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thx man...wish it would end with REVAL LOL
whewwwwwwwww !!!...lol done for now
Itisaluna to launch operations next week in Baghdad and Basra
Author: Moussa Ahmad
Source: BI-ME
Published: 25 February 2008
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IRAQ. Itisaluna Abr Al Iraq, the latest national wireless fixed voice and data telecommunications company in Iraq, announced that it will launch the first phase of its operations next week in Baghdad and Basra. This is to be followed by other expansions to reach 100% coverage across Iraq.
The company has completed all technical preparations necessary to start its operations and to provide high technology wireless services, which shows Itisaluna's commitment in making major advancements in the Iraqi telecommunications market and to increase levels of penetration across the Iraqi society. The company also has a professional work team which will provide assistance and support to all subscribers.
"As an Iraqi company we view our role towards our subscribers from a national perspective which encompasses major responsibilities of keeping them abreast of the latest technology, increasing awareness among Iraqi people about telecommunications, and spreading the culture of advanced technology across the society," an official spokesperson from Itisaluna said.
"We are launching our services with full capacity while ensuring that quality provided to our subscribers is our prime goal. Our highly trained and professional staff in both cities, who underwent rigorous training on all aspects of technical and customer support issues will be geared towards providing excellent customer care service and high operational synergies," the spokesperson added.
Itisaluna relies on CDMA2000, the latest available technology of the third generation (3G) in telecommunications technology to provide fixed wireless voice and internet services, while placing great emphasis on the security aspects against data leakage. The wireless voice service will enable subscribers to make on-network, off-network and international phone calls in competitive rates. Moreover, it allows customers to enjoy a wide range of features which were exclusive to mobile phones only, whereby short messages, caller identification, call waiting, call forward and voice mail will be available to subscribers.
Furthermore, subscribers will be able to use added value features provided through the network as Itisaluna aims to benefit the Iraqi people from this latest technology through allowing the ultimate use of available features.
Itisaluna subscribers, therefore, can use added-value features such as ring back tone and SMS2TV, which enables users to send short messages to and interact with TV and satellite channels programmes. Other added value services will include interactive voice response (IVR) which allows subscribers to dedicate songs, interpreting their dreams, and receiving daily wisdoms and jokes.
As for wireless Internet service, Itisaluna provides high-speed internet services based on two different systems to cater to the different needs of its customers. The 1X Internet service with a speed up to 150Kbps and is suitable for internet browsing, email and chatting in addition to other benefits. The High Speed Internet (EVDO) with a speed up to 3.1Mbps, is the second system, which is suitable for businesses and internet frequent users. The high speed Internet (EVDO) allows users to download programmes, listen to music and news, and access on-line games on real time basis.
Taking customer needs into consideration, Itisaluna offers two options to subscribe to its services. Customers can either subscribe to post-paid account or pre-paid accounts by using scratch cards which comes in US$5, US$10, US$20 and US$30 denomination.
Iraq's oil exports hit 59.6 million barrels in Jan.
Baghdad - Voices of Iraq
Tuesday , 26 /02 /2008 Time 7:09:29
Baghdad, Feb 26, (VOI) – Iraq's exports of crude oil reached 59.6 million barrels in January 2008, the State Oil Marketing Company said.
"The Oil Marketing Company exported 59.6 million barrels last month, with an average of 2 million barrels per day (bpd), achieving total revenues of $4.813 million," read a company statement received by Aswat al-Iraq, Voices of Iraq, (VOI).
Basra port's portion of the exported amount was 48 million barrels, with an average of 1.6 million bpd; while Kirkuk oilfields' share was 11 million barrels, 366,000 bpd, the statement explained.
A media spokesman for the Iraqi Ministry of Oil told VOI on Saturday that Iraq's oil exports total over 1.950 million bpd, including 1.600 million via the southern Basra port and 350,000 via the Turkish Mediterranean port of Ceyhan.
Mostly, Iraqi oil exports from northern oilfields are interrupted as armed groups repeatedly target the pipelines carrying oil from Kirkuk to Ceyhan port in Turkey. The larger quantities of crude are usually exported through ports in the safe city of Basra in southern Iraq.
Banking services at Basra International Airport
Basra - Voices of Iraq
Tuesday , 26 /02 /2008 Time 7:09:29
Basra, Feb 26, (VOI) – The Iraqi Central Bank started offering banking services to businessman and passengers at Basra International Airport following the inauguration of a branch of al-Rafideen Bank at the airport, a branch director said on Tuesday.
"On Monday, an al-Rafideen branch started offering its banking services to traders, businessmen and passengers after it had opened a branch at Basra International Airport," Zuheir Ali Akbar told Aswat al-Iraq, Voices of Iraq, (VOI) by phone.
The branch will offer all banking services to customers in a bid to boost trade activities in the city of Basra, he added.
The airport lacked access to banking services for over four years because of the security conditions, the director explained.
The Shiite province of Basra lies 590 km south of the Iraqi capital Baghdad.
SS
Greenspan says GCC currency float would cut, not eradicate inflation
Author: BI-ME staff
Source: BI-ME and Reuters
Published: 26 February 2008
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SAUDI ARABIA. Former Federal Reserve Chairman Alan Greenspan said on Monday near-record Gulf Arab inflation would fall "significantly" were the oil producers to drop their dollar pegs, in contradiction to Saudi policy.
The pegs restrict the Gulf's ability to fight inflation by forcing them to shadow US monetary policy at a time when the Fed is cutting rates to ward off recession and Gulf economies are surging on a near five-fold jump in oil prices since 2002.
Rifts are growing across the world's top oil-exporting region on how to tackle inflation which hit a 27-year peak of 7.0% in Saudi Arabia in January and a 19-year peak of 9.3% in the United Arab Emirates in 2006, the most recent figure.
"In the short term free floating...will not fully dissipate inflationary pressure, although it would significantly do so," Greenspan told an investment conference in Jeddah, Saudi Arabia's second-largest city.
Saudi and UAE central bank chiefs spoke in favor on Monday of retaining dollar pegs, while Qatar's prime minister advocated regional currency reform to avert possible unilateral revaluations designed to curb inflation.
"The economies of the Gulf and the United States are completely out of sync and that is exposing the shortcomings of the dollar peg," said Simon Williams, Middle East economist at HSBC Holdings in Dubai.
"Against a backdrop of inflation, high oil prices and low interest rates the debate over currency reform has to take on greater urgency," he said.
Floating the Saudi Riyal would not be appropriate for an economy that relies on oil exports, Saudi Central Bank Governor Hamad Saud al-Sayyari told Arabiya Television in response to Greenspan's suggestion.
"Floating is beneficial when the economy and exports are diverse....as for the Kingdom it remains reliant on the export of a single commodity," Sayyari said.
Dollar pegs were helping Gulf states attract foreign investments, UAE Central Bank Governor Sultan Nasser Al Suweidi added during a speech in the UAE capital, Abu Dhabi.
"They did very well for our economies because it has led to more capital flows," Suweidi said on Monday.
Still, "Gulf governments should consider the implication of such a move in the long term," Greenspan said of the idea of floating their currencies.
Qatar, contending with the region's highest inflation, is studying revaluing its Riyal among options to combat inflation that hit 13.7% in the fourth quarter, Sheikh Hamad bin Jassim bin Jabr Al Thani told Reuters late on Saturday.
The exchange rate contributes to about 40% of inflation in Qatar, where the Riyal is 30% undervalued, Hamad said.
"We prefer always to act with all the GCC countries," Sheikh Hamad, whose country currently chairs the six nation-Gulf Cooperation Council, said.
"It's now time for the Gulf to have its own currency," he said, adding the Gulf currency should be "like the Japanese yen or other currencies."
Both Qatar and the UAE are likely to sever their links to the US Dollar this year and track currency baskets as Kuwait did last May, Deutsche Bank said last month.
Divergence in Gulf monetary policy widened last May when Kuwait broke ranks with its neighbors by severing its link to the dollar in favour of a basket of currencies, saying a weak dollar was driving imported inflation.
Oman has said it will not join a single currency at all, and Suweidi said in November he was under mounting social and economic pressure to drop the peg.
He has since backtracked, mirroring the position of Saudi Arabia, which has in the last month introduced public sector wage increases, welfare payments and subsidies to offset the impact of inflation.
Inflation in the UAE last year likely rose to 10.9%, National Bank of Abu Dhabi said on Sunday.
disregard last post....ooooooops lol
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Greenspan says GCC currency float would cut, not eradicate inflation
Author: BI-ME staff
Source: BI-ME and Reuters
Published: 26 February 2008
RSS Feeds |
SAUDI ARABIA. Former Federal Reserve Chairman Alan Greenspan said on Monday near-record Gulf Arab inflation would fall "significantly" were the oil producers to drop their dollar pegs, in contradiction to Saudi policy.
The pegs restrict the Gulf's ability to fight inflation by forcing them to shadow US monetary policy at a time when the Fed is cutting rates to ward off recession and Gulf economies are surging on a near five-fold jump in oil prices since 2002.
Rifts are growing across the world's top oil-exporting region on how to tackle inflation which hit a 27-year peak of 7.0% in Saudi Arabia in January and a 19-year peak of 9.3% in the United Arab Emirates in 2006, the most recent figure.
"In the short term free floating...will not fully dissipate inflationary pressure, although it would significantly do so," Greenspan told an investment conference in Jeddah, Saudi Arabia's second-largest city.
Saudi and UAE central bank chiefs spoke in favor on Monday of retaining dollar pegs, while Qatar's prime minister advocated regional currency reform to avert possible unilateral revaluations designed to curb inflation.
"The economies of the Gulf and the United States are completely out of sync and that is exposing the shortcomings of the dollar peg," said Simon Williams, Middle East economist at HSBC Holdings in Dubai.
"Against a backdrop of inflation, high oil prices and low interest rates the debate over currency reform has to take on greater urgency," he said.
Floating the Saudi Riyal would not be appropriate for an economy that relies on oil exports, Saudi Central Bank Governor Hamad Saud al-Sayyari told Arabiya Television in response to Greenspan's suggestion.
"Floating is beneficial when the economy and exports are diverse....as for the Kingdom it remains reliant on the export of a single commodity," Sayyari said.
Dollar pegs were helping Gulf states attract foreign investments, UAE Central Bank Governor Sultan Nasser Al Suweidi added during a speech in the UAE capital, Abu Dhabi.
"They did very well for our economies because it has led to more capital flows," Suweidi said on Monday.
Still, "Gulf governments should consider the implication of such a move in the long term," Greenspan said of the idea of floating their currencies.
Qatar, contending with the region's highest inflation, is studying revaluing its Riyal among options to combat inflation that hit 13.7% in the fourth quarter, Sheikh Hamad bin Jassim bin Jabr Al Thani told Reuters late on Saturday.
The exchange rate contributes to about 40% of inflation in Qatar, where the Riyal is 30% undervalued, Hamad said.
"We prefer always to act with all the GCC countries," Sheikh Hamad, whose country currently chairs the six nation-Gulf Cooperation Council, said.
"It's now time for the Gulf to have its own currency," he said, adding the Gulf currency should be "like the Japanese yen or other currencies."
Both Qatar and the UAE are likely to sever their links to the US Dollar this year and track currency baskets as Kuwait did last May, Deutsche Bank said last month.
Divergence in Gulf monetary policy widened last May when Kuwait broke ranks with its neighbors by severing its link to the dollar in favour of a basket of currencies, saying a weak dollar was driving imported inflation.
Oman has said it will not join a single currency at all, and Suweidi said in November he was under mounting social and economic pressure to drop the peg.
He has since backtracked, mirroring the position of Saudi Arabia, which has in the last month introduced public sector wage increases, welfare payments and subsidies to offset the impact of inflation.
Inflation in the UAE last year likely rose to 10.9%, National Bank of Abu Dhabi said on Sunday.
please note that this was copied from anthr room>>>>>
Black Market vs. CBI
--------------------------------------------------------------------------------
I have been following the auction comments on "Voices of Iraq" for several weeks now. In every article they have mentioned the "spectulators" in the market. When the CBI took over with the bank auctions, the "Black Marketers" said that they would NOT acknowledge any rate the banks came up with. The "Black Market" tries to set the dinar rate, not the CBI (which was problematic in the past). From what I have been able to glean from these articles, the CBI and the "Black Market" are in a battle royale, with the CBI winning this time, by controlling the pip movement. One of the reasons we aren't seeing any movement.
Excerpts from just a few of the articles of the past 5 auctions:
2-19: He told Ahuja (Voices of Iraq) to stabilize the exchange rate over the past two weeks was parallel with the movement of speculators to create crisis in the market, which contributed to the decline of those attempts and made a critical angle, stressing the need to maintain the current prices until the access of the state of complete stability.
2-20: For his part, described the economic expert Gomaa Ani with remittances as a "continuing attempts by speculators to reduce the rate of exchange in the auction and to impose hegemony (The predominant influence, as of a state, region, or group, over another or others) on monetary policy and take the initiative from the Central Bank of Iraq."
He said Al-Ani (Voices of Iraq) that "the Central Bank to stabilize the exchange rate for two weeks is a correct step," noting that "the potential unequal between speculators and the bank, which owns Cover sufficient cash to maintain price levels and trading volumes, in order to be able to exhaust the energies of speculators short term. "
2-21: For his part expert considered the economic and industrial Sadiq Abdul Razzaq that "the increase in auction sales presentations Central Bank of Iraq signs are illusory the declining importance of the demand for cash needed local market is an attempt to deprive the foreign exchange market and raising the price of the dollar in the market by speculators."
He said Sadik told (Voices of Iraq) that "raising the rate of exchange in the market by speculators aimed at forcing the Central Bank to reduce the rate of exchange in the auction in order to reduce its price in the market, and this will lead to damage in the market," noting that "the continued stabilization of the price dollar exchange the bank would be the ideal solution to force speculators to return to normal trading levels of the market. "
2-24: He explained that "urgent orders had been postponed to the end of this week or early next week because of stabilizing the exchange rate is expected to continue to avoid a shock in the market during the recession resulting from the visit Alarbainet."
For his part, economic expert, Dr. Juma Ani that "lower sales presentations of the market to give an indication of the auction as well as general indicators is a go contrary to the general orientation of the market."
Ani pointed out that the step taken by the bank to reduce interest rates two points after only one month of the reduction of one point and said "This is a significant figure in all States, except that the proportion of high interest still limit the development but expected to continue this policy gradually with the growth Auction circulation and reduce levels of the money supply in local markets and creating cover cash sufficient to determine the official exchange rate for the local currency which is linked to early currency other than the dollar being deliberated most of the basket of currencies other global and regional. "
For his part, the economic expert and industrial Sadiq Abdul Razzaq that speculators expected to be a reduction in presentations tense with the appropriate religious to make the market go down to what appears to delude the bank that it has reduced the price at the time to be installed.
Abaiji He added that "the facts of the general market price changes are not clear reduce the profitability rates posted in the dollar auction, but on the contrary a stable market that the price low in the auction for the past month, which makes the process of decline in performance less logical."
He sincerely believed that the market will restore its health significantly coming days.
2-25: Meanwhile, economic expert, Dr. Juma Ani in a statement to Al (Voices of Iraq) that "higher orders in the auction gives indelible for the first trader to the sidelines price is still profitable for transforming what a lift this ratio despite the fact that the market is stagnating in performance significantly This discourages work speculators" .
Ani added that the "second indicator to stabilize the exchange rate has maintained a high level of deliberation and maintained market shock was great to get if possible reduction in the bank rate and speculators used to depreciate the local market which generates inversely difference in the exchange rate makes the sale of the bank profitable about the loss of small savers and trading. "
For his part, the economic expert and industrial Sadiq Abdul Razzaq Abaiji to solve any economic problem requires elimination of the causes of the problem involved in the case must be addressed speculation speculators are economically and legally not speculation is the fact that within the legal framework.
Iraqi economy should follow security gains
Published: Feb. 26, 2008 at 10:02 AM
Print story Email to a friend Font size:BAGHDAD, Feb. 26 (UPI) -- As security improvements in Iraq begin to gain momentum and government spending rises, private sector business ventures and job creation becomes the new focus.
The U.S. Embassy in Iraq says in its latest figures that the unemployment rate in Baghdad is 18 percent, with as many as 50 percent of the residents considered underemployed, National Public Radio said.
Political analysts and security officials consider chronic unemployment a security risk because unoccupied people are targets for recruitment into guerrilla groups.
The U.S. government in response launched a program in April called "Iraqi Business and Industrial Zone," or IBIZ, meant to allow Iraqi companies to develop quicker.
The program trains Iraqis in a variety of vocational skills, such as plumbing and electrical work. The certification program allows Iraqis to either set up their own businesses or work with major U.S. government contractors.
Also on the economic front, Baghdad hosted a business expo in mid-February sponsored by the non-profit Iraqi-American Chamber of Commerce and Industry.
More than 8,000 people attended the event launching a "Buy Iraqi First" campaign. The head of the Iraqi-American Chamber, Raad Omar, said the goal is to generate $500 million in Iraqi business and create 10,000 new jobs in 2008.
Omar told NPR that Iraq's needs far outweigh the capabilities, but with one U.S. official describing the participation in the latest business expo as "very heartening," the economic outlook can only improve.
© 2008 United Press International. All Rights Reserved.
This material may not be reproduced, redistributed, or manipulated in
An Opinion Opposing the Existing Draft Iraqi Oil & Gas Law
Submitted by davidswanson on Tue, 2008-02-26 11:31. Media
[This is a translation of a paper to be presented by one of the top Iraqi oil experts, Mr. Fouad AL-ALAMIR, to the Paris Seminar on Iraqi Oil, which is taking place between the 24th and 26th of February, 2008.]
It is clear now, and we are at the end of the fifth year of occupation, that the reasons announced by USA for the war were completely untrue, and the main reason, which was not announced, was Iraqi oil, a fact known by many who were following the Iraqi affair then. Lot of articles, books, debates and analyses were produced in the last five years, in the USA and other countries, emphasizing the oil reason. Here we are not going to repeat this, but we are going to point out those that are relevant to this paper.
1- USA policy to develop Iraqi oil.
When Dick Cheney was the head (CEO) of Halliburton, he addressed a number of big oil companies heads at a meeting held in 1999 at the "Institute of Petroleum", reminding the oil companies that by 2010, the oil industry will need extra (50) million barrel daily MBD . The oil will be always a government affair since 90% of world reserves are controlled by the national oil companies. The Middle East will remain the main supplier, since it has two-thirds of the world reserves and the cheapest to produce. (Of course Cheney was ignoring the Kyoto Treaty when he estimated the extra need by 50 MBD, now it's maybe half of this figure since Europe and Japan went ahead with applying the treaty). Then, Cheney became vice president of the USA and the oil file was his work and interest. He formed what was called a "Development Group", or "Cheney Basic Force", that included the heads of the biggest American energy companies. In March/2001 this group ended what was called the "National Energy Policy", advising government of the USA to take initiative in the Middle East to pressure the governments there to open their oil market for foreign investment.
So USA was preparing the political atmosphere along side the military preparation for the occupation of Iraq. Since April, 2002, the State Department took the initiative to prepare postwar plans for Iraq's future by forming several groups, and the most important one was the "Oil & Energy" group, which included Iraqi expatriate experts as well as foreign ones, chosen by the state department. This group, after several meetings between December, 2002 and April, 2004, gave their advice which was that Iraq should be open to oil companies quickly, and should create the proper atmosphere to attract foreign investment to work in accordance to Production Sharing Agreements (PSAs), and in flexible ways.
In 2004 the "International Tax & Investment Center ITIC" issued its study "Oil and Iraq Future", advising that the PSAs are the proper legal and financial solution to ease the work for developing the Iraqi oil industry. The members of ITIC are about 110 companies, including oil giant companies like BP, Shell, Chevron, Exxon Mobil, Halliburton, Conoco Phillips, and others.
So the Road Map for oil development of Iraq was established by USA and oil companies, that Iraq should pursue PSAs before consulting the real Iraqi experts or the Iraqi people. PSAs are one of the major reasons for rejection the oil law, which endorsed those kinds of agreements. PSAs are "risk contracts", that is you may or may not find oil or gas, and we are talking in Iraq about already well known defined discovered oil fields, some of them are "elephant" fields, without any "risk" what so ever.
2- Oil Reserves and Needed Investment:
The importance of Iraq comes from its high oil reserves, and the very good possibility of increasing it. It is now clear that there is shortage of oil in the world, and the shortage will be greater in the future, even with the application "Kyoto Agreement" to control global warming. We are not going here to enter into a debate whether we have reached "Peak" stage of oil production, but definitely we are near it.
There are different figures quoted for world oil reserves. Here we are taking about "conventional oil", which exclude bitumen and sand tar. According to an estimate of BP for 2005, the total of oil reserves are about 1190 billion barrels (BB), 67% of it in the Middle East, and 77% of it in Opec countries, which may be enough for nearly 40 years, assuming today's level of consumption. Out of this reserve of about 263 BB, 22% is in Saudi Arabia, the biggest reserves in a single country. Then Iran, 132.5 BB, and Iraq 115 BB as the third country. There is a lot of talk that there has been exaggeration of Saudi oil reserves.
Now the question arises: is the importance of Iraq a result only of its 115 BB?!. To answer this, a lot of new evaluations and studies have been done in many reputable institutes and companies. "The Institute of Analysis of Global Security", in a report issued on 12 May 2003, mentioned different figures. The report said the "Petroleum Economic Magazine" estimated the reserves 200 BB. Also a study by "Federation of American Scientists", estimated it as 215 BB. The joint study of the "Council of Foreign Relations" and "James Baker III Institute at Rice University" raised it to 220 BB. The "Center for Global Energy Studies and Petrology & Associates" estimated 300 BB.
In a very recent study by HIS, issued in May/2007, it said that it could very easily be another 100 BB, to raise the Iraqi reserves to 215 BB. The study of the Iraqi expert Tarik Shafiq put it at 330 BB. As an example, the reserves of the East Baghdad field was always estimated as 11 BB. A very recent study done by one of the very big companies, that restudied the previous information and using new technologies , reached a new estimate as 15 BB.
So, we can easily say that USA has found the "Treasure ", which may contain 25% of world oil reserves. They thought that by occupying Iraq, the Iranian regime will fall easily, and the all the oil will be in US hands. But things did not go the way they wanted it!.
* * *
The draft oil law included 4 annexes, the first 3 defined 78 discovered oil fields. The fourth annex, specifies 65 exploration blocks, a good number of them contain structures of high possibility of finding hydrocarbon, but no well has been drilled. Here we should mention that in previous exploration in Iraq, 7 wells out of 10 exploration wells were successful and oil or gas was found. So the risk of not finding oil or gas in those blocks is very small.
Different studies, in the USA and Iraq, just before the war and after it, estimated the investment needed to increase oil exports to 3.3 million barrel a day (MBD) - or to produce 4 MBD - as $4B billion dollar, spent over 2-3 years. And also estimated the investment needed to increase exports to 6.3 MBD to be $21B, to be spent over 4-5 years. Now some are talking about double those estimates, without any new study, just to frighten some Iraqis that the needed investments are very high and we have to accept sharing with foreign companies. Even if we add 50% to the first estimates that were done through proper studies, we will need $33B to be spent in (5-6) years, and production would be increased gradually.
