Alliance victory: {National Gathering} will be held early next week

6/20/2018

BAGHDAD / Al-Sabah
The Alliance of victory, on Tuesday, that the date of the «National Meeting» called by the President of the alliance Haider Abadi will be early next week, and pointed out that the meeting will include about ten lists winning the election, while the head of the coalition of state law, ,

That his coalition is working on the formation of a comprehensive alliance of Sunnis and Shiites and Kurds to form a majority government, denied the current wisdom of the national leadership, Ammar al-Hakim, the withdrawal of his current and turn it into an opposition front during the formation of the next government, while the leader of the alliance Saron, Raed Fahmi, Understanding with lists (wisdom and openness and The national) to form the largest bloc.

This comes at a time when a leader of the Kurdistan Islamic Group confirmed that the Kurdish parties rejecting the results of the elections will not enter into any alliance with the two main Kurdish parties to participate in the parliament and the next government, pointing out that all options are open to those parties, including the formation of a unified list to participate in parliament and the government Federalism.

Comprehensive Alliance

"All the political forces welcomed the invitation of the Prime Minister of the Nasser Alliance Haider al-Abadi to hold an expanded national meeting," said Hussein al-Adli, a spokesman for the Al-Nasr alliance. "It is hoped that this meeting will be held early next week and there are great preparations In this regard ».

"The aim of this meeting is to agree on the general features of the state administration and its institutions in the coming phase," he said.

"The meeting will include about ten lists that will win the elections and he will not address the issue of electoral appeals as a judicial issue.

For his part, the head of a coalition of state law,
Nuri al-Maliki said in a press statement: "Our coalition is working to reunite the five forces that registered an electoral presence, which could meet on the basis of non-dependence of any party in preparation for the formation of a preparatory committee for a comprehensive alliance open to all forces Sunni and Kurdish politics.

" "The coalition of state law is working to form a comprehensive alliance of Shiites, Sunnis and Kurds to form a majority," Maliki said.

"Those who believe in the majority will be considered partners and those who do not believe in them can go to the opposition according to the mechanisms of democracy.

" Maliki said, "It is too early to talk about alliances unless the course of the electoral process is corrected and the final results of the election are confirmed," expressing "concern about entering Iraq in a constitutional vacuum after the 30 of June this is the date that ends the work
Parliament ».

The wisdom denies his withdrawal in turn, between the head of the parliamentary bloc of wisdom, Habib terminal, in a press statement, that «political understandings between the people and openness and wisdom is very large and reached the maturity of political», denying the «withdrawal of his current and turn it into an opposition front during the formation of the next government».

He added that "wisdom did not put a condition on all political blocs and looks to match the views in the alliances to form the next government," pointing out that «Surun and Fatah are closer to the wisdom of the alliance together and there is no option of withdrawal or opposition so far».

In the same context, the leader of the alliance of Sason, Secretary of the Communist Party of Iraq, Raed Fahmi, that «all contacts made by the alliance with the rest of the blocks are preliminary understandings of the emergence of the largest bloc», noting that «we do not know why some feel them» .

Fahmy added that «according to the current data, the alliance of others enter the stage of advanced understandings with (conquest and wisdom and national), a candidate to be meetings with blocks of Kurdistan and other blocs, and if it reached final results will form the nucleus of the largest bloc», pointing out that «everyone Agree on reform and fight against corruption, foreign policy, etc., but must provide concrete words and practical commitments applicable to citizens ».

And on the invitation of Prime Minister Haider Abadi political blocs to hold a meeting after the Eid al-Fitr, between Fahmi «We as a Communist Party have not yet received an official invitation by Abadi to attend the meeting, which we do not know also what it contains».

He also called on the Federal Court to «take a decision on appeals for elections, because it is currently disrupting the political scene and the formation of the next government
».

In a televised speech last Thursday, Prime Minister Haider al-Abadi called on the political blocs to hold a high-level meeting immediately after the Eid al-Fitr holiday and in a place to be determined later on after consultation.

"To put our hands in the hands of some to protect the homeland and the citizens and ensure the political process and gains Democracy and agreement on specific mechanisms to accelerate the formation of constitutional institutions as best as possible and relying on our national decision and the interests of our country and our people ».

Kurdish parties
In a statement to the press, the leader of the Kurdistan Islamic Group, Shwan Rabar, pointed out that "the Kurdish parties rejecting the results of the elections have not yet decided to participate in the next Iraqi government," adding that "these parties are keen to implement the decisions of the Iraqi parliament and the Federal Court On manual counting and sorting ».

"The parties rejecting the results of the elections do not participate in any alliance with the Kurdistan Democratic Party and the Patriotic Union of Kurdistan to participate in the next Iraqi government," adding that "all options open to them, including the formation of a unified list to participate in parliament and the Iraqi government.

Rapper promised that "the participation of parties that reject the results of the elections with the two parties and the PUK without changing the election results means recognition of the results achieved by the
two parties."

http://www.alsabaah.iq/ArticleShow.aspx?ID=158787

Reporters Without Borders (RSF) has condemned the arrests to which two investigative reporters have been subjected in different parts of Iraq in the past few days in connection with their coverage of corruption, and calls for an end to the harassment of these journalists.

The latest victim was Mostafa Hamed, a reporter based in Fallujah, in the western province of Al Anbar, where he works for the local TV channel Sharqeya. He was arrested at his home at 2 a.m. on 9 June by policemen who did not tell him what he was charged with, and was finally released today without being charged.

According to the information gathered by the Journalistic Freedoms Observatory (JFO), RSF’s partner NGO in Iraq, Hamed had been investigating the involvement of Fallujah city hall leaders in a real estate scandal. Sharqeya is owned by Saad al Bazzaz, a local businessman and political rival of Al Anbar’s governor, who tried to get the TV channel closed last December.

The other recent victim is Hossam al Kaabi (pictured), a reporter based in Najaf, 180 km south of Baghdad, who has repeatedly been harassed in connection with his coverage of an alleged corruption case involving the Najaf provincial airport’s former governing board.

What with money, women and threats, every kind of method has been used in an attempt to silence his reporting on the case, he said. The corruption case is however by no means a secret. He has also been the target of dozens of legal actions. The latest method was an arrest warrant, which resulted in his having to pay the large sum of 15 million dinars (10,745 euros) in bail to obtain his release on 6 June.

