As part of the XXII St. Petersburg International Economic Forum, Rosneft and the Kurdistan Regional Government of Iraq signed an agreement securing the intention of the Parties to make a detailed analysis of potential gas cooperation options.

The Parties ensure stepwise implementation of the arrangements following the Investment Agreement signed at the XXI St. Petersburg International Economic Forum.

Rosneft will focus its analysis on how to participate in the integrated gas business value chain in the region in order to extract maximum efficiency from investments and operations in such areas as exploration and production, transportation and trading with especial attention given to partnership and project (third party) financing options.

Under the Agreement the Parties will elaborate an integral plan to progress the gas business within the Kurdish Region of Iraq. One step in this plan is the conduct of a pre-FEED of Iraqi Kurdistan’s gas pipeline construction and operation.

This is a key project to the monetization of the exploration and production opportunities Rosneft has been evaluating since signing a Gas Cooperation Agreement with the Kurdistan Regional Government of Iraq at the 10th Eurasian Economic Forum in Verona on 19 October 2017.

Following the outcomes of the integral development plan in terms of the attractiveness and efficiency of the options, Rosneft will decide on how to participate in the regional gas business.

(Source: Rosneft)

By John Lee.

China’s ZhenHua Oil [Jinhua] has signed a service contract to develop the southern part of the East Baghdad oil field.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] said that the signature of the contract was significance for Baghdad because it is the first project in the capital.

The development of the field will raise the production of the Midland Oil Company.

As part of the deal, the project will also provide social services, and see the construction of a housing complex with 2000 residential units.

(Source: Ministry of Oil)

By Mustafa Saadoun for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News

Many Iraqi legislators call for canceling election results

On May 21, a group of Iraqi parliament members submitted a request to the speaker to cancel the results of the May 12 parliamentary elections. The group also called for dissolving the Independent High Electoral Commission, discontinuing electronic voting and reinstating manual voting and sorting, with many legislators saying the elections were sabotaged.

The next day, six Kurdish parties of the Iraqi Kurdistan region threatened to boycott the political process if their demand to cancel the results in Iraqi Kurdistan and other contested areas is not met. However, the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP), the two main political parties that came in first and second in the provinces of the region, did not join in on the complaints.

On May 18, the Independent High Electoral Commission announced the results of the elections. It also said that ballots cast in 103 polling stations in five provinces — Baghdad, Anbar, Salahuddin, Ninevah and Kirkuk — had been annulled because of sabotage and suspicions of fraud. However, the commission did not say whether the cancellation of those ballots actually changed the results.

Out of 329 members of the Iraqi parliament, 176 agreed on canceling the results of the elections, legislator Tawfiq al-Kaabi said. This would mean that the number of parliament members calling for the elections to be voided has reached the majority required for a law to be passed.

Legal analyst Ali Jaber told Al-Monitor, “The Iraqi parliament has the right to dissolve the current electoral commission and cancel the results of the election if it is proven to be sabotaged and fraudulent.”

Said al-Kakai, a member of the Independent High Electoral Commission, agreed with those calling for the cancellation of the results and the reinstatement of manual sorting. During a televised interview aired May 18, he said results that had been double checked in six provinces did not match with the original tallies, with the worst cases having differences ranging from 12% to 63%.

Former Prime Minister Ayad Allawi, the leader of the predominantly Sunni National Coalition, is also skeptical of the results, although his grouping won 21 seats. He is suspicious about the vote in refugee camps and abroad and called for the cancellation of those results. He also said he supports manual vote sorting in the contested provinces.

Parliament Speaker Salim al-Jubouri, who lost on May 12 despite being a top National Coalition candidate, said in a recorded message two days after the elections, “There is a conspiracy targeting me specifically. It appears to be part of a more elaborate plan. Yet most of its threads and tools have been revealed, and I will be disclosing all information to the public.”

Shiite parties were also skeptical of the results. Mohammad al-Sahyoud, a candidate from the State of Law Coalition, called “for canceling the results of the elections, extending [the term of] the parliament and announcing a caretaker government due to electoral fraud and sabotage” in a May 17 press statement.

Political analyst Ahmad al-Abiad told Al-Monitor, “The US supports the necessity of having manual sorting for 5% of ballot boxes. This might happen in the coming days.”

