Thursday, August 30, 2007

Does Arab Money Market Witness a Crisis?

- Syria Intends to Lift the Subsidies of Fuel Gradually.
- Iraq to Hold a Conference in Dubai for Promoting Trade in the South.
- "Al-Sharq al Awsat for Development" Seeks to Hold Projects in Syria, Yemen and Djibouti.
- 1 million dinar, the Total Value of Insurance Installments in Jordan.
- The Establishment of the Fund of "1 Computer for Each Family in Palestine".
- The Emarati "", Starts its Activities in Jordan.
- The Integration of Three Egyptian Insurance Companies.
- The Iranian "LNG" Signs an Agreement with the Spanish "Socoin" Company.
- Russia and the US Cooperate in the Field of Atomic Energy.

Does Arab Money Market Witness a Crisis?

The impact of mass media on shares prices at money markets has a different dimension in the Arab countries compared to the rest of the world. The relatively-newly establishment of the Arab money markets and the most recent activities of Arab investments in the money markets, especially with regard to the middle class sector in the Arab societies, have urged the investors to take decisions of buying and selling based on mass media propaganda, and not on a long-term economic analysis and the rule of winning and loosing.
With regard to that, Arab money markets, generally speaking, and the Gulf money markets, specifically, have been characterized by sensitivity towards any mass media shock that would eventually result in a real economic shock on the ground.
But what is more strange is the intervention of speculators in the Gulf states even in the future of this or that share, be it up or down.
Last week, Arab money markets witnessed a sharp decline amid rumors about the flee of foreign investors because of the chaos witnessed by world money markets.
Indicators of 8 money markets which are: The Emirati, Bahraini, Qatari, Omani, Palestinian, Moroccan, Tunisian and Egyptian money markets have declined, whereas four of them only: The Saudi, Kuwaiti, Jordanian, and the Lebanese money markets have resign.
The question is: How we can immune our money markets?

Syria Intends to Lift the Subsidies of Fuel Gradually

Syria is expected to start a gradual lifting of the subsidies of fuel in an attempt to stop more deficit in the budget. The decision was welcomed by some economic circles which call for a rapid transformation to the market economy, whereas other sectors, economic and public, express worry that this decision will have negative results on the poor and middle classes.

Iraq to Hold a Conference in Dubai for Promoting Trade in the South

The Iraqi government has held a conference under the title "Iraq for Work and Investments" in Dubai Emirate.
The conference will last till the end of this month. It is worth mentioning, that the conference was held with the aim of enhancing and promoting more foreign investments in the South of Iraq through making available for the small-sized companies, which require a finance not less than $1 m to invest, as well as the big companies which intend to invest with a total value of $200 m. 100 big investors in the South of Iraq and the companies of the GCC, as well as world companies took part in the conference.

"Al-Sharq al Awsat for Development" Seeks To Hold Projects in Syria, Yemen and Djibouti

The Executive Chairman of al "Al-Sharq al-Awsat" Company for Development, located in Dubai, Mr. Usama al Demashqi said that the company has started to buy lands in Syria, Yemen, and Djibouti for building new cities with billions of dollars.
Mr. al Demashqi added that the special group which the total value of assets under its management is estimated by $280 m, looks for expansion outside the Middle East and North of Africa.

1 million dinar, the Total Value of Insurance Installments in Jordan

Official statistics issued by the Jordanian Insurance Commission pointed out that the insurance sector witnessed a rise at the end of last July by 177.8 million dinars compared to 153.1 million dinars during the same period of 2006, and with an increase of 16%.

The Establishment of the Fund of "1 Computer for Each Family in Palestine"

The Palestinian Group of Telecommunications and "Al Rafah" Bank for Financing Small Projects have signed a cooperation agreement for establishing the fund of "1 Computer for Each Family in Palestine".

The Emarati "", Starts its Activities in Jordan

"" has announced that it started its activities in Jordan, represented by the real estate "Beit al Aamal" company, "". It is worth mentioning that the company was established 16 years ago in the UAE, and expanded later on in Jordan, Oman, and Kuwait.

The Integration of Three Egyptian Insurance Companies

Three insurance companies owned by the Egyptian government have expressed their intention to integrate in one insurance entity. The Egyptian Al-Sharq Insurance Company, and "Al-Masria" company said that they integrated with Egypt "Maser" company for insurance with a capital estimated by 1.9 billion Egyptian pounds, as well as a volume of assets estimated by 18 billion Egyptian pounds.

The Iranian "LNG" Signs an Agreement with the Spanish "Socoin" Company

The Iranian "LNG" company signed on Monday an agreement with Spanish "Soken" company for the management of the project of producing the liquid natural gas. The executive chairman of the company Ali Kheirandish, said that the Spanish company "Soken" takes part in Iran for the first time adding that it hit a record in executing projects of "LNG" for natural gas all over the world.

Russia and the US Cooperate in the Field of Atomic Energy

Russia and the US may sign agreement next Autumn -2007 to cooperate in the field of atomic energy for peaceful purposes. Deputy Chairman of the Russian Federal Agency for Atomic Energy, Nicolai Spasky said during the meeting of "The Round Table", dedicated for the 15 anniversary of the establishment of "Nunn-Lugar" program (Cooperative Threat Reduction Programme), that Russia supports signing the special agreement of cooperation in the peaceful use of atomic energy between the US and India.

Small Indexes

- The meeting of the Syrian-Jordanian economic and trade committee is due to start today in its second session with participation of the Ministers of Economy and Trade of both countries.
- The volume of the direct of foreign investment in China had exceeded $750 bn by the end of June-2007.
- The number of tourists who visited Egypt in 2006-2007 has reached 9.7 million tourists with an increase of 13% compared to the number recorded last year which reached 8.6 million tourists.
- The total number of tourist who visited Jordan during the first 7 months of this year has reached 3.7 million tourists compared to 3.4 million tourists during the same period of last year with an increase of 8.7%.

Companies Indexes

- National Bank of Kuwaitsaid that the sellings in the real estate sector have witnessed a considerable increase during last July, reaching 459.7 million dinars compared to 245.7 million dinars reached the previous month, with an increase of 87%.
- The Taiwani "Acer" company for electronic industries intends to buy the American company "Gateway" in return for $710 m, to become the third biggest producer of personal computers in the world.

Bids & Contracts

- The governmental Iranian gas company has signed an agreement in Tehran with the Spanish "Socoin" for the management of the project of producing liquid natural gas with a total value of 36.5 million Euro, to be executed within 36 months.

Conferences & Exhibitions

- The Syrian Chamber of Trade is due to hold the activities of the Syrian-European meeting in cooperation with the Syrian-European Business Center between 8-10 of next September, with the participation of 22 agricultural companies from the different Syrian governorates, and 30 European companies from Britain, Italy, Poland, Bulgaria, Romania as well as companies from Tunisia and Ecuador.
- The joint second exhibition of cars between Iran and China is due to be held between 7-10 of next September in the Chinese "Tian Gen" city located 120 km away from the Chinese capital Bejing.