The warrant was the result of a complaint filed by Najaf airport’s former administration four days after Kaabi’s main media outlet, the NRT network’s Arabic-language channel, was forced to close for financial reasons. Defended by a consortium of lawyers, Kaabi told RSF he is concerned about the outcome because of the lack of judicial independence in Iraq.

“These two arrest warrants highlight the different kinds of difficulties for journalists in Iraq, which not only include being unjustly prosecuted but also the risk of seeing your work used for the purposes of the political rivalry,” said Sophie Anmuth, the head of RSF’s Middle East desk. “The absurd proceedings against Hossam al Kaabi must be dropped and the authorities must do their duty to protect journalists who are the target of threats.”

As Kaabi points out on Facebook, in theory Iraqi law protects the right of journalists to seek information and sources. But in practice, as JFO has often reported, local officials act with impunity when they use judicial pressure and sometimes death threats to pressure journalists who investigate corruption.

Iraq is ranked 160th out of 180 countries in RSF’s 2018 World Press Freedom Index.

(Source: RSF)

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

This article was originally published in the Marsh to Mountain blog. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

“Forget the Donations, Stupid”: New dynamics in funding the reconstruction of Iraq

Key Takeaways

In the months following the Kuwait Conference a sea change has taken place in Iraq’s financial health that has yet to be reflected in perceptions.

Higher oil prices, as a result of the changed dynamics of the oil market and the robust health of the global economy, has had a transformative effect on Iraq’s finances.

By end of 2018, based on realized oil prices of 2018 and average year-to-date for 2018, Iraq is on its way to have a cumulative two-year budget surplus of $18.8bn instead of the initially projected cumulative deficit of $19.4bn.  

This would allow it to start the reconstruction process on its own resources. Coupled with a potential surplus of $9.3bn in 2019 would give the country a great deal of flexibility to fund further reconstruction over the near-term. 

The surplus of $18.8bn by end of 2018 would equal a stimulus of 14.5% of non-oil GDP once reconstruction projects are underway, which would further accelerate economic activity. 

However, this three-year window of opportunity faces the twin headwinds of Iraq’s corrosive corruption and all of prior governments’ failures to spend oil wealth on  rebuilding the country’s infrastructure, spending it instead on expanding the state’s role in the economy.

——————————————————————-

A great deal has changed since the Kuwait Conference on the reconstruction of Iraq, which was marred by misconceptions of international observers who bemoaned that it failed to achieve its objective in raising enough donations. These were not helped by an Iraqi side that went to the conference looking for donations (investments in Iraqi speak) by focusing its efforts solely on presenting a shopping list of projects that needed $88bn in funding over five years.

These misconceptions were addressed in a prior article[1] which highlighted that over five years, Iraq should be able to fund $77bn out of this $88bn through a combination of $50bn from its oil revenues and $27bn in borrowings. Crucially, this level of direct funding and borrowing would be consistent with maintaining macroeconomic stability, which means that funding the reconstruction would not distract from the government fulfilling its traditional role in the economy, and so the reconstruction will contribute to sustainable economic growth.

This ability to fund the $77bn was derived from the IMF estimates for Iraq’s budget for 2018-2022 based on updated market-implied future Iraq oil prices, i.e. the implicit price of oil from the futures markets. In February, the implied price for Iraqi oil was $60/bbl for 2018, declining to $51 by 2022. These are in sharp contrast to the IMF’s estimates in August 2017 which used Iraqi oil prices of $45.5 in 2018, increasing to $47.2 by 2022. The 2018-2022 estimates made in 2017 would have made it impossible for Iraq to fund any portion of the needed funding as it would have needed to borrow to balance its budget during these years[2].

Iraq’s high dependence[3] on oil means that its budget and GDP are highly sensitive to the volume of oil it exports and to oil prices. The massive change in oil prices over the last few years, as seen from the five-year Brent crude price chart below, played havoc with Iraq’s budget during the ISIS conflict 2014-2017. They forced the government into a sharp fiscal retrenchment by cutting costs and cancelling all investment spending, while increasing military spending which had substantial negative knock-on effects on the economy[4]. The significant effects of oil price changes extend to planning for funding the reconstruction directly by Iraq, and indirectly by its stakeholders who need to take into account these effects in relation to their level of contributions and expected investment returns.

Brent Crude Jun 2013-Jun 2018, Source: Financial Times[5]

The fundamentals of the oil market went through major changes over the last four years, from expectations of supply scarcity versus increasing demand up to mid-2014; fears of increasing supply overwhelming decreasing demand from mid-2014 into late-2016; easing somewhat to hopes for a rebalance by mid 2017; and finally, into growing demand exceeding declining supply. Overlay the robust health of the global economy and it is expected the oil market will continue to tighten in the immediate future. This outlook is complicated by disruptive technologies such as those behind the Shale oil boom in the US, and by geopolitics affecting major suppliers such as Iran and Venezuela. These are balanced somewhat by OPEC’s actions and shifting perceptions of either its increasing dominance or increasing irrelevance. These perceptions came into sharp focus with the OPEC & non-OPEC supply cut agreement in late 2016 that started the recovery process. Recently there is news that talks have been underway to increase supply as prices have risen too high in response to threats to Iranian and Venezuelan supplies.

These would make budget planning, let alone long-term reconstruction planning, for Iraq an exercise in folly if it were to use the latest market implied future prices or to accept the prevailing wisdom at any given time as a basis for planning. This pretty much explains the conservative assumptions used by the IMF -which the world financial community depends on in assessing Iraq’s financial soundness and its credit worthiness. These assumptions served as the basis on which Iraq and the IMF identified creditors and donors for Iraq to cover its estimated budget deficits for 2017-2022 as part of the IMF’s 2016 Standby agreement.  Moreover, the IMF updated these assumptions with new estimates for forward oil prices as part of its Kuwait Conference presentation.

A recent article[6] noted “using realized prices of Iraqi oil of $49.1/bbl for 2017, and assuming Iraqi oil prices of $60/bbl for 2018, then declining to $51/bbl in 2022, would produce a cumulative surplus of $47.4bn for 2017-2022 instead of the earlier assumed cumulative deficit of $17.6bn”[7].  While using higher estimates for oil prices would result in a cumulative surplus of $78.2bn. In the first scenario Iraq could fund the reconstruction by a combination of $50bn from its oil revenues and $27bn from borrowings, and the final $11bn from aid/donations, which is in-line with the assumptions made by the IMF at the Kuwait conference.  While, in the second scenario Iraq could fund the reconstruction by a combination of $80bn from its oil revenues and $8bn from borrowings which is a vastly different proposition.

