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The Iraqi Cabinet held its weekly regular meeting in Baghdad on Tuesday under the chairmanship of Prime Minister Haider Al-Abadi.

It approved funding to support the implementation of measures to improve public services, with a focus on electricity supply, water, health and education.

It also discussed a range of policies to encourage foreign investment, and agreed measures to streamline and simplify procedures for individual investors and companies applying for entry visas and residency permits.

(Source: Govt of Iraq)

UNHCR welcomes the generous donation of 1.5 million euros from the Government of Finland. The new funds will help UNHCR support vulnerable Iraqis and Syrian refugees in a rapidly changing context.

A year on from the end of fighting in Mosul, the situation in Iraq is increasingly complex.

While the country recovers from conflict, the needs of Iraqis diversify. Almost 3.9 million people displaced by the recent conflict returned to their homes and are restarting their lives. Children are back at school, water and electricity networks are functioning, and devastated communities are seeing the shoots of regrowth. In places hard-hit by the conflict, the conditions for sustainable return are not yet met. Assistance for the 2 million internally displaced Iraqis and the communities that host them must continue for some time to come to discourage people from returning home too soon.

In addition, around 700 people cross the border every month to escape the fighting in Syria that shows no sign of abating.

To meet diversifying needs, UNHCR provides support over a broadening spectrum. From comprehensive humanitarian assistance in camps to community-based projects to promote social cohesion in slowly reforming communities; from psychological assistance for survivors of gender-based violence to support in acquiring the new or replacement identification documents people need to access state social welfare benefits.

“Iraq is an important partner to Finland and the EU,” said Ms. Päivi Laine (pictured), the Finnish Ambassador to Iraq. “We want to support the Iraqis to return home after years of conflict and continue their lives in home communities. It is remarkable that despite its own complicated situation Iraq is generous towards refugees from Syria. UNHCR has been for years a reliable partner and Finland is very satisfied to continue the co-operation in Iraq. The latest donation is 1.5 million euros.”

“The changing context in Iraq requires us to be ever-more nimble in our response,” said Mr. Bruno Geddo, UNHCR’s Representative in Iraq. “Even as cities are rebuilt and communities begin to flourish, hundreds of thousands of people struggle to make ends meet. Flexibility and creativity are at the heart of UNHCR’s work in Iraq, to consistently meet people’s changing needs. Unearmarked funding from donors like the Government of Finland enables us to be responsive and compassionate to the changing situation Iraqis face. With their ongoing support, we will stand with the people of Iraq until the job is done.”

(Source: UN)

Baker Hughes, a GE company has been awarded a contract by the South Gas Company of Iraq (SGC) for fast-track solutions to help the recovery of flare gas for Nassiriya and Al Gharraf  [Garraf] oilfields. The importance of the project was highlighted by the attendance of several high-level officials, including HE Jabbar Al-Luaib, the Minister of Oil of Iraq, at the agreement-signing ceremony.

As per the agreement, BHGE will develop solutions for flare gas recovery at Nassiriya and Al Gharraf oilfields using advanced modular gas processing (NGL) technology developed in the United States and Italy. The project will utilize the modular skid-mounted Gas Processing technology to build 200 million standard cubic feet per day (MMSCFD) NGL plant and is expected to be completed by 2021.

The project will support the development of a fully integrated natural gas liquid (NGL) plant at Nasiriya that will recover 200 MMSCFD of dry gas, liquefied petroleum gas (LPG) and condensate.

The modular solution will support power plants with dry gas for efficient power generation, thus helping meet the growing demand for electricity using clean fuel. It will also contribute to curtailing the amount of gas flared in the fields of Nassiriya and Gharraf that otherwise goes to waste.

The advanced technology used to develop the plant will help produce more than 1,000 tons of LPG per day and recover more than 900 cubic meters per day of condensates, which will help to meet the domestic demand for cooking gas.

The surplus LPG and condensate will be exported, generating high revenue to the Iraqi government.  Contributing to the social and economic development of Nassiriya, the project is aligned with the vision of the Ministry of Oil and the government.