Wednesday, August 29, 2007

Macon Marketing Group Acquires 50,000,000 Iraqi Dinars Held at Warka Bank

Written by EditorsChoice
Saturday, 04 August 2007

Macon Marketing Group, Inc. Speculation Investment Portfolio Acquires 55,000,000.00 IQD (New Iraqi Dinars) divided equally between dinar denominated bank accounts and dinar denominated securities at the ISX Exchange mostly held at Warka Bank for Investment and Finance, a Baghdad-based Bank. Also, 35,000,000.00 VND were added to the portfolio.

Las Vegas, NV (PRWEB) July 20, 2007 -- Macon Marketing Group, Inc. Speculation Investment Portfolio Acquires 55,000,000.00 IQD (New Iraqi Dinars) divided equally between dinar denominated bank accounts and dinar denominated securities at ISX Exchange mostly held at Warka Bank for Investment and Finance, a Baghdad-based Bank.

Also, 35,000,000.00 VND were added to the portfolio recently, acquired from U.S. Treasury registered dealers. Vietnam is second behind China in GDP growth and recently announced entrance to the WTO, World Trade Organization, after its invitation was ratified by the country's parliament. Considering the temporary weakness of the U.S. Dollar, this represents a reasonable parking place for a small percentage of cash allocated for speculative purposes. The upside of these speculative investments cannot be exactly determined, but both are premised to show patriotism for the efforts of our home country.

WARKA BANK IRAQ ( is the current leader among Iraqi banks for foreign investment accumulation regarding asset values of bank accounts in Iraq. They are also the current leaders in setting up accounts for investing the ISX IRAQ STOCK EXCHANGE (http:///, the new stock exchange in Baghdad that is opening up to non-Iraqi investors on August 02, 2007. The financial stocks of Iraq are currently at severely depressed levels near all-time lows across the board.

Those wishing for more information about risks and benefits of investment in the opportunity presented by Iraq may visit InvestorsIraq Site ( for general info and specifics as to how to open an account with Warka Bank and how to comply with procedures to qualify as a foreign investor, personal or corporate, and how to trade stocks on the ISX that is scheduled to go electronic trading in October 2007. They are currently overloaded as it is, and it will likely take at least 2-3 months to receive a response from them. It has been over two months since they responded to one of our inquiries. We will issue a press release when they do respond again. Therefore, any new clients should be willing to show extreme levels of patience and expect poor service and frustrating delays for the foreseeable future. Otherwise, they are model of integrity and attention to detail that exceeds any other bank ever encountered. Iraq is on track to WTO ( membership and will officially open its ISX stock exchange to non-Iraqis on August 02, 2007 and go electronic in October 2007, perhaps sooner, providing a once in a generation opportunity to help and invest in the reconstruction of a war-torn oppressed country.

Macon Marketing Group was established to provide a vehicle for entrepreneurial ventures research and development and partake in strategic speculative investments that take 5-10 years to reach maturity and maximum return. Fees from management consulting services were used to make these investments. To facilitate the investments, the corporation at times made purchases and setup accounts under the name of the CEO, but all payments, such as checks, money orders and bank wires were made from Macon Marketing Group accounts. The CEO has signed documents that all such investments are the property of Macon Marketing Group. The current gross revenues of Macon Marketing Group are $155,000.00. The company is in some debt and has generated no net income since inception in 2004. The company is privately held. Any and all treasury obligations resulting from the sale of foreign treasury notes or securities will be paid in a timely manner in full with returns prepared by a reputable accounting firm and overseen by competent legal counsel. The company may have an opening for a General Counsel to be filled starting in 2008. Currently the company utilizes several legal firms as needed.

The investment in Iraq is allowed by all U.S. Citizens and was ordered by presidential order 13309 and the company has gone through an investment legalization procedure by the U.S. State Department with help of the AACC in Washington, D.C. The company will file required documentation for calendar 2007 with the U.S. Treasury in June 2008 as obligated by current investment levels in offshore accounts. All those with foreign accounts meeting certain criteria should register with the Treasury to prevent involuntary collection of such information. Macon Marketing Group plans to offer to hire returning Iraq vets who served, especially considering those who are disabled or sustained injury preventing gainful employment. The company will announce in 2008 whether it has funds to make such offers. Ten percent of all profits will be directly donated to charities that assist returning veterans with room and board and employment retraining.


Billboard Taxi Media ( produced this release. Gobal sales information for billboard LED, LCD color advertising displays at Billboard Taxi Media Alibaba Global Site (

No financial advice is offered or given here and prudent advice is always that all investors should consult with their financial advisers prior to spending any money anywhere.

Macon Marketing Group's interim CEO, is a physician executive working for no base salary pending hiring of permanent officers. He will be paid in IQD for services rendered to the company.

Iraq violence: monitoring the surge


An extra 30,000 US troops have been deployed in Iraq, mainly in and around the capital Baghdad, since the launch of the security drive, or "surge", in February.

The BBC World Service is monitoring its effects, week by week, by looking at casualty figures, the pressure on hospitals and quality of life for ordinary civilians.

The graphics and analysis are based on figures from the US and Iraqi authorities, Baghdad's hospitals and three families from different neighbourhoods in the capital.


Bar chart showing numbers of dead and wounded since the surge began

The seven days from 16-22 August proved to be one of the most devastating since the surge reached full strength in June.

A total of 493 Iraqi civilians died - the highest number recorded during the period - and 669 were wounded - also a record - as the death toll from the previous week's multiple bombings mounted and a mass grave was found in southern Falluja.

Reports suggested some 300 bodies - of men, women and children - were found, apparently tortured and recently killed.

The number of US military killed was 19, swollen by the 14 deaths in a helicopter crash in the north of the country on Wednesday.

The total number of civilian casualties (dead and wounded) in the week topped 1,000 for the first time during the monitoring period.


Pie charts showing the number of hours' electricity per day for three families

Fuel shortages remain a major problem for Iraqis, with long power cuts and fuel queues a common feature of civilian life, particularly in Baghdad.

The families helping paint a picture of these hardships in this survey are from different areas of the city - which can mean different pressures according to the religious make-up of the area and the subsequent security risks.

Map showing locations of families

Family 1 is located in Palestine Street, a Shia neighbourhood in the east of the capital.

Family 2 is located in Zayouna, a mixed neighbourhood in south-east Baghdad.

Family 3 lives in Saba Abkar, a northern Sunni neighbourhood.

Electricity supplies for all three families improved this week.

Family 1 had an average of four hours a day from the grid compared with one the previous week.

Family 2 had two, whereas last week they averaged just 30 minutes a day.

And Family 3 had power for one hour a day following a week when the only electricity available was during a three-day curfew.

Queues for fuel were shorter than at many points during the monitoring period, but the average was still three to four hours.