The Iraqi expert, Tarik Shafiq, last spring sent a memorandum to the Iraqi parliament informing them that with existing reserves 115 BB, we could develop production gradually to 10 MBD, and maintain it at this level for 10 years, and continue at this level for another 10 years when production will start to decrease, and this could be done without any need to discover another single barrel. He compared the situation with Russia, where production is 9.5 MBD, while oil reserves are only 74 BB.
3- Why the Insistence on Passing Iraqi Oil Low Now?
The existing laws in Iraq allow all kind of oil development, except foreign sharing in Iraqi oil; which means that it would not allow PSAs. But what USA wants and already planned, are PSAs. So a law must be issued to satisfy their planning. This could be seen from the pressure they are putting on the government and parliament.
As for Iraqis objecting on passing oil law now, including me, we see no immediate need for it, since we can easily develop our oil industry without it. We have the oil fields which can easily produce 7 MBD; we have the investment needed for gradual properly planned development; we have the experience for such works or we can rent it, and we can buy the technology if needed. Also there is no problem in the export of produced oil, as long as we plan our gradual increase in production in coordination with OPEC. Iraq is the only country which can fill the future shortage of oil.
As a matter of fact there is no need, in my opinion, for a big immediate increase in oil production, given present oil prices. Production should depend on the spending capability of Iraq, with suitable money reserves to cope with unforeseen conditions and to cover the value of our currency. Export of 3 MBD would produce $88B annually, and 5 MBD export would produce $146B, (assuming price of oil as $80 per barrel), and these amounts are quite adequate for all required needs. Foreign investment should be encouraged in the downstream industries like refineries and petrochemical plants.
There would be a need for an oil law later when safe and stable mature political and social conditions are prevailing. There would be a need for an oil law to suit the new internal political condition, since we have now a federal state, which needs reorganization in the oil industry structure. It should be reorganized to emphasize central planning and decentralized application of the plans. Foreign sharing should be clearly prohibited, and approval of contracts should be under control of the federal parliament and government, since it concerns all the Iraqis and not any particular region. A law that includes above mentioned conditions will help in avoiding chaos in the oil industry; otherwise it may even cause international problems, like an oil price collapse, which will harm Iraq. We should now act quickly to pass a law that re -establishes the Iraqi National Oil Company INOC immediately.
Kurdistan Regional Government (KRG) acted on their own. Their parliament passed their own oil and gas law, and they signed a good number of contracts - nearly all of them are PSAs. Their interpretation of the Constitution is that they could do that, while ours, and lot of other Iraqis and members of parliament, is exactly the opposite interpretation. We consider the KRG oil law and all oil contracts signed by them to be unconstitutional and illegal.
The Iraqi Constitution was prepared and passed in a rushed manner and under a lot of pressure to satisfy different factions' requirements. This resulted in a constitution that contain a lot of contradictory articles, especially concerning oil and gas. If we try to take it as a whole, and study it thoroughly to solve the contradictions then, as I think, we will reach the same conclusion mentioned above, i.e. PSAs are not allowed, and there should be central planning of expansion, including signing new production contracts, of production and export. If we do not reach this conclusion and agree with the KRG one, then we may see in the future several oil laws, and tens of oil production contracts signed with foreign companies by Iraqi regions and governorates, ending in chaos and possible collapse of the Iraqi oil industry with all its consequences on world oil market. There are several articles in the constitution that reach clearly the same conclusions that we reached; for example article 27 states that public properties are "sacrosanct" and the duty of every Iraqi is to protect it. Oil and gas are definitely the most valuable public property. Article 111 states that "oil and gas are owned by the people of Iraq in all the regions and governorates", which means that no region or governorate can act independently and without the approval of the federal parliament and government; also no foreigner can have a share in Iraqi oil and gas. We all know that with PSAs, the foreign companies consider their share as part of their assets to raise their financial position. In any case we can proceed with this argument further, but this is not the place.
In conclusion, we can say that by passing the law, in the way it is drafted and without taking our objections, mentioned above, into consideration, then there will be further increase in the instability of Iraq, and there will be great chaos, not affecting Iraq only, but it will cover the entire future world oil market. There will always be huge Iraqi public objection, causing the oil law to be very unstable, and it will certainly be rejected and overturned in the very near future. All this will harm Iraqi people severely.
Fouad Alamir
Iraq's oil exports register 6% increase in Jan. from Dec.
By Sinan Salaheddin, THE ASSOCIATED PRESS
BAGHDAD - Iraq's crude oil exports in January inched up to 59.6 million barrels, a six per cent increase from the previous month, the Oil Ministry said Tuesday.
Iraq's average production was 2.4 million barrels per day in January while exports stood at an average of 1.92 million barrels per day, the ministry's figures showed. December's exports averaged 1.81 million barrels per day.
But there was still an enormous difference in output between the southern port of Basra, which exported an average of 1.54 million barrels daily, and the northern city of Kirkuk, which exported nearly 380,000 barrels per day.
The exports sold at an average price of US$80 a barrel in January and grossed a total of US$4.813 billion in January - a 2.6 per cent increase from December's revenues which stood at US$4.689 billion.
Iraq's oil exports rose 9.2 per cent last year, largely because improved security allowed oil shipments through a key northern pipeline from the Kirkuk oil fields to Turkey's Ceyhan terminal on the Mediterranean Sea.
The pipeline, which was often halted in past years due to sabotage, is now pumping more than 300,000 barrels per day.
Total oil exports in 2007 reached nearly 600 million barrels, an average of 1.6 million per day. More the vast majority of the oil was exported from Basra, while nearly 40 million barrels were exported from the north.
In dire need of expertise from international oil companies to achieve Oil Ministry's target of three million barrels per day by the end of 2008, Iraq decided to rely on a Saddam Hussein-era law until Parliament approves a new oil law to regulate the international oil companies' work and share Iraq's oil resources among the country's Shiites, Sunni Arabs and Kurds.
More than 70 international firms met the ministry's deadline of Feb. 18 and registered to compete for tenders to help develop Iraq's oil reserves, seen as vital to providing the funds to rebuild the shattered country.
Iraq has not said what fields it will tender, or on what terms, but the service and extraction contracts on offer are seen as a stopgap until the oil law is passed, and will not provide the long-term involvement big oil companies want.
Iraqi-American dialogue is based Economic Cooperation Forum tomorrow
من محمد الغزي بغداد - 26 - 2 (كونا) -- تنطلق غدا المفاوضات بين العراق والولايات المتحدة بشأن الاتفاقية طويلة الأمد على أن تستهل هذه المحادثات بعقد منتدى الحوار الأمريكي العراقي حول التعاون الاقتصادي. Mohamed Al Ghazzi BAGHDAD - 26 - 2 (KUNA) - start tomorrow, the negotiations between Iraq and the United States on a long-standing convention that the talks begin holding Iraqi-American Dialogue Forum on Economic Cooperation.
وقال مدير مكتب نائب رئيس الوزراء العراقي طه الهاشمي في تصريح لوكالة الأنباء الكويتية (كونا) ان الجلسة الافتتاحية للمؤتمر ستعقد في الساعة العاشرة من صباح يوم غد على أن تكون علنية وسيعقبها عقد ورش عمل توزعت بمعدل أربع الى خمس ورش كل يوم فيما ستعقد الجلسة الختامية ظهر يوم الخميس والتي سيعقبها اصدار بيان ختامي. The Director of the Office of the Deputy Prime Minister of Iraq, Taha Hashemi in a statement to Kuwait News Agency (KUNA) said that the inaugural meeting of the Conference will be held at ten o'clock tomorrow morning, to be held in public and will be followed by workshops spread out, with four to five workshops will be held each day in the closing session noon Thursday, which followed issuance of a final statement.
وأوضح الهاشمي أن نائب رئيس الوزراء العراقي برهم صالح سيرأس وفد العراق مشيرا الى أن الوفد العراقي سيضم وزراء المالية باقر جبر الزبيدي والنفط حسين الشهرستاني والتجارة عبد الفلاح السوداني والكهرباء كريم وحيد والصناعة فوزي حريري والاعمار بيان دزه ئي والزراعة علي البهادلي ومستشار الأمن القومي موفق الربيعي اضافة الى وكلاء الوزارات المعنية ومديريها العامين. Hashemi said that Iraqi Deputy Prime Minister Barham Salih delegation will be headed by Iraq, pointing out that the Iraqi delegation will include Finance Ministers Baqir Jabr al-Hussein Shahrastani, oil and trade Sudanese farmer Abdul Karim, electricity, industry and single Fawzi Hariri and reconstruction statement Dizah E. and agriculture Bahadli, national security adviser Muwaffaq Al-Rubaie addition Agents and managers concerned ministries years.
وأكد الهاشمي أن ورش العمل ستعقد للبحث في العديد من المجالات مشيرا الى أن هناك ورشا في المجال الصناعي والزراعي والطاقة ومكافحة الفساد والشفافية واصلاح القطاع المصرفي والتجارة والاستثمار وتحسين مستوى المعيشة ورفع قدرات الوزارات العراقية. Hashemi stressed that the workshops will be held to discuss the many areas, pointing out that there were workshops in the industrial, agricultural and energy and the fight against corruption, transparency and reform of the banking sector, trade and investment and improve the standard of living and raise the capabilities of Iraqi ministries.
من جانبها قالت السفارة الأمريكية في بغداد في بيان لها ان جولة الحوار الأمريكي العراقي هي منتدى للحوار بين البلدين حول التعاون الاقتصادي. For her part, the American embassy in Baghdad said in a statement, the Iraqi-American Dialogue Round is a forum for dialogue between the two countries on economic cooperation.
وأشار البيان الى أن الجانب الأمريكي سيمثله في هذه المحادثات السفير الأمريكي لدى العراق رايان كروكر وعدد من كبار مستشاري الحكومة الأمريكية. The statement pointed out that the American side was represented in these talks the American Ambassador Ryan Crocker in Iraq and a number of senior advisers to the American government.
وكان المتحدث باسم الحكومة العراقية علي الدباغ قد أكد في وقت سابق أن اتفاقية التعاون التي سيوقعها العراق مع الولايات المتحدة ستتيح للعراق التعامل مع أمريكا بصفته دولة مستقلة كاملة السيادة. The spokesman for the Iraqi government to Skinner had confirmed earlier that the cooperation agreement signed by Iraq with the United States will allow Iraq's dealings with the United States as a fully sovereign independent state.
وأوضح الدباغ أن الحكومة العراقية تسعى لاخراج العراق من الفصل السابع من ميثاق الأمم المتحدة وحرية التصرف بأمواله دوليا والانتقال به الى بلد متقدم وفاعل كي يسهم ايجابيا في محيطه الاقليمي والدولي. Skinner explained that the Iraqi government is seeking to remove Iraq from Chapter VII of the Charter of the United Nations and discretion Bamwalh internationally and the transition to a developed and active to contribute positively to regional and international surroundings. موسوعة النهرين في 16:11 18 صفر 1429 (26 فبراير 2008) · التعليقات: 0 · قراءات: 109 · Guinness Mesopotamia 16:11 18 zero in 1429 (February 26, 2008) comments: 0 readings: 109
The Door To Iraq's Oil Opens
By M K Bhadrakumar
25 February, 2008
Asia Times Online
The cynosure of Western eyes at the meeting of the Organization of Petroleum Exporting Countries, commonly known as OPEC, in Abu Dhabi, the United Arab Emirates, last December 5 was an unexpected personality - Iraqi Oil Minister Hussain al-Shahristani.
But that wasn't a chance occurrence. By the time OPEC gathered in Vienna six weeks later, it was beyond doubt that Shahristani was on the way to becoming a celebrity in the West.
Shahristani is "a rare thing" in politics, to quote Toby Lodge, the well-known scholar on Iraq at the International Institute of Strategic Studies in London - "not too religious, not too political, not too secular, not too pro-American Shi'ite who [Grand Ayatollah Ali] Sistani would talk to".
But for the ease with which Shahristani traversed in his later years the dividing line that separates religiosity and idealism from worldliness and pragmatism, Shahristani would have become a cult figure for human-rights activists, given his extraordinary background as a top nuclear scientist who turned a stubborn dissident, and then a reckless jail breaker from Saddam Hussein's Abu Ghraib prison where he was tortured and tucked away in solitary confinement for an impossibly long 10 years till 1991.
But in Abu Dhabi, if Shahristani became a rising star for the Western media, that was for an entirely different reason. It was hardly metaphysical. Plainly speaking, the media had good enough reason to flatter him and pamper his vanities.
Iraq's 'super giants'
Of course, the soft-spoken, English-speaking Iraqi Shi'ite dissident leader was a familiar face in Western capitals through the 1990s. But today, he is no longer a political fugitive. He is no longer an Iraqi dissident seeking patronage. On the contrary, Shahristani finds himself in an enviable position as a creator of wealth for the Western world. He holds the key to the door that opens out to the magical world of Iraqi oil.
Iraq's proven reserves of oil are only smaller than those of Saudi Arabia and Iran - and Iraq is only about 30% explored. Experts are generally of the view that Iraq's actual oil reserves could well turn out to be at least double the 115 billion barrels of proven reserves. Beyond that, it is anybody's guess as to the scale of Iraq's as-yet-untapped gas reserves.
And Shahristani is visibly getting ready to negotiate the contracts for Iraq's "super giants". In the idiom of Big Oil, "super giants" are fields with at least five billion barrels of oil in reserve. Iraq's super giants are Kirkuk (in Kurdistan), Majnoon (bordering Iran), Rumaila North and South (in the south), West Qurna (west of Basra) and Zubair (in the southeast) fields, and, possibly, the Nahr Umr and East Baghdad fields. In addition, Iraq is estimated to have 22 "giant" fields, each having more than 1 billion barrels of oil.
In fact, Iraq may host the largest untapped reserves in the world. There is a strong likelihood that Iraq's reserves may turn out to be exponentially higher than the current estimations, which are based on old-style seismic surveys. All said, unsurprisingly, the world oil market is in a tizzy when Shahristani says something, anything. He is about to sign the contracts for these and many other large Iraqi oil-producing fields.
That indeed makes Shahristani a very important statesman today - at a time when worldwide oil demands are rising and consumer countries have appeared in Asia with gargantuan appetites for energy, when the oil majors' booked reserves are in decline and the known global reserves happen to be primarily under nationalized systems.
The acuteness of the situation is apparent from the stark warning by the former chairman of the United States Foreign Relations Committee, Senator Richard Lugar, last year in a speech in New York that something like three quarters of the world's oil reserves are located in countries which are not under American influence.
To cap it all, "we're in a new oil policy ball game", as author Steve Yetiv and economist Lowell Feld recently wrote, which is that the US's capacity to ease oil prices is diminishing. On his recent visit to Saudi Arabia, US President George W Bush pushed the subject of high oil prices increasing the likelihood of an American, and therefore, a global recession. There was a time since the late 1970s until quite recently when the US's Saudi allies would have promptly pumped the market with additional oil for depressing the price. This time around, the Saudis heard out Bush, "noted that the weakening US economy is a valid concern, but they remain reluctant to increase oil supply".
The two writers pointed out, "Saudi Arabia's reluctance to address sustained high oil prices, even in the face of a potential recession, represents an important break with past Saudi oil policy ... Why? The answer may define oil in the 21st century - or at least underscore the reasons for the US to seek greater oil independence."
Urgency for Iraqi oil
Yetiv and Feld, with much hesitancy, proceed to make an absolutely unthinkable suggestion that the Saudi reluctance might be borne out of a possibility that Riyadh is "getting global markets ready for the possibility that they may not have enough oil to be a long-term fuel pump to the world".
After all, it merits attention that the US Energy Information Administration (EIA) significantly has revised its earlier 2000 prediction about how much oil Saudi Arabia would produce in 2010. The EIA scaled back the figure from 14.7 million barrels per day to just 11.4 million barrels per day. That is a major reduction. (Feld, incidentally, worked for 17 years for the US Department of Energy.)
In the current circumstances of the world energy scene, the above underscores why any plan to hasten the US effort to achieve greater oil independence translates in political terms as taking control of Iraq's oil reserves. There is simply no other viable alternative open to the US. Essentially, it boils down to the 20 words that the former US Federal Bank chief Alan Greenspan wrote towards the end of his memoir, The Age of Turbulence: Adventures in a New World, "I am saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil."
According to the International Energy Agency, the world demand for oil is set to increase from the current level of 85 million barrels a day ( mn b/d) to 116 mn b/d in 2030. Three quarters of the world's oil reserves (1,200 billion barrels) are located in the OPEC countries, with the Persian Gulf countries accounting for 62%. But the Persian Gulf countries are disinclined to raise their oil production sharply enough to meet the increase in global demand. Saudi Arabia, which has the world's largest oil reserves, for instance, is only planning to increase its oil production by 1.5 mn b/d over the next several years.
Therefore, it becomes imperative that Iraq plays a major role in meeting the additional global demand of 30 mn b/d during the coming two decades. There is yet another side to it. Peak oil - when global oil production will reach a peak and then begin to fall - is a real possibility sooner or later. It has happened in the US; it is happening in Britain, the North Sea and Indonesia; it is expected to happen in Mexico and some other major oil producing countries during the coming five-year period.
In this scenario, the criticality of Iraqi oil production cannot but be overstated. Furthermore, Iraq is particularly blessed in certain other ways. Apart from its massive reserves of oil and gas, the cost of oil production in Iraq at US$1 to $2 per barrel is very low. Second, the oil fields are dispersed evenly across the country. Third, Iraq's location itself is a boon. Unlike, say, the Caspian, Siberia or the Arctic, it is easy to develop oil export routes out of Iraq heading in several directions simultaneously - the Persian Gulf, Saudi Arabia, Kuwait, Jordan, Syria and Turkey. All this means that rapid expansion of Iraq's oil production and the arrival of substantial amounts of Iraqi oil - exceeding 10 mn b/d - in the international market is an attainable objective.
US presses for Iraqi deals
A major impediment has been the dangerous security situation within Iraq. But a significant US achievement in recent months has been the end of much of the fighting inside Iraq. Clearly, the US has bought off large segments of the Iraqi insurgency. Thousands of Arab Sunni fighters in western Iraq and parts of Baghdad have converted themselves as "comprador" militia at the beck and call of the US military. Such US-financed "resistance fighters" could number over 80,000 former insurgents.
Today, they actively collaborate with the US military in destroying the residual forces of the Iraqi resistance in the east and north of Baghdad and in cities such as Baqubah, Tikrit and Mosul, which are the residual hotbeds of insurgency. They have virtually decapitated al-Qaeda in Iraq. The four-province region of the Multi-National Division-North (comprising Diyala, Salahuddin, Ninevah and Tamim provinces), which used to be the favorite haunt of al-Qaeda fighters, is all but completely pacified. The US forces' commander in the region, Major General Mark P Hertling, has been quoted as claiming, "So many of them [al-Qaeda fighters] are going to the desert regions to just get away from being ratted out by the citizens and being pointed out and captured.
"Some of them are saying it's not even safe in the desert because the night raids are coming to get them. And that's a good thing. We want them to keep thinking that they can't sleep well at night because we're coming after them, because, quite frankly, we are."
All indications are that the US has in the more recent period met with success in striking a similar deal with the troublesome Mahdi Army militia owing allegiance to Muqtada al-Sadr, which controls the Shi'ite districts of Baghdad.
This can be expected to have a positive impact on pipeline security. According to various estimates, there have been over 600 incidents of pipeline attacks since the US invasion of Iraq in March 2003; some 60 attacks on refineries; and over 500 attacks on tanker trucks. Close to 650 Iraqi oil workers might have been killed or wounded or kidnapped. Iraq's dual pipelines in the north heading toward Turkey were a major target of attack. The improving security situation has been a factor in increasing Iraq's oil production to nearly 2.4 mn bpd by end-2007, which is the highest level since the US invasion.
Oil production is now expected to cross the pre-war level of 2.6 million barrels by end-2008. Shahristani told The Times that he expected production to reach 6 million barrels per day within the next four years. The International Monetary Fund has predicted that Iraq's economy, boosted by the increase in oil revenues, is slated to grow by 7% this year as compared to 1.3% last year. The Times newspaper recently reported that the real estate market has been sharply picking up in parts of Baghdad city and there are visible signs of a construction boom
As can be expected, Washington is keen to exploit the vastly improved security situation in Iraq. The Bush administration is leaning on Shahristani not to wait for the fractious Iraqi Parliament to approve the Iraqi oil law that would have provided a legal framework for foreign investment in the oil industry. As the first step, the executives of some of the world's oil majors have been meeting with Iraqi Oil Ministry officials since January 24 in Amman, Jordan, for discussing the terms of technical support contracts, which are in the nature of shorter-term deals.
Shahristani told Argus Media recently that these service contracts will "help Iraq fast-track the purchase of necessary equipment and train the Iraqi people to install them". He said these companies would be favored in a bidding round for longer-term contracts on the Iraqi oil fields set for later this year. Another bidding round is expected to take place next year.
The Times of London reported that ExxonMobil, Chevron, ConocoPhillips and Shell have been targeted by the Iraqi Oil Ministry for awarding the service contracts (known as "technical support agreements" or TSAs). The report said that in exchange for the oil, these four oil companies would direct training of Iraqi workers and equipment to Iraq's largest oil and gas fields. The Middle East Economic Survey has quoted Shahristani as saying that the service contracts will be signed "within a few weeks". The general expectation is that the TSAs will be signed during the third round of discussions due in March.
Meanwhile, the Iraqi Oil Ministry's deadline for any interested oil firms to pre-register for the larger contracts to develop oil fields falls on February 18. Shahristani has promised an open bidding and transparent process but only in the event that he will be the decision-making authority. He suggested that competition would be intense. "Everybody in the world, more than 45 companies, have approached us [the Iraqi government] and shown a very keen interest in working with us - the Chinese, Russians, Indians, Brazilians," Shahristani said.
In sum, as Ben Lando, United Press International's energy editor put it, "Big Oil's big dreams are close to coming true ... According to insiders, Shell, which produced a technical study of Kirkuk in 2005, wants a deal for the field. BP wants one for Rumaila, which it studied last year. Shell and BHP Billiton are angling for the Missan field in the south. ExxonMobil is interested in the southern Zubair field while the Sabha and Luhais fields are being targeted by Dome and Anadarko Petroleum. ConocoPhillips is talking with the [Iraqi] ministry about the West Qurna oil field ... Chevron and Total have teamed up in a bid for the Majnoon field."
No doubt, it is pay-off time for the four majors who didn't make an issue of the US military occupation of Iraq or the ensuing mess-ups during Paul Bremer's rule or the ensuing acute security situation, but kept going with their nose on the ground and worked with the Iraqi ministry during the past four years in conducting reservoir surveys, assisting in the drawing up of work plans and in training personnel. These oil majors simply chose to be around in Baghdad even when much of the oil industry was idling. Lando adds, "While service contracts would be highly profitable for companies, Big Oil wants risk contracts. Such deals are usually long term, covering its exploration costs and guaranteeing a profit if oil is found, and allowing them to put the reserves it discovers on the books, a boon in Wall Street's eyes."
Iraqi public opposition
Of course, Shahristani is skating on thin ice. His moves, despite the robust backing by the Bush administration, are political and highly controversial. The point is, Shahristani is virtually in a position to hand out jackpots to the oil majors. Everyone knows that apart from the security factor, the risk in exploring for crude in Iraq is virtually nil. "Historically it [oil] has been easy to find, inexpensive to produce and top quality", Lando points out.
