Iraq Reports ? Former Administration Officials Charged
Iraq has undergone a number of changes over the past month, which will bring stability to the country. Prime Minister Haider al-Abadi is taking new measures to bring an end to corruption and grow the Iraqi oil industry. Among the measures he has taken include indicting several former government officials.
Iraq News ? Several Former Officials Indicted as Abadi Cleans House
Iraqi officials recognize that a number of domestic problems have contributed to the instability in the region. The Abadi Administration has unveiled a number of new reforms to earn the trust of his citizens. Abadi appears confident that his actions will improve sentiments throughout the country, which will make Iraq a more attractive region for foreign investors.
Abadi Indicts Former Government Officials
Abadi?s predecessor, Nouri al-Maliki, has been heavily criticized for his positions in Iraq. Abadi has been investigating the practices of many former members of Maliki?s cabinet. After months of lingering suspicions, he has confirmed that many of the allegations against the former prime minister?s staff have been corroborated.
The Commission of Integrity has reported that Karim Aftan al-Jumaili, former Minister of Electricity, was among the suspects that were indicted. Abadi?s administration wasn?t the only group that suspected Jumaili of corruption. Former MP Odai Awad had accused the former Minister of Electricity of nearly 30 acts of corruption.
The indictments should restore faith in the government. During Maliki?s regime, many citizens feared that Iraq was slowly returning to authoritarianism. They may feel more confident in the government if they see that corrupt officials are held accountable.
Central Government Addresses Tensions in Kurdistan
Political instability in Kurdistan has been one of the biggest challenges that Iraq has faced over the past several years. The problems arose after the newly elected government removed several officials from the opposing party from office. The region has faced growing unrest over the past couple of months as the Goran and Democratic parties continue their feud.
The central government recognizes the rifts between the two groups. They are trying to ease the tensions within the Kurdistan Regional Government. The central government?s efforts will be necessary to improve sentiments in other parts of Iraq, since turmoil in Kurdistan often extends to other parts of the country.
Oil and Energy ? Iraqi Troops Expel ISIS from Key Oil Refinery
While Iraq is gradually trying to taper its dependence on the oil industry, oil still remains the country?s primary source of revenue. Iraqi officials are trying to boost oil production and forge new contracts as oil prices gradually begin to rebound. They have made significant progress on both fronts over the past several weeks.
South Africa Considers Collaborating With Iraqi Oil Producers
South Africa officials recently announced that demand for oil within their borders is growing rapidly. The?? Strategic Fuel Fund (SFF) believes that Iraq is the best oil producing nation to collaborate with. South Africa intends to import 24 million barrels of oil from Iraq every year.
An Iraqi diplomat stationed in Pretoria said that the original proposal was to import even higher volumes of oil. The level of imports could be increased in the future if the quantity is insufficient to meet the needs of South African businesses and consumers.
“The request is with our state oil company SOMO, they have sent us messages to say the request has been approved in principle,” said the diplomat.
Iraqi Forces Reoccupy Baiji Refinery
Iraqi forces have reportedly retaken the Baiji refinery from ISIS. The refinery was significantly damaged during the battle and may take a long time to rebuild. However, Iraq is still better off with the facilities under its control.
Kuwait Considers Importing Gas from Iraq
While oil is the backbone of the Iraqi energy industry, the country is gradually expanding its gas export business. Iraq is exploring new partnerships with other Middle Eastern countries that have more limited oil reserves. Iraqi officials have reached a tentative agreement with Kuwait, which would involve Iraq exporting large quantities of gas to its neighbor.
Nizar Al-Adsani, head of the Kuwait Petroleum Corporation, expects the details to be finalized in the near future. ?Kuwait is in need of gas for power plants ? [but] up until now we have not agreed on the quantities and prices.? Adsani told reporters.
Rising Oil Prices Lift Hopes for Iraq
Declining oil prices nearly crippled the government last year. Prices have slowly and steadily risen over the past month, which renews hope that the economy is beginning to rebound. Uticensis Risk Services believes that rising oil prices will strengthen the Iraqi economy, which means the new budget proposals will be more accurate than similar figures from 2015.
Business and Foreign Investment ? Iraqi Companies form Compacts With Ukrainian Firms
Iraqi firms have been trying to forge partnerships with more companies in other countries. A number of foreign companies have established a presence in Iraq over the last couple of years. Iraqi firms have been slower to find many firms to import goods and services from, but they have started discussing new contracts for importing in recent weeks.
As modernization progresses and the Iraqi economy continues to grow, demand for foreign products will also rise. A variety of Iraqi companies have formed more compacts with companies in overseas.
Ukrainian Vehicle Companies May Export to Iraq
Demand for Iraqi products is growing beyond their ability to produce. They need more modern vehicles to reliably distribute goods to their customers.
Baqir al-Zubaidi, the Minister of Transportation, believes that Ukrainian firms may be able to meet their needs for vehicles. A number of companies in Ukraine have expressed an interest in collaborating with Iraq, but some details need to be worked out. Zubaidi recently had a meeting with Ukrainian Ambassador, Anatoly Marenitez, to discuss the details of the proposal. Marenitez has expressed genuine earnestness about working with Iraq and pledged to do everything possible to meet the requests.
