Saturday, August 20, 2016
Iraq sinks further into $125 billion debt: Assad vowed Aleppo would be Erdogan's "graveyard.
Iraqi workers stand near a pipeline as it ejects oil at Al Tuba oil field in Basra, southeast of Baghdad, Feb 19, 2015. Falling oil prices have hit the Iraqi economy hard as the country relies on oil revenues to fund 97% of state spending. (photo by REUTERS/Essam Al-Sudani) Iraq sinks further into debt BAGHDAD — Noura al-Bajari, a member of the Iraqi parliament's Economy and Investment Committee, expressed fear that Iraq will be unable to pay off its debts in a press statement Aug. 8. She cited dropping prices for the oil upon which the country relies and the costs of the war against the Islamic State, with which the government has fought for control of Iraqi cities since June 2014. Summary⎙ Print Despite nominal moves to diversify its sources of revenue, the Iraqi government's dependence on falling oil prices and the cost of its war against the Islamic State mean the Iraqi economy is drowning in debt. Author Omar al-Jaffal Posted August 19, 2016 Translator Sahar Ghoussoub In an interview with the local Iraqi Al-Mada Press, Bajari predicted a very bad scenario for the Iraqi economy should debts remain outstanding. “Iraq would have to face dire economic conditions akin to the prior-2003 period, when the accumulated debt had reached $125 billion,” she said. Bajari’s apprehension seems justified, especially since the Iraqi government has resorted to domestic and foreign borrowing to be able to bridge the spending deficit as oil prices started to plummet in the summer of 2014. Of note, Iraq depends almost exclusively on oil revenues to finance state spending, and there are no official statistics available on the current size of the debt. Iraq’s Central Bank has been trying to employ a policy of financial transparency by publishing data on spending, debt and the country’s financial status online. However, the website only displays basic information from 2010 that is not sufficient to gauge the actual size of outstanding debt since the fall in oil prices in 2014. Mazhar Mohammad Saleh, a prominent Iraqi economist and the economic adviser to Iraqi Prime Minister Haider al-Abadi, acknowledged that there are no official statistics but discussed Iraq's estimated internal and foreign debt in a phone interview with Al-Monitor. Saleh carefully traced the history of Iraq’s debt under the previous regime and the successive Iraqi governments following the invasion in April 2003. “Iraq is indebted to 51 countries, including 10 creditors outside the Paris Club,” he said. “Iraq has borrowed around $9 billion from the Paris Club countries, while it owes about $6 billion to creditors outside the club.” There is also “$2.7 billion owed to international private sector companies with about 5% interest annually,” Saleh said. According to Saleh, the former regime saddled Iraq with “odious debt” of nearly $10 billion that the government is not bound to pay off entirely. Saleh further said that following Iraq’s 2003 invasion, the country’s debts were “not very significant,” explaining, “Foreign debts amounted to $7 billion, while the domestic debt was standing at around $34 billion, including the debts amassed by the former regime.” He added, “As per the GDP, the debt ranges around 60%, which is a safe percentage. There are also international standards for dealing with debt. Yet that does not suggest Iraq should not be cautious in paying off its safe debts.” Saleh also noted, “The International Monetary Fund requested the Ministry of Finance hire an international company to oversee Iraq’s foreign debts in a bid to set forth a mechanism to repay them.” In the same vein, Abdul Rahman al-Mashhadani, an economics professor at Baghdad’s Al-Mustansiriya University — one of the oldest Iraqi universities — said that the Iraqi government is partly to blame for not dealing transparently with debt. “The absence of official statistics on the size of debt indicates a lack of transparency vis-a-vis the country’s financial situation, as economists and society are kept at bay,” he told Al-Monitor. He noted that some indications suggest that Iraq “owes $69 billion in foreign debt,” stressing, “These funds have never been used in investment but in consumption fields, which makes it more difficult for Iraq to