Prices also fell slightly, with petrol at the pumps costing around 9,000 Iraqi dinars ($7) for 20 litres and black-market fuel roughly double that.

Gas prices have soared, a cylinder now costing 7,500 dinars compared with 4,000 dinars the previous week. Cylinders on the black market fetched 27,000 dinars.

The cost of kerosene on the black market jumped from 750 to 1,150 dinars as autumn looms.


Graph showing dead and wounded at two Baghdad hospitals

While injuries from violence among patients brought to the two Baghdad hospitals being monitored remained similar to last week, the number of people arriving at Al-Kindi hospital with injuries from violence rose to 104 - the second- highest of the period.

One of Baghdad's mortuaries reported receiving 80 unidentified bodies, 15 of whom were children.

Al-Yermouk hospital had between 35 and 40 doctors on duty, plus up to 65 medical assistants. Al-Kindi had 11 consultants and six doctors at its emergency unit.

Data compiled by BBC producer Mona Mahmoud

Iraqi dinars delivered to rural banks in Diyala

A shipment of more than 49 billion Iraqi dinars arrived by truck convoy in Baqouba, Iraq recently to be used by the Diyala provincial government to pay salaries and pensions to around 70 percent of the local residents.

The money, which equals about $38 million, was escorted by the Iraqi Army from the Central Bank of Iraq in Baghdad and was delivered to an undisclosed location in Baqouba. From the capital city, the money will then be transported to rural banks to be distributed to roughly 1.3 million residents of the province.

This is the first time the Iraqi Army has completed a money delivery without the help of Coalition Forces.

U.S. and Iraqi officials say the resumption of money deliveries to the Diyala banking system will aid stabilization efforts in the region, energizing what is mostly a cash economy.

Monday, August 20, 2007

Iraqi PM in Syria to talk security, economy

DAMASCUS, Aug 20 (Reuters) - Iraq's prime minister arrived in Syria on Monday to discuss security and economic relations strained by accusations of Syrian support for rebels in Iraq. Nuri al-Maliki is the first Iraqi premier to visit neighbouring Syria since the U.S.-led invasion toppled Iraqi President Saddam Hussein in 2003. His meetings, including one with President Bashar al-Assad on Tuesday, are also expected to focus on more than a million Iraqis who have fled to Syria to escape violence at home. Damascus this month hosted an international conference on security in Iraq at which Iraqi officials urged Syria and other neighbouring countries to help boost Iraqi security or risk militancy at home. The United States has accused Syria of not doing enough to stem a flow of fighters crossing its border with Iraq to join the anti-U.S. insurgency. Washington also says Syria allows Iraqi rebels to operate from Syria. Damascus denies the charges. Syria and Iraq restored diplomatic relations and reopened embassies in each other's capitals in December. Washington also accuses Shi'ite Iran, a close ally of Syria, of stoking violence in Iraq. Tehran dismisses the accusations. Maliki won pledges of support from Iran during a visit to Tehran earlier this month. The Iraqi leader, whose delegation includes the oil and interior ministers, was due to meet Syrian Prime Minister Naji al-Otaria later on Monday. His visit to Damascus follows trips to Syria by Iraq's President Jalal Talabani and its interior minister.
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By Invitation: Iraq's oil conundrum

Many people think it was a war for oil, but US and British companies may end up getting none of it, argues Daniel Litvin, director of Critical Resource
The Anglo-American invasion of Iraq has already provided rich lessons in unintended consequences, or "blowback," from foreign involvement in the country's affairs. The Iraqi oil industry may be about to provide another.

The US has in recent months been exerting intense pressure on the Iraqi government to pass oil legislation swiftly which, it hopes, will set a framework for the revival of the industry, including opening it up to foreign investment and dividing oil revenues fairly between Iraq's different ethnic and religious groups.

Passage of this law has been defined by Washington as a key benchmark of progress in Iraq. The theory is that it will help reconcile the country's warring factions. The US administration ideally wants passage of the oil law in time for General Petraeus's progress report to congress in September on the accomplishments of the US's Iraq strategy.

At the time of writing, with Iraqi politicians bogged down in arguments both over the law's detail and other broader issues, its immediate passage looked far from a given.

Revival of the oil sector is certainly a proper goal for Iraq itself: while over-dependence on oil may not be healthy for the Iraqi economy over the long term, its oil industry is sorely in need of investment, having been left to decline for many years.

Iraq sits on the world's third largest known oil reserves, and production - at around 2m barrels a day - could be raised to double that and more with enough investment, generating significant extra revenues for the government.

Revival in Iraqi oil production is also an important - and legitimate - international economic goal.

World oil prices have recently reached near record high levels, posing risks to the global economy which could become particularly severe if another unstable producer nation (Iran, say) threatens to cut its oil exports.

America, and other major importing nations, are hoping that revived Iraqi production will help reduce the oil price to less nail-biting levels.

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America is also suspected, fairly or not, of pushing for concessions for US oil firms in Iraq, a more narrowly self-interested goal. Public opinion in many countries holds this to be one of the reasons it invaded Iraq in the first place, of course, although hard evidence is lacking.

National feeling

Yet US pressure on Iraq to accelerate the oil legislation risks undermining all these goals, legitimate or not.

Focusing first on the industry's investment needs (and turning to Iraq's sectarian divides later), the US stance is already helping to ignite a strand of popular feeling in Iraq also now common in other oil-rich countries: resource nationalism, or the desire to boot foreigners out of the business of resource extraction.

Were the Iraqi government given the chance to develop an oil sector framework under its own steam, it would likely seek to maximise the role of Iraqi oil firms, including the Iraqi national oil company, rather than risking unpopularity by signing too many deals with foreign firms.

Even so, at least some sort of role for foreign players would most likely be accepted given the scale of the investment needed.

The fact, however, that the US is widely known to be pushing the current oil legislation, and to favour major involvement by foreign firms, creates the ideal conditions for a domestic backlash against such investment at a later stage, in particular once America has quit the country.

In whatever form the current oil legislation is eventually passed, any future Iraqi government looking to prove to its voters that it is no longer an American puppet would likely seek to rewrite this legislation as a symbolic first step, forcing any foreign firms granted access to renegotiate their contracts or even to surrender them.

Such policy and investment instability could set back the revival of Iraqi oil production by years.

That this is a plausible scenario can be seen from the range of resource-rich countries which, buoyed by the confidence brought by high oil prices, have recently renegotiated, cancelled or nationalised big deals with foreign firms. These include Russia, Venezuela, Ecuador and Bolivia.

In countries such as Saudi Arabia and Kuwait, meanwhile, political resistance to external involvement in energy has long been so strong that no major oil reserves have been even offered to foreigners for decades.

Throughout the developing world, resource nationalism has long been the rallying cry of those opposed to western interference: a basic demand of anti-colonial independence movements in the 1950s and 1960s, for example, was the nationalisation of foreign-owned oil and mining assets for which western powers had often invaded their countries in the first place.