Petrofac Secures Contract in Majnoon
Petrofac is one of the most highly regarded oilfield training companies in the world. The UK-based firm recently signed a major contract to work with Shell Iraq in Majnoon. The commencement date of the contract is October 2015 and will continue at least until 2017.
Shell Iraq is pleased with the new agreement. Their Majnoon facility was constructed in 2013 and has already made considerable contributions to the Iraqi oil industry. However, Shell Iraq executives feel that additional steps can be taken to boost performance and make the company more competitive.
Growing Need for Agricultural Reforms
The agricultural industry has faced numerous challenges over the last few years. They have been trying to deal with the price of government austerity measures and the rise of ISIS militants. Some local farmers claim that the entire sector is on the verge of collapse.
Other experts are less fearful of the challenges that Iraqi farmers face. However, while they don?t believe the sector is at risk of deteriorating entirely, they do feel that there are problems that need to be addressed. The Iraqi government and allies from other parts of the world have expressed a strong desire to strengthen the industry. The U.S. Foreign Agricultural Service has promised to invest resources that Iraqi farmers need to grow.
The central government recognizes the need to address the problems that small farmers are facing. They intend to introduce new agricultural initiatives to boost outputs and provide more security for regional producers. However, their plans will need to involve overcoming the threats of ISIS. The Minister of Agriculture stated that regions occupied by ISIS faced a 40% decline in agricultural production. Therefore, overcoming the militants will need to be a top priority to ensure stability for the sector.
Economy ?Central Bank Introduces New Proposals to Strengthen Economy
The Iraqi economy faced a disappointing downturn last year as the country contended with declining oil prices and ongoing threats from ISIS. Oil prices are finally starting to rise, which should help fill the government coffers and increase funding for economic development initiatives. The risk ISIS poses has also been lessened after continued air strikes from the United States and Russian President Vladimir Putin cut off their arms supplies.
However, if the economy does rebound as speculated, it may take a while for it to unfold. The government recognizes the need to create new initiatives to build the economy. The Central Bank of Iraq (CBI) has recently unveiled several new strategies to give the Iraqi economy a needed boost.
Central Bank Promises New Funding for SMEs
The CBI has stated that it will provide more funding for Small and Medium Enterprises (SMEs). They recently unveiled a new plan that provides an extra 500 billion dinars for SMEs. The Iraqi Private Banks League is confident that the new initiative will fuel economic growth and provide new job opportunities. ?
The loans are being granted through private banks to enhance job opportunities among the youth who own small projects, which will lead eventually to stability in the society,? the league wrote in a recent statement. ?This initiative [will] enhance the role of the private sector, develop small and medium enterprises and increase job opportunities.?
Iraqi Government Expected to Open First Islamic Bank
The Iraqi government has said that it plans to open the nation?s first Islamic bank. The Iraqi Ministry of Finance said that the bank will grant loans in accordance with Sharia Law. It should be open by the beginning of 2016.
?The ministry has completed all preparations to open its first governmental Islamic bank in Iraq, after receiving official approvals from the relevant authorities,? stated a Ministry of Finance official.
The new bank could provide direct loans to businesses throughout Iraq, which will enable them to raise new capital to grow. However, some critics believe that the drawbacks could outweigh the benefits. Khalid Salam Mhanna said that the new bank will create unnecessary competition for private sector banks.
Dinar Value and Exchange Rate ?Sustained Oil Rebound Would Avert Dinar Devaluation
Some currency feared that the dinar was facing the possibility of a rapid devaluation. Their fears were predicated on the belief that global oil prices would freefall. However, recent reports have shown that prices have been rising steadily. If oil prices continue their rebound, then the likelihood of a dinar devaluation is slim.
Experts from Bloomberg Businessweek Week Middle East point out that a growing number of emerging economies have been devaluing their currencies in a desperate attempt to strengthen their economies. China was among the largest economies that were forced to change monetary policies this summer.
However, the Iraqi economy isn?t facing the same challenges that other emerging economies are dealing with. While the economy declined last year due to falling oil prices, it has remained resilient. Oil prices appear to be rising, so the economy should be able to continue growing.
The risk of a temporary devaluation is still on the table if the CBI feels that growth is too tepid. However, statements from Central bank Governor Ali Mohsen Ismail suggest that the probability of currency devaluation is minimal.
?There is no fear for the dinar,? the governor told Bloomberg. He did caution that there was a slim chance that the currency would need to be weakened. ?The pressure remains, we could marginally change the exchange rate to increase revenues of the finance ministry,? he said. ?This is just an option that needs to be carefully studied because we don?t want to give away what we have achieved in terms of the inflation rate, which is perfect now.?
Recent reports showed that the consumer price index rose by 2.6% in July, the most recent month that data is available. If future reports show that inflation remains healthy, then the probability of a devaluation is unlikely to increase. The CBI could also strengthen the currency if rising oil prices grow the economy faster than recen reports anticipate.