Given the impossibility of forecasting future oil prices, especially up to 2022, this article will consider the data for 2017-2019 given the higher degree of predictability in this short timeframe.

The IMF updated its global growth projections to +3.9% for both 2018 & 2019, up from its previous projections of 3.7% for both which was made in late 2017 as part of its World Economic Outlook (WEO) in April[8]. It believes that the upswing that began in 2016 has accelerated since then but it expects that it will taper off afterword’s. These coupled with changed dynamics in the oil supply/demand imply higher oil price assumptions for the period, which for the short-term has positive implications for oil exporting nations in MENA as outlined in its Regional Economic Outlook (ROE) May[9].

For Iraq, these would have huge implications for its economic profile for 2017-2019 and thus to its ability to start funding the huge reconstruction demands. The table below looks at the original IMF estimates for Iraq’s budget 2017-2019[10] versus updated estimates for 2017-2019 based on the latest actual data for 2017 and updated estimates for oil prices.

For sources & assumptions see endnote[11]

The updated assumptions for 2017-2019 imply a cumulative surplus of $28.1bn vs earlier assumptions of a cumulative deficit of $22.8. Although Iraq has identified funding sources for each year during the budget planning stages, it is likely that it would have not utilized them due to the higher revenues as a result of the higher than planned oil prices. These unused funding sources could be as high as $14.3bn[12].

Irrespective of the above, the upcoming government should have a cumulative surplus of $18.8bn by the end of 2018 which can be used to start the reconstruction process, which coupled with the likely surplus of $9.3bn in 2019 would give the country a great deal of flexibility to fund further reconstruction over the near-term. This flexibility would be augmented by $30bn, over five years, in investments and trade credit guarantees that Iraq received during the Kuwait Conference in February[13].

The effect of this spending flexibility on economic activity is enormous, in that should the surpluses be spent on reconstruction from 2019 over a two-year period, this would be equivalent to an economic stimulus of 14.5%[14] of 2019’s non-oil GDP over this period. This is a major economic stimulus by any account that would be magnified over the next five-years should the $30bn in pledges that Iraq received materialize.

However, the risk, and the likelihood, is that the upcoming government would succumb to public pressures to use some of this extra fiscal flexibility on populist measures. Such pressures have already been applied by parliament as it amended the budget by removing the 3.8% tax on salaries and pensions to appease an angry electorate in an election year. The elections marked by the continued pro-reform demonstrations since 2015, and the large active non-participation movement imply that the upcoming government would increase spending on populist measures to pacify the electorate and provide a visible peace divided.  In fact, the updated estimates for 2018 & 2109 in the table above reflect the expectations of higher expenditures, which would narrow the surplus for these two years, which in turn would detract from the funds available for infrastructure investment.

A further risk is the country’s corrosive corruption which would find breathing space as a result of higher oil revenues, especially if they are spent on populist measures, in the process relieving public pressures on the government to reform and to expose corruption. Moreover, the practice post-2003 of using state contracts as a means of reinforcing political influence on selected players in the private sector could continue, further entrenching corruption, with the government ability to fund the reconstruction and ability to award contracts.

Even, if the government would not succumb to populist measures, it would still need to resort to borrowing to continue funding the reconstruction. This is especially true given the high level of government expenditures, especially its public-sector payroll and social security spending. Moreover, higher oil prices for 2017-2019 will likely lead to the government to slow the pace of fiscal consolidation in response to public demands. This therefore means that budget surpluses will decline in time, especially as oil prices are likely to moderate in the coming years[15].

Borrowing, especially from the commercial debt markets, imposes a much-needed discipline on the government to adhere to sound fiscal policy and to continue the path of reducing its role in the economy and encouraging the development of the private sector[16]. Combined with the IMF’s 2016 Stand-By Agreement (SBA) this should help ensure sustainable macroeconomic stability.

Iraq’s ability to assume debt that is sustainable and within the confines of maintaining macroeconomic stability is much higher than assumed by many who merely look at the headline figure. An upcoming report by the author looks into the composition and background of Iraq’s debt[17]. The IMF estimates the total debt to be $122.9bn by end of 2017[18], made up of external debt of $73.7bn and domestic debt of $49.2bn.

However, $41bn out the external debt is to non-Paris Club creditors, mostly the GCC nations, that date back to the pre-2003 regime which are under negotiations to reduce them on the same terms as applied by the Paris Club of creditors. Should this happen they would likely be reduced by 90% to $4.1bn[19]. Therefore, including the unused borrowing for the 2017 deficit, this means that actual debt by end of 2017 is more likely to be $71.7bn[20] than the headline figure of $122.9bn. This would imply debt/GDP ratios of 37.3% for 2017 and 32.1% for 2018[21], giving Iraq plenty of scope to assume debts of up to $40bn and still keep debt/GDP ratio under 50% for 2018[22].

A sea change in Iraq’s position has taken place since the months leading up to the Kuwait Conference, but perceptions have not. Iraq’s position was that of a country with a debt/GDP ratio of 63.8%/65.3% for 2017/18, that needs to borrow to fund its budget deficit for the next few years and thus needs aid/donations to fund an urgent and massive reconstruction. The sea change, based on the IMF’s May REO, is that Iraq now has a debt/GDP ratio of 58%/54.7% for 2017/18, a budget surplus and can start to fund its reconstruction. This article further shows that Iraq can start funding its reconstruction in 2018 with $18.8bn in cumulative surpluses based on current oil prices. If the argument above on the underlying nature of its debt were to unfold then Iraq can add to this by accessing $40bn in the debt markets- which is far more than its immediate needs for reconstruction.

The underlying positive for Iraq that is fortunately to a large extent free from any government planning, or mismanagement, is that the reconstruction along the lines described by the joint study of the World Bank Group (WBG) and Iraq’s Ministry of Planning (MoP), on its own, will generate substitutional non-oil economic activity[23]. This activity can over the course of the next five years provide the non-oil economy with sufficient momentum for Iraq to escape its high oil dependence, which no government has attempted before. The silver lining of the trauma caused by the ISIS conflict, coupled with collapsing oil prices was that Iraq, in spite of all the improbable odds, united and climbed its way out of the abyss and of total disintegration. Given Iraq’s ability to start self-funding the reconstruction, a similar silver lining is that the recovery from the same trauma, in the form of reconstruction, could lead the country’s evolution away from pure oil dependence.