H.E. Jabbar Ali Al-Allaibi, Iraq’s Minister of Oil said, that this project is important achievement for the Ministry and marks the entry of a new phase for the sector, highlighted by time optimal utilization of flare gas, which is a major milestone in the government’s extensive efforts to drive a better future for Iraq.

H.E. also highlighted the prominence of this project for the province of Dhi Qar specifically and for Iraq in general adding that BHGE will provide it latest and advanced technologies and solutions to optimize the use of flare gas at the Nassiriya and Al Gharaf oilfields recovering 200 MMSCFD of dry gas daily.

Rami Qasem, President, MENAT & India, BHGE, said:

“As a local trusted partner to Iraq, BHGE is bringing advanced technologies and solutions that can help meet the Ministry’s goals for the industry. This contract is a testament to our continued commitment to supporting the Ministry of Oil’s strategic goals by deploying advanced flare gas solutions to build the country’s oil and gas infrastructure. The project will create more than 500 direct and indirect jobs for Iraqis, build local capabilities and strengthen the local supply chain.”

BHGE is the first and only company in the world to provide a fullstream offering covering products, services and digital solutions for the oil and gas sector, from upstream, to midstream to downstream.

BHGE has been a committed partner to Iraq for more than 50 years, with three offices in Iraq - Baghdad, Erbil and the Basra –  and more than 350 employees in country, BHGE continues to deliver its latest technology and expertise to its local customers.

(Source: Baker Hughes)

This article was originally published by Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

By Mustafa Habib.

There are anti-government protests in Iraq every summer. But the recent batch are different, and in ways that could hinder any resolution.

The protests that have been rocking the Iraqi political establishment for almost a month now began when dozens of unemployed young men from the village of Bahila, on the outskirts of the southern city of Basra, gathered outside an oil company premises demanding jobs. The protests then spread to the city centre and widened their scope, with participants demanding better state services and regular water and power supplies.

Protests are expected in Iraq in summer. It’s so hot that a lack of potable water and power to cool things down, or keep food, is enough to drive people onto the streets in anger. But these protests – which spread from Basra to other provinces, including the capital Baghdad – are different from past ones in several ways.

For one thing, they appear to be spontaneous and leaderless, their demands are many, often non-specific and in some cases, unrealistic. And if the protestors have one thing in common, it is their distrust of, and lack of confidence in, the whole of the Iraqi political establishment. They are not targeting any one party or sector; basically, they don’t like anyone.

All of these factors make it unlikely that the protestors will be able to achieve what they want. In fact, it may hamper them in the long run.

The lack of leadership makes it hard to find anyone to negotiate with. Some of the demonstrators said they were heading to Baghdad, having organised delegations to meet with the current prime minister, Haider al-Abadi. But as soon as they said this, other demonstrators were quick to announce that the delegations going to Baghdad did not represent them.

In this case it’s hard to negotiate a solution, let alone following up on any plans.

The absence of any leadership could see the protests fade away. There is also the danger that other less well-intentioned parties could exploit the protests.

During last year’s anti-government demonstrations, the leaders tended to be members of civil society groups and secular movements. They created a culture of protest going back to 2010. The other leader of that movement was the influential Shiite Muslim cleric Muqtada al-Sadr and a large number of his followers.

But all of those former organisers are now somehow tainted by their recent win in the federal elections, held in May this year. They are now seen as part of the political process and therefore, unable to participate in this round of anti-government anger.

Al-Sadr, whose alliance won the most seats in the next parliament, had proposed postponing government formation negotiations in order to respond to the demonstrators.  But when al-Sadr tried to send a delegation of his supporters to speak with the Basra demonstrators, the Basra locals refused to receive the group. It was an unexpected rejection.

“Winning has its downsides,” says an MP for al-Sadr’s alliance, who is likely to be awarded a seat in Baghdad’s parliament; he could only speak anonymously as he was not supposed to comment on the situation. “The protestors believe we have become powerful in the country’s politics before the government has even been formed, or the parliament chosen. We do support the demonstrators and if we were asked to choose between taking power or supporting their demands, we would choose protests rather than becoming part of a government that is unable to provide the necessary services,” he told NIQASH.

