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Iraqi Banks Struggle with Limited Services and Capital

Reuters reports that it’s a tough road ahead for Iraqi private banks required to raise their capital to boost business as they battle against decades of state dominance to win a slice of the asset base from government-run enterprises. It blames a poor credit culture, the lack of a modern banking system, and the dominance of state banks, for slowing development in the financial sector. Many Iraqis remain do not have bank accounts, and there are concerns that most business in the country is done through direct cash dealings, which have security implications.

Economist Salam Smeism commented:

“We still have the remains of a central management which is still forcing government offices and ministries to deal with government banks exclusively, and consequently all the deposits are going into state banks.

“Where is the benefit in having the money go from the government to the government? We need to develop the private sector.”

Executive director of the Iraqi Private Banks League, Abdul-Aziz Hassoun, said Iraq nationalised its private banks in 1964, paving the way for dominance of the financial industry by the country’s state banks. After the U.N. imposed economic sanctions in 1991, private banking once again opened up in Iraq. The OPEC country has seven state-owned banks, 23 private banks and eight Islamic private banks, according to the central bank website.

But much of the private banking activity is limited to deposit services and personal lending. Its two main state banks, Rafidain and Rashid, have a virtual monopoly of most assets. Both are undergoing restructuring to eliminate debt racked up following years of war and economic sanctions, according to Reuters.

Hassoun, whose banking league is an independent organisation to support private banks, said government banks held 87% of the country’s deposits while private banks had 13%. He said state banks’ government sector deposits amounted to 30 trillion Iraqi dinars and private sector deposits were at 11 trillion Iraqi dinars. Private banks have 6 trillion Iraqi dinars.

According to Iraq’s central bank, there is no law forbidding the private banks from financing government projects whether through loans or through the purchase of government bonds. The finance ministry two years ago prohibited government institutes from dealing with private banks as a way to curb corruption and misuse of funds, but the central bank considered the move an “injustice” against the private sector, said Mudher Kasim, a central bank advisor.

“The government institutions should have the right to choose the good private bank, but not to boycott all private banks. There are good private banks,” Kasim said.

The finance ministry is now in talks to help bring the private banks deeper into the financial system in response to demands from the World Bank and the International Monetary Fund.

“They want us to direct our attention to the private sector. So our plan is how to support the private banks in all fields.” said Fadhil Nabi, the deputy finance minister.

In 2006 Iraq decided to revamp its financial system, particularly through a restructuring of Rafidain and Rashid, re-organising the central bank’s supervision department and developing the private sector. Both the World Bank and the IMF agreed in 2009 to help advise and implement the plan although progress has been slow. Rafidain bank has $28 billion in external and internal debts, while Rashid has debts of $1 billion. Most external debts were racked up by the government during Saddam’s time.

Part of the plan is a capital-raising scheme for private banks to boost capital for each institution to $213 million by June 2013, which is also expected to spur some consolidation within the sector. However, industry officials say while raising capital will aid private banks, more needs to be done to modernise Iraq’s financial system to open up banking for private banks.

“Our banks are lagging other banks and they cannot deal with the international and world banks because we do not have a full electronic system,” Nabi said.

Only eight private banks offer ATM machine and credit card services. Interbank and international payments do not exist, a worry for foreign firms seeking to invest in Iraq and help with its reconstruction.

The central bank is working with the U.S. Agency for International Development (USAID) to create a single gateway for interbank and international payments.

“Imagine a foreign investor coming to Iraq and carrying money in a suitcase,” said Smeism. “We should have a developed banking system to ensure capital flow and movement operates in the same way as the rest of the world.”

http://www.iraq-businessnews.com/201...s-and-capital/

Iraqi government begin to study the legal objections to the Shell contract

The economic adviser in the Iraqi government on Sunday that the Cabinet began to study the legal objections to the contract signed by Iraq with the Dutch Shell and its partner, Japan's Mitsubishi to develop the gas associated with oil fields in the country's south.

There were the Iraqi Oil Ministry in 13 of this month, initialed the final contract with the Dutch Shell and its partner, Mitsubishi of Japan $ 12 billion to invest in gas associated with oil fields in the country, South Korea. The Economic Adviser peace Qureshi, told the Kurdish news agency (Rn) that "the legal problems facing its contract Shell and Mitsubishi with Iraq, the Iraqi government began to study these problems, especially those that refer to it sharing contracts in the production, extraction, because the paragraphs of the contract does not suggest that they hold an investment."

He added that "the government is considering paragraph (b) of the contract, which confirms the transfer of the assets of the South Gas Company to the gas company Basra without any legal justification."