He added, “The suspicions around the results of the election are great and the calls for canceling them are even greater, but we do not have any constitutional procedure for canceling the results of elections. So the only solution available for political blocs is to pass a law in parliament canceling the elections before the constitutional end of their term June 30. The government can also appeal the parliament’s decision to the Federal Supreme Court of Iraq.”

The State of Law coalition, which won 25 seats in parliament, was a big loser in the elections, seeing its total drop 66 seats from the 2014 elections. The lower number could jeopardize the coalition’s involvement in the next government.

Skepticism about the results emanated from political parties and groupings that received fewer seats than expected.

Some individuals from other coalitions also called for canceling the results. Member of parliament Mohammed al-Lakash of the National Wisdom Movement (Hikma), which won 19 seats in the new parliament, called for canceling the results because of “fraud attempts, voter intimidation and bribery.”

The Iraqi Turkmen Front in Kirkuk, led by member of parliament Arshad al-Salihi, objected to the election results in the province and asked its supporters to protest in the streets of Kirkuk. It also sued the Independent High Electoral Commission.

This is the first time since 2005 that election results have faced such strong objections. The complaints seem to be coming from all political parties except for the Sairoon Alliance.

The alliance led by the Shiite cleric Muqtada al-Sadr won 54 seats in the next parliament. It is the only coalition that did not doubt the results of the elections despite Sadr’s constant objections to the current electoral law.

While it is possible that a law canceling the results could be passed, such a step seems unattainable given the short deadline left for the parliament. The parliament members would first have to hold talks in order to reach a political agreement on the topic. This might lead the country into chaos, so an alternative quick solution that might please all political parties might be to manually sort the ballot boxes of some polling stations.

By Ali Mamouri for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

After the Sairoon (On the Move) Alliance emerged victorious in the May 12 Iraqi elections, its leader, Muqtada al-Sadr, has been seeking meetings with the leaders of the other top-vote-getting alliances to discuss the possibility of forming the largest bloc in the new parliament and ultimately form the new Cabinet.

At a May 19 joint press conference after talks with Sadr, Prime Minister Haider al-Abadi, whose Al-Nasr (Victory) Alliance came in third, said, “During our meeting, we agreed to work together and with other parties to expedite the process of forming a new Iraqi government.”

A few days later, on May 22, Al-Nasr spokesman Hussein al-Adeli said Abadi had reached an agreement with Sadr on a map for forming a new government. Abadi himself, in his weekly press conference the same day, said his coalition was close to reaching an understanding with the Sairoon Alliance “to form a strong technocratic government.”

In a May 20 meeting with Hadi al-Amiri, leader of the second-place Fatah Alliance, consisting of the political wings of the pro-Iran militias of the Popular Mobilization Units, Sadr had said, “The process of government formation must be a national decision, and importantly, must include the participation of all the winning blocs along a national path.”

Sadr appeared to select the phrasing “national decision” and “national path” especially for Amiri, who had days earlier met in Baghdad with Qasem Soleimani, commander of Iran’s Quds Force, in an attempt to form a pro-Iranian parliamentary bloc.

Sadr also held talks with Ammar al-Hakim, leader of the Hikma Alliance, on May 21 and spoke of the importance of forming the upcoming government in a way that ensures “fixing the path of the political process to suit the aspirations of the Iraqi people who reject sectarianism and corruption.”

Sadr also met May 21 with Iyad al-Allawi, leader of the predominantly Sunni Al-Wataniyah Alliance, and two days earlier had received a letter from Kosrat Rasoul Ali, first deputy for the secretary-general of the Patriotic Union of Kurdistan, in line with discussions on potential alliances requiring Sunni and Kurdish participation alongside the Shiite majority to form a government.

After failing to assemble a parliamentary bloc under Iranian auspices consisting of the four largest Shiite lists — the State of Law Coalition and the Al-Nasr, Hikma and Fatah Alliances — Iranian Ambassador to Iraq Iraj Masjedi attempted to lure Sadr to his side to prevent the formation of an anti-Iran government. Masjedi told Iran’s Al-Alam TV May 21, “Iran has constructive relations with all parties, blocs and coalitions that won the majority of parliamentary seats in the fourth elections.”

Masjedi also denied rumors of a dispute between the Iranian leadership and Sadr, saying, “Iran’s relations with Sadr are historical and deep-seated. The country had close relations with the martyrs Mohammed Baqr and Mohammed Sadeq al-Sadr [Muqtada’s uncle and father, respectively].” Masjedi added, “Iranian officials’ relations with Sadr are friendly and brotherly, and many of them, including Soleimani, appreciate Sadr greatly.”