Disclaimer

Ahmed Tabaqchali’s 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] http://www.iraq-businessnews.com/2018/02/22/its-not-the-donations-stupid-key-points-from-kuwait-conf/ – _edn3

 

[2] IMF’s estimates and presentation in the Kuwait conference are at:  Session 3 after clicking on the pdf icon of the presentation. Presentation starts at minute 8.20 on the youtube link on the link below: –

https://view.publitas.com/1692ac51-faf7-464f-a9c2-1784ed1da647/iraq-reconstruction-and-investment-part-3-investment-opportunities-and-reforms/page/1

IMF’s earlier estimates are from Country Report No. 17/251

 

[3] 2017 estimates: Oil exports accounted for 99% of all exports, Oil revenues accounted for 87% of government revenues which in turn accounted for 32% of total GDP. Moreover, Oil GDP accounted for 38% of total GDP and indirectly accounts for the bulk on non-Oil GDP as the government’s orders drives non-Oil GDP (source: Country Report No. 17/251).

 

[4] A report by the author discusses this dynamic and the government response http://www.iraq-businessnews.com/2017/07/17/economic-consequences-post-mosul/. Some highlights of which are “The government maintained overall spending on salaries and pensions, but it introduced new and increased existing consumption taxes on a large number of consumables while it also increased utility prices, Non-oil investments bore the brunt of the cuts as the government sharply curtailed all capital spending and investments.”

 

[5] https://markets.ft.com/data/commodities/tearsheet/summary?c=Brent+Crude+Oil

Iraqi oil sells for about $5/bbl discount to Brent.

 

[6] http://www.iraq-businessnews.com/2018/05/23/market-review-elections-the-economy-and-the-stock-market/

 

[7] The deficit of $17.6bn was based on IMF estimates made in 2017 (Country Report No. 17/251). The IMF has since then updated its revenue estimates higher based on higher oil prices which imply a much lower cumulative deficit than the one used here, but these estimates were only up to 2019 and hence old estimates are still used. Updated data is at: World Economic Outlook April 2018 & Regional Economic Outlook May 2018 in the two footnotes below.

 

The estimates depend on IMF projections which assume that the government spending would continue to be constrained but this is unlikely given public demands for an ease as a result of higher oil prices. This will be balanced in this report’s higher oil price assumptions such that the surpluses would be the similar as will be seen later in this report and in the author’s other recent publications.

 

[8] https://www.imf.org/en/Publications/WEO/Issues/2018/03/20/world-economic-outlook-april-2018

 

[9] http://www.imf.org/en/Publications/REO/MECA/Issues/2018/04/24/mreo0518 (data only until 2019)

 

[10] IMF Iraq Country Report No. 17/251 (http://www.imf.org/~/media/Files/Publications/CR/2017/cr17251.ashx). The IMF assumptions are used throughout for assumptions made in 2017, instead of available Iraq budget figures for 2017 & 2018, to ensure consistency with other estimates used throughout. Moreover, the data from the IMF country report 17/251 are used instead of the IMF updated data (footnotes above) as the updated figures provide only headline numbers without specific details that are needed for a full analysis.

Note: figures are rounded, and so total figures might not add up fully.

 

Below are the main differences between IMF projections and those of Iraq’s budgets for 2017 & 2018, and Iraq’s actual 2017 budget spending.

 

Iraq’s budget vs IMF projections for 2017

  • Iraq’s budget
    • Total revenues of $66.8bn made up of oil revenues of $57.5bn based on oil price of $42/bbl, and total exports of 3.75mbbl/d. These exports include the KRG’s exports of 0.55mbbl/d.
      • The agreement with the Kurdistan Regional Government (KRG) was for it to export 0.55mbbl/d through Iraq’s State Oil Marketing Organization (SOMO). In return the KRG would receive 17%, less sovereign expenses, of the federal budget. However, neither have fulfilled their obligations, yet, both of Iraq’s budget and the IMF budget assumptions include the KRG’s oil exports and its share of expenditure.
    • Expenditures of $82.2bn, creating a deficit of $18.3bn.
  • IMF projections:
    • Total revenues of $69.2bn made up from oil revenues of $61.3bn based on oil price of $45.3/bbl and total exports 3.8mbbl/d, and non-oil revenues of $7.5bn
    • Expenditures of $79bn, creating a deficit of $9.8bn

 

Iraq’s preliminary budget vs IMF projections for 2018

  • Iraq’s budget
    • Total revenues of $77.5bn made up from oil revenues of $65.2bn based on oil price of $46/bbl, and total exports of 3.888mbbl/d. These exports include the KRG’s exports of 0.55mbbl/d.
    • Expenditures of $88.1bn creating a deficit of $10.6bn
  • IMF Projections
    • Total revenues of $73.9bn made up from oil revenues of $64.3bn based on oil price of $45.5/bbl, and total exports 3.9mbbl/d and non-oil revenues of $9.3bn
    • Expenditures of $83.4bn creating a deficit of $9.5bn

 

Iraq’s actual 2017 budget revenues and expenditures based on Ministry of Finance (MoF) data

  • Oil revenues of $55.3bn, which exclude the revenues from the KRG’s direct exports of 0.55mbbl/d (included in the IMF projections in the table used and in Iraq’s budget planning). These revenues would have been higher than planned by the government which assumed an oil price of $42/bbl total, including KRG, exports of 3.75mbbl/d vs the realized price estimated at $49.2. They are also higher than the IMF est.’s which assumed a $45.5/bbl on total exports of 3.8mbbl/d.
    • If the KRG’s exports of 0.55mbbl/d were sold at the same price, then total revenues would have been $73.6bn vs the Iraq budget plans of $57.5bn or the IMF’s estimate of $61.3bn. This reflects the budgets sensitivity of $1.4n to every $1 change in oil prices.
  • Non-oil revenues of $9.9bn for total revenues of $65.4bn (ex-KRG oil revenues).
  • Expenditures, which excluded the KRG’s share of the budget, were $63.8bn or showing a surplus of $1.6bn.
    • If the KRG’s planned $6.4bn expenditures were to be included, total expenditure would have been $70.2bn vs the planned $82.2bn, which would have resulted in a surplus of $3.4bn.

