeared from government accounts. Subsequently, private banks replaced this method to perform the same task through the dollar sale window opened by the Central Bank.  
      
    Observers say that President Biden's reference during his phone conversation with Al-Sudani to "Washington's commitment to the strategic framework agreement signed with Iraq in 2008" meant adhering to the fact that all of Iraq's oil revenues remain subject to the supervision of the US Federal Reserve.  
      
    And while Iraq can receive daily cash transfers to meet its domestic needs, all of its other financial dealings are done through the Federal Reserve.  
      
    The daily “auctions” organized by the Central Bank of Iraq constitute the widest loophole through which smuggling operations take place, especially since they include amounts far in excess of Iraq’s actual import need.  
      
    And in the event that the framework groups insist on smuggling the dollar to Iran, whether by buying it from the auction window or by purchasing it from the markets, the result remains the same, which is a decline in the dinar, an increase in prices, and an increase in the already high rates of poverty and unemployment. This provides new fuel for the outbreak of protests that will bring Iraq back to the square of the October uprising that led to the fall of the government of Adel Abdul-Mahdi in December 2019.  
      
    More importantly, this crisis will frustrate the Sudanese government's plans to buy off the street by offering services and setting up projects. As soon as the coordination framework groups return to the previous means of smuggling, these services and projects will turn into illusions, and billions will return to “disappear” from government accounts.  
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