Another unusual thing about the current protests, and a sign that the demonstrators are opposed to all kinds of elites in Iraq: They were even criticizing the country’s highest Shiite Muslim religious authority, Ali al-Sistani, who is usually not an acceptable target. Protestors had banners criticizing al-Sistani and asking why he had not spoken in support of the protests during the first week they happened.

Al-Sistani finally spoke out about the protests during last Friday’s sermons. He called upon demonstrators to keep up the pressure on the country’s politicians and demanded that the new government be finalized as quickly as possible, and that it be headed by a “strong and brave” prime minister. Al-Sistani also called on the politicians to think carefully about what they did in the past.

By talking about the past, al-Sistani was thought to be referring to the Sunni-Muslim-majority anti-government protests of 2013. The government did not respond to the protestors’ demands, or it clamped down violently – all of which enabled extremists to weaponize the protests. This can be seen as part of the reason for the rise of the extremist Islamic State group in Sunni Muslim areas.

Angry protestors also attacked and set alight the headquarters of Shiite Muslim political parties in southern Iraq. They did not appear to care which offices they damaged and even attacked the headquarters of the Shiite Muslim militias. Until just a few months ago the latter had been revered – and in many cases, considered above criticism within their own communities – for fighting the extremist group known as the Islamic State, and sacrificing their lives to do so.

Iraqi Prime Minister Haider al-Abadi is a more obvious target for the protestors and is often criticised. But over the past three weeks, his acting government – in power until the formation of the next one – has tried rapprochement. Al-Abadi travelled to Basra but was unable to get very far as he was besieged by angry locals. He later decided to receive delegations in Baghdad instead.

To appease the protestors, al-Abadi has fired his minister of electricity and also promised the creation of thousands of new jobs. The government has also tried to engage influential local personalities – including community and tribal leaders and local politicians – to help restore peace.

Unfortunately nobody believes the government. “They are lying to us,” Abdul Ridha al-Rubaie, a community leader in Basra, told NIQASH. “Months ago, when the budget was being discussed, the government announced that it would not be able to create jobs because of the financial crisis in Iraq. Now it is suddenly offering thousands of jobs. But if it is really unable to create jobs – as they said previously – then this promise is worth nothing.”

All this pressure from the demonstrations, as well as al-Sistani’s reproach, has meant that Shiite Muslim political parties are renewing attempts to try and form a government. The political elites of Iraq are currently riven by infighting.

Nonetheless they also remain confused. They’ve been having to try and negotiate with angry mobs and deal with al-Sistani’s call to form a government of technocrats that can change the country for the better, rather than one based on Iraq’s controversial quota system. Some political parties have even stopped saying that one of their members should get the job of prime minister because they know it angers those on the street.

And now they must deal with the even more difficult part: Iraq has never formed a government that ignores the quota system before. To take a new untried route to power, makes things more difficult. And despite ongoing calls to hurry the process of government formation up, it is quite possible that doing so according to al-Sistani’s call, will delay it even further.

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 market, as measured by the RSISUSD index, marked an important bottom in July as part of a likely bottoming process. The multi-month bank selling shifted into high gear. This intensified into a frenzy, climaxing by the middle of the month with the liquidation of a large foreign position in the Bank of Baghdad (BBOB) – one of the top banks on the Iraq Stock Exchange (ISX). At the worst point in July, BBOB and the index were down -24% and -12% respectively for the month, after which both reclaimed these losses to end up +2.4% and +0.5%.

The selling in the banking sector over the last few months, driven by concerns over declining FX margins (as explained here in the past), was paced by consistent foreign selling in BBOB. The size of the selling exaggerated the stock’s declines which had a knock-on effect on other banks which declined in-tandem and dragged the market with them given the sector’s dominance of trading on the ISX.

Local retail trading is dominated by speculators, yet locals tend to appreciate the true values of local assets especially at extreme valuations. At the worst point, BBOB’s market capitalization was equal to about 0.3x Book Value, 8.5% of assets and 15% of cash (based on the trailing 12 months) which would suggest that the stock was discounting some sort of end of the world type event. The locals, aware that such a catastrophe was not around the corner and that the decline was a function of a portfolio liquidation, raised funds from family, friends and banks in order to buy BBOB. Joined by a few foreign investors, undoubtedly aware of the same valuations, the combination absorbed all the significant selling, after which the stock began to climb.

