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

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

The year for Iraq, and its equity market, started with two momentous events that raised the feared spectre of a US-Iran proxy war fought in the country and all of the instability that would come with it.

In quick succession, the US’s assassination in Baghdad of Iran’s top general was followed by the Iranian missile attacks on Iraqi military bases housing US military units. Initially the market shrugged them off, discounting the possibility of military conflict as unlikely, but by January’s end the market, as measured by the Rabee Securities RSISX USD Index (RSISUSD), was down –4.7%.

However, this decline masks two contradictory trends. The first of which was heavy selling in foreign favoured stocks, such as Baghdad Soft Drinks (IBSD), Asiacell (TASC), Bank of Baghdad (BBOB) and Mansour Bank (BMNS). This was most likely foreign selling, by either Iraq-focused equity funds or most probably by frontier market funds with small weights in Iraq, likely over concerns of potential political instability following the two momentous events.

These stocks were down between - 3% to - 10%. This trend was contrasted by heavy buying in local favoured small cap cyclical stocks that had a stunning rally by early January, but which cooled off by month end as foreign selling in IBSD, TASC, BBOB and BMNS picked up steam. But this was not before posting solid month end gains on the back of strong performances in 2019 as discussed in December 2019. Certain stocks in particular had impressive performances during the month as shown in the table below (figures rounded):

January performance of selected stocks: -

(Source: Iraq Stock Exchange, Asia Frontier Capital)

These conflicting trends are in-line with the 2019 themes as discussed in the “2019 Market Review and 2020 Outlook” in which the market’s bottoming action was seen through its improved dynamics throughout 2019. The first improved dynamic was its discriminating nature – in that negative developments in certain stocks were confined to these stocks and did not spread to others in the sector or to the overall market. While, the second improved market dynamic was the broadening of breadth, and in particular, the market’s focus on the hopes of an earnings recovery for some of the industrial stocks even before any signs of such recovery can be detected in their earnings reports during 2019.

The fears that prompted the heavy foreign selling might be justified on the grounds of instability arising from the current political chaos in Iraq and the spill-over effects of these on the Iraqi economy. The countrywide demonstrations continue unabated in the face of unprecedented violent state crackdowns, however, this youth-led protest movement continues to shape events in the country. Since October these ranged from forcing the political elite to implement reforms that would threaten their interests, to its influence on the choice of the current prime minister designate replacing the forced out prime minister. The prime minister designate faces considerable challenges in the short time that will require him to produce changes, satisfying the protest movement’s demands for change, while preserving the status quo for the political elite. In addition to balancing the conflicting demands of the protest movement and the political elite, he would need to navigate any potential re-escalation of tensions between the United States and Iran.

Yet, as these events are being played out, their effects – real and feared – can be seen in the action in the exchange rate of the Iraqi Dinar (IQD) vs the USD. The market price of the USD versus the IQD by month end returned to levels that prevailed over the last 20 months after spiking higher following the events at the start of the year. This is highlighted in the chart below.

(Source: Central Bank of Iraq, Iraqi Foreign Exchange Houses, Asia Frontier Capital)

Such spikes have happened before, during periods of geopolitical crisis in the summer of 2019 which included the tanker hits and the attacks on Saudi oil installations; and during local political crises such as the elections in May 2018, and more recently the nationwide demonstrations that started in October 2019. The current spike was probably a response to sharply increased local demands for physical USD notes as flight to safety prompted this demand. Cash transactions dominate activity in the local retail and trade markets where the IQD-USD exchange rate for physical USD notes trades at a slight premium to the market price (in red) in the above chart. This premium widened during the spikes in the market rate for USD but settled down to about an 8% premium versus the usual 2 - 4% premium. This wider premium likely reflects local traders’ hoarding of physical USD notes in preparation of a possible future, real or imagined, shortage – but these fears have moderated significantly from the start of the year.

While the FX market is suggesting that the disruptions to economic activity have subsided, other data is needed for a full evaluation of their effects. The first of this data would be broad money or M2, as a proxy for economic activity due to its sensitivity to oil revenues (chart below), in which the most recent data from the Central Bank of Iraq (CBI) indicate continued growth.

(Source: Central Bank of Iraq, Iraq’s Ministry of Oil, Asia Frontier Capital)

(Note: M2 as of Oct. with AFC estimates for Nov. & Dec., Oil revenues as of Jan.)