 

 

Note:  Revenues for 2017, and likely for 2018, benefited from higher than planned oil prices. But, expenditures in 2017, and likely in 2018, were lower than planned. The under execution of the budget expenditure, especially on capital spending, is an ongoing feature of Iraqi governments due to the country’s weak institutional capacity and which possess a risk to the reconstructing effort.

 

Sources for this footnote:

http://www.mof.gov.iq/obs/_layouts/obsServices/DownloadObs.aspx?SourceUrl=%2fobs%2fObsDocuments%2fYear-End+Report+Folder+-+مجلد+تقارير+نهاية+السنة%2fEnd-Year+Report+2017.xlsx

http://www.bayancenter.org/en/2018/03/1461/

(http://www.imf.org/~/media/Files/Publications/CR/2017/cr17251.ashx).

http://www.mof.gov.iq/obs/_layouts/obsServices/DownloadObs.aspx?SourceUrl=%2fobs%2fObsDocuments%2fYear-End+Report+Folder+-+مجلد+تقارير+نهاية+السنة%2fEnd-Year+Report+2017.xlsx

 

 

 

[11] Sources: IMF Iraq Country Report No. 17/251, IMF World Economic Outlook (WEO) April 2018 database, IMF Regional Economic Outlook (REO) statistical appendix, Iraqi Ministry of Finance (MoF).

Assumptions:

  • Updated figures for 2017 are from MoF which show revenues and expenditures for 2017 excluding those for the KRG. However, MoF and IMF estimates and planed budget include those of the KRG (see details in footnote 9).
  • Iraqi oil price averaged $63.5 for Jan-Jun, while Jun’s average was $69.9. The YTD average is used as an estimate for the full year.
  • Total updated revenues for 2018 & 2019 include higher non-oil revenues as the IMF in May’s REO increased its growth rate for non-oil GDP to +4.4%/+5% for 2018/2019 up from 2.4%/3.7%
  • Revenues are estimates based on updated oil price assumptions while expenditures are the updated IMF’s estimates.
  • Updated Expenditures reflect expectations that the government will ease back on its tight fiscal consolidation, however, they might very well be off-set by the historic tendency for lower budget executions.

 

[12] The IMF (Country Report No. 17/251 P: 28) notes “The program is fully financed through the next twelve months, but there is a financing gap of $7.1bn in late 2018 and 2019. The authorities have contacted one donor to fill the 2018–19 financing gap, for which there is good prospect”. The financing gap is made up of $5bn and $2.1bn respectively 2018 & 2019. Which implies that Iraq has achieved full financing for 2017’s $9.8bn deficit, $4.5bn out of 2018’s $9.5bn deficit., and $1.3bn out of 2019’s $3.4bn deficit.

 

Since the actual budget achieved a surplus for 2017 and would likely achieve a surplus in 2018, then Iraq has borrowed $14.3bn ($9.8bn + $4.5bn see above) to fund a deficit that did not materialize and so the funds could either not be drawn which would lower overall debit or used to fund reconstruction projects.

 

However, it should be noted that “fully financed” does not imply that the all of the funds were delivered to Iraq but that funding agreements were made.

 

[13] https://uk.reuters.com/article/mideast-crisis-iraq-reconstruction/factbox-pledges-made-for-iraqs-reconstruction-in-kuwait-idUKL8N1Q55RY

 

[14] This would be about 8.4% of 2019’s updated GDP estimate, but as it would be spent on reconstruction it would be a stimulus of about 14.5% of non-oil GDP. It would have an added significance in that the planned for deficits would have been accompanied by restricted capital spending and continued fiscal consolidation by the government, the reversal of which alone would have expansionary effects.

 

[15] The major shortcoming of the successive governments since 2003, was to use most of the oil revenues on expanding the public payroll and social security spending as main vehicle for transfer of oil wealth. As a result very little of oil revenues went towards reconstructing and building the country’s physical capital that would contribute towards diversification away from oil and to economic sustainability. The upshot is high oil dependence with the resultant vulnerability to external forces, import dependence, weak/small private sector and a skewed labor market.

 

Without a fundamental change of track, such as that agreed by the IMF’s 2016 SBA, the fruits of the country’s expanding energy production profile as a result will perpetuate this process. However, this is unsustainable given Iraq’s large rapidly growing population whose needs for public sector jobs cannot be met under any optimistic scenarios for increased oil production or prices.

 

The upshot, is the fundamental change of track along the SBA guidance will take a number of years to unfold, and as such the public-sector payroll and social security spending will continue to account for the bulk of government expenditure and thus the need for accessing the debt markets to fund reconstruction down the road.

 

[16] As can be seen from the author’s report on Iraq’s debt (link on next footnote) that Iraq’s only debt on truly commercial terms are two Eurobonds worth $3.7bn: A $2.7bn bond issued in 2006, due in 2028 with a 5.8% interest rate; and a $1.0bn bond issued in 2017, due in 2023 with a 6.5% interest rate. However, the third $1bn bond issued in 2017, due in 2022, is guaranteed 100% by the U.S. government, with a 2.1% interest rate, and as such does not constitute debt on commercial terms.

 

Therefore, should Iraq access the commercial debt markets these would require fiscal discipline to assure the markets that debt would be serviced. Some of the requirements would take into account, debt repayments as a percentage of exports, currency stability and the level of foreign reserves in relations to months of imports, balance of payments, budget balance as a percentage of GDP. They would also take into account other liabilities and contingent liabilities such as the state guarantees discussed in footnote #22 below. All of these requirements will affect the amount of debt raised and the interest rate it would carry, which would place a much-needed significant fiscal discipline on the government. Coupled with the huge demands for reconstruction they should help ensure that Iraq’s governments pursue sound fiscal policies while following sustainable macroeconomic stability.

 

[17] Link to be provided in an updated version of this report.

 

[18] Updated figures in REO show that the updated figure for 2017 is $114.6bn of which foreign debt is $68bn. However, the older assumptions of 2017 are used as they are part of longer term projections, and crucially they served as the basis for Iraq securing finding for the expected deficits as explained in an earlier footnote.