Predictably, such sentiments have already begun to feature in debates in Iraq over the oil law.

In June an Iraqi union leader condemned the proposed legislation for enforcing "US hegemony over Iraqi oil fields," while followers of the Shia cleric Muqtada al-Sadr have said they would oppose granting oil deals to firms from countries with troops in Iraq.

That would leave Iraq free presumably to strike deals with Chinese, Russian and other non-US (and non-British) oil firms, many of whom would certainly leap at the chance of getting a stake in Iraq's reserves.

In this way, US pressure for the oil legislation could at the least push Iraq further into the arms of non-US firms, even if it does not destabilise the overall process of foreign investment. That would be an ironic outcome of a war perceived, correctly or not, to have been partly waged on behalf of US oil firms.

Black glue?

As for the other issue underlying American pressure for the oil law - the desire to reconcile Iraq's ethnic and religious groups - the theory behind this is sound: Iraq's Sunnis, whose land sits on little oil, require reassurance that the Kurds and Shias, under whose lands Iraq's oil is concentrated, will not exclude them from the resulting spoils.

Devising a formula for sharing revenues which is seen to be fair and based on the population of different groups, rather than their luck in sitting on oil-bearing geology, is essential for any long-term national political compact.

The risk is that if agreement on this and related issues (such as the degree of autonomy for regional governments in granting oil contracts) is forced through prematurely, rather than being grounded in genuine political consensus, it could fuel fiercer arguments in the future.

For once major new oil deals are struck, and the billions of dollars of extra revenue begin to flow, Iraq's different groups will have something more tangible to fight about than clauses in the oil legislation.

Again, the experience of other countries holds lessons here: many ethnically divided states have found that mineral revenues can intensify conflict when there is a lack of real consensus (rather than just legal agreement) over how they should be divided, or when those groups which control the revenues use them to maintain their grip on power or fund their military campaigns.

The ongoing violence in the oil-rich Niger delta region in Nigeria is driven partly by local people's anger at receiving what they see as too few of the benefits from oil combined with the stealing of crude to fund arms purchases.

In Sudan, meanwhile, the regime has sustained itself in power, and withstood international pressures over the ethnic violence in Darfur, partly through its grip over the country's oil revenues.

In recent decades, terrible civil wars in Angola and the Democratic Republic of Congo have been partly motivated and funded by oil or mineral revenues. In Indonesia and Papua New Guinea, various local conflicts have been driven by resource revenues too.

For better or worse

In Iraq, a fully worked-out agreement between the different groups about how the oil industry should be developed could reduce the risk of such outcomes. But a partially worked-out one could make matters worse.

For example, if the Shias or Kurds feel hard done by for having to surrender control of oil under what they see as their land, they could strike out on their own at a later stage, signing more deals without consent from the federal government, and keeping more of the revenues for themselves. This would make the break-up of Iraq along religious and ethnic lines more likely.

The Sunnis, in turn, could feel even more threatened under such a scenario then they do now, potentially adding fire to the insurgency.

In this respect, the heated arguments between the different groups over the details of the oil law has been telling.

The Kurds, for example, have opposed granting too much power over the running of the industry to the federal government, and have also already pushed ahead on their own by granting some small oil contracts to foreign firms, without the status of these agreements being settled at the federal level.

Other issues, such as the role of the national oil company, have also been the subject of intense debate.

All this suggests that any agreement achieved by September is likely merely to paper over cracks, rather than represent a full accommodation between the myriad interests at stake.

There is no easy answer, but the best way for the US to ensure both that oil underpins national reconciliation and that the industry revives in a way compatible with western interests may be to allow time for domestic debate and negotiation.

But that may not suit the timetable of those in Washington.

This article originally appeared in Prospect:

Daniel Litvin is director of Critical Resource, which advises natural resource companies on stakeholder and sustainability issues

U.S. Market Seen for Iraqi-Made Clothes

Published: August 13, 2007

BAGHDAD, Aug. 12 — Iraqi and American officials think Iraq’s ailing economy could get a kick-start from American consumers interested in giving Iraqi-made clothes as Christmas presents.

“We are hoping if everything goes well, by Thanksgiving and Christmas we will have from the Mosul factory teenage clothing, and from the Najaf factory ready-made suits, and from the leather industries here, leather jackets, and so on,” Sami Al-Araji, the deputy industry minister, said Sunday during the announcement of a plan to put state industries back to work.

Mr. Al-Araji said an American team led by Paul A. Brinkley, the deputy under secretary of defense for business transformation in Iraq, was in discussions with major American retailers like Sears and Wal-Mart to have the clothing on sale in a limited number of major cities by the holiday season.

The first move into American markets would be mainly symbolic, he said, involving 10,000 to 12,000 leather jackets, 20,000 to 25,000 suits priced around $80 to $90, and a similar number of garments for teenagers.

“We could go higher, but we thought we would start modestly,” he added.

Mr. Brinkley, a proponent of the theory that getting Iraq’s state-owned industries back to work will revitalize the economy and lure unemployed Iraqis away from the insurgency, would not comment on discussions “that are under way with any specific retailers.”

However, he confirmed that negotiations were taking place with some American retailers. He also said that Shelmar Inc., a Memphis-based chain with 60 stores in eight states, had placed an order with an Iraqi state-owned clothing factory to buy a “few thousand” units of children’s clothes.

Restarting Iraq’s state-owned companies, regarded by some critics as an inefficient throwback to Saddam Hussein’s era, would be a reversal of the privatization model championed by L. Paul Bremer III, the American proconsul who governed Iraq from May 2003 to June 2004.

Speaking Sunday in the fortified Green Zone alongside Mr. Al-Araji and Bayan Jabr, the finance minister, Mr. Brinkley insisted that privatization remained the ultimate goal, but said urgent revitalization of the economy was a crucial part of the counterinsurgency plan of Gen. David H. Petraeus, the commander of American forces in Iraq.

“Economic development,” Mr. Brinkley said, “is at the core of his vision of how we bring political, economic and security restoration as a three-pronged effort here to create stability and enable the eventual drawdown of our presence here and the establishment of a stable government.”

The Iraqi ministers insisted that industry was the “core” of the Iraqi economy, and that restarting it would have a “cascade” effect.

Despite the ministers’ enthusiasm, some American officials urged caution. A senior United States Embassy official said last week: “You have to look on a case-by-case basis. One of the interesting trade-offs that we face in looking at these enterprises is that they all tended to be very large consumers of electricity, and this is one of the real tensions.”

He added: “I don’t think anybody has a problem in principle with the idea that if you can put people back to work that is a good thing. That is not in this situation an idea that people would argue with, but the question is at what cost are you going to be doing that? And if the cost is taking a lot of electricity from the grid, maybe you want to look at what the alternative uses of that might be.”