Actual M2 data as of October shows robust growth with a year-over-year increase of +10.7%, while estimates show a moderation of year-over-year growth in December to less than half of that. However, it should be noted that December estimates are based on preliminary data on the deposit component of the monetary base M0 as of mid-January. These in turn show a decline from earlier figures, but there are not enough data to suggest if it’s the start of a declining trend or a normal seasonal decline. Combining the declining deposit component of M0 with the spike in the market exchange rate of the USD might be interpreted as capital flight. Yet the exchange rate as end of January suggests that it was a short-lived phenomenon. A more likely explanation than capital flight is the disruptions to economic activity, and in particular to the cash-dominated retail and trade markets, led to a decline in deposit formation as cash was used to fund operations.

While geopolitical and local political events are playing out, the equity market’s action, in particular its contrasting trends, in January supports the thesis that the stock market is bottoming following a multi-year bear market with back to back declines of –1.3% in 2019, of –15.0% in 2018, –11.8% in 2017, –17.3% in 2016, –22.7% in 2015, and –25.4% in 2014.

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

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

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

Qatar Airways, Emirates and several other Persian Gulf airlines still fly in Iranian and Iraqi airspace and to cities in both countries since Iran and the United States traded military strikes.

“Iranian airspace is important for all carriers in this region,” said Adil al-Ghaith, Emirates’ senior vice president, commercial operations, Persian Gulf, Middle East and Iran, Reuters reported.

Dubai-based Emirates and sister carrier flyDubai together serve 10 cities in Iran and Iraq, and have continued to use the airspace of both countries for other flights.

Kuwait Airways and Abu Dhabi-based Etihad Airways have also continued using Iranian and Iraqi airspace.

“We will continue to fly to Iran because Iran is an important country to us and it is our neighbor and we want to serve the people of Iran,” Qatar Airways Chief Executive Akbar al-Baker said on the sidelines of a Kuwait air show.

However, some regional carriers have changed their routes. Bahrain’s Gulf Air has redirected European flights away from Iraqi airspace and now flies longer, more fuel consuming routes over Saudi Arabia and Egypt.

“We want to take the safest option even if it costs us a little bit more for a period of time. We can live with that,” Deputy Chief Executive Waleed Abdulhameed al-Alawi said.

The UAE regulator told its carriers — Emirates, Etihad, flydubai and Air Arabia AIRA.DU — this month to “evaluate flight path risks” although it said it was up to the airlines to make the final decision on the routes they chose.

(Source: Tasnim, under Creative Commons licence)

By John Lee.

The US Federal Aviation Administration (FAA) has reportedly banned US carriers from flying in the airspace over Iraq, Iran, the Gulf of Oman and the waters between Iran and Saudi Arabia.

The ban was imposed due to "heightened military activities and increased political tensions in the Middle East, which present an inadvertent risk to US civil aviation operations due to potential for miscalculation or misidentification”.

The Russian Federal Air Transport Agency, Rosaviatsia, has reportedly issued a similar order.

(Source: Reuters)

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

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

Stop the Press: Just as this article was being readied for publication, the news came of a US strike in Baghdad that targeted a car carrying Iran’s top general and a senior commander of Iraq’s Paramilitarily Units (PMU). The attack raised the often-discussed spectre of a US-Iran proxy war fought in Iraq. While this is a real possibility, and events are extremely fluid, there a few points that should be taken into account amidst the breathless media coverage:

• Angry rhetoric from Iran promising fire and brimstone is a given, however, irrespective of all the bluster, Iran cannot afford a direct or indirect full confrontation with the US given the severe weakness of its economy.
• Iran’s false reading of the US’s hesitation to order a full strike a few months ago led it to push the envelope assuming the US would not retaliate. This attack, demonstrating the extreme extent to which the US will go to defend its interests, will force Iran to re-calculate especially given that the US will be in the midst of an election campaign that will likely see the re-election of the current administration.
• The dilemma for Iran is the need to retaliate to save face, but without crossing the now abundantly clear US red line, or for that matter starting a wider conflict in the region that it can ill-afford to wage.
• Iraqi politicians, especially some with sympathies to Iran will, after expressing their perquisite outrage over the violations of sovereignty and threats of revenge, realize that being placed in the same position as that of sanctioned Iran is not advantageous to them, to Iraq, or to Iran.
• The recent decision by the Iraqi parliament regarding foreign military presence supports the argument made here, in that it’s high on theatrics, but low on substance. It was not a decision to end US military presence, but a typical Iraqi fudge. In essence, it’s a resolution asking the government to do five things, of which two are worth noting: (1) Cancel the request for global coalition support made in 2014; and (2) for the government to work towards ending the presence of all foreign troops. Crucially, the request for global coalition support in 2014 was made by the then government, without parliamentary oversight, and as such could have been cancelled directly by the government, yet it chose to pass the buck to parliament using the excuse of being a caretaker government, but parliament then passed it back. The next steps would involve a lot of noise and bluster, but most likely the resolution would be watered down to an aspiration once the uproar subsides.
• Finally, within Iran, the government finds itself for the first time in a position to conduct a rational foreign policy, unlike the shadowy operations that were Iran’s effective de-facto foreign policy in the region. This will likely manifest through back channel diplomacy once the dust settles over the next few months.
• However, the next few weeks are to be marked by a lot of noise and come with spurious threats and counter threats that are reminiscent of the fire and fury that marked the exchanges between the US and North Korea a few years ago, but this time taking place in the most volatile region in the world.

While these events are being played out, it’s worthwhile to look at the Iraq investment story purely on its own merit, especially as the stock market was up +1.5% for the year as of Tuesday 7^th January and was building on the trends discussed below. Crucially the market price of the US versus the Iraqi Dinar has only moved up by about +2.0% above the levels for most of the last 20 months. After stabilising in early 2018, It has traded briefly at current elevated levels before the elections in May 2018, during the tanker hits during the summer, and finally, the recent attacks on Saudi oil installations.

(Source: Central Bank of Iraq, Iraqi Foreign Exchange Houses, Asia Frontier Capital)

The Iraqi equity market, as measured by the Rabee Securities RSISX USD Index (RSISUSD), ended December up +2.6% and down –1.3% for the year. The outlook for the Iraqi equity market for 2020 will be shaped by the three events that marked 2019:

• The equity market’s bottoming following a multi-year bear market
• The increasing signs, at both a macro and company level, of an economic recovery
• The repercussions of a youth led protest movement that is bringing with it profound changes (mostly positive) to the Iraq story culturally, politically and economically

Protest movement art in Baghdad’s Tahrir Square

(Source: Art by Yota Namir, Ra’ed Modah & Noor Namir, photo by Mohammed Ghani posted on Baghdad Projects’ Facebook page)

2019’s decline of –1.3% by the Rabee Securities RSISX USD Index (RSISUSD) comes on the back of declines of –15.0% in 2018, –11.8% in 2017, –17.3% in 2016, –22.7% in 2015, and –25.4% in 2014. The small scale of the 2019 decline, the improved market dynamics and the bottoming in trading turnover all point to a bottoming market formation after a brutal bear market that saw the index decline by –66.1% from the peak in early 2014 to the end of 2019.

The first of the market’s improved dynamics is its discriminating nature in evidence throughout the bank rally that started in May 2019, which at the time was led by a stunning rise in Iraq’s leading bank, the Bank of Baghdad (BBOB), which was  up +62.5% in May on hopes it would resume dividend payments for the year. These expectations led to other leading banks such as the National Bank of Iraq (BNOI), Mansour Bank (BMNS) and Commercial Bank of Iraq (BCOI) to join the rally. Subsequently, BBOB’s quarterly earnings results confirmed expectations that it is following through with the recovery in its fortunes that began in 2018 as part of the overall conditions in place for the sector’s future revival. Nevertheless, BBOB did not resume dividend payments for 2018’s earnings. However, unlike in prior years, BBOB declined from the May 2019 peak, yet did not lose all the gains– and more importantly while it pulled the other leading banks up with it in May, it did not drag them lower in the following months. By year end all of the leading banks were meaningfully higher than their pre-May rally lows.

Indexed performance: Bank of Baghdad - BBOB (black), Commercial Bank of Iraq – BCOI (purple), Mansour Bank – BMNS (blue), National Bank of Iraq - BNOI (green)

(Source: Bloomberg, data from 30/04/2019 – 31/12/2019)

The second aspect of the improved market dynamics is the broadening of breadth and the market’s focus on the hopes of an earnings recovery for some of the industrial stocks even before any signs of such recovery can be detected in their earnings report during 2019. This dynamic was evident in small industrial companies and in healthcare providers classified under the industrial sector on the Iraq Stock Exchange (ISX), as discussed here in the last few months. The chart below shows the price action of Al-Mansour Pharmaceuticals Industries (IMAP), Al-Kindi of Veterinary Vaccines Drugs (IKLV), National Chemical & Plastic (INCP), and Metallic & Bicycles Industries (IMIB).