Washington counts on Shahristani to push the oil deals through despite the vehement opposition within Iraq. First, about 70% of Iraqis firmly oppose what Shahristani is attempting. The Iraqis see what is happening as a capitulation of their national sovereignty. Iraqis look back at the nationalization of their oil industry in 1972 as a source of pride and empowerment. Second, there is vehement opposition from the labor unions in the Iraqi oil industry. They say that Iraq could increase its oil production by investing its own money and there is no pressing need at this juncture to solicit foreign investment.
Indeed, in 2006, the Iraqi Oil Ministry could only utilize 3% of its $3.5 billion reconstruction budget. The US Defense Department in a December 2007 report acknowledged, "The lack of capacity in contracting, the lack of trained budget personnel, concern about corruption and numerous other systemic structural impediments hamper faster execution."
Iraq's oil exports in 2007 brought in $35.5 billion, according to the US State Department. But a study by the Washington Times newspaper in January concluded, "Increased oil revenues stemming from high prices and improved security are piling up in the Federal Reserve Bank of New York rather than being spent on needed reconstruction projects."
To be sure, the Iraqi labor unions have a point when they say that foreign investment is not the real need for the oil industry currently, but rather the ability to invest the surplus budget. Again, the labor unions are questioning the need of foreign expertise. They insist that national expertise is available within Iraq. The fact remains that in spite of Saddam's gross mismanagement of the oil industry, Iraq had built up over the years a significant reservoir of manpower with a range of technical expertise.
"If they [Oil Ministry] are prepared to allocate more funding and spend the resources that already exist, there would be improvement and we could recruit more workers," Hassan Jumaa Awad, president of the umbrella Iraqi Federation of Oil Unions recently told the United Press International news agency. Awad alleged that Shahristani is following a "deliberate" policy of shunning domestic investment with a view to make Iraqi oil workers look incapable.
The labor unions have now sought the help of the international labor community to their demands, which also question Shahristani's intentions in awarding to international oil firms concession or risk contracts such as production-sharing agreements. Awad calls for an Iraqi oil law, "but we need to gain our full sovereignty before such a law is enacted", and he insists that if a law is to be passed, it should be approved by Iraqi voters in a referendum.
Iraq's oil unions and civil society organizations have joined hands in alleging that Washington and the present authorities in Baghdad, especially the Oil Ministry, are conspiring to hand over control over Iraq's oil to oil majors. The news agencies reported that protesters who fear that Iraq's oil wealth might be squandered met at a Middle East oil conference on February 5 in London where Iraqi and British oil industry leaders attended.
Bush's Iraq legacy
But the Bush administration's priorities lie elsewhere. It is highly unlikely to pay heed to Iraqi public sentiments. There is precious little time left for the Bush administration in the White House. But it's not just pork-barrel politics, either. There is also the aspect of the legacy of the Bush administration. With the Iraqi "surge" having proved a success, Bush is undoubtedly gearing up for the epitaph to his Iraq odyssey.
Big Oil deals in Iraq form the core of Bush's strategy of creating a legacy for the US in the Middle East that may run for decades. Big Oil needs the assurance of a near-permanent US military presence in Iraq. And Bush is determined to provide that assurance. He is convinced that no serious American politician would defy the wishes of Big Oil. By logic, therefore, Bush is creating a historical legacy of an Iraq that will remain under American control for decades to come.
Therefore, the Op-Ed in The Washington Post on Wednesday jointly authored by Secretary of State Condoleezza Rice and Secretary of Defense Robert Gates is extraordinary for its thumb sketch of what Bush's Iraq legacy is going to look like. The two top officials have written that a "crucial phase" is about to begin with the US negotiating a basic framework agreement with the Iraqi government aimed at "normalized relations".
By the end of this year, the Bush administration proposes to altogether dispense with the fig leaf of the current requirement that the United Nations must authorize on an annual basis the presence and role of the US military in Iraq under the relevant UN resolutions. Rice and Gates argue that the Bush administration "would rather have an arrangement that is more in line with what typically governs the relationships between two sovereign nations". Period.
The US-Iraqi framework agreement to be negotiated seeks to establish "a strong relationship with Iraq, reflecting our [US] shared political, economic, cultural and security interests". In other words, Washington will have ensured that US policies in Iraq are sequestered from the purview of the UN once the US-Iraqi framework agreement is through by the end of the year. Concerned parties like Russia (or China) will simply be faced with the fait accompli of what the US chooses to do with Iraq.
Second, the US-Iraq bilateral framework will include what is known as a "status of forces" agreement, which is based on a recognition that "US forces will need to operate in Iraq beyond the end of this year for progress in stabilizing Iraq to continue. In these negotiations, we [US] seek to set the basic parameters for the US presence in Iraq." Third, the basic framework with Iraq will be negotiated with bipartisan support, fully involving the US Senate's treaty-ratification authority via the appropriate committees of the Congress with briefings for the lawmakers and
congressional input so that 2008 will go down in history as "a year of critical transition in Iraq ... a foundation of success in Iraq - a foundation upon which future US administrations can build". Once the hurly-burly of the primaries is done in the presidential race, Bush proposes to invite the presidential candidates to contribute to the finessing of the US's Iraq strategy in the coming period.
What becomes evident is that the Bush administration neither intends to cut and run from Iraq nor is it in search of an exit strategy. On the contrary, it is ensuring that Iraq remains under American control for as long as it takes for the US to evacuate the oil and gas out of that country. Bush sees this as his historical legacy.
Bush is confident that his troop "surge" strategy in Iraq is working. According to US columnist and author David Ignatius, Bush favors keeping US force in Iraq close to the pre-"surge" level of 130,000 troops. Ignatius wrote, "Bush in effect is redoubling his bet on success in Iraq." It is a risky course insofar as Iraq is a polarizing issue in an election year. But there is logic in betting that with such high stakes for Big Oil in Iraq - thanks to Shahristani's deals - no serious US politician with presidential ambitions would undermine Bush's desire for continuity and his plans to leave behind a stable Iraq.
Russia stages comeback
Indeed, the rest of the world has already decided that it is time to take the Bush legacy in Iraq seriously. The alacrity with which Moscow is hurrying to get onto Shahristani's gravy train is the latest tell-tale sign. Moscow is highly unlikely to waste its time in rhetoric ridiculing the Bush administration by pointing out that the US needs assistance to save face and leave Iraq with dignity or that Russia could help stabilize the situation, and so on.
Shahristani visited Moscow last August, but at that time Moscow committed the folly of not taking him seriously. (Actually, Shahristani was a university student in Moscow in the 1960s.) A Moscow commentator wrote after his visit, "The oil minister may say whatever he wants about the operations of foreign companies in Iraq, but the Iraqi Parliament has not yet passed a law on oil and gas. Therefore, oil companies can only make assumptions about work in Iraq."
But Moscow didn't need much time to revise its opinion and to take Shahristani very seriously. In November, Shahristani, guided by American legal advisors, canceled Russian oil company Lukoil's contract with Saddam's regime for the vast oil field in Iraq's southern desert, West Qurna, with estimated reserves of 11 billion barrels of oil. Shahristani announced the field would be opened to new bidders as early as 2008. "We will defend our interests," a senior Kremlin official warned. Moscow threatened to revoke a 2004 deal with creditor nations to forgive $13 billion in Iraqi debt.
But Moscow learned that ConocoPhillips was seriously eyeing West Qurna. Moscow concluded that Iraq's oil scene was up for grabs, predators were around and there was no more time to lose. Thus, the formal signing of the agreement on Monday in Moscow writing off most of Baghdad's Soviet-era debt has not come a day too soon. The agreement stipulates that Russia will initially write off 65% of Iraq's $12.9 billion debt, accrued mostly from Saddam's arms purchases, and of the remaining $4.5 billion, 80% will be forgiven in two stages by 2009 if Iraq meets economic targets set by the International Monetary Fund, leaving Iraq to repay $900 million over a 17-year period from 2011.
The agreement opens the way for Russian oil companies' return to Iraq. Separately, Russia has agreed to invest $4 billion in Iraq, including the Iraqi oil industry. Close on the heels of the debt-relief agreement, Moscow has indicated that Lukoil and other companies including OAO Zarubezhneft, a state-owned oil producer, and OAO Mashinoimport, a supplier of machinery for energy industry, are "preparing" to return to Iraq. The Iraqi government has promised to pay "special attention" to previously signed contracts with Russian companies. But things may not be easy. The return of the Russian companies will be subject to US acquiescence, which in turn means Moscow will henceforth have to significantly roll back its earlier criticism of the Bush administration's Iraq policy.
Russian Foreign Minister Segei Lavrov has stressed Moscow's "utmost interest" in launching projects in the Iraqi gas, oil and electricity sectors, "but for the successful implementation of plans of economic development of Iraq it is necessary to solve two political problems: to achieve national reconciliation and settle the security issue". In essence, Lavrov underscored Russia's determination to seriously engage.
How the Russian "re-entry" plays out will be interesting to watch. Washington - and Shahristani - will have to work out the implications of the return of Russian oil companies to Iraq. A Middle East expert in Moscow pointed out, "If Russian companies are let in, somebody else will be kept out. It is not a matter of market competition."
EU reaches out to Iraq
But Iraq is likely to impact Russia's fortunes in a much more profound way on a second front where Moscow's ability to influence is virtually nil. Moscow will be watching with anxiety the progress of the energy dialogue that has commenced between the European Union and Iraq. Alarm bells would have rung in Moscow when Shahristani travelled to Brussels and met the EU officials on January 31.
EU officials have openly acknowledged that their desire to seek closer energy ties with Iraq is a critical component of their broader strategy to reduce Europe's dependence on Russian energy supplies. EU countries currently depend on Russia for roughly a quarter of their gas supplies. EU External Affairs Commissioner Benita Ferrero-Waldner told Shahristani, "Iraq is a natural energy partner for the EU, both as a producer of oil and gas and as a transit country for hydrocarbon resources from the Middle East and the Gulf to the EU."
She said the EU was keen to see Iraq link into the Arab Gas Pipeline project from Egypt to Jordan near the Syrian border, which is under construction and is expected to allow European customers to tap into supplies from Egypt and other countries along the line via Turkey. The EU's Arab Gas Pipeline project forms part of the 3,300-kilometer pipeline to transport gas from the Middle East and Central Asia to Europe while bypassing Russia.
The plan is to transport Iraqi natural gas from a gas field in southern Iraq to the EU through the Arab Gas Pipeline, which, when completed, will connect Syria, Jordan, Lebanon, Egypt and Turkey. Iraqi gas could then reach Europe through the planned Nabucco pipeline, which is to run from Turkey to Austria. Iraq has been invited to an upcoming ministerial meeting on the Arab Gas Pipeline project.
An interesting sideline is that access to Iraqi energy suddenly makes the Nabucco pipeline viable. Russia, through robust efforts in the recent past had gained the high ground as the key energy supplier for the southern European countries. The Russian efforts had dampened Nabucco's prospects despite Washington's vigorous backing for the project. Now, when it appeared that Moscow had all but finished off Nabucco, thanks to Iraqi energy, Nabucco is rising again as a major challenge to Russia's interests as the major energy supplier for Europe. The implications for Europe's relations with Russia and even for the trans-Atlantic relations are far-reaching.
Shahristani told his EU interlocutors in Brussels that Iraq planned to develop its gas fields this year and should be in a position to supply Europe with gas "in two or three years". Iraq is estimated to have 111 trillion cubic feet of natural gas reserves. Royal Dutch Shell, France's Total and Italy's Edison are seeking Shahristani's approval for a deal to develop one of Iraq's largest gas fields, Akkas, located near the Syrian border, which could be connected to the Arab Gas Pipeline.
On the oil front, Shahristani said in Brussels that Iraq is studying the possibility of new pipelines through Turkey. Oil from the Kirkuk fields in northern Iraq is currently exported through a pipeline that links up the Turkish Mediterranean port of Ceyhan.
India-Israel energy ties
EU-Iraq energy ties will be a worrisome development for not only Russia but also for Iran. Tehran has been nurturing the hope that the EU's strategy to diversify its energy imports would eventually give impetus to the European countries to normalize their relations with Iran and that in turn would prompt them to withstand the US pressure to isolate Iran. But Tehran is watching with dismay that Iraq is fast becoming a golden goose for the EU and the expansion of EU-Iraq energy ties may dampen any sense of urgency in the European capitals for building up an energy dialogue with Iran in the near term.
The virtual "loss" of the EU market - in the near term, at least - compels Iran to turn more toward the Asian region. But here too, US pressure is working on India, one of Asia's most significant energy markets, from linking up with Iran. Washington is instead encouraging Indian companies to become active in Iraq. Ideally, Washington would like to promote a Turkey-Israel-India energy grid that could tap into the Iraqi reserves. This approach also fits
in with the US geostrategy of developing Turkey, Israel and India as three "pivotal" states that are Washington's natural allies in the regions surrounding the volatile Middle East.
In January, Turkey launched a feasibility study for a natural gas pipeline connecting northern Iraq's fields to its Mediterranean port of Yumurtalik, which will run parallel to the oil pipelines. Once the northern Iraq gas fields are developed, 353 billion cubic feet of natural gas will flow to Yumurtalik. Turkey hopes to export liquefied natural gas (LNG) by tankers to destinations such as Israel and India. There is strong US backing for the project.
To the extent that India is kept away from linking with Iran, Washington also hopes to scuttle the prospect of an Asian energy grid developing that might involve Iran, Pakistan, India and China alongside Russia and the Central Asian states. Significantly, serious discussions have begun for the first time between Turkey and India on energy cooperation.
Turkish Foreign Minister Ali Babacan, who visited Delhi recently, has reportedly proposed to his Indian counterpart the possibility of Turkey exporting oil from the Ceyhan port to Israel's Ashkelon-Eilat pipeline and Indian super tankers sourcing oil from the Israeli port of Eilat in the Gulf of Aquba. A visit by Turkish President Abdullah Gul to India, followed by a visit by Prime Minister Recep Tayyip Erdogan, is in the cards.
The Indian Oil Corporation is already building pipelines in Turkey. A major Indian company belonging to the powerful Reliance Group (which has collaboration with Chevron) is active in northern Iraq. (By a curious coincidence, the Kurdish leadership in northern Iraq and the Indian government have employed the same lobbying firm - run by Robert D Blackwill, a former deputy national security advisor and ambassador in New Delhi - to canvass for their interests in Washington.)
Indian companies have traditionally been active in the Iraqi oil sector. But what explains the US's interest at this juncture is that energy cooperation in Iraq could significantly cement the strategic ties between Israel and India and thereby ease Israel's regional isolation. On the face of it, it would have made eminent sense for India to connect Iraq via a pipeline through Iran. But Washington's entire strategy is to cut Iran out of the loop and to instead encourage Turkey, Israel and India to forge an energy grid.
However, a Turkey-Israel-India energy grid may face domestic opposition within India. The question of India partaking of the economic bonanza of US-occupied Iraq may militate sections of the Indian public opinion. The present Indian Parliament has adopted a resolution which seriously delimits Delhi's collaboration with US-occupied Iraq. How Indian public opinion reconciles its antipathy towards US "imperialism" with the tantalizing prospect of the country tapping into Iraq's vast energy reserves will offer an engrossing political and diplomatic spectacle. But, in the short term, the prospect of Iraq as a significant source of energy supply is surely working as yet another damper on India-Iran energy cooperation. In that respect, the US strategy is working.
Turkey major beneficiary
In sheer geopolitical terms, the single biggest beneficiary out of all Iraq's neighbors is going to be Turkey. Shahristani's projects will catapult Turkey into the status of a crucially important energy hub in the US's strategy. During his Washington visit last month, Turkish President Gul had meetings with Bush, Vice President Dick Cheney and the secretaries of State and Energy. The agenda of discussions related to the US and Turkey jointly working in Iraq to develop its energy sources.
US-Turkey energy cooperation in Iraq impacts on the geopolitics of the region in many directions. First, Washington will expect that Turkey go slowly on expanding and deepening its cooperative ties with Iran, a trend that the Bush administration had been viewing with disquiet in the recent past. Turkey can be expected to respond with pragmatism and calibrate its ties with Iran in accordance with the US sensitivity.
In turn, any recalibration of the dynamics of Turkish-Iranian ties will be a matter of utmost satisfaction for Israel. Correspondingly, therefore, we may expect a revival of warmth in Turkish-Israeli relations. Furthermore, Turkey is now poised to be a conduit for energy supplies from northern Iraq to Israel. Israel already enjoys strong influence in the Kurdistan region in northern Iraq. Thus, there is a tremendous convergence of interests between Turkey and Israel over issues of Israel's energy security.
The Israel-Turkey political axis is bound to consolidate in the coming period, thanks to Iraq's oil. But from Turkey's point of view, the most important outcome is the readiness on the part of Washington to disengage from its erstwhile Kurdish allies in northern Iraq. This is already giving Ankara a relatively free hand in militarily countering Kurdish militant activities. Washington is not only turning a blind eye to Turkish military incursions into northern Iraq but is even reportedly sharing vital intelligence with Turkey, which makes the Turkish military's "hot pursuit" of Kurdish militants inside northern Iraq more effective. Washington is definitely leaning on the Iraqi Kurdish leadership to rein in the activities of Turkish militants based in northern Iraq.
Equally, Turkey is able to exploit the vested interests of Iraqi Kurdish leaders in oil trade. There are signs that Iraqi Kurdish leaders are cooperating with the Turkish military operations in meaningful ways.
Turkey has certainly influenced the US decision to scuttle on technical grounds the holding of a referendum regarding the status of oil-rich Kirkuk region in December as provided under the provisional Iraqi constitution of 2005. Conceivably, growing US dependence on Turkey could even lead to an indefinite postponement of the referendum beyond June this year. Turkey is pressing for a UN-negotiated "special status" for Kirkuk, making it a region unto itself. Washington may well heed the Turkish suggestion. At a minimum, Ankara can heave a sigh of relief that the specter of an independent Kurdish national identity taking shape in northern Iraq has receded into the background. Without US backing, it is simply not possible for the Kurds in northern Iraq to assert their independence.
Turkey also finds common ground with the Iraqi Sunni and Shi'ite political blocs, who have made a pact against holding any referendum in Kirkuk until a new law is passed that would firmly establish Baghdad's control over the province's oil wealth. This enhances Turkey's leverage in Baghdad. The Iraqi political alliance challenging the Kurdish separatist aspirations includes as many as 145 legislators in the 275-member Iraqi Parliament.
Indeed, from the Turkish perspective, all this is far from offering a permanent solution to the Kurdish problem as such. As the prominent Turkish editor Ilnur Cevik pointed out recently, "It is a problem that has to be addressed with pragmatism and with the notion that there are citizens of Kurdish origin who still do not feel they are being treated as first class citizens of the Turkish republic." But the fact remains that Turkey gains valuable time to set its own house in order while Washington dotes on Ankara as a key ally in Iraq.
Turkey has played its cards brilliantly. With the correct mix of strategic defiance and realism, Ankara has persuaded the Bush administration to view the northern Iraqi situation through its prism. In fact, out of all Iraq's neighbors, it is Turkey that the US will have to count on in the coming period. The Turkish-US relationship, which went through a bad four-year period following Ankara's refusal to assist in the US invasion of Iraq, has certainly regained some of its traditional verve as a key alliance. This adds immensely to Turkey's regional status vis-a-vis its Arab neighbors, Russia, Iran, and even the European countries.
Turkey's influential role in Iraq, in fact, makes it a significant player in the Middle East. But, more important to medium-term Turkish national priorities would be that Europe would be more inclined as time passes to take note of Turkey's strategic importance. For the EU, Turkey is emerging as a vital energy bridge connecting the Middle East. At some point in the foreseeable future, this should turn to Turkey's advantage, if only Ankara relentlessly continues to pursue its EU membership.
M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for over 29 years, with postings including India's ambassador to Uzbekistan (1995-1998) and to Turkey (1998-2001).
(Copyright 2008 Asia Times Online Ltd.
Ministerial portfolios under debate in Iraq
Tuesday, February 26, 2008 10:29 GMT
Despite parliamentarian blocs’ approval on the new government’s formation, the situation on the ground is different after new rows came up between Iraq political parties on ministerial portfolios mainly key ministries. Iraqi President Jalal Talabani conveyed Kurds’ willingness to cede the post of President in return of Finances or Defense portfolios. In a televised interview with Al Iraqiya, Talabani added that the executive council has appointed Al Maliki to form a new government with a less number of ministers.
When asked about the existing government and main posts held by Kurds as well as their future aspirations, Talabani affirmed that Kurds want Al Maliki’s government to succeed as they have overlooked many demands. Iraqi President confirmed his willingness to cede the post of presidency to other parties in return of Finances or Defense portfolios.
Few weeks earlier, Al Maliki’s proposal to announce a new government regardless of political apportionment including 22 ministries was subject to debate. Prime Minister’s political advisor Sadeq Al Rukabi said that Al Maliki hasn’t received any response to his proposal letter of forming a new government, affirming his intention to fill in ministerial gaps. Arab Bloc for National Dialogue MP Haydar Al Mulla noted that circumstances are not appropriate to form a government upon competency and professionalism, saying that the political process will continue on the basis of apportionment and sectarianism, while adding that Al Maliki does not have the will to contain non-participating powers in the government.
Meanwhile, Al Maliki headed to London for routine medical tests, his private advisor Yassin Majid said.
http://www.alsumaria.tv/en/Iraq-News...e-in-Iraq.html
marketbrowser.com
no...found it in my travels..I WISH I wrote it...lol
Obama's calling..imo..I think he needs to help HIS race before trying to tackle ours....
Farrakhan praises Obama at Nation of Islam convention in Chicago
By Margaret Ramirez | Tribune reporter
10:47 PM CST, February 24, 2008
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Digg Del.icio.us Facebook Fark Google Newsvine Reddit Yahoo Print Reprints Post comment Text size: Speaking to thousands of members of the Nation of Islam in Chicago at their annual convention, Minister Louis Farrakhan on Sunday praised presidential candidate Sen. Barack Obama as the only hope for healing America's racial divisions.
Farrakhan spoke about the war in Iraq, the nation's ailing economy and the increase in natural disasters, saying the world was in a perilous state and Obama could help it recover.
"We are witnessing the phenomenal rise of a man of color in a country that has persecuted us because of our color," he said.
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"If you look at Barack Obama's [diverse] audiences and look at the effect of his words, those people are being transformed from what they were," Farrakhan said. "This young man is the hope of the entire world that America will change and be a better place."
The speech, titled "The Gods At War—The Future is All About Y.O.U.th," closed the Nation of Islam's annual Saviours' Day Convention, which commemorates the birth of the movement's founder, Wallace D. Fard Muhammad.
Five months later, in February 2007, Farrakhan appeared at Ford Field in Detroit, suggesting it was time for a new era.
The Sunday speech at McCormick Place convention center again contradicted statements that Farrakhan's speech in Detroit last year was his final public address. Speculation arose about a potential successor to the controversial 74-year-old Muslim leader after September 2006, when an ailing Farrakhan handed leadership of the Nation over to an executive board.
"My time is up," Farrakhan said then. "The Final Call can't last forever."