In fact, Sadr’s father and Iranian officials were not friendly at all. His representative in Iran, Jaafar al-Sadr, son of Mohammad Baqr, was arrested and his office shuttered in Qom in 1998. In addition, everything indicates that relations between Muqtada and Iran have gone downhill as well in recent years.

Sadr had made several statements critical of Iranian interference in Iraqi decision-making, and his alliance competed against the pro-Iran lists — Al-Fatah and the State of Law Coalition — in the elections. In the preceding years, Sadr’s supporters chanted slogans against Iran at protests calling for reform. Sadr, unlike his rivals Maliki and Amiri, has not met with Soleimani in recent years.

Sadr greeted a group of ambassadors from neighboring countries May 19 after his list’s victory was confirmed. In attendance were the ambassadors of Saudi Arabia, Jordan, Kuwait, Turkey and Syria. Official Iranian websites, including Al-Alam’s, criticized Sadr’s relations with Saudi Arabia and charged that Riyadh had been behind Iran’s exclusion from the meeting.

Sadr insists that the largest parliamentary bloc include all Iraqi components, which would be unprecedented if successful. The largest parliamentary bloc has always consisted solely of Shiite parties, which then negotiated with Kurdish and Sunni blocs over forming the government.

On May 21, Sadr tweeted, “I am Muqtada. I am Shiite, Sunni, Christian, Saebean, Yazidi, Islamist, civil, Arab, Kurdish, Assyrian, Turkmen, Chaldean and Shabak. I am Iraqi. Do not expect me to side with any sect against the other to renew enmities and lead to our demise. We are headed toward a comprehensive Iraqi alliance.”

Al-Hayat newspaper on May 21 cited Iraqi sources close to Sadr discussing efforts to bring together Abadi, Allawi, Kurdistan Democratic Party leader Massoud Barzani and Sunni Al-Qarar Alliance leader Khamis al-Khanjar to explore forming the leading parliamentary bloc with all their parties’ participation. If Sadr succeeds, Iraq might overcome sectarian quotas in forming a government, and Iranian influence would dwindle with its political allies, Al-Fatah and the State of Law Coalition, excluded from the bloc.

By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Market Review:  The Elections, the Economy and the Stock Market

A key aspect of the Iraq investment opportunity is arbitraging the delta between real and perceived risk. The perceptions of the widely covered parliamentary elections fit within this arbitrage opportunity in that they miss the mark by a wide margin.

The May elections did not result in an overall winner with an outright majority (165 seats among the parliament’s 329 seats) enabling the formation of a government. Instead, they produced winners and losers who will eventually form a coalition government. At the lead is Sairoon, a coalition of Shia cleric Muqtada Al Sadr, Communists and Liberals, with 54 seats; followed by Fateh, a coalition of the political arms of the Popular Mobilisation Units (PMU’s), with 48 seats; finally, Nasr, the Prime Minister’s (PM) coalition, with 42 seats.

The rest are made up of: five different coalitions each with 18-25 seats; four coalitions each with 4-6 seats; and finally, a gaggle each with 1-3 seats. The next step would be the formation of an alliance of coalitions that would, on the first day of the new parliament by end of June, have the largest number of seats to enable it to have a PM with a chance of forming a government. The whole process should take a few weeks but, in the past, it took a few months.

The winning coalitions, irrespective of their lead player, are all cross-sectarian unlike the prior ethno-sectarian monolithic blocs that dominated over the past 14 years – a division that was the root cause of Iraq’s political and social instability since 2003. Moreover, for the first time since 2003 there was a strong mass opposition to these ethno-sectarian monolithic blocs that manifested

in an active non-participation movement. This led to an election participation turnout of 44.5%, which in turn had huge effects on the seats won and lost by the different coalitions.

Drilling further into the leading blocks shows neither they nor their leading players conform to simplistic assumptions. For example, Muqtada Al Sadr is often described as a firebrand cleric who is anti-secular, anti-Western and pro-Iran as a result of his leading role in Iraq’s dark history since 2003. Yet, at least outwardly, he went through a transformation to a firebrand cleric who is anti-Iran and anti-its proxies in Iraq, whose alliance with Communists and Seculars kept the 2015 pro-reform demonstrations alive and relevant.