Indexed performance: Al-Mansour Pharmaceuticals Industries- IMAP (green), Al-Kindi of Veterinary Vaccines Drugs- IKLV (black), National Chemical & Plastic – INCP (purple), Metallic & Bicycles Industries -IMIB (blue)

(Source: Bloomberg, data from 31/12/2018 – 31/12/2019)

Normally, cyclical stocks outperform defensive or growth stocks at the start of economic recoveries even though their earnings do not support this outperformance – at least initially. It can be argued that similar dynamics are taking place through the action of cyclicals on the ISX in 2019 such as the banks, mentioned earlier, versus those of market stalwart growth stocks – Pepsi bottler Baghdad Soft Drinks (IBSD) which was down –8% for the year, or for mobile telecom operator Asiacell (TASC) which straddles the cyclical and defensive sectors due to the specifics of its earnings drivers since 2014, which was up +12% in 2019. In contrast, in 2018 both were up +34% and +47% respectively, but the banks were down, such as BBOB –52%, BMNS ­–20%, BNOI –28%, BCOI –4%. Even though the analysis of cyclicals versus growth stocks can only go so far on the ISX, given its illiquidity and limited diversification, the logic of an economic recovery driving cyclical earnings is applicable.

This economic recovery was initially driven by the revival in government spending on goods and services and on wages, the evidence of which was seen in: (1) the upturn of the country’s exports and in new vehicle sales as reported here in October, and (2) the continued growth of broad money, or M2, as a proxy for economic activity as reported here in December.

Data from the Central Bank of Iraq (CBI) on private sector deposits and credit to the private sector support the above trends. These show private sector deposit growth of +12% for the year by end of September 2019 after a few years of no change, while credit to the private sector was up +3% for the period but should accelerate as the economy continues to recover.

(Source: Central Bank of Iraq, Asia Frontier Capital)

The above chart is based on aggregate data for the private sector with the banking system as a whole – both for state banks, and commercial sector banks which accounted in 2018 for 36% of total credit to the private sector and 37% of private sector deposits – and thus do not show the performances of specific commercial banks listed on the ISX.

Drilling down to the company level within the commercial banking sector, the earnings profile of the National Bank of Iraq (BNOI) for the first nine months of 2019 (9M/2019) demonstrates the above macro trends. For BNOI private sector deposits were up +54% in 9M/2019, while credit to the private sector was up +116% for the same period. Its pre-tax earnings for 9M/2019 hold promise for strong full year earnings – a long way to go before recovering to pre-crises levels– but supporting management’s bullish expectations for the year. While it’s not possible to extrapolate much from these results, or to generalize for the sector as a whole from them, they support in any case the argument that the conditions are in place for the sector’s recovery in 2020.

The macro and the micro trends discussed so far are affected by the youth protest movement that dominated all events in Iraq from the 25^th of October 2019 after the initial wave of protests in early October. The protest movement forced the political elite to implement reforms that would threaten their interests – contrary to earlier expectations of the opposite. Parliament approved electoral reforms that if made into law would be a meaningful departure from the prior ones that largely allowed the political elite to maintain their oversized influence on successive government formations.

If the hoped-for early elections in 2020 are to be conducted under these electoral reforms they will most likely lead to the formation of the next government with a majority in parliament and parliamentary opposition, as opposed to the case since 2003 in which successive governments were composed of all parties in parliament. This was the root cause of the failures of the past to implement the reconstruction of the country, as each party pursued its own program within its own sphere of influence within an all-inclusive government.

These developments have yet to be played out and a lot of uncertainties remain, yet the near-term effect on the economy would be that the current caretaker government, while unable to act on capital spending plans, will follow up with implementing the current spending element of the 2019 expansionary budget. Moreover, it will continue to implement this budget in 2020 through the upcoming months of pre-election manoeuvring, elections, and post-election government formation. The government has plenty of firepower to fund this spending in the form of a 33-month cumulative surplus of about USD 28.9 bln that will increase in a firmer oil price environment. The most important consequence of this is the sustainable continuation of the consumer led economic recovery discussed in earlier paragraphs.