Obama spokesman Bill Burton said that "Senator Obama has been clear in his objections to Minister Farrakhan's past pronouncements and has not solicited the minister's support."
But Farrakhan spoke last May before the predominantly black congregation at St. Sabina Roman Catholic Church in Chicago, and in the fall he spoke to a crowd of 5,000 in Atlanta on the 12th anniversary of the Million Man March he led in Washington.
Zaheer Ali, a Columbia University researcher who is compiling an oral history of the Nation of Islam, said that although Farrakhan has continued to speak, his statements have focused on concerns of African-Americans and Muslims, as opposed to sweeping statements on U.S. politics and foreign policy.
"Most of his lectures have been confined to the mosque setting and focused primarily on the internal organizational and spiritual concerns of his community," Ali said. "His continuing to teach in whatever capacity—to small or large audiences—is probably welcome by the members of his community as well as members of the larger black community who welcome his as a much-needed voice in a critical time for Muslims and black people, and America in general."
The history of the Nation of Islam dates to 1930 in Detroit, when Fard Muhammad began preaching a new religious message merging the Islamic faith with black nationalism. Elijah Muhammad took over the movement four years later and oversaw its rapid expansion.
After Elijah Muhammad's death in 1975, his son, W.D. Mohammed broke away and moved his followers to mainstream Islam. In 1977, Farrakhan separated from W.D. Mohammed and rebuilt the Nation. On Sunday, Mohammed gave his own Saviours' Day speech at the Regal Theater.
maramirez@tribune.com
Iraqi Government Selects Net1's UEPS Technology
JOHANNESBURG, South Africa, Feb. 25 /PRNewswire-FirstCall/ -- Net1 UEPS Technologies, Inc. (NASDAQ:UEPS) ("Net1" or the "Company") today announced that it has signed a contract with a consortium comprising the Iraqi government and local Iraqi banks for the use of Net1's UEPS technology in Iraq. Under the contract, Net1 will provide a customized UEPS banking and payment system to the consortium.
The consortium, International Smart Card LLC, selected Net1 as its partner to assist with the challenges currently encountered with the payment and distribution of cash disbursements in Iraq. It is expected that the UEPS technology will also be utilized by Iraqi citizens living abroad, via bank branches in other countries.
The deployment of the UEPS will provide a ubiquitous platform for retail payment transactions in Iraq by providing interoperability between automatic teller machines, point of sale devices and bank branches. The UEPS technology will provide offline and online transaction processing solutions to enable affordable products and services to be offered to Iraqi citizens irrespective of where they reside. Projects identified include the payment of social grants to war victims, employee salary/wage payments, banking products and financial services. The first project will pilot the solution for the distribution of social grant payments to war victims.
"This contract is further proof of the versatility and strength of our UEPS technological offering," said Dr. Serge C.P. Belamant, chairman and CEO of Net1. "Our solutions will allow the Iraqi government to provide a national payment system that can deliver secure, flexible and affordable financial services to the Iraqi people. We look forward to working with our partners to assist with the upliftment of the Iraqi citizens' lives"
Net1 expects to commence this project in the fourth quarter of fiscal 2008 and expects to generate revenue from this contract in the first quarter of fiscal 2009. Under the agreement, Net1 will receive ongoing transaction and license fees, as well as payments for the provision of outsourcing services and the sale of hardware.
Brenda Stewart, Net1's Senior Vice President Sales and Marketing, added, "Net1 is extremely proud to provide Iraq with its technology, which will prove beneficial to all participants including financial institutions, government departments, the private sector and, most importantly, the citizens of Iraq."
About Net1 (http://www.net1ueps.com/)
Net1 provides its universal electronic payment system, or UEPS, as an alternative payment system for the unbanked and under-banked populations of developing economies. The Company believes that it is the first company worldwide to implement a system that can enable the estimated four billion people who generally have limited or no access to a bank account to enter affordably into electronic transactions with each other, government agencies, employers, merchants and other financial service providers. To accomplish this, the Company has developed and deployed the UEPS. This system uses secure smart cards that operate in real-time but offline, unlike traditional payment systems offered by major banking institutions that require immediate access through a communications network to a centralized computer. This offline capability means that users of Net1's system can enter into transactions at any time with other cardholders in even the most remote areas so long as a portable offline smart card reader is available. In addition to payments and purchases, Net1's system can be used for banking, health care management, international money transfers, voting and identification.
The Company also focuses on the development and provision of secure transaction technology, solutions and services. The Company's core competencies around secure online transaction processing, cryptography and integrated circuit card (chip/smart card) technologies are principally applied to electronic commerce transactions in the telecommunications, banking, retail, petroleum and utilities market sectors. These technologies form the cornerstones of the "trusted transactions" environment of Prism, a South African based subsidiary of the Company, and provide the Company with the building blocks for developing secure end-to-end payment solutions.
This announcement contains forward-looking statements pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, implied or inferred by these forward-looking statements, such as implementation of the Company's Prism strategy, product demand, market and customer acceptance, the effect of economic conditions, competition, pricing, development difficulties, foreign currency risks, costs of capital, the ability to consummate and integrate acquisitions, and other risks detailed in the Company's SEC filings. The Company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.
DATASOURCE: Net1 UEPS Technologies, Inc.
CONTACT: Ilja Graulich, Net1's vice president investor relations, Work,
+27-11-343-2019, Cell +27-83-604-0820, , or William Espley
of Net1, Investor Relations, +1-604-484-8750, +1-866-412-NET1 (6381)
Web site: http://www.net1ueps.com/
Iraq discuss with the European Commission trade cooperation agreement
PUKmedia حيدر بدرخان/ بغداد: 14:28:09 2008-02-25 PUKmedia Haider Badrakhan / BAGHDAD: 14:28:09 2008-02-25
من المنتظر أن تعقد المفوضية الأوروبية والحكومة العراقية في 26 و27 شباط الجلسة الرابعة من مباحثات إتفاقية التعاون التجاري، والتي بدأت أساساًَ في تشرين الثاني من عام 2006. It is expected to hold the European Commission and the Iraqi government on 26 and February 27 the fourth meeting of the Convention on trade cooperation talks, which began mainly in November of 2006. من المتوقع أن تغطي الجلسة الرابعة من المباحثات مواضيع عدة مثل: حقوق الإنسان، تجارة البضائع والخدمات، الجمارك والضرائب، التعاون الصناعي، النقل، العمالة والحماية، التعليم، التدريب، الشباب، الثقافة، الزراعة والتنمية الريفية. Expected to cover the fourth meeting of the talks with numerous topics such as: human rights, trade in goods and services, customs, taxation, industrial cooperation, transport, employment and protection, education, training, youth, culture, agriculture and rural development.
وقال المكتب الصحفي للمفوضية انه سيرأس المباحثات من المفوضية الأوروبية السيد هيج منغاريللي، نائب مدير عام مكتب العلاقات الخارجية، ومن الجانب العراقي السيد محمد الحاج حمود، نائب وزير الخارجية العراقي. The press office of the UNHCR that the talks will be chaired by the European Commission, Mr. Hage Mngarelli, Deputy Director, Office of External Relations, and the Iraqi side, Mr. Mohammed Al-Hajj Hamoud, Deputy Foreign Minister of Iraq.
وقد تم اطلاق مباحثات إتفاقية التعاون التجاري في تشرين الثاني 2006 بمبادرة من مفوّضة العلاقات الخارجية وسياسة الجوار الأوروبية بينيتا فريرو والدنر ومفوّض التجارة بيتر ماندلسون ونائب رئيس الوزراء العراقي للشؤون الاقتصادية الدكتور برهم صالح. The talks were launched commercial cooperation agreement in November 2006 initiative of the Commissioner for External Relations and European Neighbourhood Policy Benita Ferrero Waldner and Trade Commissioner Peter Mandelson and Iraqi Deputy Prime Minister for Economic Affairs Dr. Barham Salih.
وتهدف مباحثات إتفاقية التعاون التجاري إلى تطوير التجارة بين الاتحاد الأوروبي والعراق وإعادة دمج العراق في الأسواق التجارية العالمية. The aim of the trade talks cooperation agreement to develop trade between the European Union and Iraq and the reintegration of Iraq in the global commercial markets. ومن المعروف أن جلسات المباحثات السابقة والتي تم عقدها في حزيران وتشرين الثاني من عام 2007 قد كانت مباحثات ناجحة ومثمرة، حيث تم الاتفاق على العديد من الأمور مثل محاربة الإرهاب والتصدي لانتاج أسلحة الدمار الشامل والتعاون في مجالات الطاقة وغيرها. It is known that the meetings of the previous talks, which were held in June and November in 2007 of the talks had been successful and fruitful, as was agreed on many things such as fighting terrorism and responding to the production of weapons of mass destruction and cooperation in the fields of energy and others. هذا ومن المتوقع أن يتم الترتيب لعقد الجلسة المقبلة في حزيران من هذا العام. This is expected to be arranged to hold the next meeting in June this year.
وقال بيان المفوضية إن مباحثات اتفاقية التعاون التجاري تأتي ضمن التزام ومثابرة الإتحاد الأوروبي على لعب دور فعال في مساعدة العراق على تحسين الأوضاع المعيشية لمواطنيه. The UNHCR statement said that the talks convention trade cooperation comes within the commitment and perseverance of the European Union to play an active role in helping Iraq to improve the living conditions of its citizens. وقد تمت ترجمة التزام الإتحاد الأوروبي من خلال المساعدات التي تم تقديمها من المفوضية الأوروبية لإعادة إعمار العراق، والتي بلغت أكثر من 800 مليون يورو منذ عام 2003، حيث كان التركيز دوماً على مساعدة الشعب العراقي وتأمين الإحتياجات الأساسية ونشر الديمقراطية وحكم القانون. Has been translated commitment of the European Union through the assistance which has been provided by the European Commission for the reconstruction of Iraq, which amounted to more than 800 million euros since in 2003, where the focus was always on helping the Iraqi people and ensure the basic needs and spreading democracy and the rule of law.
بعد الإنتهاء من هذه الجولة من المباحثات، سيعقد الجانبان مؤتمراً صحفياً مساء الأربعاء 27 شباط لاعطاء ايجاز حول النتائج. After the completion of this round of talks, the two sides will hold a press conference on Wednesday evening February 27 to give briefly on the results.
Kurdistan premier signs 2 MoU with S.K. on oil, reconstruction
Arbil - Voices of Iraq
Monday , 25 /02 /2008 Time 5:04:55
Arbil, Feb 25, (VOI) – Iraq's Kurdistan prime minister signed two Memorandums of Understanding (MoU) on energy and reconstruction with South Korean companies, saying they were made "within the boundaries of the Iraqi constitution."
"A delegation from two South Korean companies working in the fields of oil and construction will soon visit the Kurdistan region to discuss means of turning the memorandums into action on the ground," the Kurdistan Regional Government's (KRG) premier, Negervan al-Barazani, said during a press conference held at the cabinet headquarters on Sunday.
The memorandums were signed during Barazani's visit to South Korea last week.
The region had signed 15 contracts with 20 foreign oil corporations despite the central government's objection and ahead of the Iraqi parliament's final endorsement of a new draft law on oil.
The Iraqi Ministry of Oil invited foreign corporations to invest in the oil field in all Iraqi provinces, including those in the Kurdistan region and in Kirkuk, but excluded the companies that have signed contracts with the region without a prior approval from the ministry.
Dropping Zeros, Gaining Credibility? good read
Currency Redenomination in Developing Nations
Layna Mosley
Dept. of Political Science
University of North Carolina
Chapel Hill, NC
mosley@unc.edu
www.unc.edu/~lmosley/
Abstract: This paper investigates the conditions under which developing and transition nations engage in currency redenomination. Given that many governments of developing countries experience high levels of inflation and deterioration in their currencys value against other currencies, why do some elect to redenominate, while others do not? And why do some governments wait many years after a bout of hyperinflation, or after their currency is priced at 1000 or 5000 units to the dollar, to redenominate, while others do so relatively quickly? I suggest that the explanations rest in a combination of economic and political factors, including inflation, governments concerns about credibility, and the effect of currencies on national identity. I employ survival analysis to test these expectations, using a set of data for developing and transition nations, covering the 1960-2003 period. I find, not surprisingly, that inflation is an important predictor of redenomination. Redenomination also is related to political variables, including governments time horizons, the governing partys ideology, the fractionalization of the government and legislature, and the degree of social heterogeneity.
Paper presented at the 2005 Annual Meetings of the American Political Science Association, Washington, DC.
Comments welcome; please cite only with permission. I thank Sarah Brooks, Mark Crescenzi, Mitch Sanders for advice on the project and Dae Jin Yi for research assistance.
1
Since 1960, governments of developing and transition economies have redenominated their currencies on approximately seventy occasions. These redenominations generally involve reducing the value of the currency by a factor of ten. For instance, in January 2005, Turkey replaced its currency (the Lira) with the New Turkish Lira (YTL), with a conversion rate of one million old lira to one new lira. And in July, Romania introduced a new heavy version of its currency, the leu, with four fewer zeros. In both cases, governments noted that redenomination would send a signal to citizens, as well as to the international community, that economic policy mistakes were in the past.
While decisions about the denomination and design of currencies may seem more technical than political, a governments control and administration of its currency and, more broadly, of transactions within its boundaries -- is one of the hallmarks of the modern nation-state. Governments began to achieve such monetary control in the mid-nineteenth century; today, many struggle to maintain this control, particularly in the face of civil conflict or economic collapse (e.g. Woodruff 1999). Currency redenomination, then, may come as part of a broad package of economic and political reforms, as was the case in Afghanistan in October 2002; following years of decline in the currencys value, a new afghani was introduced, with three zeros removed. This introduction was meant to herald, along with a series of other measures, the emergence of Afghanistan from years of civil conflict, and its movement toward modern nationhood.
Currency redenomination also can be a means by which governments attempt to reassert monetary sovereignty. If citizens lose confidence in the national currency, they may begin to use foreign currencies, particularly those with greater prestige. This may be both a psychological and an economic blow to the government: with widespread foreign currency substitution (or, more extremely, full dollarization), the central bank no longer controls the money supply, rendering it unable to provide lender of last resort functions (Cohen 2004). Economic policy is influenced not only by international capital markets (e.g. Mosley 2003), but also by foreign central banks. Currency redenomination, then, is a means by which governments can attempt to reverse this currency substituting behavior: if citizens are confident that the new Turkish lira will hold its value, they may be willing to shift from using euros and dollars to using lira. While the act of dividing a currencys value by a factor of ten is somewhat symbolic, it also can help to convince citizens of a currencys worth. As a result, redenominations often occur after economic crises, as governments attempt to convince citizens and markets that hyperinflation is a thing of the past. In some cases, the timing is correct, in that redenomination caps off high levels of inflation. In other cases, governments are not able to reign in inflation immediately after redenomination, and they may make multiple efforts at currency reform. Argentina and Brazil during the 1980s and early 1990s exemplify this pattern.
Yet not every country with high levels of inflation, or with a low local currency/dollar exchange rate (so that thousands of local currency units are required for everyday transactions), chooses to redenominate its currency. Some governments are content for citizens to spend two thousand lira or manta for a cup of coffee, even if this leads citizens to question the legitimacy of the local currency. In other cases, governments do choose to redenominate, but only after a sustained period during which inflation has been reigned in; the time between hyperinflation and redenomination, then, may stretch to over a decade. Were redenomination a purely technocratic exercise, this pattern would be surprising: redenomination seems to have few real costs, beyond the short-run expense of printing new notes and advertising the change to citizens and financial markets.
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This paper investigates the conditions under which developing and transition nations engage in currency redenomination. Given that many governments of developing countries experience high levels of inflation and a deterioration in their currencys value against other currencies, why do some elect to redenominate, while others do not? And why do some governments wait many years after a bout of hyperinflation, or after their currency is priced at 1000 or 5000 units to the dollar, to redenominate, while others do so relatively quickly? I suggest that the explanations rest in a combination of economic and political factors, including inflation, governments concerns about credibility, and the effect of currencies on national identity. I employ survival analysis to test these expectations, using a set of data for developing and transition nations, covering the 1960-2003 period. I find, not surprisingly, that inflation is an important predictor of redenomination. Redenomination also is related to political variables, including governments time horizons, the governing partys ideology, the fractionalization of the government and legislature, and the degree of social heterogeneity.
I. Trends in Redenomination
Redenomination1 has a long history: in the 19th century, when governments faced shortages of gold or silver, they sometimes adjusted the value of their coins accordingly (recoinage; see Helleiner 2003). Among developing and transition nations, currency redenomination was employed on 60 occasions during the 1960-2003 period.2 These redenominations varied in size, from removing one zero from the currency (14 instances) to removing six zeros (9 instances); the median redenomination was three zeros, dividing the currency by 1000. Nineteen countries have used redenomination on one occasion, while ten countries have redenominated twice (sometimes, with many years in between, as in Bolivia, in 1963 and 1987; in other cases, redenominations follow rather quickly, as in Peru in 1985 and 1991). Argentina (4), the former Yugoslavia/Serbia (5), and Brazil (6) are the most frequent users of redenomination.
Table 1 demonstrates significant variation in terms of the way in which redenomination is employed. The table lists the country-years in the dataset during which annual inflation exceeds 100 percent; some of these country-years are clearly hyperinflationary, while others are more moderate instances. In some cases, as in Argentina in 1992, redenomination marks the culmination of dramatic economic reform packages; by the time governments redenominate, they have addressed the monetary policy problems that generated the large local currency to dollar ratios. In other nations (e.g. Chile, Croatia), redenomination comes during, not after, the economic stabilization process. In still other cases, particularly those marked by long-running civil conflicts (Angola and the Democratic Republic of the Congo, Nicaragua), redenominations are employed, perhaps repeatedly, but high rates of inflation persist afterward. And not all periods of high inflation generate a subsequent redenomination: Ghana in the late 1970s and early 1980s and Indonesia in the late 1960s are two examples.
Many nations with high levels of inflation also have relatively lowly valued local currencies, making large denomination currencies necessary for basic transactions in the economy. While it is high or hyperinflation that often causes this situation, the presence of
1 Some authors use currency reform and redenomination almost interchangeably (e.g. Leijonhufvud 2000, Mas 1995). Others use currency reform to refer to exchange rate-based stabilizations, rather than to the specific act of removing zeros from a currency (e.g. Bernholz 1995).
2 In a few cases, nations have added zeros to their currency, often in the immediate post-independence period. Some also have changed their local currency from the pound to the dollar. Among countries that added digits to their currencies, Mas lists South Africa (1961), Sierra Leone (1964), Ghana (1965), Australia (1966), The Bahamas (1966), New Zealand (1967), Fiji (1969), the Gambia (1971), Malawi (1971) and Nigeria (1973). See Mas (1995), fn. 15.
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large-denomination notes may be the most obvious sign to citizens of a potential need for redenomination (e.g. Mas 1995). In Argentina in the 1960s, for instance, one US dollar was equivalent to 1,100 (1962) to 3500 (1969) Argentine pesos moneda nacional. The 1970 redenomination addressed this issue, removing two zeros while creating the peso ley. And in the early 1980s, one US dollar was equivalent to between 18,000 (1980) and 180,000 (1982) pesos ley; the 1983 currency reform (resulting in the peso Argentino) divided currency values by 10,000. Where redenomination is employed, but where overall economic reform is ineffective, these large ratios persist: the Azerbaijani manat was equal to 0.06 US cents in 1994 and to 0.02 cents in 2003.
Table 1: Inflationary Episodes and Redenomination Outcomes
Country
Years & Annual Inflation Rates
Redenomination?
Albania
1992 (226%)
No
Angola
1992 (299%), 1993 (1379%), 1994 (949%), 1995 (2672%), 1996 (4145%), 1997-2002 (average, 194%).
Yes, 1995.
Argentina
1975-1982; average annual rate 267%
Yes, 1983.
Argentina
1983 (344%), 1984 (627%), 1985 (672%)
Yes, 1985.
Argentina
1987, 1988, 1989 (3080%), 1990 (2314%), 1991 (172%)
Yes, 1992.
Armenia
1994 (4962%), 1995 (176%)
No.
Azerbaijan
1992 (912%), 1993 (1129%), 1994 (1665%), 1995 (412%)
Yes, 1992.
Belarus
1993 (1190%), 1994 (2221%), 1995 (709%)
Yes, 1992.
Belarus
1999 (294%), 2000 (169%)
Yes, 2000.
Bolivia
1981-1986; peaked at 11749% in 1985.
Yes, 1987.
Brazil
1981-1985, average annual rate 151%.
Yes, 1986.
Brazil
1986 (147%), 1987 (228%), 1988 (629%), 1989 (1431%)
Yes, 1989.
Brazil
1990 (2948%), 1991 (433%), 1992 (952%), 1993 (1928%), 1994 (2076%)
Yes, 1993 and 1994.
Bulgaria
1991 (338%), 1996 (122%), 1997 (1058%)
Yes, 1999.
Chile
1973 (362%), 1974 (505%), 1975 (375%), 1976 (212%)
Yes, 1975.
Congo, Dem. Rep.
1979 (101%), 1989 (104%), 1991 (2154%), 1992 (4129%), 1993 (1987%)
Yes, 1993.
Congo, Dem. Rep.
1994 (23773%), 1995 (542%), 1996 (542%), 1997 (176%)
Yes, 1998.
Congo, Dem. Rep.
1999 (285%), 2000 (514%), 2001 (360%)
No.
Croatia
1992 (625%), 1993 (1500%), 1994 (107%)
Yes, 1994.
Georgia
1995 (163%)
Yes, 1995.
Ghana
1977 (116%), 1981 (117%), 1983 (123%)
No.
Indonesia
1962 (131%), 1963 (146%), 1964 (109%), 1965 (307%), 1966 (1136%), 1967 (106%), 1968 (129%)
No.
Israel
1980 (131%), 1981 (117%), 1982 (120%), 1983 (146%), 1984 (374%), 1985 (305%)
Yes, 1980 and 1985.
Kazakhstan
1994 (1877%), 1995 (176%)
No.
Laos
1999 (128%)
No.
Latvia
1992 (243%), 1993 (109%)
Yes, 1993.
Lebanon
1987 (488%), 1988 (128%)
No.
Lithuania
1993 (410%)
Yes, 1993.
Macedonia
1994 (126%)
Yes, 1993.
Mexico
1983 (102%), 1987 (132%), 1988 (114%)
Yes, 1993.
Mongolia
1993 (268%)
No.
Nicaragua
1985-1991. Highest in 1989 (4770%), 1990 (7485%) and 1991 (2945%)
Yes, 1998.
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Country Years & Annual Inflation Rates Redenomination?
Peru
1983 (112%), 1984 (110%), 1985 (163%)
Yes, 1985.
Peru
1988 (667%), 1989 (3399%), 1990 (409%)
Yes, 1991.
Poland
1982 (104%), 1989 (245%0, 1990 (555%)
Yes, 1995.
Romania
1991 (231%0, 1992 (211%), 1993 (255%), 1994 (137%), 1997 (155%)
Yes, 2005.
Russia
1993 (875%), 1994 (308%), 1995 (197%)
Yes, 1998.
Sierra Leone
1987 (179%), 1990 (111%), 1991 (103%)
No.
Sudan
1991 (124%), 1992 (118%), 1993 (101%), 1994 (115%), 1996 (134%)
Yes, 1992.