He explained that "did not specify the initial contract with Shell assets and the assets to be transferred to the Gas Company of Basra, which had not been established so far, its capital is disproportionate to the assets of Southern Gas Company, amounting to only $ 20 million While appreciating the assets of the South Gas Company in millions of dollars."

Under the contract signed between Iraq on the one hand, Shell and Mitsubishi on the other hand, will be the joint venture, named Gas Company of Basra at the forefront of Iraq's plans to modernize power plants and promote exports of oil, will hold the Iraqi government 51 percent of the project. And loses Iraq billion cubic feet of gas per day by burning, mostly in the south. And intends to use the gas production is a joint venture with Shell in the local market to meet the growing demand for electricity has issued surplus. and will help deal development, which has a term of 25 years to collect more than 700 million cubic feet per day of gas being burned now in three fields south are Rumaila, Zubair, West Qurna 1, which was put forward in the round of awarding contracts in 2009.

Quraishi said that "there are blurry in the contracting process between the ministry and Shell in particular with regard to rates of price and the relationship between the oil ministry and companies." He added that "the government is considering how to develop a contract to secure the needed citizens, gas stations and laboratories eligibility provided should not be higher than the world price of gas."

Iraq has the OPEC member's fourth-largest oil reserves in the world, and needs to gas for electricity generation and end the repeated power outages that the nation is still suffering from eight years after the US-led invasion United States of the country.

http://www.aknews.com/ar/aknews/2/253441/

CBI sells $125 million in Sunday auction

The Central Bank of Iraq's (CBI) sales in its Sunday auction have reached U.S.
$125 million, on basis of 1,170 dinars per dollar, a figure down from Saturday sales that reached 171 million dollars, according to the CBI’s daily bulletin.

“The total size of the demand for U.S. dollars on Sunday reached 125, 130,000 dollars, covered by the CBI on a basis of 1,170 dinars per dollar,” the bulletin reported.

The CBI sales for its previous session on Saturday reached 171, 124,000 dollars.

The sales were distributed via cash sales totaling 6, 660,000 dollars, at a rate of 1,183 dinars per dollar, including the CBI’s interest of 13 dinars per dollar, the bulletin stressed.

The bulletin repeated its previous announcement that the 17 banks that shared in the CBI’s Sunday auction did not offer any dollar for sale, similar to the previous days.

http://en.aswataliraq.info/Default1....&id=143924&l=1

Source close to the Tigris Radio: Talabani presented today a new proposal because it is the dispute between Iraq and the rule of law

Source revealed that President Jalal Talabani will meet Sunday evening Prime Minister Nuri al-Maliki to discuss ways to end the differences between the political blocs, and the resolution of naming ministers security.

The source for Radio Tigris, "The upcoming meeting will discuss developments in the political situation, in addition to the next meeting of the leaders of political blocs".

And between the source, "said Talabani, a new proposal presented today includes the filling of the Minister of the Iraqi List, the defense portfolio, acting to end the disputes revolving around the question of security ministries."

http://www.radiodijla.com/cgi-bin/ne...-24%2009:04:28

Maliki – re-packaging, re-aligning or just hanging on in there

By Gavin Jones, Director of Iraq Business News, and Partner at consultancy firm Upper Quartile. This article was originally published on the Emerging Economics blog.

It has been long in the making but it looks like Prime Minister Nuri al-Maliki is beginning to publicly recognise that a post-2011 US presence in Iraq is necessary for both Iraq and himself and starting to shuffle deck-chairs to mesh coalition politics with his own finely-tuned survival instincts.

An important flip in attitude was after his recent meeting with the new US defence Secretary Leon Panetta; Maliki has started talking about “instructors” and not “advisers” or, for that matter, troops. Having regular US forces or military bases and “advising” would also be at obvious variance with a stance on Iraqi nationalism and bring nasty flash-backs of the British involvement in Iraq all those years ago.

The area in which Maliki is thought to be reluctantly accepting US “training” assistance includes border surveillance, logistics and intelligence. This is actually the least unacceptable position locally and something that could be repackaged to sit well with the notion of Iraqi sovereignty: the US is considered a world leader in many of these areas; and to ask for assistance from a global superpower in these specific areas would not harm the domestic idea of Iraqi independence in the same way that the presence of US “advisers” would. However it is a delicate balance.