The effort to restart factories is by no means the first indication that Prime Minister Nuri Kamal al-Maliki’s government aims to pump cash into the economy. There are also plans for $30 million in microloans to small businesses, agriculture and government welfare programs.

Last month, at the start of an initiative to provide state subsidies to farmers, Talib Aziz, an American-educated economic adviser to Mr. Maliki, said: “The idea in the beginning was that unless security is provided in the country, the economy won’t move. The prime minister thinks the reverse, that the economy needs to improve in order to improve security. So he is going to use the public funds, public investment and government investment to jump-start the economy.”

He added, “The economy now is stalled, so he is doing just what F.D.R. did in the Great Depression.”

Damien Cave contributed reporting from Diyala.

Why Iraqis oppose U.S.-backed oil law

Workers think foreign firms will take over

Sunday, August 19, 2007

At the Basra refinery, workers opposing the law shut pipe... Hassan Juma'a Awad, president of the oil workers union, w...

Across the political spectrum in Washington, members of Congress are now demanding that the Iraqi government meet certain benchmarks, which presumably would show that it's really in charge. But there's a big problem with the most important benchmark: the oil law. It is extremely unpopular in Iraq.

Congress has been told the law is a way to share oil wealth among Iraq's regions and religious sects. Iraqis see it differently. They say the law will turn over the oil fields to foreign companies, giving them control over setting royalties, deciding production levels, and even determining whether Iraqis get to work in their own industry.

Under Washington's guidance, the Iraqi government wrote the oil law in secret deliberations. It needed secrecy to obscure the fact that it gives foreign corporations control over exploration and development in one of the world's largest oil reserves, through agreements called "production-sharing" contracts. Such deals are so disadvantageous that they have been rejected by most oil-producing countries, including Kuwait, Saudi Arabia, the United Arab Emirates and otherwise conservative regimes throughout the Middle East.

The leaders of the Iraqi opposition to the oil law are the industry's workers. In early June, the Iraqi Federation of Oil Unions shut pipelines from the Rumeila fields near Basra, in the south, to Baghdad and the rest of the country. Their main demand was that oil remain in public hands, although they also sought to force the government to improve conditions for workers.

Iraqi Prime Minister Nouri al-Maliki responded by calling out units of the 10th Division of the Iraqi army and surrounding the strikers at Sheiba, near Basra. U.S. aircraft buzzed the strikers as well, while al-Maliki issued arrest warrants for the union's leaders. Facing the possibility, however, that the strike would escalate into shutdowns on the rigs themselves, cutting off oil exports, al-Maliki blinked. He agreed to hold off implementation of the oil law until October, giving the union a chance to propose alternatives.

This undoubtedly increased al-Maliki's troubles in Washington, where failure to move on the oil law benchmark has been held as evidence of weakness and incompetence. In Iraq, however, al-Maliki faces a fact that U.S. policymakers refuse to recognize: The oil industry is a symbol of Iraqi nationhood.

Because of its actions, the oil workers union has become one of the strongest voices of Iraqi nationalism, protecting an important symbol of Iraq's national identity, and, more important, the only source of income capable of financing the country's post-occupation reconstruction.

U.S. legislators trying to impose the oil law might note that they are requiring the Iraqi government to betray one of the few reasons Iraqis have for supporting it - its ability to keep oil revenue in public hands.

Some of the oil workers' other demands reflect the desperate situation of workers under the occupation. They want their employer, the government oil ministry, to pay wage increases and promised vacations, and give permanent status to thousands of temporary employees. In a country where housing has been destroyed on a huge scale and workers often live in dilapidated and primitive conditions, the union wants the government to turn over land for building homes.

Every year, the Oil Institute, a national technical training college for the industry's workers and technicians, has miraculously continued holding classes. Yet the ministry won't give work to graduates, despite the war-torn industry's desperate need for skilled labor. The union demands jobs and a future for Iraq's young people.

Fighting for these demands makes the union even more popular and further enhances its nationalist credentials. Many Iraqis see it defending the interests of the millions of workers who have to make a living and keep their families eating in the middle of a war zone. Conversely, the United States, which imposed a series of low-wage laws at the beginning of the occupation, looks bent on enforcing poverty.

Iraq has a long labor history. Union activists, banned and jailed under the British and their puppet monarchy, organized a labor movement that was the admiration of the Arab world when Iraq became independent after the revolution of 1958. When Saddam Hussein came to power, though, he drove its leaders underground, killing or imprisoning the ones he could catch.

When Hussein fell, Iraqi unionists came out of prison, up from underground and back from exile, determined to rebuild the labor movement. Miraculously, in the midst of war and bombings, they did. The oil workers union in the south is now one of the largest organizations in Iraq, with thousands of members on the rigs, pipelines and refineries. The electrical workers union is the first national labor organization headed by a woman, Hashmeya Muhsin Hussein.

Together with other unions in railroads, hotels, ports, schools and factories, they've gone on strike, held elections, won wage increases and made democracy a living reality. Yet the Bush administration, and the Baghdad government it controls, has outlawed collective bargaining, continuing to enforce a decree originally issued by Hussein in 1987 banning unions in the public sector.

The al-Maliki government has seized all union funds and turned its back on a wave of assassinations of union leaders. After the June strike, Iraq's oil minister ordered oil industry officials to refuse to recognize or bargain with the oil worker unions. Iraq's oil industry was nationalized in the 1960s, like that of every other country in the Middle East. The Iraqi oil union became, and remains, the industry's most zealous guardian.

When Halliburton Corp. went into Iraq in the wake of the troops in 2003, the company tried to seize control of wells and rigs, withholding reconstruction aid to force workers to submit. The oil union struck for three days in August 2003, stopping exports and cutting off government revenue. Halliburton then closed its Basra offices and left the oil region.

The oil and port unions compelled other foreign corporations to give up agreements under which the U.S. occupation gave them control of Iraq's deepwater ports. Muhsin's electrical union is still battling to stop subcontracting in the power stations, a prelude to corporate takeover of a public resource.

Iraqi nationalists make sharp accusations that the occupation has an economic agenda, including the wholesale privatization of the Iraqi economy. Paul Bremer, formerly head of the Coalition Provisional Authority, published lists in Baghdad newspapers of Iraqi public enterprises he intended to auction off. Arab labor leader Hacene Djemam bitterly observed, "War makes privatization easy: First you destroy society, then you let the corporations rebuild it."

Hassan Juma'a Awad, president of the oil workers federation, wrote a letter to the U.S. Congress on May 13. "Everyone knows the oil law doesn't serve the Iraqi people," he warned. The proposed new statute "serves Bush, his supporters and foreign companies at the expense of the Iraqi people. ... The USA claimed that it came here as a liberator, not to control our resources."

The unions have vowed to strike if the law is implemented. At the occupation's end, the government in Baghdad will need control of the oil wealth to rebuild a devastated country. That gives Iraqis a big reason to fight to protect public ownership and control of the oil industry.