Irrespective of BBOB’s strong position among local banks, it too suffered from the same forces that crushed the sector’s earnings, as discussed in last month review of banks (Of Banks and Budget Surpluses). Furthermore, it had its share of company specific issues and structural weaknesses that were exposed by the pains of 2014-2017, including the recent pressure on FX margins. The bank’s focus on addressing these weaknesses at the expense of revenue growth is hindering near term growth. However, given the quality of its management, strong position with high quality customers (in particular foreign companies) and the strength of its franchise, it should emerge in a position to resume growth in the recovering economy.

As explained last month, the banks’ leverage to the economy crushed their earnings. In particular, the double whammy of the ISIS conflict and the collapse in oil prices squeezed government finances as expenses soared while revenues plummeted. The government resorted to dramatic cuts to expenditures by cancelling capital spending and investments which, due to the centrality of its role in the economy, led to year-year declines in non-oil GDP of -3.9%, -9.6% and -8.1% for 2014, 2015 and 2016 respectively. Ultimately, the government had a cumulative deficit of around USD 41bn during this period and accumulated significant arrears to the private sector in the process.

The same leverage should work in reverse as the expected budget surpluses of USD 28.5bn for 2017-2019 should have simulative effects on economic activity which ultimately should translate to stronger future earnings for the banks. These were discussed in further details at: “Forget the Donations, Stupid.”

For BBOB, the changes for the worse during the years of conflict can be seen through the three charts below that look at loans/non-performing loans (NPL’s), deposits and trade finance and their association with budget surpluses/deficits. BBOB Data as supplied by the research team at Rabee Securities is gratefully acknowledged. Data from 2010-2014 are based on Iraqi accounting standards, while data from 2015-2017 are based on IFRS.

BBOB’s loan book growth peaked in 2015, while NPL’s grew at the height of the crisis in 2016. The sharp decline in the loan book since then exaggerated the growth of NPL’s as a percentage of loans, as NPL’s declined in absolute terms marginally in 2017 vs. 2016.

Bank of Baghdad: Loans, NPL’s & Loan provisions 2011-2017

(Source: Central Bank of Iraq (CBI), Rabee Research, Asia Frontier Capital (AFC))

Though NPL’s are relatively high, even during the relative boom times, loans as a percentage of deposits have been very low at the mid-20%’s level as can be seen below.  Moreover, most of these loans are collagenized by property as most banks’ loans are in Iraq where the norm is for collateral value at 2x the loan. BBOB’s relatively large NPL’s were a function of the relative size of their loan book which meant a larger exposure to riskier loans taken during the boom years.

Bank of Baghdad: Deposits and Loan/Deposit ratio 2011-2017

(Source: Central Bank of Iraq (CBI), Rabee Research, Asia Frontier Capital (AFC))

The decline in deposits as a function of the economic contraction was made worse by the decline in BBOB’s trade finance business as that meant the loss of funds deposited as partial collateral required for the provisioning of trade finance.

Trade finance, once an engine of growth for the bank suffered as a result of the sharp economic contraction brought about by investment cuts and the slowdown in consumer spending.

Bank of Baghdad: Trade Finance 2011-2017

(Source: Central Bank of Iraq (CBI), Rabee Research, Asia Frontier Capital (AFC))

It’s logical to conclude that the sea change which has taken place in the government’s financial health would reverse the trends that affected the sector’s earnings as the significant stimulus to non-oil GDP should lead to sustainable economic activity which would provide BBOB room to recover, address its weaknesses and grow.

The question- when will these budget surpluses find their way into the economy through government action- has been partly answered by the government’s response to nationwide protests that erupted in early July, demanding the provision of services. The first response was to allocate USD 3bn to the city of Basra to fund long delayed infrastructure projects, a USD 669mn injection into the country’s housing fund to provide about 25,000 housing loans, plus a number of smaller projects in the southern governorates.