Contrast this with the prevailing themes concerning the “West” in Iraq:

• Iraq’s almost complete absence of external defence capabilities comes up again and again. And while this is probably true, as long as it is presented as a general issue rather than broken up into bite-sized chunks and specific issues that can be singled out for cooperation kneejerk nationalist reactions will continue in a divided parliament.
• The peacekeeping role in and around Kirkuk is also pretty high up the concern list. This is also something that is very sensitive to Iraqi nationalist knee-jerks because it fits so well with the belief that “foreigners” are plotting to keep the Iraqis divided to justify a military presence. Using Arab-Kurdish tensions in this will be used to reinforce views that foreigners are manufacturing Sunni vs. Shiite tensions to extend a presence in the oil-rich areas in the south.

Maliki seems to be accepting that an international military presence must be retained but make sure that the internal debate is so low-key that any Iraqi debate is avoided. Great for Maliki, interesting for the US but who and how is this going to be paid for now Iraq has a budget surplus, oil fields coming on stream; just wondering if we are going to see more US companies picking up big oilfield contracts to balance this job-saving move.

For their part, the Iraqis still need to agree on a new Minister of Defence, so that any training can be applied.

And post-conflict reconstruction rolls on …………….

http://www.iraq-businessnews.com/201...g-on-in-there/

London: Democracy in Iraq did not back down and an agreement was not implemented fully Erbil

Said the British ambassador in Baghdad, Sunday, that democracy in Iraq did not back down despite the fact that eight years old, and while considered that the agreement Erbil has not been implemented fully, he called on politicians to show more flexibility in dealing with each other.

The Ambassador Michael Aaron in an interview for 'Alsumaria News', that "there is a decline in democracy in Iraq, and what I've seen since I arrived here that people want, Valtzepehrt that were different from those in other countries as they got under the direction of an elected government."

Said Aaron that "The world saw the end of the deadline cent on how the foot every minister is on the screen satellite television what he had done, and this is different from what is happening in the Arab States, and Iraqis can be proud of him," and expressed optimism that "the future of democracy to Iraq." He said Aaron that "democracy in Iraq is still very young at the age of eight years, it remains a new process to continue", calling on politicians in Iraq to "show some flexibility with each other." He said the British ambassador in Baghdad, "I am optimistic that the Iraqi politicians are working to find solutions to the implementation of the Erbil that has not been applied so far in full."

http://www.alsumarianews.com/ar/1/25...-details-.html

Banking expert's (the future of Iraq): You must to keep the economy from political differences

expert called a bank for political blocs to keep economic matters for their conflicts of political circuit and affecting the economy of helplessness and confusion, criticizing at the same time the government and the House of Representatives not to pass laws that help the private sector in the performance of economic role in the development of the country, said a specific Abdul Aziz landlords Director Commissioner of the Islamic Bank of Iraq in a telephone conversation with (the future of Iraq): that the leaders of the blocks to distance economic affairs for political conflicts the paralyzing and confusion, especially as we are going to attract investments.

He called on owners to amend the investment law as vague and plagued by a lot of negatives.

He added: The policy of free market economy pursued by Iraq after 2003 did not succeed because of the confusion and poor economic planning and stressed the need to separate the management of state institutions for political conflicts, noting that Iraq's experience in this field through the Council of reconstruction in the fifties of the last century.

where the Council works isolation from the political conflicts and constant change of governments and parliaments because it is run by technocrats working away from politics and continued the angel that the experience of private banks in Iraq's modern in its dealings banking and because of the wrong policies that were pursued by the previous regime where the size and significantly the private sector in the economic process by giving roles of small exceeding some light industries, including banking sector, which was until a few years before his fall monopolized the government banks only, and despite the novelty of these banks, their number and that only 26 banks, but it contributed to the development of the national economy.

praised the angel in the Iraqi government's decision which provides for an increase the amounts allocated to the issuing letter of credit to domestic banks than a million dollars a year to two million dollars for each adoption, calling it the important step in the way of strengthening the work of private banks and increasing share in the revitalization of the economic sector in Iraq.

http://www.almustakbalpaper.net/Arti...w.aspx?ID=6083

Boston Herald: Iraq is the most important investment opportunity in the Middle East

Saw the newspaper (Boston Herald) U.S. in an editorial Sunday that the investment in Iraq would make it the country's leading business in the Middle East, having reached a certain level of political stability.

The newspaper said the U.S. that increasing stability in Iraq encouraged the rush of foreign investment so.

The opinion of the newspaper The United States is still a young player in the field of investment in Iraq, even as it comes after France.

and attached the paper to say that there is no irony in this speech, pointing out that (the newspaper USA Today) quoted in the last week that foreign investment in Iraq's other on the right track to double in the year 2011.

