Finance Clouds Utilities Push

The following article was published in the latest edition of Inside Iraqi Politics, and it is reproduced here with the publisher’s permission. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Full Text of Inside Iraqi Politics Issue No. 19 (PDF)

The government’s aggressive energy policy and its electricity push in particular have stood in contrast to broader policy stagnation, yet there are concerns that inadequacy of the banking sector in providing finance will stymie it. There are also increasing indications that Maliki’s China trip this past week, finance problems with a previously-arranged Korean deal, and his June 2 raid of the country’s only internationally-respected financial institution may be interrelated.

The government framed Maliki’s three-day state visit to China beginning July 18 entirely around economic development and mutual commercial interests. While petroleum supply to China was predictably a major topic, the subtext, discussed more gently, was Iraq’s need for finance. As economic analyst Sadiq al-Rikabi noted, as quoted in the UAE-based al-Ittihad, Iraqi banks lack the liquidity to finance projects, and this despite the enormous sums which the government has received, not only from oil revenue but also the $250 billion Iraq Development Fund Iraq took control of in June. In the past, the government has often grandly announced investment projects only to have them dissipate for a variety of reasons; this pattern may be continuing.

Government spokesman Ali al-Dabagh implied this in comments to AP on July 18, saying “We are asking the China side to make a fund, for the reconstruction, and to guarantee and assure the investment in Iraq for the Chinese companies.” The AP comments did not reference the faltering Korean agreement or Iraq’s banking problems.

In this context we may return to Maliki’s June 2 raid on the Trade Bank of Iraq (TBI) and the flight of its director, Hussein al-Uzri, from the country. Remember that Uzri claimed that Maliki started by demanding that TBI finance the Korean electricity deals, which he said he refused to do without a government guarantee. Maliki accused Uzri of stealing millions of dollars from TBI, which is the only bank in Iraq capable of accessing credit lines from international banks. (See IIP No. 18 for background.)

Hamdiya al-Jaf, whom Maliki appointed to replace Uzri, said in a widely-cited July 18 interview with Reuters “we have proved to the world that the TBI has not changed concerning its work and its banking activities.” She added that TBI [Reuters paraphrase] “operates independently and is monitored by the Central Bank of Iraq [CBI] and the Bureau of Supreme Audit like any other Iraqi bank,” and the “investigation of alleged financial violations had not been completed.”

Jaf’s claims may be true, but anyone concerned about the politicalization of TBI’s decision-making may want to ask for direct proof of this investigation. Our search of Iraqi and pan-Arabic news sources found numerous news outlets quoting Jaf’s remarks to Reuters, yet we found not a single news report citing an independent authority confirming even the existence of an investigation. We also performed searches of the Arabic websites of the CBI, the audit bureau and the justice ministry and found nothing referencing an investigation. So when sources say that “the Iraqi government” has accused Uzri of theft, this is based solely on statements from individuals tied to Maliki. While it is possible that there is an investigation which has not been reported openly, given the vital role of TBI to Iraq’s financing needs, the lack of transparency should raise questions.

One Response to Finance Clouds Utilities Push

  1. [...] here: Finance Clouds Utilities Push | Iraq Business News Watch THE LION OF JUDAH MOVIE- Review for yourself Lion of Judah The Movie- visit the official [...]


  1. US News- Tweets » Blog Archive » Finance Clouds Utilities Push | Iraq Business News - 29th July 2011

    [...] here: Finance Clouds Utilities Push | Iraq Business News Watch THE LION OF JUDAH MOVIE- Review for yourself Lion of Judah The Movie- visit the official [...]