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On July 29, 2015, the Executive Board of the International Monetary Fund (IMF) approved SDR 891.3 million (about US$1.24 billion or 75 percent of quota) for Iraq under the Rapid Financing Instrument (RFI).

The purpose of this financial assistance is to help Iraq address present and urgent balance of payment and budget needs in 2015 related to the ISIS insurgency and a decline in oil prices. The IMF financing will support the authorities’ current economic program, which includes fiscal adjustment measures and structural reforms.

Following the Executive Board’s discussion of Iraq, Mr. Mitsuhiro Furusawa, IMF Deputy Managing Director and Acting Chair of the Board, issued the following statement:

“The twin shocks faced by Iraq from the ISIS insurgency and the drop in global oil prices have severely widened the government deficit and caused a decline in international reserves. The authorities’ policies to deal with the shocks, including sizable fiscal adjustment and maintenance of the exchange rate peg, go in the right direction.

"Access under the IMF’s Rapid Financing Instrument will help address Iraq’s urgent balance of payments and budget needs. However, large fiscal and external financing gaps remain.

“The large financing gap calls for the rigorous implementation of the authorities’ policies, but also additional fiscal adjustment measures and identification of domestic and internal financing. In this context, it will be important to implement the new electricity tariff schedule as soon as possible, or adopt compensatory measures.

"Looking ahead, the authorities should lay the ground for medium-term structural reforms that would better support macroeconomic policy management and boost the economy’s resilience to shocks.”

(Source: IMF)

(Dollars image via Shutterstock)

By John Lee.

The Ministry of Electricity has reportedly signed a contract with the German company Siemens for the provision of that includes processing equipment, civil works and the rehabilitation of four 132 kV substations in Baghdad.

Shafaaq News reports that the contract includes processing equipment and the execution of civil works for the four stations, which are already present to the service.

(Source: Shafaaq)

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.

Political Independence Doesn't Pay: Basra's Beleaguered Governor Under Fire

As they have done with the pictures of his predecessors, the protestors in Iraq's southern Basra province were so angry they publicly ripped up pictures of the current governor, Majid al-Nasrawi.

In Iraq, Basra is well known as one of the most corrupt provinces; although the province is a relatively wealthy one – it has oil, agriculture and shipping – a large percentage of the locals and local government services remain poor. The poverty level in Iraq sits at around 22 percent but recent estimates suggest that it’s higher in Basra, indicating that just over a third of the population there live in poverty.

Part of al-Nasrawi's electoral platform included promises to remedy these problems, investigate corruption and provide better services, via a number of infrastructure projects.

However, as the small demonstration by civil society activists in Basra, who ripped up al-Nasrawi's pictures, showed, nothing much has happened. In fact, the demonstrators said, there had been a deterioration in services and an increase in corruption. Surrounded by a disproportionate number of security forces, they demanded the governor's resignation.

To counter these kinds of criticisms, al-Nasrawi held a special session at the provincial council in order to explain exactly what he had achieved, in terms of projects and to present the council’s expenditures in a transparent way.

But it didn't seem to help. The criticism that came after that meeting indicated the level of political antipathy inside the council itself, which has also had a major effect on the council's – and the governor's - ability to achieve any goals.

“That session of the council was a violation of standard procedure,” complained Ahmad al-Sulaiti, a senior politician on the council and the chairman of the provincial committee for financial supervision. “The council itself is supposed to review the governor's work. To do this after only six months of the fiscal year goes against procedure.”

Al-Nasrawi spent money on projects that were not a priority, critics said. “The governor has spent around IQD2 billion [around US$1.5 million],” al-Sulaiti argued. “But there were no tangible results. Additionally the provincial council was not informed as to how the money was spent.”

On the other side of the argument, al-Nasrawi was backed by members of the coalition that had voted for him as governor. It was pointed out that he had inherited the province's problems at a particularly bad time for the country.

