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- Thursday,14-11-2024,PM 12:39
- Karar Al-Asadi
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Due to the chronic dollar crisis and the control of private banks, parliamentarians are waging a movement to question and dismiss the governor of the Central Bank, Ali Al-Alaq. Amidst questions about the feasibility of this step, economists and businessmen believe that overthrowing Al-Alaq will not change anything in the economic reality and the fluctuations of the exchange rate. While some found that the bank’s policy “drains the dollar balance,” others praised this policy, as it maintained a certain level of the exchange rate.
Last Sunday, a member of the parliamentary finance committee, Mohammed Nouri, revealed a move within the committee and the House of Representatives to question the governor of the Central Bank, Ali Al-Alaq, due to the lack of control over the stability of the dollar price and the dominance of private banks over the currency selling window. He pointed to another move through official letters and correspondence to change Al-Alaq “because he has exceeded the legal age and continues in the position, while he should be referred to retirement.”
Economic expert Ziad Al-Hashemi says, “Changing the heads of major sovereign institutions such as the Central Bank of Iraq with other figures may bring some improvement in the quality of the public decision-making process, but it will not have a tangible impact on the processes of making and directing monetary and investment policies, planning, and other major tasks of the Central Bank, as these are the tasks of the bank’s board of directors.”
Al-Hashemi rules out "any tangible improvement in the dollar exchange rate due to the replacement of the governor, but rather through measures and decisions adopted by the government and political forces that stand behind many instances of imbalance in exchange rates and the weakening of the value of the dinar against the dollar."
As for the Central Bank’s influence on the dollar, the economic expert points out that “the bank’s policy is based on pumping and transferring as much of the dollar as possible for the purpose of controlling exchange rates, and this is considered a means of draining the dollar balance, making the process of supporting the value of the dinar very costly.”
It is noteworthy that the Supreme Judicial Council in Iraq, on August 19, supported the State Council’s conclusions regarding referring the Central Bank Governor Ali Al-Alaq to retirement after reaching the legal age. The judiciary said that the same issue was studied by the Studies Committee in the Presidency of the Judicial Supervision Authority, and the same opinion as the State Council was reached.
The House of Representatives had sent a letter to the Supreme Judicial Council inquiring about the judiciary’s opinion on the permissibility of the bank governor continuing in service after reaching the legal retirement age. It was also stated in the correspondence between the State Council and Parliament that the legislator had explicitly stipulated that retirement upon reaching the legal age is an inevitable retirement by virtue of the law unless exempted by a special provision, and there is no special provision exempting the governor of the Central Bank from the provisions of inevitable retirement upon reaching the legal age.
For his part, economic researcher Hammam Al-Shamaa believes that “the dollar problem is not a problem of a person that will end with his disappearance. Bringing in a new governor for the Central Bank will not change anything if the circumstances that lead to the rise in the exchange rate do not change.”
Al-Shamaa added, "Any person placed in Al-Alaq's place will not change anything. There are pressures and wills that have contributed to the increase in demand for the dollar in the local and foreign markets, due to political circumstances and goals, not economic ones, which Al-Alaq has fallen under the influence of."
He points out that "Iraq is under the influence of a vortex of corruption that no one can resist. There are political currents and pressures greater than even the Prime Minister, not just the Governor of the Central Bank."
Washington intervened to limit the smuggling of dollars from Iraq, which led to the dollar price rising in the local market to a record level in recent periods, reaching 170 thousand dinars for every hundred dollars, due to the decline in the Central Bank’s sales of dollars, given its subjection to the international financial system “SWIFT”.
The Central Bank has issued packages and measures to control the sale of the dollar and ensure that it is not smuggled abroad. At the beginning of the crisis, it reduced currency auction sales, but then recently it rose again to its previous level of about 300 million dollars per day.
In addition, businessman Hassan Al-Khafaji confirms that “what many politicians are missing is addressing the root of the problem and resorting to patchwork solutions such as changing names and personalities. The dollar is generally unstable in the Middle East region, not just Iraq.”
Regarding the Central Bank’s policy, Al-Khafaji finds that “it is relatively good and has maintained a reasonable level of the exchange rate, compared to the rates of financial inflation in the region,” noting that “the Iraqi markets are much better than some markets in neighboring countries such as Turkey, Iran, Syria, and Lebanon.”
Previous reports revealed that currency smuggling operations continue, despite controls on banks, and are carried out via bags transported overland to Turkey and Iran, after withdrawing dollars from the local market, and not through the official dollar sales window, which specialists call “black transfers.”
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