Moreover, he was a leading player in rebuilding Iraq’s relationship with Saudi Arabia and the UAE – both received him in their capitals in 2017 to further this rebuilding. The second leading coalition, Fateh, a grouping of the political arms of the supposedly pro-Iranian PMU’s, although not all are, is led by Iranian-allied Bader Organization. Yet Bader has been a part of every Iraqi government since 2005, responsible for the Ministry of the Interior, and as such a major part of the next phase of Western support for Iraq in rebuilding its security apparatus in the long-term fight against ISIS.

The most visible fruit of which has been the decline of violence since the end of the Mosul campaign and in the first violence free elections (see chart below). Finally, the Naser coalition which is led by the PM and while much admired for leading the fight against ISIS, he suffers from perceptions of failure to address the demands of the demonstrators since 2015. Although an unfair criticism given the overriding priority to deal with the ISIS invasion, it was behind much of the reason for his collation’s third place showing. Nonetheless, his chances of returning as a PM capable of leading a workable government are high.

UN Casualty figures for Iraq November 2012 – April 2018

(Source: United Nations Assistance Mission for Iraq (UNAMI), for 8 months from 2015 UNAMI, in some cases, could only partially verify certain incidents)

Optimists see the potential for a coalition governing with a clear reform agenda and with a proper opposition in parliament providing a check on the government. The pessimists however see a repeat of the prior coalition governments that were made up of all groupings in parliament, and thus no real change to the failures since 2003. However, irrespective of who would be right, a few things are clear that would have implications for Iraq’s economy, the investment opportunity in Iraq and the stock market.

The combination of the lead by Sadr’s coalition, the continued pro-reform demonstrations since 2015, and the large active non-participation movement together imply that the upcoming government would need to address the issues at the heart of the public’s anger. This would be the provision of services and reconstruction, which require much needed overdue investments in the country’s infrastructure and the reconstruction of the liberated areas.

The new oil price dynamics have a huge positive implication on Iraq’s ability to provide funds for this massive investment spending estimated at USD 88bn over the next five years. Current estimates for the country’s revenues for 2017-2022 are based on Iraqi oil price assumptions of USD 45.3/bbl in 2017 and increasing to USD 47.1/bbl by 2022. These estimates would result in a cumulative deficit of USD 17.6bn, thereby increasing the debt load, necessitating borrowing to fund the deficit and restrict the ability to fund reconstruction. This implies the need for outside aid and investment to fund reconstruction.

However, different assumptions based on the new oil price dynamics would provide a vastly different picture. For instance, using realized prices of Iraqi oil of USD 49.2/bbl for 2017, and assuming Iraqi oil prices of USD 60/bbl for 2018, then declining to USD 51/bbl in 2022, would produce a cumulative surplus of USD 47.4bn instead of the earlier assumed cumulative deficit of USD 17.6bn. In other words, this equals a turnaround of USD 65bn in potential available funds.

While, an assumption of an oil price of USD 64/bbl for 2018, then declining to USD 55/bbl by 2022 would produce a cumulative surplus of USD 78.2bn, or a turnaround of USD 95bn in in potential available funds.

Granted some of this windfall will result in higher government spending, especially on populist measures which would be detracting from the funds available for infrastructure investment. Though this would nevertheless be a large positive for consumer confidence and economic activity, all of which would ultimately support the earnings profile of consumer service providers and the banking sector.

In the immediate term, given the impossibility of forecasting future oil prices out to 2022, if Iraq’s oil price was to hold the YTD average for the remainder of 2018, it would convert the IMF 2018 projected deficit of USD 9.5bn into a surplus of USD 10.9bn. This means a turnaround of USD 20bn in potential available funds. Coupled with a slight positive variance to 2019 projections, this would provide Iraq with enough fiscal flexibility to start directly funding the immediate needs for reconstruction. This changed fiscal position would further allow it to comfortably access debt markets at reasonable rates to build upon this reconstruction. The potential addition of regional investments led by Saudi Arabia, as discussed here in the past, could lead to a self-reinforcing investment cycle.

The stock market’s action in the weeks before and after the elections has been business as usual and very much followed the same themes discussed over the last few months. This is an indication of how much negative news the market has discounted over the last three years that saw the index, as measured by the RSISUSD Index, decline -68% from its 2014 peak to the 2016 bottom.