The eruption of protests in the city of Basra and their spread across the southern governorates right to Baghdad has, as is the usual case in all Iraqi events, led to two polar views. The first dismisses these as the usual ritual of summer protests ignited by the scorching heat that would soon settle with a few government handouts and the end of summer - echoing perhaps an old Iraqi politician who likened Iraqis’ anger to effervescent salts that erupt with a great fanfare before settling down. The second warns of the emergence of instability given that the Iraqi political establishment is incredibly slow to change its bad old habits, if at all, but that the young angry population is running out of patience.

While both arguments have merit, current protests should be seen from a wider prism in that they are the fourth instalment of a protest movement that began in 2010 and developed in both scope and maturity. The last incarnation in 2015 had a profound effect on how the election was fought and its ensuring results, as it led to the break-up of the ethno-sectarian monolithic blocs that were dominant over the past 15 years and which were at the root of Iraq’s instability. Thoughts supporting this line of thinking appear in (The Protest Movement, the Politicians and the Elections).

The influential religious leadership has supported the protest movement calling for the quick formation of a government focused on meeting the demands of demonstrators. This should hasten the formation of the government ending the current uncertainty. However, irrespective of how it is formed, the government would have the financial wherewithal to start the reconstruction of the country and the provisioning of infrastructure in the form of cumulative two-year budget surplus of USD 18.8bn by end of 2018- equal to a stimulus of 14.5% of non-oil GDP once reconstruction projects are underway. These would be enhanced by potential budget surplus of USD 9.3bn in 2019 or a further 6.8% stimulus to non-oil GDP. (Details available in a recent article).

It worth noting that while Iraq has its share of challenges, none are unsolvable in that the key issue of the last few years has been a sequence of crises that have forced successive governments into short -term solutions without providing overall long-term solutions. For instance, the current demonstrations were started by anger over the lack of electricity coverage beyond a few hours each day. Yet, “of 26 gigawatts installed generation, theoretically enough to meet the current 23 GW of demand, less than 17 GW is operable because of lack of fuel, maintenance and transmission capacity: source.” As such, these are addressable in a reasonable timeframe by a focused government with a clear mandate which could emerge given the current pressures from the electorate supported by the religious authority.

Finally a report on Iraq’s debts addresses a number of misconceptions on its debt profile that would have a huge implication for its ability to fund the needed reconstruction and the provisioning of services is here (Understanding Iraq’s Debt).

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

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

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

Kurdistan Regional Government Prime Minister Nechirvan Barzani inaugurated a new power station in Sulaymaniyah.

In a speech during the ceremony, Prime Minister Barzani thanked South Korea for helping build the plant, which generates 400 KV electric power.   He also said that despite major challenges, the KRG has taken serious steps ahead, and it allocated significant resources to the electricity sector.

Below is the transcript of Prime Minister Barzani’s speech:

Ladies and gentlemen,

Good morning.  I welcome you all to the grand opening ceremony of the 400 KV power plant in Bazian. I congratulate everyone on successfully finishing this important project, and I hope this project will contribute to solving the electricity issue in the area and in the Kurdistan Region in general.

I commend the Ministry of Electricity, the Korean National Oil Company (KNOC), the project implementer Posco from South Korea, the Ministry of Natural resources and all others involved in delivering this project after facing many obstacles and issues such as the fight against terror and the financial crisis. Although it has taken a long time, the project was finally finished and started operating.

I would like to especially thank the local community here and those respected individuals who some of them are present here today. They have played an important role in resolving many issues related to social issues or land ownership disputes or compensation issues. I again applaud them for their efforts, and I welcome them again.

Ladies and gentlemen,

This project is part of a wider strategic plan set out by the KRG for the electricity sector. However, similar to other projects, it has been delayed due to the war against the terror and financial crisis. It is true that the war and the financial crisis have adversely affected all aspects of life, but the KRG, with the support of its loyal citizens and friends of Kurdistan Region, has always striven to overcome the problems and the crises by implementing the projects to its best capacity even during the hardships.