(Source: Iraq’s Ministry of Oil, Rabee Securities, Asia Frontier Capital)

(Data for oil revenues as of December 2019)

The stock market continues to look through the political developments to the upcoming economic recovery, and while it’s in the early process of forming a base it is worthwhile to point out its continued divergence from its past close relationship with oil revenues (a proxy for the forces driving the economy). This divergence is still at the widest it has been for the last few years and it is showing tentative signs of narrowing this divergence as the above chart shows.

For further reading, here are some interesting, relevant news links related to Iraq:

• An interesting article on the emerging art and the future significance of the protest movement is “Hip hop, poetry and Shia iconography: How Tahrir Square gave birth to a new Iraq”, Fanar Haddad, December 9^th, 2019, Middle East Eye.
• For a full coverage of the protest movement’s symbolic art form visit the Facebook page of Baghdad Projects.

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

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

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

The Governor of Anbar, Mr Ali Farhan Hameed, visited the UK this week as a guest of the Iraq Britain Business Council (IBBC) .

While here, he attended various meetings at Chatham House, UKEF, at roundtables with IBBC members and dinner in the House of Lords with Baroness Nicholson ( President of IBBC and PM Trade Envoy to Iraq)

Mr Hameed’s message is that Anbar province is open for business, is secure, and has defeated and rooted out ISIL. Anbar is on the look out specifically for British engineering companies to work on water projects. The province now has good, rebuilt infrastructure, and the benefits of large phosphate deposits, natural gas, and is locationally at the crossroads between Turkey, Saudi Arabia and Syria. It seeks to reclaim its position as one of Iraq’s wealthier areas and has great opportunities for companies looking to establish businesses there.

Mr Hameed also attended the IBBC Christmas party, attended by Lord Green and Lord Robertson, vice presidents of IBBC, Mr Alastair Kett of PWC ( Deputy Chairman of IBBC) and Mr Rasmi El Jabri – deputy chairman IBBC ) and many new and original IBBC members and supporters, at the Royal Overseas League.

Mr Christophe Michels says’ that IBBC is ready and willing to facilitate any further introductions and initiatives with Anbar province, and we invited Mr Hameed following our own visit to Anbar in July 2019. We all look forward to a busy and successful year ahead.’ Season’s greetings and thanks to you all in our world.

(Source: IBBC)

Iraq has paid back more than $20 billion in foreign debt, the head of the parliamentary finance committee Haitham Al-Jubouri has said.

“Iraq’s foreign debt amounted to more than $50 billion. More than $20 billion was paid back over the last period,” Al-Jubouri told the Iraqi news agency.

According to the official, Iraq still owes $27 billion to foreign countries, in addition to $41 billion to Saudi Arabia given as a grant to the late Iraqi President Saddam Hussein.

(Source: Middle East Monitor)

Iraq's media regulator should reverse its decision to order the closure of 12 broadcasters over a licensing dispute and should allow media outlets to freely cover protests in the country, the Committee to Protect Journalists (CPJ) said on Monday.

On November 12, the Communications and Media Commission (CMC), Iraq’s media regulator, ordered the closure of eight television broadcasters and four radio stations for three months for allegedly violating media licensing rules, and issued a warning against five more broadcasters over their coverage of protests, according to a copy of the closure decision, which CPJ reviewed, and reports by local news organizations and press freedom groups.

According to the decision, the commission also renewed the closure of U.S.-funded broadcaster Al-Hurra for an additional three months. The outlet was shuttered on September 2 after it aired a report on alleged state corruption, as CPJ reported at the time.

The decision includes a recommendation to the prime minister’s office to send security forces to the outlets to force them to close. According to CPJ’s review of the outlets’ broadcasts, and an official with the media regulator who spoke to news website Arab News, none of the outlets have been closed as of November 25.

The outlets have critically covered the protests that have taken place throughout Iraq since October over a lack of basic services, unemployment, and government corruption, according to CPJ’s review of their broadcasts.

“Iraqi authorities are using all the means at their disposal, legal and otherwise, to intimidate outlets in an effort to prevent them from covering the ongoing protests in the country,” said CPJ Middle East and North Africa Representative Ignacio Miguel Delgado. “We call on the Iraqi Communications and Media Commission to reverse this order and to allow TV broadcasters, radio stations, and journalists to do their jobs.”