Through 22nd May the market was down -3.9% for the month, bringing the year to date gains to +5.8%. The daily market action has been almost identical to that of the prior month with the same low turnover, the same buying in the selected leading stocks and the same selling in the banks based on the same fears.

The response of the currency to the elections for the most part matches that of the market with the market price of the Iraqi Dinar (IQD) weakening versus the USD in the days around the elections but returning to the same levels at the start of the month. The upshot, is that the premium of the market price of the IQD over the official exchange rate increased from 1.2% at the end of April, reaching 2% just before the elections and is now back to 1.2%.

The issue that continues to dominate the market is the timing of the return of liquidity as a result of the expansionary effects of higher oil prices and the end of conflict. As discussed here in the past, the observed time lag between Y-Y changes in oil revenues and Y-Y changes in M2 has been about 7-9 months which suggests that M2 growth should see improvement over the next few months as the chart below implies: it shifts the Y-Y percentage change in M2 back by 9 months versus the Y-Y percentage change in oil revenues. However, it is complicated by the additional time taken up by pre and after elections, and the additional time needed for the formation of the new government. All of which will delay this recovery but would likely result in a large back-end loaded return of liquidity.

Oil Revenues (green) vs the RSISUSD Index (red)

(Source: ISX Central bank of Iraq, Iraq’s Ministry of Oil, AFC.)
(Note: M2 as of Jan. with AFC est.’s for Feb & Mar, Oil revenues as of Mar with AFC estimates for Apr & May)

As argued here in the recent past, the backdrop continues to be positive: historically the equity market, as measured by the RSISUSD Index, has tended to follow oil revenues with a time lag of 3-6 months as the chart below shows.

Iraq’s Oil Revenues (green) vs the RSISUSD Index (red)

(Source: Iraq’s Ministry of Oil, Rabee Securities, Iraq Stock Exchange, AFC)
(Oil revenues are as of Mar with estimates by AFC for Apr & May)

Given the time lag involved and the delay over the formation of the new government, this will probably unfold over the next few months and the recovery will likely be in fits and starts with plenty of zig-zags along the way. This continues to underscore the opportunity to acquire attractive assets that have yet to discount a sustainable economic recovery.

Please click here to download Ahmed Tabaqchali’s full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the CIO of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years’ experience in US and MENA markets. He is a non-resident Fellow at the Institute of Regional and International Studies (IRIS) at the American University of Iraq-Sulaimani (AUIS). He is a board member of the Credit Bank of Iraq.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.

_______________________

[1] Source of current estimates on Iraq (deficit, oil price, revenues etc) are from the IMF Iraq Country Report No. 17/251 (http://www.imf.org/~/media/Files/Publications/CR/2017/cr17251.ashx). Updated assumptions are the author’s calculations based on the above source

By John Lee.

Bashneft, a subsidiary of Russia’s Rosneft, has found oil at its Salman-1 exploratory well at Block 12 in Iraq.

In a statement, the company said that an exploration well was successfully drilled to depth 4,277 metres; oil was found, “which gives grounds for expecting the discovery of industrial reserves“.

Rosneft said it views this discovery as an important milestone in the development of exploration and production projects abroad.

China-based company Zhongman Petroleum and Natural Gas Group (ZPEC) was previously announced as the general drilling contractor.

(Source: Rosneft)

By John Lee.

Sharjah-based Ducorr has reportedly completed the design and deployment of a cathodic protection system for Shell’s Majnoon oil field.

Construction Week Online quotes company sources as saying that the flowlines were buried in very corrosive soil, hence the need for protection.

(Source: Construction Week Online)

By John Lee.

Kuwait Energy has reportedly hired an investment bank to advise it on options that could include selling all or part of its Block 9 field in southern Iraq.

Reuters says that Perella Weinberg Partners (PWP) will assist in creating liquidity and a cash buffer to repay debt.

Discussions on a possible merger with UK-listed SOCO International broke down earlier this year.

(Source: Reuters)

By Ali Mamouri for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Sairoon (On the Move) Alliance formed by Muqtada al-Sadr and the Iraqi Communist Party is ahead in the preliminary results of the Iraqi elections. More than 90% of the votes in all of Iraq’s provinces have been counted so far, with the exception of Dahuk and Kirkuk, where counting was postponed.