settle them.” It appears that Mashhadani’s reading is sound, as Abadi’s program provided for the diversification of sources of income. Yet two years later, the government is still closely monitoring the oil price data as it continues to rely on oil proceeds. Mashhadani added, “The government lacks a strategy to deal with the debt, which could cause the country to further sink into debt and thus resort to mortgaging oil to pay it off." Iraq’s foreign debts have always been a thorny issue that calls for vigilant care, as Saleh stated. The successive governments ought also to stop relying on oil revenues to pay off domestic and foreign debts in order to help Iraq escape its economic quagmire. Read more: http://www.al-monitor.com/pulse/originals/2016/08/iraq-economy-debt.html#ixzz4Hvm0uokz ================== AP EXPLAINS: Why Aleppo is Syria's fiercest battleground By The Associated Press Aug. 21, 2016 2:48 AM E AP Explains Syria Aleppo FILE - In this Tuesday, Oct. 2, 2012 file photo, smoke rises over Saif Al Dawla district, in... Read more With rebels and government forces each promising to unite the divided city, Aleppo is once again a main battlefield in Syria's devastating civil war. Relentless shelling and airstrikes have killed more than 300 civilians in the city since rebels broke through a government blockade of the opposition-held east on July 31. A photo of five-year-old Omran Daqneesh, who was rescued from the rubble of a missile-struck building, sitting alone in an ambulance, confused and covered in debris and blood, has become the haunting image of the unforgiving struggle. A look at Aleppo: ___ A SHATTERED HISTORICAL TREASURE by Taboola More from AP After verbal missteps, Trump blames others The Latest: Trump says he'll restrict speaking fees Syria's largest city and once its commercial center, Aleppo was a crossroads of civilization for millennia. It has been occupied by the Greeks, Byzantines and multiple Islamic dynasties. As one of the world's oldest continuously inhabited cities, Aleppo's Old City was added in 1986 to UNESCO's list of World Heritage sites. But the civil war has damaged its landmarks, including the 11th century Umayyad Mosque, which had a minaret collapse during fighting in 2012, the 13th century citadel and the medieval marketplace, where fire damaged more than 500 shops in its narrow, vaulted passageways. Some historic sites have been used as bases for fighters. Aleppo was one of the last cities in Syria to join the uprising against President Bashar Assad's government. ___ THE KEY TO VICTORY Because of its heritage and its economic potential, it is often said that whoever holds Aleppo wins the war. In fact, rebels hold other pockets around the country, but their defeat in Aleppo would mark a turning point in the conflict and deal a devastating blow to the movement to unseat Assad. But Aleppo also sits just 50 kilometers (30 miles) from the Turkish border, making it the central theater to the Syrian-Turkish proxy war. Turkish President Recep Tayyip Erdogan is an open critic of Syria's Assad and has shown strong support toward the rebels. Ankara enjoys wide influence in northern Syria, and most rebels' supplies flow across the shared border. In a national address in June, Assad vowed Aleppo would be Erdogan's "graveyard." ___ BREAKING THE SIEGE Earlier this month, the International Committee for the Red Cross called the battle for Aleppo "one of the most devastating conflicts in modern times." Pro-government forces, supported by overwhelming Russian air power, had managed to encircle rebels and some 300,000 civilians in the city's eastern quarters in July, leading the U.N. to raise concerns of catastrophic suffering if a protracted siege ensued. But a fierce offensive led by thousands of rebels from outside the city broke the blockade on July 31, and fighting has only intensified since then. Both sides are bombarding their opponents indiscriminately, at a tremendous cost to infrastructure and human life. ___ THE WARRING PARTIES The main Kurdish militia, known as the People's Protection Units, or YPG, controls several predominantly Kurdish northern neighborhoods. The main insurgent groups in the city are the Nour el-Din Zenki brigade, the ultraconservative Ahrar al-Sham group and the Al-Qaida-linked Jabhat Fatah al-Sham, formerly known as the Nusra Front.