Suriname
1993 (144%), 1994 (368%), 1995 (236%)
No.
Turkey
1980 (110%), 1994 (106%)
Yes, 2005.
Uganda
1981 (109%), 1985 9158%), 1986 (161%), 1987 (200%), 1988 (196%).
Yes, 1987.
Ukraine
1993 (4735%), 1994 (891%), 1995 (377%)
Yes, 1996.
Uruguay
1968 (125%)
Yes, 1975.
Uruguay
1990 (113%), 1991 (102%)
Yes, 1993.
Zambia
1989 (123%), 1990 (107%), 1992 (166%), 1993 (183%)
Zimbabwe
2002 (140%), 2003 (estimated 1000%)
No.
a Inflation data from the World Bank, World Development Indicators, annual percent change in consumer prices.
b There are additional redenominations, often in response to high levels of inflation; but comparable inflation data are not available. These include Brazil (redenominates 1967 and 1970), Estonia (1992), Kyrgyz Republic (1993), Moldova (1993), Uzbekistan (1993), and Vietnam (1975 and 1985).
If we use local currency/dollar ratios (rather than inflation rates) as indicative of the potential for redenomination, we observe a larger set of country-years than those listed in Table 1. In 360 country-years, this ratio exceeds 1,000. (And, in 160 country-years, the ratio exceeds 5,000). This set contains most countries that ultimately elect redenomination (such as Mexico, Peru and Poland). For instance, 1422 Turkish lira purchased a dollar in 1988; by 2003, the number had grown to 1,500,890. In Romania, the leu’s value sank to 1655 to the dollar in 1994, and further to 33200 by 2003. Turkey, like Romania, redenominated earlier this year.
This set also includes a significant number of countries that do not drop zeros. The latter group includes Cambodia, with a riel-dollar rate ranging from 1037 to 3973 during the last fifteen years; Ecuador, which chose near-full dollarization in the face of sucre-dollar rates of 25000; Indonesia, where 10,000 rupiah purchased a dollar in 1998; and Paraguay, with local currency-dollar rates ranging from 1,000 to 6,400 during 1989-2003. Of course, local currency ratios to the dollar do not always correlate with inflation: in some cases, ratios remain high long after inflation has been addressed. South Korea, for instance, has had single digit inflation since 1982; but the won-dollar rate has been at four digits since late 1997. As a result, policymakers in Korea discussed the possibility of currency redenomination in 2004, as did government officials in Japan at various times during the 1990s.3 And several countries presently have high-denomination (100,000 local currency units) bills in circulation Indonesia, Cambodia, Lebanon, Mozambique, Paraguay and Vietnam (Central Bank of the Republic of Turkey 2004a).
3 In 1993, Liberal Democratic Party (LDP) members suggested the redenomination could help stimulate the sagging Japanese economy. In 1994, observers argued that redenomination would increase public confidence in the yen as the country attempted to emerge from recession. (The Daily Yomiuri, November 8, 1994; Report from Japan, March 30, 1993). In 1999, the LDP formed a committee to investigate removing two zeros from the yen, motivated in part by a fear that the yens reputation as an international currency would suffer with the circulation of the euro. (Financial Times, November 19, 1999).
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Furthermore, for those nations that do adopt redenomination as a strategy and particularly those that redenominated at the end of an economic reform progress there are substantial variations in timing. The lag between the appearance of high inflation, or of high local currency/dollar ratios, and of the removal of zeros from the currency varies. Poland, for instance, experienced its highest levels of inflation in 1989 and 1990; redenomination did not occur until 1995. Similarly, Romanias inflationary years were in the early and mid-1990s, but its redenomination occurred in July 2005, perhaps more as a signal of its interest in taking part in EMU than as an effort to reassure its citizens that hyperinflation was no longer a threat.
What, then, explains the use of redenomination by developing and transition nation governments? Why do some government eschew redenomination in the face of, or after the resolution of, high inflation, while others embrace it? And why do some nations embrace redenomination, but with a long lag? What might explain, for instance, the fact that Bolivia removed zeros from its currency in 1987, less than two years after successfully launching a stabilization program; while Poland waited five years between the introduction of its (also successful) stabilization program and the dropping of zeros? How might redenomination serve as a signal, both to domestic constituents and to external market participants? And is there a connection between redenomination and national identity? The following section explores three sets of mechanisms that might influence redenomination credibility, domestic politics, and identity.
II. The Rationales for Redenomination
Why do governments engage in the redenomination of their currencies? In an era when money is backed by confidence (fiat money) rather than by gold and silver, governments may be tempted to manipulate the value of the publics currency stocks as a revenue-generating measure. One means of manipulation is inflation: a government can reduce its own domestic currency-denominated obligations by allowing a dramatic expansion of the money supply. Another means of manipulation is currency reform, in which the government introduces a new currency, but makes it difficult for citizens to convert their holdings of old currency. Ignacio Mas (1995) suggests that, while the use of currency redenomination as a mechanism of confiscation is more the exception than the rule, it has been used as such throughout history. For instance, when governments require citizens to exchange old currency for new during a very short period (e.g. one day in Laos in 1976, or three days in Nicaragua in 1988 and in the Soviet Union in 1991), it is very likely that not all old currency will be exchanged. The old currency that is rendered worthless is essentially revenue indirect seignorage -- for the government.
This account suggests that we might think about two types of redenomination: the more common case, in which redenomination is motivated by hyperinflation (and by a desire to signal that inflationary days are over); and the less common case, when redenomination is motivated by the governments desire to squeeze additional resources from society. This does not predict that democratic governments will be more likely, in general, to redenominate; but it does suggest that redenomination in the absence of high inflation is more likely in authoritarian societies, or during instances of civil conflict (as in Nicaragua in 1988, or in Rwanda in 1993).4
Hypothesis 1: Both authoritarian and democratic governments may have political reasons for redenomination. Democratic governments are likely to redenominate in response to high inflation. Authoritarian governments may
4 Indeed, Mas (1995) suggests that authoritarian governments will choose confiscatory currency reform rather than direct inflation as a strategy of financing.
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redenominate even without high inflation, particularly in the presence of civil conflict.
Mas (1995) account is one of the few academic treatments of redenomination. Yet he assumes that, in the realm of clean redenominations, there is little role for politics. Redenomination has little economic significance, beyond the one-time transition costs it imposes on countries (p. 487). Redenomination absent monetary reform will not halt inflation, and redenomination should not change individuals behavior. Indeed, taken separately from a broader program of macroeconomic reform and monetary tightening, redenomination seems unlikely to generate winners and losers, in the same way that changes in exchange rate or trade policy do (e.g. Frieden 1991, Rogowski 1989). But might there be a role for politics, even in such seemingly technical cases? Three sets of mechanisms, sometimes overlapping, could influence decisions regarding redenomination.
Credibility, Local and Global. Governments often are interested in establishing their credibility specifically, in establishing a commitment to low-inflation policies vis-à-vis their own citizens, as well as international capital markets (Maxfield 1997). Enhanced credibility can improve a governments electoral fortunes, as citizens reward economic growth and macroeconomic discipline (Armijo 1996, Stokes 2002); and it can improve a governments treatment as a borrower, as a location for private investment, and as a defender of an exchange rate in the eyes of global capital markets (Jensen 2005, Leblang 2002, Mosley 2003). As part of their efforts to establish credible commitments, governments in recent years often have increased the (statutory) independence of their central banks and have made explicit commitments to macroeconomic targets (e.g. Bernhard et al 2002). For countries that seek to join regional currency areas (e.g. EMU), assuring international markets of their commitments is essential. Romanias central bank, for instance, portrayed its redenomination as indicating that the days of hyper-inflation are over and the new currency will help keep things that way (BBC 2005). Romania has established a goal of joining EMU by 2012, and a currency that was worth 29,890 to the dollar was seen as an impediment to doing so.
In countries where hyperinflation has occurred, governments face an uphill struggle when it comes to regaining the confidence of international markets and domestic constituents. The most direct means is through a stabilization program, which generally involves using either exchange rate-based or monetary-oriented targeting; increasing the operational independence of the central bank; and removing distortionary economic policies. In many cases, such stabilization occurs the aegis of an IMF standby agreement. Redenomination can play into this process, in two ways: first, it can be used at the end of a stabilization, to signify to citizens and private markets that the days of high inflation are over. Used in this way, redenomination is largely symbolic: inflation has been tamed via other means, and the removal of zeros simply serves to remind citizens and investors of the success in fighting inflation or to remove a very visible reminder of an inflationary past. A new currency is largely the result of, not the cause of, stabilization (Bernholz 1995). When this mechanism holds, we should expect that redenomination will occur after a period of high inflation, but also after that inflation has been removed from the system; a dramatic downward change in inflation should increase the chances for redenomination. Pressures from international capital markets, from the IMF, and from politically independent central banks can help motivate anti-inflationary measures (e.g. Simmons 1994, Stone 2002), as well as subsequent redenomination.
Along these lines, in the run-up to its recent redenomination, the Turkish central bank pointed to two main motivations. The first was technical, in that multiple zeros complicated statistics and transactions. The second was about credibility: that the existence of a 20,000,000
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lira banknote, unique globally, had a negative effect on the credibility of our currency. The removal of zeros was a means of restoring credibility; one benefit would be that the determination in bringing inflation down to single digits permanently is better comprehended (Central Bank of the Republic of Turkey, 2004b). Indeed, 2004 was the first year of single-digit inflation in Turkey since 1972, making 2005 an apt time to reinforce the commitment to low inflation. And some of the onus for Turkeys reforms comes from its IMF-backed stabilization plan, agreed to after the 2001 economic crisis, and from its interest in joining the European Union (e.g. Financial Times, December 22, 2004). Similarly, in August 1997, the Russian government announced that the ruble would be redenominated as of January 1, 1998, with three zeros removed from the currency. This was intended to assure the public that Russias economic crises were behind it; inflation was on the decline, falling from 875% in 1993, to 200% in 1995 and further, to 15%, in 1997 (Washington Post, January 3, 1998). Ultimately, of course, the ruble redenomination did not mark the end to Russias hard times. In the wake of the Asian financial crisis, the ruble was hit by a speculative attack in August 1998; the Russian government became unable to repay its international debts. Although hyperinflation did not return to Russia, annual inflation spiked to 86% in 1999.5
Second, redenomination can be used directly in the stabilization process, as part of an effort to change citizens inflationary expectations. For instance, Israels most recent currency reform was undertaken in September 1985, with the creation of the new divided by 1,000 shekel. Israel was in the midst of a stabilization program at the time; but in August 1985, inflation was still at an annual rate of 386 percent (Central Bank of the Republic of Turkey 2004a). Similarly, in December 1993, the Yugoslav National Bank slashed nine zeros from the dinar, hoping to quell persistent hyperinflation (Financial Times, December 30, 1993).
The rationale for using redenomination in this way is that the physical act of using large-denomination notes has an impact on agents expectations. When a newspaper costs 10,000 lira, consumers and firms are constantly reminded that prices increased dramatically in the past, and they continue to expect such increases in the future. When the highest banknote in circulation is the 100 lira, on the other hand, citizens may grow more confident that a return to high inflation is unlikely. A sort of money illusion is assumed to operate in this case: zeros matter, and they drive inflationary expectations. Governments, then, could argue that redenomination is part of the stabilization package itself. Of course, the problem with this logic is that it may assign too great a role for the physical currency in the reduction of inflationary pressures; redenomination absent economic stabilization may well result in a new currency, but continued hyperinflation. Table 1 suggests that this has occurred on several occasions, including Azerbaijan (redenomination in 1992, but with hyperinflation in subsequent years) as well as some repeat redenominators, in which initial efforts at removing zeros failed to stem the inflationary tide.
If we consider the impact on credibility of redenomination, we should expect that the former type redenomination as an end to a reform process, rather than as an instrument itself of stabilization is more likely to reassure investors and citizens. The latter type is more a stopgap measure, implemented by governments that do not have the domestic political wherewithal to push through tough stabilization programs, or that do not face strong international pressures to do so. We expect, like Mas, that confiscatory redenominations will be much more the exception than the rule. In terms of credibility, then:
5 Also see Bernholzs account of Bolivias (1985-1986) stabilization and subsequent (1987) redenomination.
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Hypothesis 2: Redenomination is more likely following a period of high inflation and a subsequent stabilization. A dramatic downward movement in inflation increases the probability of a redenomination. This is particularly likely in countries that are more open to international capital flows, that are under an IMF adjustment program, and that have politically independent central banks.
Domestic Politics. The use of redenomination as a means of improving credibility is ultimately an account rooted in domestic politics. Governments want to keep inflation low because they are rewarded by voters for strong economic performance, and low inflation helps the economy. Alternatively, governments want to impress international markets, as this allows them to borrow more cheaply and to attract foreign investment, which in turn facilitates government spending and domestic economic growth. All of this assumes that governments are responsive to the views of citizens, which may be more true in democracies.
Beyond this broad claim, how might domestic politics matter? First, in democracies, the electoral calendar can be an important determinant of the timing of redenomination. If governments want to signal to voters in the pre-election period that times have changed, redenomination could be more likely as elections approach. At the same time, however, redenomination can be seen as an admission of failure the government, or some past government, allowed rampant inflation and the deterioration of the local currencys purchasing power in world markets. Governments may be hesitant to remind voters of such policy mistakes, just as they are hesitant to devalue just before an election (Frieden et al 2001; also see Leblang 2002). Once elected, with the next election in the more distant future, these same governments should be more willing to redenominate particularly if they can blame the need for redenomination on their predecessors (Edwards 1996, Leblang 2003).6 Moreover, concerns about redenomination as an admission of failure may be particularly pronounced with single-party governments; coalition partners can share blame for past policy mistakes, while single party governments have difficulty avoiding blame.
Hypothesis 3: Redenomination is more likely immediately after an election (or with many years remaining until the next election), less likely immediately before an election, and more likely in more fractionalized political systems.
Second, we might expect an ideological dimension to decisions to redenominate. If redenomination has no distributional consequences, then it is difficult to make a case for the role of ideology. But, if redenomination does sometimes succeed in lowering (or helping to lower) inflation, or if it occurs in tandem with an inflation stabilization program, then it will benefit creditors and harm debtors (e.g. Leijonhufvud 2000). As such, we might expect left-leaning governments to be less inclined to redenominate than their right-leaning counterparts. Moreover, if we expect that left governments are generally less responsive to international market pressures than other governments, we might also see an ideological effect on redenomination. Leblangs (2002) study of speculative attacks against fixed exchange rate systems, for instance, finds that such attacks are more likely under left governments, because markets view such governments as less committed to defending the currency. Such a hypothesis
6 On elections and the selection of stabilization programs, also see Schamis and Way (2003); they argue that exchange rate-based stabilizations (currency reforms) are more likely in the pre-election period, while money-oriented stabilizations are more common just after elections. We might also expect that governments are more likely to redenominate when governing as part of a coalition, because each party can blame past policy mistakes on other members of the coalition. See Section III.
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assumes, of course, that left governments are more interested in defending the interests of their constituents than in demonstrating to financial markets that they are trustworthy.
Hypothesis 4: Redenomination is less likely, all else equal, when left-leaning parties are in office, and more likely when right-leaning politicians hold office.
Third, when redenomination is seen as taboo, governments are less likely to employ it. But, if redenomination has been used by past governments or by the same government in previous years it may become less tainted, less an admission of policy failure. As a result, I expect that the probability of redenomination at a given point in time is higher in countries that have employed redenomination in the past.7
Hypothesis 5: Redenomination is more likely in nations where it has been used in the past. The total past experience with redenomination increases the hazard of its use.
Identity and money. Many observers view money largely as a medium of exchange: territorial currencies are instruments that facilitate transactions in the economy and assist governments in macroeconomic management, while also providing revenue at the time of printing (seignorage). Others take a broader view of national currency: it not only facilitates economic interactions, but also affects citizens identity and, subsequently, the legitimacy of the national government (e.g. Cohen 2004, Helleiner 2003, McNamara 2005).
The latter view is rooted in the analysis of money as a social phenomenon. For instance, sociologist George Simmel argues that the use of money does not express numerical calculation but rather allows it (quoted in Woodruff 1999, p. 16). Exchanges between citizens can occur without money, but money allows citizens to quantify exchanges, and to seek out parity in transactions. Moreover, monetary transactions help to create community, as a currency draws together individuals who use the currency and who assume that others in the community will accept the currency (Simmel 1907, Woodruff 1999; also Polanyi 1957). Money, then, can serve as a means of creating or cementing political identities (Helleiner 2003, McNamara 2005). Along these lines, a major goal of territorial currencies in the nineteenth century was to build up the nation, as far as possible, as a unified economic and political community
(Cohen 2004, p. 5).8 Similarly, Woodruff (1999) argues that the widespread use of barter and the emergence of surrogate monies in Russia in the early 1990s retarded efforts to create a unified market economy. Once the government lost its monopoly on monetary control, its overall capacity to govern the economy diminished substantially.
Decisions about the denomination of money therefore could influence citizens views of the market and of their country. And, as the denomination of currencies changes and
7 The opposite claim may also be plausible: citizens are willing to tolerate one redenomination, but repeated redenominations may drive them away from the national currency so that past redenomination renders future redenomination less likely.
8 The nation-building motivation also may explain why some governments choose to leave their currencys names largely unchanged, despite redenomination. For instance, in Turkey, the Lira expression has been kept unchanged when selecting a name for the new currency owing to its being an already accustomed term, the unique currency unit valid for the Republican period, and its being identified with the countrys name. (Central Bank of the Republic of Turkey 2004). On other occasions, governments choose different names for their currencies (e.g. moving from pesos to australs), perhaps to convince citizens and investors that they are making a fresh start, or perhaps to avoid confusion in countries with repeat redenominations.
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particularly as their denomination comes into question citizens views of the currency and the market also will evolve. This logic suggests that governments will worry when citizens come to view their currencies as diminished in value, both economically and symbolically. The economic aspect ties into the discussion of credibility above: governments want citizens to hold the domestic currency, as this makes domestic economic management much easier, and as it may tie the interests of citizens more tightly to that of the central government (Helleiner 2003).9 And the best means of convincing residents to hold the territorial currency is to boost its credibility (Cohen 2004). Prior to its recent redenomination, Turkey cited this reestablishing public confidence toward the national currency as one of several benefits to removing zeros from the lira (Central Bank of the Republic of Turkey 2004a).
The symbolic aspect adds to this a worry that when citizens have disdain for national money when, for instance, they prefer instead to hold dollars they may develop disdain for the national government or for their national identity.10 Problems with the currency, resulting from hyperinflation and manifest in multi-digit local currency/dollar rates, may spell problems for the governing coalition or even for the survival of the nation. Cohen argues, for instance, that when widespread currency substitution occurs,
an instrument that was intended to symbolize the power and nobility of the nation becomes instead a daily reminder of inadequacy and impotencenot sound currency but funny money, an object of derision and disrespect. Governments that issue such currencies are not apt to command much respect, either (p. 22).
In some cases, near-full dollarization of the economy ensues, either de facto or de jure. 11 If concerns about the symbolic dimension are accurate, when citizens begin to (or threaten to) engage in widespread currency substitution, governments will be more apt to redenominate.12 Currency substitution, in turn, tends to be driven at least initially -- by high inflation (Feige et al 2002, Leijonhufvud 2000). The identity mechanism, then, also provides another means by which Hypothesis 2 should hold. Given the difficulty of measuring the level of foreign currency substitution in a cross-sectional time-series, the indirect effect of currency substitution (via inflation and high local currency/dollar ratios) may be easier to observe empirically.13
9 For instance, in the immediate post-WWII period, US officials (including Robert Triffin) advised Latin American governments to eliminate the use of foreign currencies within their territory wherever that practice was still widespread (Helleiner 2003, p. 191), as a means of ensuring that the central bank had a monopoly on the currency and, therefore, could develop a strong and independent monetary policy.
10 Along slightly different lines, Towers and Borzutzky (2005) report that many interviewees in El Salvador expressed a sense of loss of a cultural symbol (p. 50) after dollarization was legalized (2001).
11 De facto, or unofficial dollarization, involves the substitution of any foreign currency for the domestic currency, without foreign currency being recognized as full legal tender by the national government. Official dollarization, which is less common, involves recognition as legal tender. On the costs and benefits of dollarization, see Balino et al (1999), Berg and Borenszstein (2000), Feige et al (2002), Towers and Borzutzky (2005).
12 The reverse might also be true: where citizens have great respect for their national currency, they will be more hesitant to substitute away from it. While Germans with a low-denominated, stable currency -- were quite reticent to give up the deutsche-mark in the mid to late 1990s, Italians with multiple zeros at the end of high-circulation banknotes -- were quite happy to do so.
13 Balino et al (1999) report annual data for 1990-1995 on one measure of dollarization, the ratio of foreign currency deposits to broad money. Their data exist for as many as fifty countries in 1995, and for as few as 18 nations in 1990. Feige (2003) estimates foreign currency holdings in 25 transition nations for 2001; Feige et al (2002) provide similar estimates for 13 Latin American countries, for 1998.
11
We also expect that currency substitution will be more widespread as financial globalization intensifies. Financial globalization places national currencies into direct competition with one another, and financial openness allows citizens to engage more easily in currency substitution (Balino et al 1999, Cohen 1999, 2004). A recent study of currency substitution, for instance, reports that in the mid-1990s, foreign currency notes accounted for 20 percent or more of the local money stock in more than thirty nations; another study cited 18 nations in which foreign currency comprised at least 30 percent of the broad money supply (Krueger and Ha 1996; Balino et al; cited in Cohen 2004, pp. 13-14).
Hypothesis 6: Redenomination is more likely, all else equal, where foreign currency substitution is more prevalent in the domestic economy. This is more likely in nations with high inflation, with high local currency/dollar ratios; and foreign currency substitution is more likely after 1989 (as financial globalization expands) than before.
The potential symbolic link between currency and respect for the national government also suggests that different types of societies will be more or less willing to engage in redenomination, as a means of reestablishing the value of their territorial currency. We might expect that, in heterogeneous societies, where building a common national identity is more challenging, governments will be particularly anxious to promote the use of national money. And in newly independent nations, where the national identity is quite nascent, governments will want to ensure that citizens see the territorial currency as credible. In both cases, then, when the need to redenominate presents itself, governments will be more apt to act.
Hypothesis 7: Redenomination is a more likely response to economic problems in more heterogeneous societies, and in younger nation-states.
In the following section, I offer an initial assessment of the various rationales for redenomination. I do so using survival analysis, which estimates a nations risk of redenomination, and the contribution of various independent variables to that hazard. The following section also discusses the operationalization of the main independent variables.
III. Statistical Analyses and Results
The dataset includes developing and transition economies during the 1960-2003 period. Many countries enter the dataset after 1960, because they do not gain independence until later in the period. Country-years that coincide with official dollarization, either fully or nearly, are omitted from the analysis.14 I also include Portugal, Spain and Greece long classified as part of emerging Europe until they join EMU (1999 for Portugal and Spain, 2001 for Greece). This results in a dataset of 5,736 country-years although, for many variables, missing data render the number of cases included significantly smaller.