Yes, I agree that there is a problem in the electricity sector. There has been the inability for the projects and plans to be implemented adequately. And, a there has been an exponential increase in demand on electricity and other public services due to urban development of the cities and towns, constant building of mega constructions such as malls, industrial areas and the renovation of the villages. And an imposed war was among other reasons that KRG could not implement its plans and projects as it should have.

Despite all that, the KRG made serious steps ahead, and it allocated significant resources to the electricity sector. Meanwhile, it encouraged private investors to initiate large projects for that sector in Erbil, Sulemani, Duhok, Halabja and other areas.

And now, enforced by the perseverance of our patient people and the heroic sacrifices of our valiant Peshmergas, we have vanquished the plans of our foes. The hard days are passing. The KRG, with all its capacity, will make steps ahead on all fronts, and it will, again, resume the projects. For the electricity sector too, we are in need of small and large steps, and this project is one of those steps. It is an attempt to reduce the issues of electricity.

Besides those attempts by the KRG to better the electricity, as previously announced that the KRG is going ahead with the implementation of Smart-Meters for electricity. This new system will have a major role in reorganizing the electricity distribution process; therefore, it would translate into providing more electricity to the public.

In addition, this system will help in changing a bad cultural habit of over-consumption of electricity and tampering with it. Instead, it will help create a new and good habit. The habit of energy conservation and reducing the consumption of electricity is very necessary for the Kurdistan Region. This system will encourage everyone to use only the amount of electricity that is needed and when needed.

Ladies and gentlemen,

This project in Bazian benefits the national grid, but it also has a special benefit to the area, which is an industrial area, as industrial projects can benefit from it. As planned by the KRG, I hope to see more projects in other sectors to be implemented in this area.
Bazian and its surrounding area with its patient and forbearing people have a history full of pride, and they undoubtedly deserve more projects and better services. The KRG will diligently continue in pursuing its mission of equally reconstructing every part of Kurdistan without distinction. It will equally provision services and implement projects in all areas.

The KRG has never made distinctions between two different areas or between cities. Because of political competitions and rivalries, some people have irresponsibly resorted to creating a false image of KRG for being unequal to different areas of the Kurdistan Region. There are some people are ready to do anything just to make people lose trust and faith in their own government.  They continuously work on disseminating the culture of rejection of everything.

They do this for only one reason because they are not in power and they have not been able to win the trust of people. This is a very damaging phenomenon, because the nation, the government, and institutions belong to the people of Kurdistan, but not any political party or any other faction. It is correct that there are shortages and problems, but not everything in this country is negative.

The people of Kurdistan are very aware and mindful than to listen to those dark pessimistic voices. It was because of the strong awareness of the people of Kurdistan, we were able to surpass all those recent years of hardship and crises. It was because of the loyalty and deep understanding of the people of Kurdistan for the situation, we were able to withstand all the problems, the war, and the crises, as they never lost faith and trust.

Here, I would like to express the utmost gratitude and reverence of the government to the people of Kurdistan and those who are on the payroll of the KRG. They have demonstrated their faithfulness to their nation, and they showed their maximum understanding of the serious situation and the threats that were engulfing the Kurdistan Region.
I would like to applaud the courageous Peshmergas, security forces and volunteers, who fought with soul and blood in defending what is achieved so far. I salute our fallen heroes. Our heartfelt condolences to the martyr’s family members and their relatives.

Dear fellow citizens of Kurdistan,

The interests of the Kurdistan Region and protecting its accomplishments requires us to be united. It is normal for the political parties to be competitive with each other. But for the public interest, for attaining the constitutional rights for the Kurdistan Region and in critical matters, we need to be together and unified.

I, again, call upon all factions in the Kurdistan Region to put aside their political discords, and go to Baghdad as one team, formed on the basis of the interests of the people of Kurdistan.

In conclusion, I congratulate all who participated in succeeding in this project. I wish for us to meet again in ceremonies similar to this project in this area and all other areas in the Kurdistan Region.
Thank you all.

(Source: KRG)

By John Lee.

The spokesman for the Ministry of Electricity, Dr. Musab Sari al-Mudaris [Mussab Serri al-Mudaris] (pictured) has denied reports that he had told Bloomberg about an agreement to buy electricity from Saudi Arabia.