David Bacon is author of "The Children of NAFTA" (University of California, 2004) and "Communities Without Borders" (Cornell University, 2006) and reported from Iraq in 2003 and 2005. He was the board chairman of the Northern California Coalition for Immigrant Rights. Contact us at

This article appeared on page E - 3 of the San Francisco Chronicle

A plan for Iraq

By Eyad Allawi, Los Angeles Times-Washington Post
Published: August 19, 2007, 23:05

Next month, General David Petraeus, commander of US forces in Iraq, and Ambassador Ryan Crocker will report to Congress on the situation in my country.

I expect that the testimony of these two good men will be qualified and nuanced, as politics requires. I also expect that their assessment will not capture the totality of the tragedy - that more than four years after its liberation from Saddam Hussain, Iraq is a failing state, not providing the most basic security and services to its people and contributing to an expanding crisis in the Middle East.

Let me be clear. Responsibility for the current mess in Iraq rests primarily with the Iraqi government, not with the United States.

Prime Minister Nouri Al Maliki has failed to take advantage of the Iraqi people's desire for peaceful and productive lives and of the enormous commitment and sacrifices made by the United States and other nations.

The expected "crisis summit'' in Baghdad is further evidence of the near-complete collapse of the Iraqi government.

The best outcome of the summit is perhaps a renewed effort or commitment for the participants to work together, which may buy a few more weeks or months of cosmetic political activity. But there will be no lasting political reconciliation under Al Maliki's sectarian regime.


Who could have imagined that Iraq would be in such crisis more than four years after Saddam Hussain? Each month 2,000 to 3,000 Iraqi civilians are killed by terrorists and sectarian death squads.

Electricity and water are available, at best, for only five to six hours a day. Baghdad, once evidence of Iraq's cultural, ethnic and religious diversity, is now a city of armed sectarian enclaves - much like Beirut of the 1980s.

It is up to Iraqis to end the violence and bring stability, security and democracy to our country. I am working with my colleagues in parliament to build a nonsectarian majority coalition that will support the following six-point plan for a "new era'' in Iraq and replace through democratic means the current Iraqi government.

- Iraq must be a full partner with the United States in the development of a security plan that leads to the withdrawal of the majority of US forces over the next two years, and that, before then, gradually and substantially reduces the US combat role.

The United States is indispensable to peace and security in Iraq and the greater Middle East. But we owe it to America -and, more important, to ourselves - to start solving our own problems. This will not happen as long as the present government is in power.

- I propose declaring a state of emergency for Baghdad and all conflict areas. Iraq's security forces need to be reconstituted. Whenever possible, these reconstituted forces should absorb members of the sectarian and ethnic militias into a nonsectarian security command structure.

Empowering militias is not a sustainable solution, because it perpetuates the tensions between communities and undermines the power and authority of the state. A state has no legitimacy if it cannot provide security.

- We need a regional diplomatic strategy that increasingly invests the United Nations and the Arab world in Iraqi security and reconstruction.

Washington should not shoulder this diplomatic burden alone, as it largely has until now. Prime Minister Al Maliki has squandered Iraq's credibility in Arab politics, and he cannot restore it.

In addition, Iraq needs to be more assertive in telling Iran to end its interference in Iraqi affairs and in persuading Syria to play a more constructive role in Iraq.

- Iraq must be a single, independent federal state. We should empower local and provincial institutions at the expense of sectarian politics and an all-powerful and overbearing Baghdad.

Religion should be a unifying -not divisive - force in my country. Iraqis, both Sunni and Shiite, should take pride in their Islamic identity. But when religious sectarianism dominates politics, terrorists and extremists emerge as the sole winners.

- National reconciliation requires an urgent commitment to moderation and ending sectarian violence by integrating all Iraqis into the political process.

We should recognise the contribution of the Kurds and the Kurdistan Regional Government to Iraq's democratic future. Reconciliation requires the active engagement of prominent Iraqi Shiite and Sunni political and religious leaders.

Al Maliki has stalled the passage of legislation, proposed in March, to reverse de-Baathification. That proposal should be passed immediately.

- The Iraqi economy has been handicapped by corruption and inadequate security. We must emphasise restoration of the most basic infrastructure.

There can be no sustainable economic development and growth without reliable electricity, running and potable water, and basic health care. Over time, Iraq needs to build a free-market economy with a prominent role for the private sector.

It is past time for change at the top of the Iraqi government. Without that, no American military strategy or orderly withdrawal will succeed, and Iraq and the region will be left in chaos.

Eyad Allawi was interim prime minister of Iraq from 2004 to 2005.

Sunday, August 19, 2007

IMF report on Iraq stresses importance of reconstruction, security, oil investment

Author: Moussa Ahmad
Source: BI-ME and agencies
Published: 17 August 2007

IRAQ. For the first time in 25 years, the International Monetary Fund (IMF) has issued an economic assessment on Iraq, advising the government to increase the pace of reconstruction and investment, mainly in the oil sector.

"Directors commended the Iraqi authorities for keeping their economic programme on track by strengthening economic policies and making progress in structural reforms, despite an unsettled political situation and a very difficult security environment," said the IMF in a statement on Thursday summarising its Executive Board assessment on Iraq's economic performance.

Iraq has taken steps to strengthen its economy but there will be no real progress until the country's dire security situation has improved, the IMF said.

Announcing the completion of the fifth review of Iraq's US$727 million standby arrangement, which Baghdad wants as a precaution and not because it badly needs the money, the IMF said the country faced some serious economic challenges.

"The expansion of oil production is lagging, and that inflation, while on a downward path, remains high, reflecting in large part continued shortages, notably of fuel products," added the statement. After a decline in oil production in 2005, economic growth was estimated at nearly 6% in 2006, while maintaining an average annual crude oil production of two million barrels per day since 2004.

The IMF urged the Iraqi authorities to "strengthen the protection of oil installations" and welcomed Baghdad's decision to raise the fuel price to the regional level to avoid direct subsidies on fuel products.

Inflation in Iraq is at 46% in June 2007, the Central Bank of Iraq (CBI) allowed the exchange rate of the Iraqi Dinar to appreciate by 15% and the CBI's gross domestic reserves increased to US$ 18.7 billion by end of last year.

The Executive Board praised the Iraqi government's fiscal policy in 2007, calling on the CBI to "stand ready to accelerate the pace of appreciation and tighten monetary conditions further if inflation deviates from its downward path and dollarisation is not reduced as expected."

"Key to fighting inflation would be to continue restraining public spending pressures and stepping up efforts to reduce shortages, especially by actively supporting private sector fuel imports," added the statement.

"A turnaround hinges critically on an improvement in the security situation," it said.

The United States has rushed 30,000 extra troops to reinforce a clampdown aimed at stemming sectarian violence, which has pushed Iraq to the brink of all-out civil war.