Senior council member, Amin Wahab, said that the current provincial leadership had inherited infrastructure projects from the last budget; the governor only took office after the projects were already budgeted for and contracted out. “So we were only able to follow up on those projects,” Wahab explained.

“In 2014 there was no budget approved because of the security crisis [caused by the extremist group known as the Islamic State]. It would be a legal violation if the governor started coming up with new bids for projects when there was no budget approved yet.”

In fact, as Wahab pointed out, the council had focused on power production to cope with the extremely hot Iraqi summer. “In terms of electricity, Basra is now the leading province,” Wahab said. “People are enjoying 20 hours of uninterrupted energy supply here.”

Local political activist, Abbas al-Jurani, also attended the special meeting. He says the governor dutifully answered all the questions that his critics asked him. “But after the meeting ended, the governor's opponents started to contest what he had said. They said that the governor had not convinced them with his answers,” al-Jurani notes. “But they didn't discuss any of that him during the session.”

Al-Jurani says that the local government has been headed by a number of different leaders and parties over the past few years but that none had been able to resolve Basra's problems, which were caused by years of negligence and three different sets of violent conflict. That was due to mismanagement, corruption and partisan political quotas, al-Jurani argued.

Even if a new governor was appointed tomorrow, they still wouldn’t be able to resolve those issues because of the distrust between different political parties in Basra and because of politicians' own self-interest. If local people protest, the political parties simply use it as an excuse to start accusing and insulting one another – no consideration is given to the legitimate demands of the protestors, al-Jurani says. “And the intensity of the backbiting increases every time there are upcoming elections,” al-Jurani concludes.

Despite the protestors' calls for the governor's removal and general political ill will in Basra, it seems unlikely that al-Nasrawi will be forced to step down. “The protestors are trying to change the political map and destabilize the country,” Wahab told NIQASH. “But that won't happen because the most senior political leaders in the country want to retain the balance of power at this time and keep Iraq as stable as possible.”

By John Lee.

The Iraqi government has declared a four-day holiday starting on Thursday, as the country attempts to cope with temperatures expected to exceed 50 degrees Celsius (122 Fahrenheit).

Highest temperatures are expected on Sunday, and in the Central and Southern areas of the country, including Baghdad.

Poor electricity supplies will continue to cause problems are people rely on air conditioners; Prime Minister Haider al-Abadi ordered planned electricity cuts at state institutions and at the homes of all government officials.

(Sources: Reuters, Shafaaq, Associated Press)

(Heatwave image via Shutterstock)

By John Lee.

Iraq's Electricity Minister, Qassem Fahdawi [Qassim al-Fahdawi] (pictured), has reportedly said that his ministry is looking to invest in solar energy projects, in an attempt to solve the continuing shortage of electricity.

He said the country produces only about 11,000 MW of power, but needs 21,000 MW.

According to Kuwait's KUNA news agencey, he said that fuel supply was the major stumbling block, especially since the Baiji [Beiji, Bayji] oil refinery had stopped operating following attacks by the Islamic State group (IS, ISIS, ISIL).

(Source: KUNA)

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.

'The USA Sold Us to Iran': Iraqis Weigh In On Iran Nuclear Deal

Earlier this month news broke that a deal on Iran's nuclear programme had been reached, after months-long negotiations involving foreign ministers from seven countries – Iran, the US, the UK, Russia, China, France and Germany as well as the European Union's head of foreign policy.

The deal would curb Iran's nuclear programme and prevent the country from developing nuclear weapons quickly. In return long-standing international sanctions against Iran would eventually be lifted.

Around the world, opinions were divided as to whether the agreement was a triumph of diplomacy that would help achieve peace in the Middle East or whether it was, as one conservative US senator put it, “a historic defeat for the United States”.

Opinions were also divided in Iraq, which shares an almost 1,500 kilometre border and a chequered history of war, peace and political interference with Iran.

Just a few hours after the agreement was announced, Iraqis were heatedly discussing the topic on the streets, in cafes and on social media forums. The opinions expressed mostly seem to be indicative of the ethnic and sectarian fault lines already running through Iraqi society.