 

[19] The IMF notes: “These arrears can be tolerated under the Fund’s policy on Arrears to Official Bilateral Creditors because the Paris Club Agreement was found to be adequately representative (i.e., Paris Club creditors provided most of the financing contributions required from official bilateral creditors in the context of that agreement) and the authorities have since been making best efforts to conclude agreements with non-Paris Club creditors on Paris Club comparable terms. Negotiations to implement debt relief on the same terms as with the Paris Club creditors, i.e. an 89.75 percent net present value reduction, are ongoing.”.

 

In the current environment of the rebuilding of the relationship between Iraq and the GCC it is very likely that these negotiations will lead to a grand bargain in which both sides agree to the same 90% debt reduction in exchange for investment opportunities and long-term agreements.

 

[20] $122.9bn less: (1) 90% of $41 or $36.9bn, (2) Unused deficit funding of $14.3

 

[21] The IMF’s updated GDP figures for 2017/2018 are $197.76bn/ $223.3 and GDP/Debt ratios of 58%/54.4%

 

[22] It should be noted that the government has issued 11 state guarantees that affect the total amount of debt that it can take as these are contingent liabilities. These are a total of $36bn made of which the largest is $32.4bn in guarantees of service payments to independent power producers (IPPs) in the electricity sector for the 14 years of the contacts.  This makes it essential for the government to continue with the electricity sector reform and ensure the collection of tariffs-the failure of which will make the state liable to fulfil its guarantees to the IPP’s which would add to the debt.

 

Separately, the IMF aware of all of the above liabilities, in its presentation in the Kuwait Conference, had argued that Iraq should be able to borrow up to $36bn over the next five-years while its debt to GDP would be around 50% by 2022-23. These were made under lower oil price assumptions, with more fiscal discipline in expenditures, over a longer time frame, but without the benefit of the 90% haircut to the $41bn in debt.

http://www.iraq-businessnews.com/2018/02/22/its-not-the-donations-stupid-key-points-from-kuwait-conf/ – _edn4

 

[23] The IMF has attributed reconstruction for increasing its non-oil GDP growth rates to +4.4%/+5% for 2018/2019 up from prior +2.4%/+3.7%.

 

These figures could be higher should the full $88bn in reconstruction spending be embarked upon over the next five years as that would be a stimulus equivalent to about 14% of non-oil GDP in each year over the five-year period. While, it is ambitious to assume that all of that amount would be properly spent, yet even half that amount would create the conditions for self-sustaining economic activity for the non-oil sector.

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.

New fees up to 200% .. Warnings of a wave of high cost will be seen in Iraq
6/11/2018

The federal government insists on increasing taxes despite the fact that Iraq lacks factories to meet its domestic needs. After imposing taxes that analysts described as unfair in the 2018 budget, it has imposed a tariff on nine consumer goods that will pay the Iraqi citizen, Which impose taxes to achieve a number of objectives,

the most important of which is the protection of local products from foreign competition, expansion of domestic production and export development, the creation of financial resources for the public budget to cover government expenditures, as well as controlling the volume of imports.

Economic and financial corruption rampant in all parts of the state has deprived Iraq from benefiting from this important resource, but became a major problem for the Iraqi economy, and rock burdens of the citizen, while the money is still spent on the allocations and allowances and the effects of the deputies and ministers and senior degrees.

According to economists, the new government approach to the imposition of taxes, comes in accordance with the demands of the International Monetary Fund, in an attempt to obtain the value of 13 trillion dinars of taxes and fees.

The new tax program to be implemented from 5/8/2018 to four years:A 20% tariff on the imported men’s suit product, 30% minor white garment producers, clear utensils for dishes and dishes, as well as 50% for all chicken products and frozen meat, as well as 26% for box stations.

The cream products, the Newcastle vaccine, plague, small ruminants , PPR imposed an additional fee of custom 100%, and 27% for producers Block Althermiston, and LANSOPRAZOL 15MGTABLET Vdilaan 200% product textbook primary and secondary stages, and 85% of the product chips natural potatoes imported into Iraq.

The Committee on Economy and Investment described recent economic measures as "ill-considered". "The decision to impose new taxes and duties will be paid by the poor citizen and will not benefit the people at any time," said Ahmed Kanani, head of the Economic and Investment Committee.

"This decision will lift the economy of his country and increase competition in the country. Local market"."It was better for the government to prevent the importation of these materials in a move to encourage local production, not to impose taxes that would weigh on the citizen," he said. Hoping that the government would make a deliberate decision in the future.

"The decision to impose taxes on consumer goods needs to be reconsidered," he said.He notes that: "Iraq’s response to what the International Monetary Fund demands is a clear indication of the weakness of the state, and the federal government should have a view on taxation, especially as this measure will affect the income of the poor citizen and will cause a lot of problems.

"A harbinger of a huge wave of price"The budget of 2018 came in a decision to impose taxes," economic expert Salam Samisem told The News News, in a move to bridge the fiscal deficit suffered by the budget through taxes and fees levied by the federal government from citizens, but these taxes will lead to waves Big inflation in the Iraqi economy, which would raise prices, and reduce the real value of citizens’ income.

""The country is experiencing an economic crisis that has negatively affected the lives of citizens and raised the poverty and unemployment rates. Taxation will only hurt the middle and poor classes, as it will be difficult for them to meet their income requirements in line with rising market demands," she said.

"The absence of factories to meet these commodities domestically will lead to a large gap in the Iraqi economy, as well as a huge surge in goods in the market, and it was better for the federal government to provide infrastructure for Iraqi industry that would meet the needs of citizens, And it has the advantage of cheap prices and thus will promote domestic production again.

""Justifying taxation by the government is not logical," he said. "The fact that taxes were imposed is in line with its agreement with the International Monetary Fund, which stipulates the need to diversify state resources, the first of which is taxation.

" And notes that the citizen will include direct taxes on income, and indirect taxes imposed on goods."There is a difference between fees and taxes.

Taxes are imposed for no fee or any service, but the fees are for service, but the state should deal with the citizens in a broader sense, but unfortunately we suffer from the lack of economic governance and lack of transparency, Financial institutions in the interest of citizens.

"Earlier, the financial advisor to the prime minister, Dr. Mazhar Mohammed Saleh, justified the government’s use of the tax option to diversify the economy and end oil-dependent rents.