The aim of the analysis is to estimate the correlates of redenomination: which variables serve to increase or to decrease the likelihood (or the hazard) that a government will redenominate its currency (failure, in the language of event history analysis). To do so, I employ Cox regression, which uses a partial likelihood estimation method to derive a baseline hazard rate and to assess the effect of covariates on this rate. Additionally, redenomination is a phenomenon for which repeated events are possible; that is, it is possible that a government will drop zeros from its currency several times during the period under observation (in fact, we
14 I rely on the list provided by Cohen (2004): Ecuador from 2000, El Salvador from 2001, Kiribati from 1943, Kosovo from 1999, Nauru from 1960, and Panama from 1904.
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assert in Hypothesis 4 that experience with redenomination renders it more likely in the future). Were we to exclude countries from the analysis once they experience their first redenomination, as many event history analyses do, we would lose an important set of observations, and this might bias the results.
Therefore, I use a duration model that allows for repeatable events. When a country redenominates, it does not exit the sample, as future redenominations remain possible. This model, the conditional risk set model, assumes that the baseline hazard for each failure (per country) is different, while the coefficient estimates are the same across the entire set of observations. The conditional risk model (proposed initially by Prentice, Williams and Petersen 1981; also see Box-Steffensmeier and Jones 2004, Box-Steffensmeier and Zorn 2002, Cleves 1999) also assumes that a country does not become at risk for a second redenomination until it has experienced the first redenomination. For this model, the ordering of events matters (first failures are taken to be different from second failures), and the time to failure count begins anew once a redenomination occurs. The hazard models, therefore, are estimated as stratified Cox models, with stratification according to how many failures have already occurred for a given country.15 Furthermore, given that the use of cross sectional time-series data can lead to problems with the independence of within-country observations, I employ robust variance estimation (the Lin and Wei estimator); and the standard errors are adjusted for clustering by country. Finally, in specifying the models, I am conscious of the relatively small number of failures present in the dataset; many statisticians (e.g. Allison 1984) recommend that covariates be limited to one-fifth to one-tenth of the number of failures.
Tables 2 and 3 reports results from several hazard models, designed to test many of the hypotheses developed in Section II. The coefficients reported are exponentiated, so that they provide a direct estimate of the contribution of each covariate to the hazard rate. Estimates above 1.0 indicate an increased hazard (countries are [estimate-1] times more likely to redenominate), while estimates below 1.0 reflect a diminished hazard. The first model is a basic model that includes three widely available variables (inflation, democracy, and being under an IMF arrangement), and that assess the intuitions contained in Hypotheses 1 and 2. The inflation variable is used to measure the need to redenominate; it captures the annual percentage change in consumer prices. The models reported in Table 2 employ the natural log of inflation, which addresses the issue of extreme values of inflation during hyperinflationary periods. Other types of inflation variables, including inflation and the three year moving average of inflation, result in estimates of similar significance and similar size (in terms of effects on hazard rates).16 The rate of growth of the money supply also proxies for inflation.17
Insert Table 2 here
Inflation. If we add an inflation change variable to the basic model, measuring the annual (or the t-2 or t-3) movement in the exchange rate, we find that it is associated significantly with the hazard of redenomination. Its exponentiated coefficient, however, is 0.99, suggesting little effect (that is, an effect very close to 1) on the overall likelihood of
15 Estimation is performed in Stata 8, using stcox, with stratification by a countrys number of redenominations. Country-years with no failures are classified as sequence 1, with one failure as sequence two, and so on. All models use the Efron option for dealing with ties.
16 Also, models using only inflation data from the World Development Indicators, as opposed to data supplemented (for post-Communist nations in the early 1990s) with observations from the Economist Intelligence Unit produce very similar results. I elect to use the supplemented inflation data, as this increases the number of country-years by approximately 100.
17 In the models estimated, inflation has a correlation of .61 with the rate of money growth.
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redenomination. Analysis of the scaled Schoenfeld residuals for such models, however, indicates that rho (the correlation between the scaled residuals and the rank of survival time) is significantly different from zero; models including this indicator, then, are likely to violate the proportional hazards assumption. As a result, we focus on models including the overall level of inflation.
Another potential measure of the need for redenomination is the exchange rate; specifically, the presence of excess zeros is indicated by a countrys US dollar to local currency exchange rate. This rate varies markedly across countries and over time, reflecting the fact that some currencies are nearly on par with the dollar, while others are worth very little compared to the dollar. When I include the natural log of the exchange rate variable in the models reported, it rarely is statistically significant. Interestingly, there is only a small positive correlation (.16) between inflation and the dollar/local currency rate. Inflation rates turn out to be a much better correlate of the hazard of redenomination. They support the contention that inflation, or an inflationary past, makes redenomination more likely.18
Democracy. The main model also includes a measure of democracy; this variable assesses the impact of democracy on the likelihood of redenomination. Are democracies more likely to redenominate following an inflationary episode, as they aim to please voters? Or are they less willing to admit to past policy mistakes? Or do all types of regimes have their reasons albeit potentially different ones for employing redenomination? We employ the POLITY2 measure (ranging from -10 for full autocracy to 10 for full democracy, with adjustments made for transition country-years) in the basic Cox model. The democracy variables exponentiated coefficient is slightly larger than 1, indicating that increases in democracy are associated with increases in the likelihood of redenomination. In Model 1, however, this estimate is not statistically significant. This may be consistent with Mas (1995) claim: it is not that democracies and autocracies vary in their use of redenomination, but that they vary in their motives (to bid farewell to a past inflationary crisis, versus to extract resources from society). An alternate dichotomous measure of regime type (from Cheibub and Gandhi, an updated dataset of that used in Przeworski et al 2000) also results in a hazard rate estimate that is slightly greater than 1, but statistically insignificant.
Might it be, then, that the effect of inflation on the probability of redenomination is contingent on the degree of democracy? If we add an interaction term (democracy*inflation) to the basic model, the hazard ratio estimate for democracy remains slightly greater than 1, but insignificant. The interaction term, which is largest when democracies experience high inflation, and smallest when autocracies experience low inflation, displays a statistically significant hazard ratio. The ratio, however, is 0.99997, indicating that democracies are slightly less likely to redenominate in the face of high inflation, but that the difference is a very small one. This may provide initial evidence that democratic governments are disinclined to redenominate because of concerns about the publics response, but a one percent change in the interaction term is predicted to generate a very small (.00003) change in chance of redenomination.
IMF Pressure. The third covariate included in Model 1 is a dichotomous variable, indicating whether a country is under an IMF program during a given year. This variable assesses one form of external influence on redenomination (and on economic reform more generally): direct pressure from the IMF, via some sort of structural adjustment lending. The significant hazard rate estimate (2.55) suggests that IMF programs have a strong influence on a
18 The rate of economic growth per capita, which is correlated positively with inflation (.54) also influences the hazard of redenomination. When included in the basic model, its exponentiated coefficient is 1.05, significant at a 95% confidence level.
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countrys chance of redenominating in a given year. An alternate variable, the total number of years (since 1960) that the country has been under an IMF program, also produces a statistically significant hazard rate estimate. With each additional year (total) of IMF oversight, the probability of redenomination increases by nearly 5 percent. Given that countries in the sample are, on average, under IMF programs for an average of 3 (and up to 36, of 43) years, this effect is substantively important.
The IMF variables, of course, may partially be proxies for past economic troubles: we would expect nations under IMF programs to have some past (and/or current) experience with high levels of inflation. The correlation, however, between contemporaneous inflation and IMF program participation is only .11; the inclusion of both variables does not generate estimation problems. This result also suggests that, despite recent concerns about its effectiveness in helping countries to promote economic growth (e.g. Vreeland 2003), the IMF does influence redenomination decisions and, perhaps, inflationary outcomes (e.g. Stone 2002). If we add to Model 1 an interaction term between IMF programs and democracy, we find no evidence that the effect of IMF programs varies according to regime type. The exponentiated coefficient is greater than one (indicating an increase in the hazard rate as the variable increases), but it is not statistically significant. In Model 1, the standard test of the proportional hazards assumption (generating the rho for each covariate, where the null hypothesis is that rho is equal to zero) does not reveal any problems. There are no grounds for rejecting the proportionality assumption.
External and Credibility-Related Variables. The next set of effects to analyze, as suggested by Hypothesis 2, is credibility-related variables. Theoretically, we want to measure the extent of international pressure, or pressure for market-friendly policies. Participation in an IMF program is one means of doing so; but we also could include the degree of openness to international capital flows, the actual amounts of international capital flows, or the existence of a politically-independent central bank (as the latter tend to be market-oriented in ideology). The difficulty with these models, given the time period and countries contained in the dataset, is finding appropriate measures of international influence. One possibility is to measure flows (e.g. capital inflows to GDP) as a measure of international pressure; but flow measures say little about the cost of capital (e.g. risk assessments, or interest rates), and they assume governments react to actual, rather than potential, capital inflows (see Mosley 2003). Sovereign interest rate data, though, is difficult to use in a comparative context, given variation over time and across countries in the maturity structure and currency denomination of government bonds. Another possibility, then, is to measure legal restrictions: is capital allowed to exit and enter freely? Does the exchange rate float, so that governments might worry more about market reactions to their policies? Such potential for exit should generate a capacity for voice. A final possibility, and one rooted more in domestic politics, is to use a measure of central bank independence.
I explore several of these possibilities and report one set of results in Model 2. The reported model includes a measure of international capital flows (scaled to GDP) as well as a measure of the type of exchange rate regime (higher values indicate more floating). Both maximize the number of available country-years (although it falls relative to Model 1), and this model meets both the global and the covariate-specific tests for proportionality. While the estimates for the other three independent variables remain similar in signs and significance, neither international variable is statistically significant. These results, then, fail to provide evidence that external market pressures beyond those, of course, that come through the IMF drive redenomination decisions.
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Of course, neither measure captures international influences perfectly: the capital flows indicator includes all types of capital (short and long term), and it is likely that different types of flows (e.g. equity vs. FDI) will affect government policymaking in different ways. Moreover, the exchange rate regime could cut either way, assuming (and this is an assumption, given the time frame) capital mobility. Governments with fixed rates may worry more about external pressures, as they need to impress markets, lest they face a speculative attack on their peg. Alternatively, governments with flexible rates may worry about their currencys value, particularly if they are more trade dependent.
In other estimations, then, we employ different credibility-oriented variables. For instance, Simmons and Elkins (2004) employ measures of capital account openness (a dichotomous indicator) and of central bank independence. Including these measures constricts the domain of our analysis from 1960-2003 (although some countries enter later, given later dates of independence) to 1967-1996. When we do so, the results suggest that capital account openness positively and significantly affects the hazard rate for redenomination: countries with full market openness are more than four times as likely to redenominate as others. The estimated hazard for central bank independence, on the other hand, is not statistically significant. Our confidence in the capital mobility result, however, is low: models that include this indicator (either alone, or in conjunction with central bank independence) have acceptable variables for the overall model test of the proportional hazards assumption, but not for the covariate-specific tests. We cannot be sure that the estimation meets the assumptions of the Cox model and this, combined with the smaller set of observations for which data exists, lends caution. Likewise, two final measures of external economic openness a countrys ratio of trade (imports plus exports) to GDP; and its current account deficit or surplus to GDP -- do not significantly influence the hazard rate.19
Electoral and Party Politics. Turning more fully to domestic political variables, Hypothesis 3 suggests that there is a link between the timing of elections and redenomination, as well as between the degree of parliamentary fractionalization and the likelihood of redenomination. To test the first of these, I rely on various measures of national elections: a parliamentary election in a given year (or in the next year), a presidential election in a given year, or either type of election. I also create a variable that measures the number of years until the next election (of either sort), as a means of assessing the extent to which governments must worry about the ballot box when considering redenomination.
The election variables tend to be somewhat collinear (.5 to .6) with the dichotomous under IMF program variable, so I exclude the IMF variable from Model 3 (as well as from some subsequent models). Model 3 includes a lagged election measure; here, I use a measure of either parliamentary or presidential elections. In other specifications, I substituted the parliamentary or the executive variable for the any election variable. In all three cases, the estimated hazard rate for lagged elections is less than one (meaning that an election in the previous period decreases the hazard of redenomination, so that a country-year that has just experienced an election is approximately half as likely to redenominate) and is statistically significant.20 It also is interesting to note that the democracy variable becomes significant in Model 3. Again, analysis of the Schoenfeld residuals indicates that the covariates in this model, and the model overall, does not violate the proportional hazards assumption.
19 In both cases, however, the democracy variable displays a significant (at a 94% level of confidence) association with the hazard of redenomination, and neither model violates the proportional hazard assumption.
20 For lagged parliamentary elections, the exponientiated coefficient is 0.48, with a 92% level of confidence; for lagged executive elections, the exponientiated estimate is .40, at a 95% level of confidence.
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Interestingly, contemporaneous election variables (an election in the current period) also generate exponentiated coefficients (hazard rates) of less than 1, but they are not statistically significant, either when included in place of, or along with, the lagged election variable. Elections appear to have effects, but only after they occur. Moreover, the election effect directly contradicts Hypothesis 3: once an election is over, we predicted that governments would be more likely to redenominate, following the logic of redenominate and blame ones predecessor. In fact, governments are less likely to redenominate on the heels of an election. This may reflect the technical fact that, in some cases, there is a delay between a governments decision to redenominate and the actual redenomination, particularly for redenominations that address long-standing (or long-since-resolved) problems. In this case, the result on the lagged election variable may be more about the practicalities of redenominating just after an election rather than about political calculations.
Political calculations, however, could play a role: governments may avoid redenomination early in their term because they worry that it could erode public confidence (if the public disapproves of the dropping of zeros) at a time when they want voters support for other items on the economic agenda. One means of distinguishing between political and technical effects of the election variable would be to recode the failure date, using the date of the decision to redenominate rather than the date on which it was effective. Another way of assessing the importance of electoral calculations is to consider the effect of the time until elections on the hazard rate of redenomination.
The time until elections variable measures the number of years until the next election; it is zero in election years. This variable assumes, of course, that politicians can anticipate when the next election will occur, which should be the case with fixed electoral calendars, but may not be true with endogenous election timing. When added to Model 3 (which also includes the degree of democracy, the rate of inflation, and the occurrence of an election in the previous year), the time until elections variable is slightly greater than 1 (1.03), but is not statistically significant. This result provides little support, then, for the notion that governments are more (or less) likely to redenominate when their electoral time horizons are long.
Interestingly, though, if we include both the time until elections variable and an interaction term (time until elections*inflation), both the time and the interaction measures are statistically significant, as are the democracy and inflation variables (again, the IMF variable is excluded because of collinearity concerns). This model is reported in Column 4 of Table 2. Time until the next election, on its own, reduces significantly the hazard of redenomination.21 Hence, governments are less likely to redenominate earlier in their terms, just as the lagged any election variable suggests. The interaction variable, however, increases the hazard of redenomination. Where governments have both high levels of inflation and a long electoral time horizon (thereby generating the largest values of the interaction term), they become more at risk for redenomination.
This is broadly consistent with the expectations developed in Section II: governments with the need to redenominate (higher inflation) may be more inclined to do so earlier in their terms (with more years until the next election). This result also supports the conclusion that the lagged election coefficient which remains statistically significant reflects the practical difficulties of redenominating just after an election, rather than a political resistance to doing so.
21 If we use years left in the chief executives term (YRCURNT, from DPI), the result is similar: the variable is associated with a statistically significant reduction in the hazard of redenomination. Such results, however, are based on fewer (1756) country-years than those reported in Model 4.
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The final element of Hypothesis 3 involves the degree of fractionalization in the political system. Fractionalization may push in two different directions. On the one hand, when facing problems of fractionalization of keeping together a diverse parliamentary coalition, for instance governments may lack the political will to implement redenomination, despite economic pressures to do so. This is somewhat akin to the notion that financial markets are less confident that coalition governments will defend a fixed exchange rate (e.g. Leblang 2002). On the other hand, a fractionalized governing coalition (including many parties) provides cover to political parties. They can implement policies for which no coalition member wants to be held responsible, and each party can blame the policy on another coalition member (e.g. Pacek and Radcliffe 1995; also see Mosley 2003, Chapter 5).
Insert Table 3 here
To assess the impact of fractionalization on redenomination, I estimate a model that includes a measure of government fractionalization (in the legislature). This measure is a Herfindahl index for the governing coalition, from the Database of Political Institutions (DPI, from Beck et al 2001, updated 2004). The DPI contains observations for a wide set of developing and transition economies, but its coverage begins in 1975; as a result, this model relies on fewer observations, and includes some additional left censoring of the data. Because of a high correlation (-.63) between the fractionalization measure and the inflation variable, this model is estimated without inflation. In this model (Model 5, reported in Table 3), higher values of the Herfindahl index, indicating less fractionalization, are associated with a significantly reduced hazard of redenomination. Put differently, when the government coalition is more fractionalized (spread across a greater number of legislative parties), redenomination is more likely, all else equal. Furthermore, if we include instead a dummy variable for presidential (vs. parliamentary) systems, the hazard estimate is statistically significant, and it suggests that redenomination is less likely in presidential systems.22 These results, then, give credence to the blame avoidance view of fractionalization rather than to the lack of political will view.
Ideology. Another element of domestic politics is ideology: contrary to predictions regarding the end of ideology, government partisanship continues to be an important influence on many economic policy choices, in both the developed and the developing world (for instance, see Brooks 2002). We might expect, then, that government ideology plays a role in determining the hazard of redenomination. Hypothesis 4 suggests that left-oriented governments are less likely to employ redenomination, while right-oriented governments are more inclined to do so.
Data on government ideology are taken from the DPI, which covers the 1975-2000 period. When included in the Cox models, the ideology variables produce mixed results. On the one hand, hazard rate estimates for the presence of left parties in government (either the chief executives party, or the largest participant in the parliamentary governing coalition) are below 1, but are statistically insignificant. And, where the main opposition party is a left party, the hazard rate is greater than one, but also insignificant.
22 This model, which is not reported in Table 2, is based on 3,373 observations. It includes the inflation variable, but excludes under IMF. The hazard rate estimates on inflation (2.38), democracy (1.06), lagged elections (0.47) and presidentialism (0.53) are all statistically significant, and the model satisfies the proportionality assumption. A model including a proportional representation dummy variable produces similar results: that variables hazard estimate is 3.53 (also statistically significant), indicating that proportional representation systems have a 253% larger hazard of employing redenomination.
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On the other hand, hazard rate estimates for the presence of right parties23 are statistically significant and greater than 1 (2.05 in Model 6, using right executive and 2.21 for a model with right government party). And, along similar lines, the hazard estimate for the ideology of the largest opposition party is significant and less than one (0.22). The former result suggests that, when right parties dominate the government, the chance of redenomination expands; and when right parties are in opposition (implying a left or center party in office), redenomination is less likely. If we consider right parties to be market-friendly, we can take this as indirect evidence of market-based influences on the decision to redenominate. Of course, the results reported in Model 6 are based on a relatively small set of cases (and on ideology scores, which are sometimes difficult to assign in underdeveloped party systems), lessening our confidence in the validity of these results. They do suggest, however, that there may be an ideological component to choices regarding the using and timing of redenomination.
Repeated Redenomination. Hypothesis 5 suggests that redenomination is more likely if it has been used in the past. Governments hesitation regarding dropping zeros is reduced when past governments have done so. To test this intuition, I add a number of past redenominations variable to the main model. This variable records the number of times (since 1960) that a country has removed digits from its currency. Again, I omit the under IMF variable from the model, given its collinearity with the redenomination count measure.
The results of this estimation (Model 7) are reported in Table 3. As before, the inflation and election variables are statistically significant. The past redenominations variable also is significantly associated with a much greater hazard of redenomination. This relationship, of course, is due in part to economic policy: as the positive correlation between the IMF program variable and the redenomination count suggests, nations economic difficulties often persist over time. Countries with the need to redenominate in 1970 may again have this need in 1980. The hazard estimate also leaves open the possibility, again, for political considerations to affect redenomination: once the redenomination dam has been broken, it becomes a more viable political option. This assertion could be tested in future work using case studies of (the consideration of) redenomination, as well as assessing public opinion data before and after various rounds of redenomination (or in countries with similar economic problems, but with more or less redenomination experience).
Currency and Identity. The final two hypotheses developed in Section II concern the relationship among confidence in currency and government, national identity and redenomination. Along these lines, hypothesis 6 suggests that foreign currency substitution will influence positively the hazard of redenomination. Unfortunately, data on foreign currency substitution is not available for most of the country-years included in the analyses. One means of assessing these hypotheses would be the analysis of public opinion data: holding all else equal, are changes in the inflation rate or the dollar to local currency rate correlated with changes in approval of the government, or changes in affinity with the nation-state? Or, in a cross-sectional sense, do citizens of nations with higher levels of foreign currency denomination have significantly lower levels of confidence in their governments? The latter analysis would necessitate only cross-sectional (as in Feige et al 2002, Feige 2003) data on currency substitution, rather than a fuller set of time series data.
Another possibility is to use, as a very rough proxy, the post-1989 (versus 1960-1989) period; despite cross-national variation in financial openness, the early 1990s often are treated as the advent of contemporary financial openness. With post-Communist transitions and post-
23 The left party and right party measures are strongly correlated with one another, but not perfectly so. In some cases, a centrist party is in office, and all measures are coded as zero for centrist parties.
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debt crisis restructurings, nations were increasingly exposed to the possibility of foreign currency substation. Citizens that had lost confidence in domestic currencies were more able to obtain foreign currencies. The addition of a post-1989 variable to the basic model, however, does not generate a statistically significant hazard rate estimate. I leave the further testing of Hypothesis 6 for future research.
Lastly, Hypothesis 7 suggests linkages between the age of the nation-state and redenomination, and between the social heterogeneity and redenomination. I test the former by including the logged value of a countrys years since independence in the duration model. The hazard rate is 1.08, suggesting a slightly elevated hazard of redenomination as states age, but the estimate is not statistically significant. Interacting the state age variable with inflation, or with ethnic heterogeneity, also does not result in significant estimates. One possibility is that state age cuts both ways: on the one hand, newer states must worry more about national identity, making them more likely to redenominate as a means of boosting currency (and, therefore, identity). On the other hand, newer states may hesitate to reform or replace one of the symbols of their independent status a national currency. This impulse might then deter redenomination in the face of economic troubles.
I turn, then, to a model that considers the impact of social heterogeneity on the risk of redenomination, both on its own, and in conjunction with the rate of inflation. This model (Model 8) suggests that social heterogeneity may play a role. The effective number of ethnic groups (which varies across countries, but not over time) in a nation is significantly associated with redenomination; as ethnic diversity increases, the hazard of dropping zeros decreases. Ethnic heterogeneity on its own points in the direction opposite Hypothesis 7. But when interacted with inflation high inflation in the presence of ethnic diversity the diversity indicator produces a statistically significant, and increased, hazard of redenomination. Inflation in the presence of social heterogeneity, as well as being under an IMF agreement,24 increases the hazard of redenomination. The results are consistent, therefore, with the assertion that governments of heterogeneous societies may be particularly worried about the erosion of public confidence in their currencies (and, therefore, will be quicker to redenominate).
IV. Conclusions and Future Directions
This paper generates a set of hypotheses regarding the role of political factors in governments decisions to redenominate their currencies. In a way, this is a most difficult case for politics: currency redenomination may be seen as a largely technical issue, in that if done in a way that allows the public sufficient ability to exchange old cash for new, and if it has little impact on inflationary expectations it has few real effects. Redenomination often comes at the end, rather than at the beginning, of a process of economic reform; so it may be viewed as much less contentious than other economic policy choices.