Those favouring the deal tended to be Shiite Muslims and they suggested that a better relationship between Iran, a Shiite Muslim theocracy, and the US would mean more stability in Iraq in general. The two nations – arguably Iraq's closest foreign allies – often jostle for power inside Iraq, using Shiite Muslim (Iran) or Sunni Muslim (the US) proxies. If they are on better terms, so the argument goes, maybe Iraq's sects will be on better terms and all forces could come together to combat the extremist group known as the Islamic State, which is currently causing Iraq's debilitating security crisis.

“It's a good deal,” argues Haider Kadhim, a shop owner in the upmarket Karrada area in central Baghdad. “I went to Tehran three months ago and I saw what suffering the economic sanctions have caused. It made me remember the problems that sanctions on Iraq caused here – poverty, disease, lack of services.

The fact that sanctions on Iran are lifted will be good for Iraq. They are our neighbours and we are close to them. If they're good, then we're good. And it will certainly increase economic cooperation and trade with them.”

However those opposed to the deal - most often Sunni Muslims - are arguing that the agreement gives Iran the right to interfere in Iraq without any US opposition. Washington has bought Iran's nuclear weapons, they complain, and in return they have sold Iraq to Iran.

“The nuclear deal is against Iraq's interests; Iran and the US have allied to destroy this country,” says Safaa Abdel-Meguid, an employee with the Ministry of Electricity who lives in the mostly Sunni neighbourhood of Saidiya in southern Baghdad. “Ali Khamenei has already acknowledged that his country won't stop supporting Iraq, even after the deal – which basically means his country won't stop interfering in Iraq.”

Insults and accusations also flew, with anyone opposed to the agreement often accused of being a secret agent for Saudi Arabia and the Gulf states – these countries have already expressed concern about the agreement, believing that if Shiite-majority Iran has more power it will be to the detriment of their Sunni-Muslim-majority nations.

The same kinds of arguments and discussions played out everywhere in Iraq – from family dining tables to coffee shops to Facebook. The Iran agreement also brought back unpleasant memories for many Iraqis – of the nuclear programme that was initiated by former Iraqi ruler, Saddam Hussein, and the trouble it caused.

“This kind of controversy among Iraqis reflects the social divisions we already have” Majid Kathem, a professor of sociology and psychology who lectures at the University of Baghdad and the University of Mustansiriyah, told NIQASH. “It is the result of the sectarian problems between Sunnis and Shiites that have plagued this country for years. Which is why every time there is a contentious topic like this, Iraqis come down on one or the other side; they cannot agree.”

The nuclear deal also gave critics of the Iraqi government another opportunity to harangue local politicians and their lack of achievement. Iraq's Foreign Minister Ibrahim al-Jaafari, a Shiite politician, was the target of much criticism. His dismal performance on open files – such as the fight over water with neighbouring Turkey and the dispute over Kuwait's Mubarak al-Kabir Port - was compared with that of Iranian Foreign Minister Mohammad Javad Zarif, who was seen as triumphant after many long and difficult negotiations. There were a lot of jokes made about al-Jafaari too. Iraqis often laugh about the way al-Jafaari speaks Arabic. He uses a haughty style of Arabic that seems old fashioned to many. Jokes about him compared his way of speaking to Zarif's, whom Iraqis see as more plain spoken and direct.

As for Iraq's senior politicians themselves, their opinions were divided in the same way as their voters were. At a senior political level most of Iraq's leaders welcomed the agreement in various statements to the press – even if some were a little lukewarm with that welcome.

“The agreement will help in strengthening security and stability in the Middle East,” Iraqi President, Kurdish politician Fuad Masum, told local media.

“We hope that the agreement will spare the region the scourge and disaster of war and conflict,” Iraq's Prime Minister, Shiite Muslim politician Haider al-Abadi, added in a statement.