Saleh said that "Iraq occupies the last place in the world by paying taxes, as it does not correspond to 3% of GDP because the culture of tax payment is weak and strange to the Iraqi people," noting that "the payment of taxes a national mandate to contribute to everyone to provide the budget funds, Funds go to projects seen by a particular citizen such as the establishment of hospitals, streets and others.

"The taxes included in the budget of 2018 include: 15% on the import of cars and the same on restaurants and hotels, 20% on telephone lines and the Internet, 10% on goods traded in malls and large markets, fuel tax 10%, 12% real estate tax and others on cigarettes, Sugary drinks, road and bridge maintenance tax, and water and electricity fees.

It is noteworthy that the government is facing significant limitations in the collection of taxes from its departments, as the government admitted to waste more than $ 8 billion in one year of customs duties on the import of goods.

http://oneiraqnews.com/?aa=news&id22=5326#.Wx-IvNJKjIU

UN Iraq Representative Kubiš says elections were held in generally calm and stable environment, urges calm as electoral appeals are being adjudicated through established legal channels.

Briefing the UN Security Council, Special Representative of the Secretary-General for Iraq Ján Kubiš said national elections were held on 12 May in a generally calm and stable environment. He called on political actors and their supporters to uphold peace as electoral appeals are being adjudicated through established legal channels, and urged the independent electoral management bodies to adjudicate all appeals properly, fully and expeditiously, to enable corrections of the problems, justice and the timely certification of the final election results.

Mr. Kubiš noted that many Iraqi political leaders publicly endorsed the electoral process including the Prime Minister and the President, but some other political leaders, including Vice Presidents of the Republic and the Speaker of the Parliament, raised concerns over some of the technical shortfalls encountered with the electronic vote tabulation devices, as well as reports of fraud and vote rigging, active intimidation of voters including by some armed formations, and political interference.

“We continue to urge all Iraqi political actors and their supporters to uphold peace, as electoral appeals are being adjudicated through established legal channels. I also call on the Electoral Commission to continue to safeguard the integrity of all electoral materials and equipment and to cooperate fully and abide by the decisions of the Electoral Judicial Panel, including possible measures to effectively address complaints as lodged by stakeholders in a number of locations. We urge the independent electoral management bodies to adjudicate all appeals properly, fully and expeditiously, to enable corrections of the problems, justice and the timely certification of the final election results.”

The Special Representative highlighted the readiness and availability of United Nations electoral advice and expertise, in support of any activities and measures that may be required to retain confidence in the process, including as regards Kirkuk also in the light of the forthcoming Provincial Council elections across Iraq and the regional elections in the Kurdistan Region later this year.

Mr. Kubiš stated that the elections were marked by a low voter turnout of 44.52 percent as reported by the Independent High Electoral Commission (IHEC), a significant decrease in comparison with previous national elections in Iraq after 2003. This sends a strong signal to the elites ruling the country since 2003, a loud call on their representatives to finally rise up to the people’s expectations. “I urge the Iraqi political elites to hear that call and draw the necessary conclusions on the need for improved representation, justice for all, democratic accountability and good governance void of corruption, sectarian quota system, nepotism and patronage.”

In his briefing, he noted that despite defamation campaigns aimed at undermining the candidacy of women which he roundly condemns, several female candidates received a high number of votes within their political lists, and that some 19 female candidates were elected to parliament.

“Our expectation for the future is that the 25% quota which now guarantees 83 seats for women, represents the minimum threshold and not the ceiling,” he added, calling on political leaders to ensure the full participation of women in political negotiations and their representation at the highest levels in Iraq’s political and decision-making structures.

The SRSG urged political leaders to build on the achievements of the current government in the post-election phase, stressing the need to prioritise inclusive, non-sectarian dialogue, and to ensure the swift formation of a new truly national Government which reflects the will of the people of Iraq.

(Source: UN)

Newspaper: Iran paid 50 million dollars to join the alliances, Ameri

5/29/2018



Baghdad/Iraq news network. New Arab newspaper of London, Tuesday, the Iranian Embassy in Baghdad succeeded heart table alliances for coalition leaders conquest Hadi Ameri and State law in a move that Maliki threatened Sadr Sadr leader’s efforts to form the biggest bloc in the newspaper.

The report revealed the Alliance’s understandings "walkers", led by Muqtada al-Sadr, last week, with the various parliamentary blocs to form the largest parliamentary bloc, threatened not to check after the success of last resort for the second camp, led by President of the State of law Coalition, "Nouri al-Maliki, head of the Alliance.

" Conquest, "Hadi al-Ameri, who finally succeeded in attracting quite a few small blocks, as well as Sunni Arab shunning them blocks, another Kurdish alliance with him, meet huge financial temptations and promises of ministerial posts and various public bodies, realizing the prior requests and conditions.

This is supported by Iranian efforts newspaper Clear, turned the Iranian Embassy in central Baghdad salhiya, "host", according to a senior Iraqi Minister in Baghdad, which he said "an integrated operations HQ current alliances ripening.

" mobility "newspaper, that" the Kurdish blocks negotiations with Maliki and Ameri sponsored Iranian through (Corps Commander), General Qassem suleimani, who introduced himself as guarantor for any agreement between the parties, including a Kirkuk, oil and gas and the disputed areas,

"adding that" Kurds trust the Iranian promises more than Americans who abandoned them in a referendum to secede, and allowed Baghdad’s military campaign against them, and drove them out of more than 30 mixed city they controlled in Kirkuk and Salahuddin, Diyala and Nineveh, within what is known as the disputed areas, "he said, according to the Minister,

who asked not to be named, said negotiations with the coalition are also" Al karblah "( Jamal Al karboli’s solution movement) as attempts to buy their Alliance by giving them important posts, at the expense of the exclusion decision "Alliance, led by Vice President Usama Najafi, calculated" IIP "(brotherhood).


The Minister revealed that "some small clusters that won three seats, buy loyalty for reaching 50 million dollars.

There is a similar move targeting members of alliances (victory) headed by Haidar Abadi, and (national) led by Iyad Allawi, (walkers), giving them promises of positions or large amounts of cheques for joining the camp II ", referring to Maliki’s Alliance, believing that" the negotiations are complicated More, and Iran gave everything to scratch through the current moves.