He said the statement from the news agency is incorrect.

Bloomberg had cited Mudaris as saying that Saudi Arabia agreed to build a 3,000-megawatt solar power plant in Saudi Arabia and sell the electricity to Iraq at $21 per megawatt-hour, a quarter of what it paid Iran for the imports.

Iran recently stopped supplying electricity to Iraq due "the accumulation of debts owed by Baghdad".

(Source: Ministry of Electricity, Bloomberg)

By John Lee.

Prime Minister Haider al-Abadi suspended Electricity Minister Qassim al-Fahdawi (pictured) on Sunday for what he described as the "poor performance of the sector".

Protests against unemployment and poor public services turned violent earlier this month, with several protesters killed.

Many areas of Iraq are struggling to cope with insufficient electricity supply during the annual heatwave.

(Source: Office of the Prime Minister)

The Iraq Governance and Security and Justice Programmes are key in delivering the UK’s mission to support the Iraqi Government and people as they build a stable, prosperous and democratic nation.

Working with the Government of Iraq, the UN Mine Action Service (UNMAS) and the UNDP, CSSF funding has helped to rebuild essential infrastructure in areas liberated from Daesh, and cleared it of explosive hazards, enabling over 3.6m people to return home and access basic services, including healthcare, education, water and electricity.

CSSF support to the UNDP-led Funding Facility for Stabilisation, a multi-donor pooled fund, has helped deliver over 1,500 stabilisation projects restoring services and essential infrastructure in liberated areas. UNDP has staff deployed across Iraq, including embedded stabilisation advisors in 10 municipalities to support project planning.

The programme has provided cash for work for both men and women, and stimulated local business through reconstruction contracts. Over 15,000 residents earned a wage whilst restoring their homes and city.

Inclusion is critical to the stabilisation effort—and women have been recruited as engineers, social workers and in local councils. In total over 2,000 jobs and more than 1,000 small business grants have been created for women, and over 1,000 vulnerable women and female headed households have benefitted from cash for work programmes.

As well as the ‘pooled’ Funding Facility for Stabilisation projects, CSSF funding has specifically paid for the rehabilitation of a water plant serving over 300,000 people in Mosul and repaired over 2,000 homes in the city.

In Mosul the UNMAS demining programme has facilitated the removal of more than 585,000 explosive hazards, helping to enable the return of nearly 1 million people. Clearance locations include Al Khansa Hospital in Mosul and four schools in Al Qayarra, helping 1,286 children return to school.

To download the full report from the UK's Foreign and Commonwealth Office, please click here.

This article was originally published by Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

By Mustafa Habib.

Iraqi Internet Shuts Down, Fake News Blossoms During Information Blackout

When it came to disinformation, shutting down the Internet to prevent protests in Iraq may have backfired. Iraqis get most of their information from social media and there was none, so false reports circulated wildly.

On June 14, the Iraqi government shut down the Internet in an effort to try and prevent the spread of anti-government protests. The demonstrations, which called for better state services, power and water, had spread from the southern city of Basra to nine other provinces, including Baghdad. And clearly the government wanted to prevent them from going any further.

For the past few years, these types of protests have broken out every summer. In stifling heat rising to 50 degrees Celsius, the lack of power to refrigerate foods or keep houses cool and the fact that water coming out of the taps is salty, is enough to drive Iraqis to protest. But these demonstrations spread further than previous years.

And one imagines that the Iraqi government was trying to prevent the spread of information about the protests, in order to contain them. They are able to block the Internet thanks to the fact that most of infrastructure used for relaying the Internet is government-owned.

However the Internet blockage seemed to only frustrate Iraqis further. Locals here rely heavily on social media to get their news; they tend not to trust local media, believing it to be partisan or funded by interested parties who push their own agenda. What friends and relatives post on Facebook has become a major and important source of information – and when the Internet is down they obviously cannot access this.

So locals found themselves watching TV to get more information about the protests or resorting to VPN – virtual private networks – to access the online world. Iraqis have become accustomed to using this kind of software when the government shuts down, or throttles the Internet here, but as digital privacy experts point out, these too can be  dangerous, especially with regard to privacy.