US President George Bush has said he hopes the surge of military force will curb the bloodshed while efforts aimed at kick-starting the economy cut crippling unemployment, which has pushed many young men into the anti-US insurgency.

The IMF said it welcomed steps taken by the Iraqi government to bolster the economy and cited increases in official fuel prices as a step in the right direction.

The hikes have lifted the official price of gasoline from pre-2003 invasion level of around 3 US cents a litre to around 32 cents a litre, meaning money previously spent on subsidies can go toward more pressing public projects.

However, the IMF was definitely worried by a lack of progress in revamping the country's crucial energy industry.

"Measures to speed up reconstruction and increase investment, especially in the oil sector, are needed," it said.

Iraq sits on the third largest oil reserves in the world and depends on oil sales for almost all its foreign currency earnings. These funds will be vital for rebuilding its infrastructure and public services, which have been badly run down by years of international sanctions and war.

But foreign investment to modernise the industry has been held up while Iraqi politicians have failed to finalise a new oil law to determine the structure of oil industry institutions and the international tendering process. A separate law to determine how revenues will be shared between the Shi'ite and Sunni Arabs, and the Kurds, has been approved by the cabinet and the Kurdish Regional Government but is still locked in parliament.

"Unlocking Iraq's oil wealth requires advancing the enactment of a new legislative framework for the hydrocarbon sector, in view of the large investments needed to increase oil production," the IMF said.

The IMF said it had approved an extension of the standby arrangement by three months to 28 December.

It waived certain performance criteria under the deal, including an interim audit of the Central Bank of Iraq's 2006 financial statement, a census of all public service employees, and improvements to the budget classification and accounts.

However, IMF officials said the central bank audit and budget classification changes had since been adopted by the Iraqi authorities, albeit a few weeks after deadline, and took this as an encouraging sign of progress.

The IMF also said the central bank ought to continue its tight monetary and exchange rate policy to curb inflation and de-dollarise Iraq's economy.

Monthly inflation rose 6% in June after a spike in black market fuel prices and recorded a 46% year-on-year gain, after a 38% increase the previous month.

But core inflation, excluding fuel, edged down slightly to a 19% yearly pace from 21% in May, and a 32% level at the end of 2006.

The Iraqi central bank has raised interest rates and the Iraqi Dinar has strengthened sharply against the US Dollar, in a deliberate effort to squeeze inflation and improve confidence in the domestic currency.

This was relaunched at some cost after the fall of Saddam Hussein, and officials want to stem the widespread use of dollars and coax people back to dinars.

This consultation, taking over two years to culminate, advised the Iraqi government to "streamline the tax system with a view to expanding the tax base and improving incentives for economic activity", improve public transparency and accountability, and restructure the banking system.

Weapons recovered, suspect seized in raid

By Multi-National Division - Baghdad PAO
Aug 18, 2007 - 5:34:41 PM
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Blackanthem Military News, FORWARD OPERATING BASE LOYALTY, Iraq - Soldiers with the 2nd Infantry Brigade Combat Team, 2nd Infantry Division and the 4th Brigade, 1st Iraqi Army Division captured one suspected insurgent and recovered a weapons cache during a raid in eastern Baghdad Aug. 16.

During Operation Chesterfield in the New Baghdad District, Soldiers of Company A, 2nd Battalion, 16th Infantry Regiment based out of Fort Riley, Kan., and attached to the 2nd Infantry Brigade Combat Team, joined with their Iraqi counterparts in capturing the suspected insurgent, recovering two AK-47s, two pistols and 900,000 Iraqi dinar.

The suspect is being held for further questioning.

The capture comes as insurgents have stepped up their activity against Iraqi civilians and police officers. U.S. and Iraqi forces have responded by driving into insurgent strongholds and setting up combat outposts and joint security stations as part of the Baghdad Security Plan to secure the capital.

Saturday, August 18, 2007

IMF advises Iraq to shore up reconstruction, oil investment

WASHINGTON, Aug 15 (NNN-KUNA) -- For the first time in 25 years, the International Monetary Fund (IMF) has advised Iraq to increase the pace of reconstruction and investment, mainly in the oil sector.

"Directors commended the Iraqi authorities for keeping their economic programme on track by strengthening economic policies and making progress in structural reforms, despite an unsettled political situation and a very difficult security environment," said the IMF in a statement Tuesday summarizing its Executive Board assessment on Iraq's economic performance.

"The expansion of oil production is lagging, and that inflation, while on a downward path, remains high, reflecting in large part continued shortages, notably of fuel products," added the statement.

After a decline in oil production in 2005, economic growth was estimated at nearly 6 per cent in 2006, while maintaining an average annual crude oil production of two million barrels per day since 2004.

The IMF urged the Iraqi authorities to "strengthen the protection of oil installations" and welcomed Baghdad's decision to raise the fuel price to the regional level to avoid direct subsidies on fuel products.

Inflation in Iraq is at 46 per cent in June 2007, the Central Bank of Iraq (CBI) allowed the exchange rate of the Iraqi dinar to appreciate by 15 per cent and the CBI's gross domestic reserves increased to USD 18.7 billion by end of last year.

The Executive Board praised the Iraqi government's fiscal policy in 2007, calling on the CBI to "stand ready to accelerate the pace of appreciation and tighten monetary conditions further if inflation deviates from its downward path and dollarization is not reduced as expected".

"Key to fighting inflation would be to continue restraining public spending pressures and stepping up efforts to reduce shortages, especially by actively supporting private sector fuel imports," added the statement.

This consultation, taking over two years to culminate, advised the Iraqi government to "streamline the tax system with a view to expanding the tax base and improving incentives for economic activity", improve public transparency and accountability, and restructure the banking system.

The IMF linked economic improvement to security condition in Iraq and encouraged Iraq's effort to join the World Trade Organisation (WHO).

Sebastian River Holding's Inc. Informs Shareholders of Iraq's Stock Market Upgrade

SEBASTIAN, Fla.-(Business Wire)-August 8, 2007 - Sebastian River Holding's Inc. (Pink Sheets: SBRV), Today announced that news media was in Iraq on August 2nd 2007 to witness history, non-Iraqi's able to invest in the Iraq stock market.

"All share holders can view this remarkable CNN special on our new website: _www.SBRVINFO.com_ (", stated, Daniel Duffy president and CEO of Sebastian River Holding's Inc. "The Company believes that there will be a revalue of the Iraqi Dinar in the near future."

With all the positive financial news from the Iraq government and the rate of the dinar rising from $1USD= 1450 Dinar to a recent high of $1USD = 1238 Dinar, the company feels that the Iraq government must revalue their currency to give all Iraq citizens purchasing power and a new way of living. The company currently holds 135,000,000 dinar and every $1 USD upward movement in the price of the Iraq dinar gives the company a profit of 134,900,000USD or roughly an EPS of $2.73.