Sairoon has so far secured 54 out of a total of 329 parliamentary seats, while the Al-Fatah Alliance, formed by the Iranian-backed Popular Mobilization Units, has won 44 seats, followed by 39 seats for Prime Minister Haider al-Abadi’s Al-Nasr Alliance. The State of Law Coalition led by former Prime Minister Nouri al-Malik has secured 25 seats, and the Al-Wataniya Alliance of former Prime Minister Ayad Allawi has obtained 22 seats.

The results have raised the chances that the Sairoon Alliance will form the largest bloc in the next parliament, which will be tasked with appointing the prime minister and forming the next government. Sairoon leaders rushed to express their desire to put together the largest bloc and voiced their opinions on the next government’s shape and inclination.

“The door is open” for Sairoon to work with any of the rival blocs, said Dhia al-Asadi, head of the political bureau of the Sadrist Movement, on May 14 after the announcement of the preliminary results of the elections. “Sairoon has the right to claim the post of prime minister,” he said. On May 16, Sadr, the head of the Sadrist Movement, confirmed his wish to form a government of technocrats free of partisanship and sectarianism.

In a May 14 tweet, Sadr hinted at the alliances and broad nature he hopes will characterize the new government. Using a play on words derived from the meaning of various political entities’ names, he wrote: “We are Sairoon (On the Move) with Hikma (Wisdom) and Al-Wataniya (Patriotism) to make the people’s Iradah (Will) our demand, to build Jilan Jadidan (a New Generation), to witness Taghir (Change/Gorran) toward reform and for the Al-Qarar (Decision) to be Iraqi,” continuing the puns with, “So we raise the Bayariq (Banners) of Al-Nasr (Victory), and to make Baghdad, the capital, our Hawiyatuna (Baghdad is Our Identity) and our Hirakuna (Democratic Movement) move toward the formation of a paternal government from among technocratic Kawadur (Cadres) free of partisanship.”

Sadr used parenthesis in his tweet to denote various Iraqi political entities, including Abadi’s Al-Nasr, Ammar al-Hakim’s Hikma and Allawi’s Al-Wataniya alliances, and others — excluding the Iranian-supported militia Al-Fatah Alliance and Nouri al-Maliki’s State of Law Coalition.

If Sadr can achieve an alliance that includes the aforementioned forces, he would form the largest bloc and isolate his rivals, the Al-Fatah Alliance and the State of Law Coalition.

Arab powers opposing Iran, led by Saudi Arabia, welcomed Sadr’s victory and expressed hope that it will undermine Iran’s influence in Iraq. Thamer al-Sabhan, the minister of state for Arabian Gulf affairs at the Foreign Ministry and a former Saudi ambassador to Iraq, commented on Sadr’s tweet and retweeted, “You are really Sairoon (on the move) with Hikma (wisdom), Wataniya (patriotism) and Tadhamon (solidarity). You have taken Al-Qarar (decision), toward Taghyir (change) to have Iraq raise the Bayariq (banners) of Al-Nasr (victory), to [secure] independence, Arabism and identity. I congratulate Iraq for having you.”

Some Sunni Arab forces, including the Al-Qarar Alliance led by Khamis al-Khanjar, also welcomed Sairoon’s victory. Khanjar even voiced his desire to ally with it. Abadi congratulated Sadr on his victory, which could imply a desire to ally with him.

But this does not prevent Sadr’s rivals from seeking to sideline Sairoon by forming a larger bloc in a rival axis.

State of Law Coalition spokesman Abbas al-Musawi expressed skepticism May 16 that some electoral lists (in reference to Sairoon) will be able to form a government, stressing that “historic leaders” will be the key drivers in this matter. State of Law Coalition parliament member Mohamed Sahyoud said May 15 that efforts are near completion to form an alliance between the State of Law, Al-Fatah and Al-Nasr coalitions, which would secure more than 100 seats and account for the largest bloc in parliament. If this occurs and the bloc gets support from some Kurdish and Sunni forces loyal to Iran, the next government could be formed by the axis opposing Sadr.

Al-Monitor learned from sources who asked not to be named within the State of Law, Al-Fatah and Al-Nasr coalitions that the commander of Iran’s Quds Force, Qasem Soleimani, who has been in the Green Zone in Baghdad since May 14, is leading efforts to strike an alliance deal between the State of Law Coalition’s Maliki and Al-Fatah Coalition leader Hadi al-Amiri, and then to encourage Al-Nasr’s Abadi and Al-Hikma’s Hakim to join this alliance. If Soleimani succeeds, this could prevent Sadr from forming the largest bloc.