The outlets listed in the decision are the Amman-based Dijlah TV and Anb TV, the Dubai-based Al-Sharqiya TV, the Saudi-funded Al-Arabiya Al-Hadath, the U.S.-funded Radio Sawa, the Sulaymaniyah-based NRT News and Radio Nawa, and the Baghdad-based Al-Rasheed TV, Al-Fallujah, Hona Baghdad, Radio Al-Nas, and Radio Al-Youm.

The decision also issued a warning to five outlets to “adapt their discourse to the media broadcasting rules” or else face possible suspension: the Abu Dhabi-based Sky News Arabia, the Beirut-based Al-Sumaria, the Erbil-based Rudaw, and the Baghdad-based Asia TV and Ur TV.

The document recommends that the prime minister’s office approach representatives from the home countries of the foreign outlets listed in the decision, as well as the management of Egyptian satellite provider NileSat, to address the alleged violations.

Iraq’s Communications and Media Commission did not immediately reply to CPJ’s emailed request for comment.

Amid the protests, unidentified gunmen raided the Baghdad offices of four broadcasters, and the Communications and Media Commission ordered Al-Dijlah TV’s transmissions into Iraq to be blocked and its offices shut down for allegedly failing to abide by professional standards, according to CPJ reporting.

(Source: CPJ)

Journalists injured and detained, broadcasters banned as protests resume in Iraq

On Tuesday, the Committee to Protect Journalists (CPJ) condemned recent attacks on journalists and media outlets in Iraq, and urged authorities to ensure that journalists can cover the ongoing protests in the country safely and without obstruction.

After a brief lull, anti-corruption and unemployment protests reignited in Iraq on October 24, and led to at least 74 deaths by October 27, according to news reports and a statement by the Iraqi High Commission for Human Rights.

At least two journalists for local broadcaster Al-Sumaria TV have been injured in the latest wave of protests, one journalist was briefly detained, and two broadcasters have been banned, according to statements from the National Union of Journalists in Iraq and local press freedom organization Press Freedom Advocacy Association in Iraq, as well as news reports.

“Iraqi authorities seem more focused on preventing journalists from doing their jobs than on protecting them from harm while they cover protests,” said CPJ’s Middle East and North Africa Representative Ignacio Miguel Delgado. “We call on Iraqi authorities to do all they can to ensure that journalists and news outlets can do their jobs freely and safely.”

On October 25, police fired a tear gas canister that hit Hisham Wassim, a reporter for Al-Sumaria TV, in the face while he was covering protests at Baghdad’s Jumhuriyya Bridge, according to the journalists’ union statement and reports by his employer.

Wassim was seriously injured by the grenade and was taken to Al-Kindi Hospital in Baghdad, according to those reports. On October 27, he was flown to Beirut for surgery, according to his employer. Zian, an Al-Sumaria employee who declined to provide their full name to CPJ, said via phone that Wassim is set to receive minor surgery on his face, but had not sustained any bone fractures.

On October 26, police fired a tear gas bomb that hit Ali Jassem, a camera operator for Al-Sumaria TV, in his right hand and abdomen with shrapnel while he was covering protests in Baghdad’s Tahrir Square, according to his employer, the journalists’ union, and the Press Freedom Advocacy Association in Iraq.

Zian told CPJ that Jassem sustained light injuries and had gone back to work.

At 2:30 a.m. on October 27, a group of counter-terrorism agents stormed into the house of Hussein al-Amal, a reporter for the newspaper Al-Mada, in the southern Iraqi city of al-Nasiriyah and detained al-Amal, his son, and his nephew, according to the Press Freedom Advocacy Association in Iraq and Amir Hamid, a researcher for Al-Mada, who spoke to CPJ via email.

Agents took al-Amal and his family members to the Counter-Terrorism Directorate in al-Nasiriyah on allegations of participating in demonstrations, and released him and his nephew on bail a few hours later, according to a Facebook post by al-Amal. His son was released the following night, according to another post by al-Amal.

In a video posted to Facebook, al-Amal said he had gone to the protests as part of his work as a journalist. The day before his arrest, he had reported in Al-Mada on clashes between protesters and militias in al-Nasiriyah.

Iraqi authorities have also cracked down on news coverage of the protests. On October 24, the Iraqi Interior Ministry banned live coverage of the protests in Baghdad’s Tahrir Square, according to news reports.

Interior Ministry Spokesman Brigadier General Khaled al-Muhanna was cited by the news website Nas News as saying that authorized journalists were allowed to interview protesters and record the protests, but not to broadcast them live.