At the same time, however, not every nation with an objective need to drop zeros from its currency does so, and not every nation does so at the same pace. This suggests that there are causal pathways through which politics may influence redenomination decisions. It is not that economic factors do not play a role, but that political variables also can. I discuss three overlapping mechanisms through which politics may affect redenomination concerns about credibility (internationally as well as domestically), factors in the domestic political economy
24 Again, because of collinearity, I do not include the lagged election variable in the model at the same time as the IMF variable. If, however, I substitute the IMF variable for the election variable, the results for other covariates remain very similar. Like other models reported in Tables 2 and 3, this models covariates satisfy the proportional hazards assumption of the Cox model.
20
(election timing, government time horizons, partisanship, and fractionalization), and the influence of money on social identity.
The statistical analyses presented in Section III often an initial assessment of these hypotheses. On the basis of the redenomination experience of developing and transition nations, I conclude that inflation contemporary or past is an important predictor of the likelihood of redenomination. I also find that pressure from the IMF, via a loan arrangement, increases the likelihood of redenomination (suggesting at least one area in which the IMF is effective). In terms of domestic politics, the degree of democracy is associated significantly, in some models and to a small degree, with redenomination. Perhaps because of the need to maintain public confidence in their currencies, democratic governments are slightly more likely to remove zeros.
Other domestic political factors generate stronger results: the odds of redenomination fall just after elections and when governments have longer time horizons (the opposite of what I predict in Section II). But when governments face the combination of high inflation and long remaining terms in office, the likelihood of redenomination grows. Put differently, governments in (economic) need of redenomination seem more likely to do it early in their terms, a wise decision if they expect redenomination to upset or confuse the public. Additionally, right governments are more likely than center or left governments to redenominate, perhaps reflecting some interest in market-pleasing policies. Moreover, governments characterized by greater fractionalization, rather than those marked by greater unity, are more likely to redenominate their currencies. One causal pathway for this result is the possibility that multiparty government facilitates blame avoidance.
The statistical analyses also suggest that there may be a link between social heterogeneity and redenomination, at least in the face of high inflation. While ethnically diverse societies are generally less at risk for redenomination, ethnically diverse societies experiencing high inflation are more likely to undertake a currency reform. This may, to some extent, hearken back to the linkage between multiparty government and redenomination. But it may also provide evidence of a link between currency and identity, and of the governments particular interest in maintaining confidence in their currencies in diverse nations.
These findings leave room for future research, both qualitative and quantitative. On the quantitative side, collecting better data on various political indicators would improve the validity (and the country-year coverage) of the analysis. Additionally, it would be useful to generate another measure of redenomination (specifically, of failure), based on the date of the (political) decision to redenominate rather than on the date that redenomination goes into effect. The size of this gap varies across countries, from weeks to over a year; for instance, the law regarding the new Turkish lira was passed on January 31, 2004, but the new lira was not introduced until January 1, 2005. If political factors are important, then a more politically-focused measure is justified.
The quantitative analyses also would benefit from the inclusion of other explanatory variables. Civil conflict, for instance, may play a role in redenomination, at least in some (and perhaps so in more heterogeneous) polities. Some of the redenominations in the dataset occur in nations riven by civil conflict -- Angola, Sierra Leone, Nicaragua, and Rwanda. While these countries often experience high levels of inflation, such redenominations may be motivated more by the governments desire to seize revenue, or to reduce the funds held by rebel groups, than by the desire to establish credibility or to stem currency substitution (Mas 1995).
21
Furthermore, estimations of the hazard of redenomination could be coupled with an analysis of public opinion data. For instance, does redenomination enhance governments credibility in the eyes of citizens? Are nations with higher levels of foreign currency substitution characterized by a lack of public trust in the government, or by lower levels of affinity with the nation-state?
Finally, research on this topic should address the broader question of how redenomination fits with other economic strategies. Does redenomination have real effects, in terms of altering expectations regarding (or even rates of) future inflation? Does it lead to improved capital market access and credibility, enhanced public trust in governments, and sustained stability of macroeconomic policies, as its proponents suggest? Presumably, policymakers anticipate these benefits when choosing to enact currency reform; but there are few systematic investigations of the effects of dropping zeros. We also might ask about alternatives to redenomination: rather than reform the national currency, governments could simply dollarize, as Ecuador and El Salvador have done in recent years. What, then, determines whether a government will abandon, or attempt to shore up, its currency? Such questions require that we consider the political motivations behind what seem to be very technical decisions how to assign numerical values to national monies.
22
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Armijo, Leslie Elliott. 1996. Inflation and Insouciance: the Peculiar Brazilian Game, Latin American Research Review 31: 7-45.
Balino, Tomás J. T., Adam Bennett, and Eduardo Borensztein. 1999. Monetary Policy in Dollarized Economies. IMF Occasional Paper No. 171.
BBC, July 1, 2005, Romanias Currency Gets Makeover. http://news.bbc.co.uk/2/hi/business/4642519.stm
Beck, Thorsten. George Clarke, Alberto Groff, Philip Keefer, and Patrick Walsh, 2001/updated 2004. "New tools in comparative political economy: The Database of Political Institutions." World Bank Economic Review 15(1): 165-176.
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Bernholz, Peter. 1995. Hyperinflation and Currency Reform in Bolivia: Studied from a General Perspective, pp. 227-254 in Pierre L. Siklos, ed., Great Inflations of the 20th Century: Theories, Policies and Evidence. Aldershot, UK: Edward Elgar.
Box-Steffensmeier, Janet M. and Bradford S. Jones. 2004. Event History Modeling: A Guide for Social Scientists (Cambridge: Cambridge University Press).
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Brooks, Sarah M. 2002. Social Protection and Economic Integration: The Politics of Pension Reform in an Era of Capital Mobility. Comparative Political Studies 35(5):491-525.
Central Bank of the Republic of Turkey, 2004a. Redenomination of Turkish Lira by Dropping Six Zeros. Available at http://www.tcmb.gov.tr/yeni/eng/index.html (accessed July 1, 2005).
_____. 2004b. Frequently Asked Questions on YTL. http://www.tcmb.gov.tr/yeni/iletisimgm/NTL_faq.htm (accessed August 9, 2005).
Cheibub, José Antonio and Jennifer Gandhi, 2004. Classifying Political Regimes: A Six Fold Classification of Democracies and Dictatorships. Dataset, Yale University.
Cleves, Mario. 1999. Analysis of Multiple Failure-Time Data with Stata. Stata Technical Bulletin 49: 30-39.
Cohen, Benjamin J. 2004. The Future of Money. Princeton: Princeton University Press.
23
_____. 1999. The Geography of Money. Princeton: Princeton University Press.
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_____, Vedran oić, Michael Faulend, and Velimir onje. 2002. Unofficial Dollarization in Latin America: Currency Substitution, Network Externalities and Irreversibility in James W. Dean, Dominick Salvatore, and Thomas Willett, eds., Dollarizing the Americas, New York: Oxford University Press.
Financial Times, 2004. Turkeys Chance: EU and IMF-Inspired Reforms Could be Transforming. December 22, 2004, p. 16.
_____. 1999. Japan Eyes Knocking Noughts off the Yen. November 19, p. 12.
_____. 1993. Belgrade Spirits away Zeros from Spiraling Dinar. December 30, p. 2.
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Frieden, Jeffry, Piero Ghezzi and Ernesto Stein. 2001. Politics and Exchange Rates: A Cross-Country Approach to Latin America. In The Currency Game: Exchange Rate Politics in Latin America, edited by Jeffry Frieden and Ernesto Stein. Baltimore: Johns Hopkins University Press.
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Mas, Ignacio. 1995. Things Governments do to Money: A Recent History of Currency Reform Schemes and Scams. Kyklos 48: 483-512.
24
Maxfield, Sylvia. 1997. Gatekeepers of Growth. Princeton: Princeton University Press.
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Democracy and Development: Political Regimes and Material Well-Being in the World, 1950-1990. Cambridge: Cambridge University Press.
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Simmons, Beth A. 1994. Who Adjusts? Domestic Sources of Foreign Economic Policy during the Interwar Years. Princeton: Princeton University Press.
Simmons, Beth A. and Zachary Elkins. 2004. The Globalization of Liberalization: Policy Diffusion in the International Political Economy. American Political Science Review 98: 171-189.
Stokes, Susan. ed. 2001. Public Support for Market Reforms in New Democracies. Cambridge: Cambridge University Press.
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Vreeland, James Raymond. 2003. The IMF and Economic Development. Cambridge: Cambridge University Press.
Washington Post. 1998. New Ruble has Russians Counting their Kopecks. January 3, p. A15.
Woodruff, David. 1999. Money Unmade. Ithaca: Cornell University Press.
25
Table 2: Stratified Cox Model Estimation Results, Part I
Variable
Basic Model
(1)
International Variables
(2)
Elections (3)
Time Horizons (4)
Inflation (log)
2.1910***
(0.2152)
1.9100***
(0.3119)
2.3313***
(0.2610)
1.9984***
(0.2787)
Democracy (Polity 2)
1.0276
(0.0236)
1.0309
(0.0295)
1.0431**
(0.0218)
1.0560**
(0.0230)
IMF Program
2.5772**
(1.0287)
6.5979***
(3.2443)
Exchange Rate Regime
1.0288
(.0788)
Capital Flows (Net/GDP)
0.0039
(0.0183)
Elections, Parliamentary or Presidential (Lagged)
0.4476*
(0.1711)
0.4159**
(0.1691)
Years until Election
0.8528*
(0.0745)
Years until Election * Inflation (log)
1.0551**
(0.0247)
LR Chi2
106.38
38.75
61.20
101.66
Prob<Chi2
0.00
0.00
0.00
0.00
Schoenfeld Global Test (Prob<Chi2)
0.2764
0.7526
0.9484
0.5695
N Failures
46
30
44
44
N Countries
131
95
131
131
N Observations
3496
2000
3470
3466
*10%, **5%, ***1% level of confidence.
Reported estimates are exponentiated coefficients (hazard rates).
Standard errors are robust (Lin-Wei estimator).
26
Table 3: Stratified Cox Model Estimation Results, Part II
Variable
Elections and Fractionalization (5)
Elections and Ideology (6)
Redenomination History
(7)
Social Heterogeneity
(8)
Inflation (log)
1.9534***
(0.3005)
2.3254***
(0.2549)
1.2406
(0.2003)
Democracy (Polity 2)
1.0387*
(0.0215)
1.0254
(0.0328)
1.0327
(0.0225)
1.0327
(o.0306)
IMF Program
2.2479**
(o.7636)
4.4582***
(2.1118)
Elections, either type (Lagged)
0.3503***
(0.1435)
0.4876
(0.2499)
0.4326**
(0.2031)
Fractionalization (Herfindahl Index, Governing Coalition)
0.4648*
(0.2134)
Ideology: Right Party Executive
2.0493*
(0.8362)
Past Redenomination (total count)
6.2821***
(2.7612)
Effective Number of Ethnic Groups
0.2438***
(0.1139)
Number of Ethnic Groups*Inflation (l0g)
1.4214***
(0.1380)
LR Chi2
18.34
21.91
82.01
77.14
Prob<Chi2
0.0011
0.0002
0.00
0.00
Schoenfeld Global Test (Prob<Chi2)
0.7853
0.3501
0.9773
0.6915
N Failures
38
31
44
38
N Countries
134
95
131
103
N Observations
2502
1358
3470
2889
*10%, **5%, ***1% level of confidence.
Reported estimates are exponentiated coefficients (hazard rates).
Standard errors are robust (Lin-Wei estimator).
27
Data Appendix
Capital Account Liberalization: A dichotomous measure, indicating whether a government restricted capital flows in a given year. Coding, where liberalization=1, is based on annual IMF volumes on exchange restrictions and controls. Data taken from Simmons and Elkins (2004).
Capital flows: net capital inflows, scaled to gross domestic product (both provided in current US dollars). Both indicators are taken from the World Banks World Development Indicators.
Central Bank Independence: from Simmons and Elkins (2004), a 0 to 1 scale indicating the degree of political independence of the national central bank. Higher values indicate more independent central banks; Simmons and Elkins take this data from Cukierman and from McNamara and Castros update of Cukierman.
Currency redenomination (failure variable): uses the list provided by the Central Bank of the Republic of Turkey 2004a; see http://www.tcmb.gov.tr/yeni/eng/index.html This source also indicates the number of zeros (ranging from 1 to 6) removed. Mas (1995) also provides a list of redenominations, as well as other currency reforms; his list spans the 1944 to 1994 period (see pp. 488-489, Table 1).
Democracy: Measured using the Polity IV dataset, Political Regime Characteristics and Transitions, 1800 to 2003, Monty G. Marshall and Keith Jaggers, principal investigators. http://www.cidcm.umd.edu/inscr/polity/. My estimates use the Polity 2 score, which is the combined Polity scale (-10 to 10, with transition codes -88 replaced with best estimates; -77 replaced as zero; and -66 as missing).
Elections: For 1975-2000, election dates are based on the executive election and legislative election variables in the Database of Political Institutions (these indicate the election month, in many cases). For elections prior to 1975 and after 2000, election years are collected from the International IDEA Voter Turnout Website (http://www.idea.int/vt/), as well as from www.electionworld.org, and (in a few cases) from national sources.
Ethnic heterogeneity: measured as the effective number of ethnic groups, which varies across countries, but not across years. This measure applies Laakso and Taageperas (1979) method, for calculating the effective number of political parties, to ethnic groups. Data on ethnic groups are taken from Minority Rights Group International (1997) and from Gurr (1993). The variable ranges from 1 to 11.32.
Exchange rate: average official exchange rate, US dollar to local currency, from International Financial Statistics. When redenominations occur, the IMF adjusts the exchange rate data to account for the change, so that all of a nations data reflect new currencies. Given the subject of this project, these readjustments were reversed. Where a country had a redenomination in January to June, data for the previous years are converted to old values. Where a country had a redenomination in July to December, data for the present year also are converted to old values. If the data source does not provide a month for the redenomination (e.g. the Democratic Republic of the Congo), it is assumed to have occurred in the first half of the year.
Exchange rate regime: Reinhart and Rogoffs fine exchange rate classification, annual measure. This variable ranges from 1 to 15, with 1 indicating the most fixed regimes, and 15 indicating the most freely floating. Data are available from 1946 to 2001. Carmen M. Reinhart
28
and Kenneth Rogoff, The Modern History of Exchange Rate Arrangements: A Reinterpretation, University of Maryland.
Government Fractionalization: from Beck et als Database of Political Institutions, the government Herfindahl index. This measures concentration (and fractionalization) by calculating the sum of the squared seat shares of all parties in the government. When there are fewer parties in the governing coalition, the index takes on higher values (with the index ranging from zero to one). When there are no political parties in the legislature, the variable is coded as blank. This variable is available for 1975-2000.
IMF participation: from Vreeland (2003), as updated (through 2003) by Vreeland and Gandhi, using information from IMF Annual Reports and the IMF Survey. I updated the Vreeland and Ghandi data for 2001-2003 using information from IMF Annual Reports. In all cases, programs included are Standby Arrangements, Extended Fund Facility Arrangements, Structural Adjustment Facility Arrangements, and Enhanced Structural Adjustment Facility Arrangements.
Inflation: annual percentage change in consumer prices, from the World Development Indicators. For transition countries in the early 1990s (approximately 100 country-years), these data are supplemented with consumer price data found in the Economist Intelligence Units Country Profiles.
Past Redenomination: A count of the number of occasions, 1960 to 2003, on which the government has redenominated its currency. This variable ranges from zero to 6.
Presidentialism: dichotomous variable, based on Cheibub and Gandhis INST variable (0=dictatorship, 1=parliamentary democracy, 2=mixed democracy, 3=presidential democracy). Coded 1 where INST equals 3.
Proportional representation: dichotomous variable, coded 1 for proportional electoral systems, from Beck et als Database of Political Institutions.
Right party executive: based on the EXECRLC variable from Beck et als Database of Political Institutions. Right executive is coded as 1 when EXECRLC=R, and coded as zero when EXECRLC=L or C. Similarly, left executive is 1 when EXECRLC=L, and zero when EXECRLC=C or R. This variable is available for 1975-2000.
Right party government: based on the GOVRLC variable from Beck et als Database of Political Institutions. Right government is coded as 1 when GOVRLC=R, and as zero when GOVLRC=L or C. Similarly, left government is 1 when GOVRLC=L and zero when GOVLRC=C or R.
Right party opposition: based on the OPPLRC variable form Beck et als Database of Political Institutions. Right government is coded as 1 when OPPRLC=R, and as zero when OPPLRC=L or C. Similarly, left government is 1 when OPPRLC=L and zero when OPPLRC=C or R.
Years since independence: based on date of national independence, collected from the CIA World Factbook, http://www.cia.gov/cia/publications/factbook/index.html
Years until election: Number of years until the next election, legislative or executive. The value of the variable is set at 20 throughout the period for countries that have never had competitive elections (e.g. Bhutan, Brunei, Saudi Arabia
Vice President Tariq Hashemi: from abused and benefited from the amnesty law, it must reconsider its position
February 24, 2008
The Vice President Tariq Hashimi initiative to form several committees to follow up the implementation of the amnesty law, pointing to the agreement was with the Prime Minister Nuri al-Maliki on work to develop this law to include more of the detainees in the near future.
He said his Excellency, in a press statement following a meeting on Sunday 24-2-2008, the President and members of the Nineveh province and a number of heads of departments service, "We want good citizen active today with his family and with the Government to improve the conditions of life," stressing that "one of their wrongdoings and benefited from amnesty law, it must reconsider its position so as not due to the prison again. " The Vice President has heard, during the meeting, to explain in detail the suffering of conservative, particularly on the subject of electricity and oil derivatives, confirming the existence of general problems affecting everyone on the current circumstances that surround the country, in addition to other things, to be followed up with the best government Central to the purpose of removing obstacles that stand in the way without providing the necessary services for citizens. And His Excellency promised to follow up these issues and find appropriate solutions as soon as possible.
http://www.iraqipresidency.net/news_...5287&type=news
NBAD says currency revaluation cannot be ruled out
Bloomberg
Published: February 24, 2008, 23:29
Dubai: The UAE revaluation of the dirham's peg with the dollar "can't be ruled out" as the state's central bank prepares to publish annual inflation data next month, the National Bank of Abu Dhabi said.
Revaluation would be "the most palatable of a number of options" open to the UAE central bank, which may say 2007 inflation rose to 10.9 per cent from 9.3 per cent in 2006, Giyas Gokkent, NBAD's head of research, said in a note to clients e-mailed yesterday.
While food prices rose by about eight per cent in 2007 on the weakening dollar, rental prices probably rose by 19 per cent compared with 15.4 per cent a year earlier, the NBAD note said.
Even though 61.8 per cent of inflation is attributable to rents, "regardless, a one-time revaluation would have a one-off anti-inflationary impact," Gokkent said.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Central banks in six Gulf Cooperation Council states, including Saudi Arabia and Qatar, are under pressure to revalue their currencies as the dollar declines, stoking inflation to record levels.
Kuwait was the first to drop its peg in May, choosing a basket of currencies instead. The dollar has dropped in five of the past six years, and fell to a three-week low against the euro February 23 on speculation the Federal Reserve will cut borrowing costs next month to avert US recession.
Economic Improvements Needed to Stabilize Iraq
by Peter Kenyon
Weekend Edition Sunday, February 24, 2008 · U.S. and Iraqi officials hail improvements in Iraq's security, but they say economic improvements — especially job creation — are urgently needed.
Government and military spending are picking up, but the private sector still has much catching up to do.
Reliable figures are elusive, but according to the U.S. Embassy in Baghdad, the official unemployment rate in the city is 18 percent, and underemployment may be as high as 50 percent.
For years, officials and analysts have pointed to high unemployment as an economic and a security problem, since it leaves a large pool of idle men available for recruitment by insurgents, militias and other armed groups.
With the daily violence well down in many parts of the country, people say jobs programs are finally beginning to gain momentum.
At the edge of a huge U.S. military base near Tikrit, north of Baghdad, an Iraqi carpenter-in-training tries his hand at the power saw as an American adviser looks on.
Under a program called "I-Biz," the military is beginning, nearly five years after the invasion of Iraq, to train Iraqis to be plumbers, electricians and carpenters.
Once certified, they can either set up shop in the hometowns or get a job with KBR, the major U.S. contractor. Most choose the latter option.
Munif Munawer, 29, says the pay isn't great, but when a neighborhood leader known as a mukhtar told him the Americans would help him learn a trade, he seized the opportunity.
"I was unemployed for a long time. We used to be shepherds. This is much better. When the mukhtar said there were jobs for Iraqis on the base, I said yes," Munawer says.
In Baghdad's massively fortified Green Zone this weekend, the Iraqi-American Chamber of Commerce and Industry finally launched its "Buy Iraqi First" initiative. A previous attempt in 2004 had to be cancelled due to insurgent violence.
Chamber CEO Raad Omar says "the sky's the limit" in terms of needs in Iraq, but the atmosphere is better than it has been in years.
Omar's goal is to create $500 million in new Iraqi business activity and 10,000 jobs this year.
He says that is not as ambitious as it sounds when you consider how much work is currently being outsourced.
Take KBR, for example. The company does about $500 million worth of business in material for the coalition forces. All of it is imported from Dubai. This is work that Iraqis could do, he says.
Kais Ghazi, 30, owns Al-Eban Construction with his brother. The company has rebuilt police stations, hospitals and offices shattered during the invasion or its anarchic aftermath.
Ghazi says the challenges include working around roadside bombs and getting loans from dysfunctional banks, but the worst problem by far is corruption.
The civil society group Transparency International ranks countries according to a series of corruption criteria. Last year, Iraq came in 178th, out of 179.
Ghazi says the Planning Ministry was a nightmare under Saddam Hussein and not much has changed.
"Unfortunately, the problem is still happening, even after the fall of the old regime — the first thing is always the payoff. The official says how much are you going to pay me, then we can discuss the contract," Ghazi says.
Abd Alzahra al-Hindawy, a spokesman for the Planning Ministry, says corruption is a problem, but it's a two-way street.
"I will not deny these problems; for sure there are corruption cases. Unfortunately, there are some contractors who also want to get contracts illegally, so there is corruption from that side as well," he says.
The Chamber of Commerce's Omar says right now, the needs vastly outweigh the resources. But he takes heart from developments over the past few years, including those in Kurdish northern Iraq, where security is better.
Anxious American politicians, homesick U.S. forces and their families, and millions of Iraqis are hoping that Omar is right, and that Iraq's future holds — if not peace and prosperity — at least basic services and jobs for the able-bodied Iraqis now sitting at home or on street corners, waiting for anyone to pay them to work.
http://www.npr.org/templates/story/s...oryId=19315159
Iraqi gov't urged to be patient before signing long-term agreement with US
--------------------------------------------------------------------------------
Iraqi gov't urged to be patient before signing long-term agreement with US
BAGHDAD, Feb 24 (KUNA) -- Spokesman of the Iraqi government Dr. Ali Al-Dabbagh asserted here on Sunday that the long-term cooperation agreement that Iraq would sign with the United States would allow Iraq to deal with America as a fully independent and sovereign country, however, the religious authority in Najaf urged the Iraqi government to take its time before negotiations start.