"she said in her report, that" until Monday evening, the political arena in Iraq point to the emergence of two clear; what would be considered the Iranian line, led by both al-Maliki and Al-Ameri, Second, what is now known as the Iraqi line of chest and Abadi Allawi. "


She noted that "the rule of law and open we were able to attract quite a few blocks, notably Hanan’s PM’s will movement (3 seats), Haitham Al-Juburi’s competencies (two), civil party (one seat), led by Hamad al-Musawi accused of crimes of money laundering for the benefit of the Syrian regime and Iran, and block Public party led by Salahuddin Governor Danielle (5 seats), and mass public martinka555 ‘s Castle (3 seats),

a movement led by Hussein Al-Maliki, Nouri al-Maliki smelting (two), while still continuing to negotiate with party leader Jamal Al karboli solution, "Red Crescent Society official "The former, accused of corruption, and assesses Jordan since 2005, manages his brother Mohamed Al karboli currently party to join them," according to the report..


The report was completed, saying that "this Alliance will feature in the event the Belizean 103 parliamentary seats, with continued pressure on other blocks, at a time to negotiate with Kurdish blocks individually, such as the Kurdistan Democratic Party, Union, change, Kurdistan Islamic Group and an Alliance of For democracy.

"and went on:" in contrast, highlight the menus near the alliances victory and walkers, a good banner block led by Khalid Al-Obeidi (2 seats), Allawi’s national (21 seats), Iraqi Kurdistan’s decision (13 seats), Ammar al-Hakim’s wisdom (20), gathering Iraq’s men (one seat), the Democratic Party led by Ghassan Attiyah (one seat), being led by Qasim captured suspects (two), Super Sheikh’s ambitiously (two), Arab coalition in Kirkuk (3 seats) and Turkmen front in Kirkuk, led by Arshad al-Salihi (3 seats), About 120 seats.


The newspaper pointed out that "the Kurdish blocs continue dialogues with the living situation of new political recovery for the first time since her setback in a referendum to secede from Iraq in September of last year.

The Kurdish parties hold 57 seats, the largest of KDP by 27 seats, followed by the other parties, the National Union, change, Jemaah Islamiyah, the Islamic Union, new-generation mobility, the Alliance for democracy and justice, "the paper noted.

Its report, that "the great split saw Sunni Arabic blocks in last position booster Abadi, according to information from inside the Iraqi decision Alliance record convergence Alliance Al karblah (solution) and Maliki’s camp."


According to the same sources, the solution is trying to attract small blocks on the level of Sunni provinces North and West of the country, notably the ktlhediali our identity, our salads, Arabs Kirkuk, Baghdad Alliance as well as moving towards Parliament of Sunni Arabs in the Western and northern provinces, notably Yahya Muhammadi and Ghada Al-shammari (National Coalition) and Faisal Al-Issawi (Alliance victory), what constitutes 19 parliamentary seats.

"quoting a member of the Alliance" victory ", Mohamed labidi, the" current negotiations dominated by distrust between the blocks, there is tremendous external pressures on everyone ", noting that" You can say bye now, and what goes on behind the scenes is quite different from the advertiser.

http://aliraqnews.com/%D8%B5%D8%AD%D…6%D8%B6%D9%85/

Hakim from Kuwait: Iraq is on its way to form a government open to the world

5/26/2018

The head of the National Alliance, Ammar al-Hakim, the former Prime Minister of Kuwait Nasser al-Muhammad, Iraq is in a way to form a government open to the world.

A statement by the Office of the President of the National Alliance, received by «morning», that Hakim discussed, during his meeting with former Prime Minister Nasser al-Mohammad in Kuwait, «bilateral relations between the two countries and ways to improve them in various fields and developments of the political situation in the region», Call for easing tension in the region and withdrawing the fuse of crises ».

On the Iraqi situation, Hakim said that «Iraq is on its way to form a national government which has important priorities, including the provision of services and the fight against corruption and openness to the countries of the world and the region to serve the common interests».

http://www.alsabaah.iq/ArticleShow.aspx?ID=157674

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.

The UK’s Serious Fraud Office (SFO) has brought further charges against two individuals facing trial in relation to the Unaoil investigation.

Basil Al Jarah and Ziad Akle have both been charged with conspiracy to give corrupt payments to secure the award of a contract worth US$733 million to Leighton Contractors Singapore PTE Ltd for a project to build two oil pipelines in southern Iraq.

  • Basil Al Jarah was charged on 15 May 2018 with two offences of conspiracy to give corrupt payments, contrary to section (1) of the Criminal Law Act 1977.
  • Ziad Akle was charged on 16 May 2018 with one offence of conspiracy to give corrupt payments, contrary to section (1) of the Criminal Law Act 1977.

Basil Al Jarah and Ziad Akle will appear before Westminster Magistrates’ Court on 23 May 2018.

The SFO would like to thank the Australian Federal Police for the assistance it provided in connection with our investigation.

The investigation is ongoing.

(Source: SFO)

Hakim and Kubitsch discuss UN support for Iraq

5/22/2018

BAGHDAD / Al-Sabah The head of the National Alliance Ammar al-Hakim, during a meeting with the representative of the Secretary-General of the United Nations in Iraq, Jan Kubic, the international organization to support the next government in achieving its goals of eliminating corruption.

This comes at a time when the President of the Supreme Judicial Council, Judge Faik Zeidan, the UN official and discussed with him the situation in Iraq.

"Hakim received the representative of the Secretary-General of the United Nations in Iraq, and discussed with him the developments of the political situation locally and regionally, and the results of the elections and the formation of the next government," the statement said.

"The importance of forming a national government is capable of achieving the aspirations of the Iraqi people and the need to be an Iraqi decision away from regional and international disputes and the importance of investing the opportunity available after the recent democratic practice to remove the country from its crises and achieve what the citizen aspires to.

He urged the president of the coalition, "the international organization to support the next government in achieving its goals of providing services and the elimination of corruption and renewal of the administrative system through the expertise and possibilities possessed by the
United Nations ."

In a statement to the Supreme Judicial Council’s Information Office, Al-Sabah said that the head of the Judicial Council, Judge Faik Zaidan, met with the UN official, discussed the situation in Iraq, discussed a number of issues of mutual interest and reviewed the UN support for Iraq in all Areas.

http://www.alsabaah.iq/ArticleShow.aspx?ID=157502