On October 25, Iraq’s media regulator, the Communications and Media Committee, ordered the Amman-based Iraqi satellite broadcaster Al-Dijlah TV’s transmissions into Iraq to be blocked and its offices shut down for allegedly failing to abide by professional standards, according to news reports and the journalists’ union statement.

Al-Dijlah TV’s offices in Baghdad were ransacked and burned by unidentified armed assailants on October 5, as CPJ reported at the time.

Jamal Karbouli, leader of the Al-Hal Party and owner of Dijlah TV, said on Twitter that Dijlah TV had never violated professional standards, and said it covered Iraq truthfully.

“I prefer the closure of Dijlah TV and the stopping of its broadcast a thousand times over hiding the truth from Iraqis,” Karbouli said in his tweet.

On October 27, Iraqi police told Saudi broadcaster Al-Arabiya and its sister company Al-Hadath that the outlets were banned from operating in the country and urged theirs staffs to cease all journalistic work, citing a licensing issue, according to news reports and a report by Al-Arabiya.

CPJ emailed the Communications and Media Committee and the Iraqi Interior Ministry for comment, but did not immediately receive any replies.

(Source: CPJ)

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

Is Iran expanding its influence in Iraq?

Well-known Iranian activist and journalist Roohollah Zam was captured Oct. 14 in Iraq and deported to Iran. The details surrounding his arrest and deportation have raised questions about the magnitude of Iran’s influence in Iraq.

BBC Persian, Saudi-funded Alarabiya and many other Persian and Arabic media outlets reported that Zam had been captured by the Iraqi National Intelligence Service on an arriving flight from France at the Baghdad airport and immediately handed to Iranian agents, who sent him to Tehran the same day. Both the Iranian and Iraqi governments have remained silent about the reports, neither confirming or denying them.

Click here to read the full story.

By Ahmed Mousa Jiyad.

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

Transparency in the Arab Countries’ Upstream Petroleum Sector- Iraq as case study*

While upstream petroleum sector is either dominant or has significant importance in many Arab economies of MENA region, the transparency of the sector is alarmingly lacking; this is manifested by their “formal” association with Extractive Industry Transparency Initiative (EITI), which is extremely limited and their Resource Governance Index (RGI) and Corruption Perception Index (CPI) that are too poor.

This presentation comprises three parts;

The first part addresses, briefly, the essence of transparency and what it entails:

• Full disclosure & availability of and accessibility to related Data & Information;
• Openness, answerability, accountability;
• Multiplicity of involved, reporting or concerned entities;
• Objective, Independent & Verifiable Indicators;
• Transparency is not rhetorical claim; it is evidence-based;
• Reconciliation of data: Materiality, Identifiably, Measurability;
• Constitutional Premises (ownership) Right and Rights Based Development- RBD

Also, this part provides a selection of most known international entities specialized in the matter; these are EITI, Natural Resource Governance Institute (NRGI), Transparency International (TI), Publish What You Pay (PWYP) and the Fund for Peace. Each of these entities has its distinct methodology, working procedures and publications. In addition to them, this part refers to the IMF’ Fiscal Transparency Code.

The second part exhibits charts on the standing of the Arab countries based on the latest available data and information from three international entities: EITI, NRGI-RGI and TI-CPI.

As on September 2019 only Mauritania has “meaningful progress” standing with EITI; Iraq was “suspended” since October 2017 due to “inadequate progress” and Yamen was “suspended” on February 2015 due to “political instability”, then in October 2017, Yemen was “delisted” and, thus, could be invited to reapply to the EITI once conditions were again favourable for implementation.

Obviously, the above manifests extremely poor standing (in number of countries and their status) with EITI.

The NRGI’ RGI measures the quality of resource governance in countries that together produce 82 percent of the world’s oil, 78 percent of its gas and a significant proportion of minerals, including 72 percent of all copper. RGI is the product of 89 country assessments (eight countries were assessed in two sectors), compiled by 150 researchers, using almost 10,000 supporting documents to answer 149 questions.

NRGI’s RGI for 2017 (oil and gas only) covers 89 countries and provides their “Score” on a scale of 100 and “Rank” of 89. RGI 2017 classifies the standing of countries according to their scores into: Good (>74); Satisfactory (60:74); Weak (45:59); Poor (30:44) and Failing (<30).