And, senior Sunni Muslim politician, Salim al-Jibouri, also the Speaker of Iraq's Parliament, noted: “We hope that this agreement achieves greater economic and trade cooperation and gives the people their chance to live in peace and security”.

Other politicians made comments that reflected their own political allegiances.

“Unfortunately the agreement did not discuss the issue of respect for other nations' sovereignty and Iranian interventions in the region,” Ayad Allawi, one of Iraq's three Vice Presidents said; although Allawi is a Shiite Muslim too, he leans towards the secular lobby and he is well known for his antipathy toward Iran. “However,” Allawi conceded, “the agreement remains significant.”

Meanwhile Nouri al-Maliki, former Prime Minister of Iraq and now another of the country's Vice Presidents, described the agreement as a “victory for those who love peace in this region and in the world”. By the end of his regime last year, al-Maliki was known for his close links with Iran. Unsurprisingly the same kinds of sentiment were expressed by most of the Shiite Muslim-majority political parties.

While influential cleric Muqtada al-Sadr, who leads the millions-strong Sadrist movement and who has been critical about Iran's policy toward Iraq in the recent past, kept out of it, one of his counterparts, cleric Ammar al-Hakim, who heads a major Shiite Muslim political party, the Islamic Supreme Council of Iraq, said in an official statement: “We congratulate the noble Iranian people, its wise leaders and brave negotiators... We believe the nuclear deal is key to solving many of the thorny problems in the region”.

As yet though, the true impact of the agreement on Iraq cannot be seen. For instance, the impact of the agreement on oil prices. These dropped after the agreement was signed, a negative for Iraq which needs prices to rise if it wants to overcome its current federal budget crisis.

There may yet be more aspects of the agreement that have an affect on Iraq but these terms have not yet been revealed, says Ahmad al-Allusi, a local political analyst based in Baghdad. “The talks focused on more than just the nuclear issue. And we will doubtless learn more in the coming days – we will learn whether the two sides have agreed to resolve other conflicts in a conciliatory manner, through negotiation, or whether they will simply maintain the status quo.”

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

Never-ending Electricity Crisis means Lights Out for Iraqis, Again

Electricity generators have often saved Iraqis from summer temperatures that can reach 50 degrees Celsius (122 degrees Fahrenheit). Yet, they have also become a symbol for Iraqis suffering a lack of basic services, especially electricity. Generators have also become evidence that the government has failed to supply sufficient electricity.

One of the most notable plans was the Ministry of Electricity’s announcement in April 2013 that 2015 would witness an end to the electricity crisis and that the next year’s summer is set to become better than the ones that preceded it in terms of electricity. However, such promises have come to naught.

Ali Hatem, a grocer from the Babylon province, 100 kilometers (62 miles) south of Baghdad, relies on three sources of electricity to supply his house, after the Ministry of Electricity failed to provide the citizens with sufficient electricity.

He told Al-Monitor, "The first source is [his] own gasoline-powered generator, which produces 10 amps for six hours a day. The second is the neighborhood’s generator supplying 20 amps for nearly 10 hours a day. This is while the electricity during the rest of the day is supplied by the government.”

This is an example of how much the Iraqis rely on the indispensable generators at home and in the workplace.

Hatem told Al-Monitor that he paid $300 to purchase a Chinese-made generator that produces 10 amps of electricity. This is while he pays $50 as a monthly subscription to receive electricity from the neighborhood’s generator.

He said, “[When I’m out of gasoline] I have to get it in a barrel from the station for nearly $70. It will be enough just for a month and a half.”

He added, “All of these efforts are made to have 10 amps of electricity and to be able to run a refrigerator, an air conditioner and a TV.”

The electricity crisis in Iraq dates back prior to the US-led invasion of Iraq in 2003, when the country used to produce nearly 4,300 MW daily, which did not meet its electricity needs. According to a 2014 statement by Iraqi Minister of Electricity Qasim al-Fahdawi, Iraq needs 30,000 MW daily.

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