Al-Dabbagh said in a statement the Iraqi government is seeking to remove Iraq from Chapter VII of the Charter of the United Nations and to have Iraq be free to deal with its money internationally, adding that this is one of the main problems facing Iraq.
The statement added that Al-Dabbagh will show through a discussion program to be broadcast by Al-Hurra television channel tomorrow that deliberations were still continuing over time tables and the Iraqi delegation is ready and waiting for the American side to prepare its negotiator.
He pointed out that the date that was determined for the signing of the agreement is not final, adding that many of the issues may need views of some political forces in Iraq, and this may take more time than expected.
http://www.kuna.net.kw/home/Story.a...en&DSNO=1074000
Iraq forms committee for shared oilfields issues
--------------------------------------------------------------------------------
24/02/2008
(MENAFN) The Iraqi Cabinet announced that it will form a government committee to negotiate with neighboring countries over shared oil fields, a move that comes after Iraq accused Iran of stealing its oil from areas along their border, AP reported.
The Iraqi Prime Minister Nouri al-Maliki's office issued a statement saying that the Cabinet had agreed to form a committee to be headed by a foreign affairs deputy, with representation from the Oil and Interior ministries.
Earlier this month, the Oil Ministry accused Iran of stealing oil from a shared field under their common border and of illegally seizing and capping off wells in a second field that Iraq claims lies entirely within its territory.
After the 2003 U.S.-led invasion, Iran seized six wells in Abu Gharb, claiming they were on disputed territory and should be sealed until the border dispute was settled.
http://www.menafn.com/qn_news_story_...yId=1093186620
Subject:CAN MUSLIMS BE GOOD AMERICANS <<from another room>>>
A FRIEND SENT ME THIS, I FOUND THIS VERY INTERESTING WHAT DO YOU
THINK
CAN MUSLIMS BE GOOD AMERICANS?
This is very interesting! We all need to read it from start to
finish......... and send it on to anyone who will read it.
Maybe this is why our American Muslims are so quiet and not speaking
out about any atrocities.
Can a good Muslim be a good American?
This question was forwarded to a friend who worked in Saudi Arabia for 20 years.
The following is his reply:
Theologically - no. . . . Because his allegiance is to Allah, The moon
God of Arabia.
Religiously - no. . . . Because no other religion is accepted by His
Allah except Islam ( Quran, 2:256) (Koran).
Scripturally - no. . . .. Because his allegiance is to the five
Pillars of Islam and the Quran.
Geographically - no. . . . Because his allegiance is to Mecca, to
which he turns in prayer five times a day.
Socially - no. . . . Because his allegiance to Islam forbids him to
make friends with Christians or Jews.
Politically - no. . . . Because he must submit to the mullahs
(spiritual leaders), who teach annihilation of Israel and destruction
of America, the great Satan.
Domestically - no. . . . Because he is instructed to marry four women
and beat and scourge his wife when she disobeys him (Quran 4:34).
Intellectually - no. . . . Because he cannot accept the American
Constitution since it is based on Biblical principles, and he believes
the Bible to be corrupt.
Philosophically - no. . . . Because Islam, Muhammad, and the Quran do
not allow freedom of religion and expression. Democracy and Islam
cannot co-exist. Every Muslim government is either dictatorial or
autocratic.
Spiritually - no. .. . . Because when we declare 'one nation under
God,' the Christian's God is loving and kind, while Allah is NEVER
referred to as Heavenly father, nor is he ever called love in The
Quran's 99 excellent names.
Therefore after much study and deliberation, perhaps we should be very
suspicious of ALL MUSLIMS in this country.
They obviously cannot be both 'good' Muslims and good Americans.
* * * Call it what you wish; it's still the truth.
* * * You had better believe it.
* * * The more who understand this, the better it will be for our,
country and our future. The religious war is bigger than we know or
understand.
And Barack Hussein Obama, a Muslim, wants to be our President?
You HAVE to be kidding?! Wake up America!
Obama even says if he wins the election, he will be sworn in on the
Quran (Koran)---not the Bible!
exactly...and their opponent party in this election has an approval rating of 19%....not that I agree with it but it is what it is and they will still win the election...roflmfao
yep...same thought here
Black Pres or woman Prez no way...Dems made a huge mistake with these two. With an injured Rep Pres in office anyone could have beat the Reps but they picked the perfect storm to not win. Maybe it was on purpose...who knows. The only depression will be most US citizens if someone like Obama doesn't step up and try to straighten out his own race before taking on a challenge like US Pres....jmho
Freedom in Iraq is here to stay!
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Posted: February 23, 2008
1:00 am Eastern
© 2008
Editor's note: Marc Knutson recently returned from a two-week trip to Iraq. He wrote a three-part series of columns reporting on what he found there. This is Part 3 of the series. Read Part 1, "Iraqis enjoy freedom from fear." Read Part 2, "Neighborhood Watch on a national scale."
By Marc Knutson
On my recent trip to Iraq, I wanted to know what the locals really thought of American actions. We often hear about the "Great Satan" intervening in their affairs. So, my goal was to ask everyone I came in contact with, "Do you see America and the coalition forces as invaders or liberators?" I asked that question so often that my driver would anticipate my timing and would ask the question before I got to it. Overwhelmingly, the reply was "liberators!!" with an extra exclamation point.
I had the opportunity to speak with Adnan, the Iraqi country manager for a British petroleum company in Erbil. Adnan portrayed the stereotypical image that I had of an elder Middle Eastern man. His presence commanded my instant respect. Once again, I was treated to an enjoyable feast of wisdom and great appreciation of America. It was obvious that he didn't want me to lose a single syllable of his answer: "Liberators! That's who you are. That's what you've done. That's how we will always think of you." Assured that he had my undivided attention, what he was going to say next was from his heart, "and don't let anyone tell you anything different." Yes, his English was broken and heavily spiked with a Middle Eastern accent, but his message was not lost because of it.
"But," I protested, "There are many Americans who believe that our efforts were inspired by big oil profits and personal political gain by governmental leaders." I thought surely I was representing the protests of those who oppose American involvement.
"I know that in America, you are not a country of fools. You couldn't be who you are in international stature if you were. Saddam was a fool, Hitler was a fool, and look where they are now. Americans are not fools. But, I also know that politics will rule their emotions." For a moment he turned away; I think he was a bit frustrated in how he wanted to express his point. "I only ask for half of America to live what we have lived, to experience the everyday fear of torture, family separation and harassment. I will say this as plainly as I can – George Bush is a hero. He is our hero! The sons and daughters of America who died to make it so we can be free are heroes and indeed liberators! We now enjoy freedom and liberty almost as the Americans do."
Once again, silence highlighted the moment. "I believe you Americans called the war 'Operation: Iraqi Freedom,' right?" I conceded with a nod as Adnan continued, "Then why would you so quickly change? The great people of America have are charged with duties of helping the repressed peoples of the world. It's not something that I just believe; it is as a result of your own greatness and moral integrity. America is known around the world as a nation with a big heart and a heavy responsibility. … It is more incumbent upon the most powerful nation in the world to help the repressed."
(Column continues below)
I thought of how people like Adnan could live lives of guilt-free liberty and have a say in their own society, culture and fate. There appears a genuine ownership of their new freedom, evidence that they won't take it for granted.
It is one thing to secure an area by force. Drop a few bombs, roll in a couple tanks, bivouac a battalion or two of soldiers – and it's yours. However, not completely, not if you haven't won over the hearts of the indigenous people.
Baseball in Iraq
I had the opportunity to visit Camp Zaytun, the Korean-operated Airport Perimeter Security military installation. While the Korean contingent of the coalition force is responsible for maintaining perimeter security of the Erbil International Airport, there is a small cadre of American soldiers assigned to the camp. In fact, they are the only American soldiers stationed in Kurdish-controlled territory. I was invited to have lunch with them in their mess hall. After I handed out Christmas cards and Oreo cookies from home, we sat down to eat lunch.
I was seated among four ranking officers and a non-commissioned officer. For an hour they spoke of countless "positive" events that they had experienced. One surfaced as my favorite.
A colonel from the Oregon National Guard related a story to me that he surely thought would pique my interest and satisfy my desire to seek positive stories from Iraq.
"This past summer we decided to conduct a 'Baseball Camp' for local children," he explained. "They weren't very familiar with baseball, so we had to start with the very, very basics." He ramped up his excitement and his whole countenance beamed as he relived the event. "We invited children from Erbil to participate, but we encountered some issues right away. The U.S. State Department required that the parents sign a waiver of liability. Most of the parents opted out because they didn't trust the papers. In the old days, signing government papers in Iraq was usually for quite severe reasons; these parents were too gun shy and abused by the previous regime. This meant that we were short of kids to field teams. We went to a local orphanage and recruited kids from there. Another issue presented itself; these kids needed the proper shoes. We had some, but not all of them fit. So, we ran downtown and bought enough sneakers for all the kids. We had a blast teaching them the game." He was proud as he spoke of outfitting the children with "sneakers." "Our primary mission was Iraqi Freedom; today it is 'Iraq: Enjoy Your Freedom!'"
(Photos: Marc Knutson)
Construction boom
There are many explosions in the lands of the South, but none matches the construction boom coming from the Kurdistan Region. Not just reconstruction, as one would picture post World War II Europe, but brand-new modern buildings. The war itself barely touched the Northern Province. So to say that they are rebuilding war-damaged structures would be inaccurate. Ironically, Turkish investors are pouring investment monies into the North.
After years of neglect and abuse from the Saddam government, which sought the demise of the Kurds, their freedom to build and expand is at a feverish pace. New hotels, shopping centers, swim centers and even bowling alleys have sprung up throughout the region. In Erbil alone, they are enjoying four new shopping malls. While not American-sized malls – they are indeed American-style. The dollar is very welcomed. If you run out of Iraqi dinars, the dollar makes for a great and welcomed substitute.
The Erbil International Airport is being rebuilt with an "under construction" terminal and a 4.8-kilometer runway, strong enough and long enough to handle the new Airbus A380. At completion, it will rank fifth among the world's longest runways. Looking toward the future, planners see Erbil as a hub for many airlines headed from Europe and the West, to the Far East and India.
There are future revenue sources literally lying in puddles on top of the ground. In the land Saddam Hussein preferred to waste away, there are oil resources just itching to be tapped. The oil industry in Kurdistan is admittedly 25 years behind the rest of the oil exploration world, simply because Saddam would not allow modern technology information into the industry. Oil-related trade magazines, periodicals, etc. were not permitted. Nonetheless, today they are making up for it. New wells are being dug in areas where looking for oil was a matter of taking a stroll, because there is oil lying in puddles on the surface. Despite the obvious evidence to the contrary, the Kurds had been told for years that they had no oil resources under their soil. The oil is there, and that is great economic news for the Kurds. New hope glistens with each new sunrise.
To my wonderment, Northern Iraq was the actual antithesis of my expectations. I saw people who had been released into the field of life's opportunities unencumbered by the freedom-restricting yoke on their shoulders called Saddam Hussein.
What I learned was, as Americans, we ought to be proud of what has happened. Our work in Iraq has been well-received and greatly appreciated – and not in some light or trifled fashion. These people grieve for the sacrifices many Americans have paid. They are ashamed and embarrassed by the renegade, fanatical Islamacists from other countries who have caused so much grief. As one mother of a dead Iraqi son so adeptly put it, as she spoke through her tears, "Your sons are our sons."
There are plenty of good news stories within Iraq that need to be told to America, and indeed the entire world. I had been misled into believing that there can only be three things that we can expect from Iraq: despair, hopelessness and death.
There are stories that are brimming with hope, stories that fill our hearts with pride and lift our heads from the dregs of defeatism, allowing us to rise to the soaring heights of pride. We Americans, using our resources, earned through liberty, helped to free others squashed by tyranny. Who better than Americans to realize the taste of democracy?
The liberated peoples of Iraq now enjoy the opportunity to release pent up, repressed ideas and expressions that only liberation from tyranny can provide. Only a few short years separate these people from the days of hiding in fear. Savoring the fresh taste of democracy on their tongues, today's worries consist of their children's school grades, rising oil prices, or other common things that the rest of the world wrestles with.
As one person in the government related to me as I was leaving, "We love America, we love George Bush, we want to maintain a relationship with America like Israel has. In fact, we want to be America's 'Second Israel' in the region!"
Such high hopes, I thought! Such trust in America! As I remember the joyous, childlike faith and the look on his face as he told me that, my heart went out to him. And I heard my inner voice say, dripping with cynicism, "I only hope that your trust in American is not shattered by American politicians and American politics."
The hope in democracy, the faith in freedom and the trust in liberty allow these people to have a say in their own destiny. Their fate rests in their hands, and from what I observed, they are not going to let it go. They know it came at a great cost, to them and to America. Because I have seen that look in their eyes, I believe that they are not going to squander the opportunity that has been handed to them. They don't take their freedom for granted – and they won't.
Vice President Tariq Hashemi: from abused and benefited from the amnesty law, it must reconsider its position
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Vice President Tariq Hashemi: from abused and benefited from the amnesty law, it must reconsider its position
February 24, 2008
The Vice President Tariq Hashimi initiative to form several committees to follow up the implementation of the amnesty law, pointing to the agreement was with the Prime Minister Nuri al-Maliki on work to develop this law to include more of the detainees in the near future.
He said his Excellency, in a press statement following a meeting on Sunday 24-2-2008, the President and members of the Nineveh province and a number of heads of departments service, "We want good citizen active today with his family and with the Government to improve the conditions of life," stressing that "one of their wrongdoings and benefited from amnesty law, it must reconsider its position so as not due to the prison again. " The Vice President has heard, during the meeting, to explain in detail the suffering of conservative, particularly on the subject of electricity and oil derivatives, confirming the existence of general problems affecting everyone on the current circumstances that surround the country, in addition to other things, to be followed up with the best government Central to the purpose of removing obstacles that stand in the way without providing the necessary services for citizens. And His Excellency promised to follow up these issues and find appropriate solutions as soon as possible.
http://www.iraqipresidency.net/news_...5287&type=news
Basra port receives 3 cargo ships
Basra - Voices of Iraq
Sunday , 24 /02 /2008 Time 4:49:30
Basra, Feb 24, (VOI) - Basra's port of Umm al-Qasr received three cargo ships on Sunday, the public relations and media director at the State Company for Iraqi Ports said.
"Three ships arrived at Umm al-Qasr port: Salimi 1, a Comoran ship with a varied cargo; Jabal Ali 6, a Panamanian ship carrying 255 containers; and another Panamanian ship with 454 containers," Abdul Kareem al-Basri told Aswat al-Iraq, Voices of Iraq, (VOI).
The Shiite province of Basra, 590 km south of the Iraqi capital Baghdad, has five commercial ports and two oil ports: al-Maaqal, established in 1916 by the British forces and handed over to Iraqi authorities in 1937; and Faw, a small port on the al-Faw Peninsula near the Shatt al-Arab, and the Persian Gulf.
SS/SR
Imported products subvert Iraqi economy
Baghdad - Voices of Iraq
Sunday , 24 /02 /2008 Time 5:20:40
Baghdad, Feb. 23, (VOI) – Average Iraqi consumers are open to frequently purchasing cheap products from different countries of origin currently available on the local Iraqi market. Iraqi economists are blowing the whistle; Iraqi made products are unable to compete with the imported foreign-fabricated items.
Iraqi academic Abdul-Rahman al-Mashhadani commented on this issue, "No customs fees on foreign products, especially Chinese, Syrian, and Iranian made, engenders a flow of these products that reach Iraqi customers with lower prices when compared to similar Iraqi products," Al-Mashhadani told Aswat al-Iraq – Voices of Iraq – (VOI). He continued, "due to this phenomenon, many Iraqi factories ceased their production lines, because they are unable to compete with the prices of imported items."
In his argument, al-Mashhadani explained to VOI "Allowing those products to enter Iraq arbitrarily creates a calamity for the Iraqi economy," proceeding "Iraqi capitals fled the country because of this economic flaw…the embargo that was imposed on Iraq during the 1990s negatively affected the private industrial sector in Iraq." He demanded "rehabilitation of the Iraqi private-owned industries, and to assist Iraqi capitals by offering them loans and supplies crucial to their facilities, such as electricity, fuel, and water."
Economic researcher Sattar Jabbar considered "No customs fees are the most important problem facing the Iraqi market." However, "there are customs fees, such as the rebuilding fee, on other goods, like raw materials used for industrial purposes," proceeding, "all these parameters decelerate the Iraqi industry; a matter that increases unemployment in Iraq…The state should interfere to assist both the public and private industrial sectors in Iraq." He stressed the fact that "Tens of Iraqi factories are currently not working."
Owner of a fabrics factory, Abu Noor, said to VOI "In the 1970s, my father established an industrial facility in Kadhimiya district of Baghdad – capital city of Iraq, to produce fabrics," adding "I closed that factory because the products are unable to compete with imported foreign fabrics. The machines that I have in my factory are very old. Their production capacity is limited to only 200 meters per day; factories in neighboring countries embrace advanced technologies that enable each of them to produce 1000 meters per day."
Abu Noor addressed an essential question, "How can we proceed in our production without governmental support that helps us to buy new equipment thereby allowing us to compete with foreign products?" Abu Noor told VOI, "Before the embargo, the quality of Iraqi products was able to compete with foreign qualities," confirming "the industrial private sector alone won't be able to retrieve that position again, because it requires governmental support."
In Abu Gharib district, west of Baghdad, Naseer Nadhom has a plastics factory, but foreign plastic made items that dominate the market in Iraq divert the interest of Iraqi customers. "As an outcome of the low demand on Iraqi made plastic products, due to the presence of the high quality Iranian and Syrian plastic items, I released 50% of my staff," Nadhom said to VOI, confirming, "this is not a unique case of my factory; it happened in other factories too… the phenomenon of unemployment in Iraq will reach unprecedented levels if the situation remains as it is."
Iraqi industrial figure, Basheer Al-Najafi, perceives that private industries in Iraq have only one major problem. "Shortage in power supply is the most important problem that faces Iraqi factories nowadays," Al-Najafi asserted to VOI, explaining "we increased the prices of our products after we started using domestic generators, and thus, our sales were negatively affected by return." Al-Najafi demanded the Iraqi government to fulfill only one request, "Just to provide industrial areas in Iraq with 6 continuous hours of electricity per day," adding "this, if it were to happen, will remove many obstacles that seriously endanger our performance, and will actively minimize production costs."
Iraqi labor Abu Eman told VOI "I used to work at one of the factories in Abu Gharib industrial area in Baghdad, but the factory was closed due to the deterioration in security situation in that area," adding "I remained unemployed for a period of time, until the security circumstances in Abu Gharib were improved, the factory then resumed operations, and I got my job back." Abu Eman considers that foreign products "would undermine the industrial sector in Iraq, an issue that will increase unemployment in this country."
Average Iraqi Customer, Um Hussein, prefers imported rather than Iraqi made products. "Imported clothes vastly contribute to Iraqi families with limited incomes," Um Hussein said to VOI, adding, "I have five children, three of them are attending school, and I have a lot to buy for them. If the government decided to prohibit importing these goods, or planned to increase customs fees on them, then the government should find an alternative for limited income families." She continued, "The government should not think of rich businessmen; it should try to find a solution for the problems of citizens with a limited income."
Sociologist Faris Al-Obaidi analyzed this social phenomenon of demand on imported products. "It is a consuming cultivation affected by the out of standards circumstances that Iraqi citizens had experienced during the past 25 years, represented by wars and embargo," Al-Obaidi said to VOI, adding "as a result, Iraqis were accustomed to demanding anything that is prohibited, and consuming foreign products became a gauge of social contention in Iraq," referring "Changing this kind of attitude is difficult, and would take time." He clarified that "it is important to support local industries to rebuild Iraqi customers’ trust in the quality of Iraqi products. Only at this point will there be a sort of balance between the Iraqi and foreign products, and consumers in Iraq will have the opportunity to choose between them."
MH/SR
Iraq's oil flows to Turkish port despite incursion
Baghdad - Voices of Iraq
Sunday , 24 /02 /2008 Time 4:49:30
Baghdad, Feb 24, (VOI) – Iraq will continue exporting oil from its northern oilfields via the Turkish Mediterranean Port of Ceyhan despite the Turkish incursion into the Kurdistan region, an oil ministry spokesman said.
"Iraq's oil exports from Kirkuk's oilfields via the Turkish Ceyhan port will continue as usual and will not be influenced by military operations," spokesman Aasem Jihad told Aswat al-Iraq, Voices of Iraq, (VOI).
"Baghdad and Ankara are both keen on the continuation of Iraqi oil exports via the Turkish port, which reaches 350,000 barrels per day (bpd)," Jihad added.
The spokesman explained that Iraq's oil exports total over 1.950 million bpd, including 1.600 million via the southern Basra port and 350,000 via the Turkish port.
On Thursday, Turkish forces shelled regions inside the Iraqi-Turkish-Iranian border triangle and engaged in battles with Kurdistan Workers Party (PKK) fighters in the border area of Bazia, which came under air attacks by Turkish warplanes.
Iraq's oil flows to Turkish port despite incursion
Baghdad - Voices of Iraq
Sunday , 24 /02 /2008 Time 4:49:30
Baghdad, Feb 24, (VOI) – Iraq will continue exporting oil from its northern oilfields via the Turkish Mediterranean Port of Ceyhan despite the Turkish incursion into the Kurdistan region, an oil ministry spokesman said.
"Iraq's oil exports from Kirkuk's oilfields via the Turkish Ceyhan port will continue as usual and will not be influenced by military operations," spokesman Aasem Jihad told Aswat al-Iraq, Voices of Iraq, (VOI).
"Baghdad and Ankara are both keen on the continuation of Iraqi oil exports via the Turkish port, which reaches 350,000 barrels per day (bpd)," Jihad added.
The spokesman explained that Iraq's oil exports total over 1.950 million bpd, including 1.600 million via the southern Basra port and 350,000 via the Turkish port.
On Thursday, Turkish forces shelled regions inside the Iraqi-Turkish-Iranian border triangle and engaged in battles with Kurdistan Workers Party (PKK) fighters in the border area of Bazia, which came under air attacks by Turkish warplanes.
ISX index down by 0.723%
Baghdad - Voices of Iraq
Sunday , 24 /02 /2008 Time 4:49:30
Baghdad, Feb 24, (VOI) - The Iraqi Stock Exchange (ISX) index dipped by 0.723% on Sunday compared to the previous session, closing at 35.68 points.
Traded shares in Sunday's session exceeded 275 million at a total value of 490.461 million Iraqi dinars (1 U.S. dollar =1,223 Iraqi dinars) by implementing 189 contracts. Non-Iraqi investors participated with over 3 million shares, totaling more than 4 million Iraqi dinars by implementing four contracts in the banking sector.
According to the daily analysis of the capital market, the banking sector's index, in which 11 companies traded, closed at 37.570 points; while the industrial sector, in which six companies traded, ended at 11.220 points.
The statement concluded that 29 companies were traded in Sunday's session out of 94 companies registered in Iraq's stock exchange, of which nine indexes went up, eight dropped, and 12 maintained their previous price.