The (USA Today) quoted a report about the company's minimum Consulting as saying that Iraq is attracting $ 45.6 billion as an investment foreign, in the first half of this year, an increase of about $ 3 billion from what it was the case in 2010.

http://www.radiodijla.com/cgi-bin/ne...-25%2006:26:32

Anbuge: The private sector is able to achieve development through loans from private banks

The whole economists that created 100 thousand jobs strategic objective requires planning and a clear and sound is in the pay of the private sector to absorb this number is important to unemployment.

Perhaps the conference marked (private banking sector Corner basis in the building sustainable development and the creation of productive jobs had been inspired by the content of this strategy when discussing the working papers submitted by the constellation of researchers and specialists. The first conference organized in cooperation between the Gulf Commercial Bank and the Iraqi company for financing small and medium enterprises and the Iraqi Company for Bank Guarantees by creating opportunities for working interest exception where studies focused on the mechanisms of action and proposals for the implementation of the goals.

and a President of the Conference Abu Talib al-Hashemi working papers of eight included in the conference, including small loans .. challenges .. success factors .. and the required support to Dr. Hussain Al-Anbuge and the Central Bank's role in supporting the development of institutions financing the projects of Professor Walid Idi and the role of these projects in building sustainable development and the creation of productive jobs for Dr. Riaz Hassan Mohamed Ali and the window of international investment to the President of the Conference.

also included other worksheets Find marked (the role of the private banking sector in reducing unemployment, and in search of another titled towards building a strategy for project development Small and medium Shirwan Anwar Mustafa in pregnancy recent research address the role of companies, bank guarantees in the financing of small and medium enterprises.

is striking that the Economic Advisor to the Prime Minister Dr. Abdul Hussain Anbuge recognized the importance of the private sector in the process of achieving sustainable development by providing opportunities to work and pay the small and medium enterprises for the production of requirements of large enterprises.

Anbuge stressed the need to quit to devote a culture rely on public money in everything and move towards the private banking sector in the process of lending projects and considered the mechanism and means capable of moving production because the borrower in this case obliged to pay not rely on the state in debt forgiveness in most cases.

He called for the need to support the private banking sector to lead this process, stressing the success of this technique in achieving the desired development in the case of making the private sector operates smoothly complete financial in the Iraqi state, stressing the need for state sponsorship of private sector and financed by stressing the importance of lending to industrial projects with loans without interest to encourage these special projects on production and that the government lift her hand for the direct production of goods and make the task of the private sector. The Director General of Statistics and research at the Central Bank and Walid Idi Nabi has reviewed the role of the Iraqi Central Bank to support and develop the work of microfinance institutions and SMEs in Iraq. He that the state has adopted different criteria for defining small and medium enterprises is the most common standard number of employees, assets, sales and the level of investment and referred to the examples and the experiences of many international in Germany and England.

He referred to the fact Statistical SMEs, noting that Baghdad was ranked first in the number of projects small and attributed the cause to the popularity of its markets on the assumption that a worker profit is the main driver for the sustainability of these projects promise of government support for such projects as significant as contributing to the polarization of Iyad unemployed leads to a reduction in the unemployment rate.

Then discussions and observations from a number of participants, representatives unions and organizations with economic affairs, where he urged some of them on the need to cover projects of industrial and productive private and suspended production of such loans in order to activate them and their contribution to the sustainable development process. It is interesting that this conference brought together the official opinion and of the presence of an active role for government representatives and opinion and special representatives with representatives of the private sector. The move is the task on the road to activate the partnership between the public and private sectors and indicate touch the government of the importance of the private sector in moving the development factors are required.

Perhaps such activities are required as long as they had been marked by transparency, openness and clarity of narratives that aim to correct mistakes and to address obstacles to economic reform on the way to revive our national economy.

http://www.alsabaah.com/ArticleShow.aspx?ID=11043

Pumping begins at al-Ahdab oil field
China's largest oil company began pumping crude from al-Ahdab, the first major new oil field in Iraq for 20 years, to export terminals in the south yesterday.

Officials said output is currently flowing at 40,000 barrels per day (bpd) and will rise to 60,000 bpd within a few days, with an eventual projected flow of 160,000 bpd. Exports of the oil will begin on August 1.

China National Petroleum Corp. signed a deal with the Iraqi government in 2008 to exploit the Basra field's substantial resources of more than one billion barrels for 23 years.

China is increasing its financial foothold in Iraq with a focus on the energy and natural resource fields. Iraqi Prime Minister Nouri al-Maliki visited Beijing last week in a move aimed at securing greater investment from the Asian giant.

http://www.zawya.com/story.cfm/sidZA...hdab_Oil_Field