Soleimani was said to have proposed that these alliances refrain from nominating any of their leaders. Other names are being put forward as a consensus prime minister, including Muhammad Shayya al-Sudani, who is one of the Dawa Party leaders and the minister of labor and social affairs in Abadi’s government.

An earlier report by Al-Monitor indicated that negotiations by Soleimani in Erbil led to an agreement with the Kurdistan Democratic Party not to support Abadi as prime minister. Nechirvan Barzani, the prime minister of the Kurdistan Regional Government (KRG), revealed upcoming plans for a visit by a KRG delegation to Baghdad to participate in talks aimed at forming the next government.

Hisham al-Rekabi, who heads Maliki’s media office, said May 16 that all discussions to form the largest bloc “will be completed within the next 48 hours.” Dawa Party leader and parliament member Kamel al-Zaidi spoke of “semifinal” understandings between the State of Law and Al-Fatah coalitions, in addition to current attempts to include other [parliamentary] blocs in this larger bloc. Zaidi added, “There are ongoing contacts with the National Union Front and Barham Salih’s party, as well as with Sunni political authorities to form an alliance that guarantees a national political majority.”

On May 15, US State Department Spokeswoman Heather Nauert answered a question about Soleimani’s interference in the ongoing consultations to form the Iraqi government. “That is certainly always a concern of ours, but we have a great deal of trust and faith in the Iraqi people and whoever ends up governing, whatever the structure is, the governing of that country going forward,” she said.

Iran appears to be in a hurry to strike a deal between its loyalists for fear of Sadr’s success in dominating the next government, which would curb its influence in Iraq.

Iraq Duty Free has responded to allegations regarding the renewal of its contract to run the duty free concessions at Baghdad and Basra airports in Iraq.

According to the statement from its CEO, Ahmed Kamal, the owner of company has not been convicted of “any crime of punishment that deprives the freedom in Iraq.”

His response is carried in full below:

Iraq Duty Free strongly refutes all such allegations regarding the contract renewal which have been aired on Al Ahad channel. The contract between Iraq Duty Free and Iraqi Civil Aviation Authority has passed through a number of legal and regulatory authorities before concluding it. It was approved by Iraqi Civil Aviation Authority and then further endorsed by Ministery of Transportation. So all allegations by Al Ahad channel regarding the contract renewal are baseless and these allegations are aimed to tarnish our reputation and business goodwill. What was published about us in Al Ahad Channel is flagrantly untrue, and we have requested the channel to show evidence and documents of what it has stated; or else the right of reply is assured for us by law.

As for what your website has reported about the Al Ahad Channel and what was published about our company, we would like to indicate to you and all observers that businesses in Iraq have been encountering many challenges and every day false accusations are being published here and there and the last of which is what was aired about us in Al Ahad Channel which is baseless and defamatory act targeted on a business which has employed hundreds, if not thousands, of Iraqis and is one of the major employers in Iraq. We not only bring a pleasant shopping experience to Iraq but also we bring world best brands for Iraqi travelers. As a responsible corporate citizen, Iraq Duty Free is regularly contributing its resources for the welfare of Iraqi people.

We inform you that our company has a contract of leasing Iraqi duty free shops, which was entered into with relevant parties under the supervision of the Ministry of Transportation, and our company has not lagged behind in implementing the provisions prescribed in the contract, as it is an investment contract and cost us millions of dollars in order to develop and modernize the free duty shops, showrooms and some works related to Baghdad International Airport in terms of modernization, reconstruction and development, and there is no legal impediment to prevent renewing the contract even before its expiry; rather both contracted parties are entitled by law to do that with mutual consent.

Regarding what is said on website about the owner of company, we would like to tell you that the owner of company is an Iraqi National and not convicted of any crime of punishment that deprives the freedom in Iraq; furthermore, there is no text or law that prevents him from contracting inside Iraq, requesting your esteemed website kindly to investigate the facts before publication, as the bad information could commercially affect the company’s reputation, especially that our company is of the leading companies in Iraq.

We would request Iraq Business News to not pick the defamatory news spread by Al Ahad channel. If Al Ahad Channel has any evidence or legal documents that confirm what is published about us, we request them to announce it before slandering it on media.

(Picture: Duty free, from asiandelight/Shutterstock)