All the 12 Arab countries covered by RGI scored less than 60 out of 100. Countries with Weak score are Tunisia, Kuwait and Oman. Those scored poorly are Qatar, UAE, Bahrain, Egypt, Iraq, Saudi Arabia, Algeria and Yamen. Finally, Libya scored failing.

TI’ CPI 2018 draws on 13 surveys and expert assessments to measure public sector corruption in 180 countries and territories, giving each a Score from zero (highly corrupt) to 100 (very clean) and their Ranks accordingly.

Syria, Yemen, Sudan, Iraq and Lebanon each scored less than 30; Egypt, Algeria, Kuwait, Tunisia, Morocco, Jordan and Saudi Arabia scored over 30 up to 50; Oman, Qatar and UAE scored over 50 to 70.

Since both RGI and PCI are composite indexes, there is strong correlation between Scores and Ranks: low scores are associated with high rank numbers; high rank number means at the bottom of the list.

In conclusion all the standing of Arab countries is alarmingly very poor and disappointing with EITI, NRGI and TI.

The third part of the presentation focuses on Iraq as a case study on transparency through its association and experience with EITI.

Briefly, Government of Iraq (GoI) launched (2007/8) the International Compact with Iraq (ICI) in cooperation with the UN and the WB. ICI specifically calls to, “Establish and implement mechanisms to ensure transparency of petroleum sector flows”.

The government publicly announced its commitment to work with all stakeholder groups at the 4^th EITI Global Conference in Doha, Qatar, in February 2009, and then made formal commitment to EITI at the Iraq EITI (IEITI) launching conference on 10-11 January 2010; a month later the country was accepted, by EITI Board, as a Candidate.

The first validation report, prepared by EITI’ International Secretariat- IS staff, endorsed by Adam Smith International- ASI, prompted EITI Board to announce, on 12 December 2012, Iraq as “Compliant” country under EITI rules and process. On 3 April 2013, IEITI organized big event in Baghdad celebrating this achievement by Iraq.

A team from EITI-IS visited Iraq during 1-9 April 2017 and held numerous meetings in Baghdad and, also, in Dubai (UAE); IS Report presents the findings and initial assessment of the data gathering and stakeholder consultations and followed EITI usual and unified “Validation Procedures” and applied the “Validation Guide” in assessing Iraq’s progress with the EITI Standard.

Iraq was found to have inadequate progress in implementing the EITI Standard in October 2017. The country status as “compliant member” was suspended and, according to EITI rules, was given a grace period to rectify the shortcomings to achieve at least “Meaningful” progress on all identified requirements.

Why and what went wrong

The presentation highlights and discussed questions relating to why and what had led to such suspension under the following headlines:

• “Mission accomplished” and sense of complacency; frequency of MSG meetings and attendance curve
• Wrong understanding of what “compliant” status really means;
• Focus on “release on time” not on the quality and contents of the IEITI Annual Reports;
• IEITI Annual report mostly Copy & Paste; most Parts are prepared by MoO/ MIM officials and full of flaws and inaccuracies;
• Structure & composition of the MSG: dominated by Government representatives, IOCs not active, CSO lack understanding of Extractive Industry and language;
• Big Secretariat, weak national capacity contribution and complete reliance on the Administrator;
• Opposing domestic views: useless/invisible; event-base; abused by authorities and two extreme views (Rosy vs. UN full control!):
• Surprising passivism on Corruption!!!!!!;
• IEITI itself is a Black Box
• Limited impacts that led to diminishing international support and lack of funding e.g., NORAD; NRGI: from “priority country” to “Limited engagement” to only in “RGI”;

What are next and the way forward

In this part, the presentation reviewed responses and actions taken by the Iraqi authorities since the suspension: From the initial “muteness” and “passivism” October -2 November 2018,….., to 4 Nov 2018 alerting article; Committees & changes,  …; February 2019 Baghdad Conference; EITI-IS second validation; EITI Global Conference, Paris- June 2019.

In case of re-instating Iraq “Compliant” status, IEITI still has to take specific necessary measures and actions for real impacts instead of making rhetorical statements; such measures and actions were proposed, justified and discussed during the presentation. The PowerPoint slides are attached herewith.

* Presentation delivered before the 12^th Middle East and North Africa Oil & Gas Conference, organized by Target Exploration www.targetexploration.com, Imperial College, London, UK. 18 September 2019. I am very grateful to Target Exploration for sponsoring my participation.

Click here to download the PowerPoint slides presented at the conference.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.