Clearly Iraqis right around the country were interested to know more about the protests. But pictures and videos were hard to come by, given the Internet shutdown. This led dozens of Facebook pages, specializing in Iraqi news and current affairs, to write up stories about the protests – but as they did, they also used older pictures and videos and many ended up publishing unsubstantiated rumours.

Iraqis who sympathized with the demonstrators didn’t just publish news reports on their pages, they also uploaded pictures and videos to Facebook – some of these were real and some were not. News organisations, like NIQASH, received these kinds of items via messages from people who appeared to be private citizens; however, due to the Internet shutdown, it was difficult to verify the content that was being sent and some of it was certainly not from the current demonstrations.

In fact, as Internet-rights activist and head of the Ansam Network, Haidar Hamzouz, says, the Internet blockade may well have had the opposite of the government’s intended effect. “Shutting down the Internet is a violation of the freedom of expression,” Hamzouz told NIQASH. “And the decision to do this was not the right one – it actually contributed to the spread of false news and it also became very difficult to inform anyone that  certain items were false news.”

It seems that in Iraq, as elsewhere in the world, false reports and emotion-generating half-truths spread far faster than the truth.

Even though the government owns the public broadcaster, Iraqi Media Network, and they have huge resources, they still have not been able to stop the spread of these false reports and rumours, Hamzouz says. “We need institutions that are capable of relaying the facts and combatting fake news, rather than those who just shut down the Internet,” he argues. “Combatting fake news and untrue reports requires a change in the communal culture, one that values verification and checks sources. Unfortunately this doesn’t yet exist in Iraq,” he notes.

One of the more dangerous pieces of false news involved reports that the security forces, who were clashing with the demonstrators in the south, were actually from elsewhere, and more specifically from Anbar and Mosul. The message was that Sunni Muslim soldiers – who mainly come from central and northern Iraq - were abusing Shiite Muslim protestors, who mainly live in southern Iraq. It was clearly a report aimed at fuelling sectarian conflict.

“It is so unfortunate that this news incited hatred against us,” says Ali al-Rubaie, a police captain based in Rustafa, Baghdad. “The members of the security forces who were deployed to the protests were actually residents from the same cities. Each province has its own police and counter-terrorism forces. It would be impossible to do that job with troops from outside of the provinces in which the protests occurred,” he argues.

Additionally when the protests first started, news that the demonstrators were clashing with Iraqi security forces spread fast. But given the internet blockade, it was difficult to find pictures from incidents. One picture that was shared many times shows an Iraqi soldier pointing his gun at an unarmed civilian lying on the ground. However the picture was actually taken during a military training exercise in 2014, organized for a military training graduation ceremony in Karbala.

Another dangerous piece of news had Talib Shaghati, the head of Iraq’s special forces troops, commenting on the clashes between the demonstrators and the security forces. “This is not our battle and we will not stain our hands with the blood of our sons and brothers for the sake of some corrupt officials,” Shaghati was alleged to have said in a  statement that was widely circulated on social media.

The same report said that Shaghati  had been asked to send his troops to the protests but he had refused, and that he had asked the government to listen to the demonstrators’ demands before it was too late. Thousands of Iraqis believed this report and some even said that there should be a military coup because it was clear that the protests had no impact on the government, and the military were on the protestors’ side.

The US was not coming to the rescue either: One report said that US president Donald Trump had said his government was keeping a close eye on the protests in Iraq. This was followed by video footage of two military divisions landing at Baghdad airport. None of this was true: The video was an old one.

Saudi Arabia was not coming to the rescue either. As the protest movement gained momentum, its critics were divided. Some said Iran was behind the protests because the neighbouring nation was going to stop supplying power to Iraq. Others said Saudi Arabia was at fault and was pushing people to demonstrate in order to cause chaos in Iraq.

One of the obviously false reports was started by a page on Facebook called Saudi News. It said that Saudi Arabia’s ruling monarch had ordered water lines and electricity transmission lines to be built urgently for the southern parts of Iraq. The report spread quickly throughout Iraqi social media despite its fanciful nature.