It was stated by the minister of finance that it is the countries goal to see the Iraq Dinar at its original value of 1USD = .312 dinar or $3.20USD. With the United States help and all the laws that have been passed, the financial situation in Iraq has dramatically improved over the last 12 months. The country of Iraq has put itself as one of the only few countries to be nearly debt free, have the third proven oil reserves in the world and to be first in natural gas reserves. With all this and still holding a large amount of gold and 28 billion USD in the United Stated Federal Reserve, the Company feels that Iraq will accomplish their goal.

Sebastian River Holding's Inc. is a holding company of profitable private companies, with a foreign currency division and two pending acquisitions with Pelican Capital Mortgage Lending Inc and TCI Electronics, Inc. The foreign currency division currently holds 1,000,000,000 Vietnamese Dong and 135,000,000 Iraq Dinar.

Forward-Looking Statement

This Press release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on the Company's current expectations as to future events. The forward-looking events and circumstances discussed in this press release might not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements.


Thursday, August 16, 2007

Iraqi growth slower than expected

15th August 2007

The Iraqi economy has been growing at a much slower pace than expected, a new report has found.

The Iraqi economy grew by just 6.2 per cent in 2006

The Iraqi economy grew by just 6.2 per cent in 2006

The International Monetary Fund (IMF) study blames this on an expected expansion in oil production that failed to materialise.

"Economic growth has been slower than expected at the time of the last Article IV consultation, mainly because the expected expansion of oil production has not materialised," the IMF said.

Average annual crude oil production has remained at just 2 million barrels per day since 2004, the report revealed.

Iraq's gross domestic product (GDP) should reach 6.3 per cent in 2007, up slightly from the 6.2 per cent rate recorded last year.

But the report also highlighted some encouraging points for the troubled Iraqi economy.

The Central Bank of Iraq (CBI) has successfully brought consumer price inflation (CPI) under control.

CPI stood at 46 per cent in June, down from 65 per cent at the end of 2006.

Since last November, the CBI has allowed the exchange rate of the Iraqi dinar to appreciate by 15 per cent and has raised its key interest rate twice so it currently stands at 20 per cent.

In addition to reducing inflation, these policies have also had some success in de-dollarising the economy and increasing the demand for dinars.

The CBI gross international reserves increased to $18.7bn at the end of 2006.

"Despite an unsettled political situation, capacity constraints, and the deterioration in security in 2006, progress has been made in implementing structural reforms, although much remains to be done," the report concluded.


Tuesday, August 14, 2007

The Dinar is Appreciating!

The Dinar is Appreciating!
Central Bank of Iraq
Official Exchange Rate
as of today
1240 NID = 1 USD

02/27/07 - 1281
01/16/07 - 1308
12/19/06 - 1380
12/18/06 - 1388
12/17/06 - 1400
12/03/06 - 1433
11/19/06 - 1452
11/02/06 - 1470

Saturday, August 11, 2007

'Your World' Exclusive: President Bush on Economy, War on Terror

Friday, August 10, 2007

This is a rush transcript from "Your World with Neil Cavuto," August 8, 2007. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: This is a FOX News Alert. Did something the president of the United States told us today move the markets today? They were up big much of the day, and then ending up even bigger. Another wild day for Wall Street, but a very big day here in Washington as we sat down with the president of the United States for an exclusive one-on-one on these big market swings, on the housing market, and mortgage problems, on calls for a bail-out, even on Barry Bonds' record home run last night.

We sat down for a rare chat inside the United States Treasury where the president was talking up the economy. Topic number one today though, those trapped miners in Utah.


CAVUTO: Mr. President, always great to have you.


(Story continues below)

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CAVUTO: I notice in the heat, you just don't sweat.


CAVUTO: Let me ask you, I know you have been in contact, sir, with Governor Huntsman out in Utah and the miners. And you have offered whatever federal support and help he needs to rescue them. But it comes at a time when environmentalists say you should go a step further and maybe abandon coal. That it is too risky, too dangerous, too dirty. What do you say?

BUSH: I say that, first of all, it doesn't make any sense to abandon an energy resource of which we have got a bountiful supply if part of our strategy is to become less dependent on foreign sources of energy.

Secondly, I'm a believer in technology, and I believe we will be able to continue to develop technologies that will enable us to use coal in even more environmentally friendly ways.

CAVUTO: So at a time when we are looking the bridge collapse in Minneapolis, and infrastructure costs, and this push that maybe we need to reprioritize our federal spending, what do you say?

BUSH: Look, I'm all for prioritization, but if what one is suggesting is, is that we don't need to be fully engaged in an enemy that wants to attack us again, and therefore cut back spending and supporting our troops, I strongly disagree.

The biggest threat to our economy — short-term threat, the biggest threat to the lives of our citizens is another terrorist attack. And after September 11th, Neil, I vowed I would use all resources necessary to protect this country.

Now I believe we've got ample revenues to do a lot of important projects. I mean, if rebuilding bridges is that big a priority, then we ought to prioritize that in the highway monies that we have already budgeted, as opposed to helping individual congressman or senators realize pet projects in their districts. In other words, prioritization means real prioritization.

CAVUTO: Does it bother you, Mr. President, when every time we have a crisis, unfortunately, that if it wasn't for Iraq, we would have money for this, if it wasn't for Iraq we would have money for this?

BUSH: No, it doesn't bother me, because I firmly believe that what we are doing is the right thing. And I know it is an unpopular war with some. But I will tell you it would be even more unpopular, is if we abandoned the mission there and al Qaeda and other extremists became more emboldened and attacked us again.

And then people would look back and say, what happened to them in 2007? How come they could see the impending threat? Well, I see the threat. And I will look forward to working with Congress, with members of both parties to continue to focus on the threat.

And I have been told you can't fight a war and balance the budget. Well, we are fighting a war, we cut taxes, and our deficit is shrinking, as a matter of fact, it is — as a percentage of GDP, it is below the 40-year average.

We are told we can't do a lot of things. And I believe we can do a lot of things, starting with protecting our country and in the meantime, diversify our energy supply or fix infrastructure. But it does require prioritization, something that Washington is not very good at doing.

CAVUTO: Speaking of prioritization, sir, a lot of the Democratic presidential candidates have said since the mortgage troubles that we would have to rescue or bail out. They are very particular not using the word "bail-out," but what they do say is a reserve set aside for sick lenders.

Hillary Clinton, I think, is proposing something in the vicinity of a billion dollars to do that. Are you for such measures that would shore up the mortgage industry?

BUSH: I'm for letting the market work. My biggest concern when it comes to the mortgage industry is the lendee, not the lender. It is the person to whom people have lent money. In other words, I'm worried about people having their homes foreclosed. I'm worried about people buying into a deal that they are not certain as to what they are buying into.

And I think the focus ought to be on the individual homeowner. And to that end, I do believe there needs to be more transparency. And we are asking for more money for truth in lending. I think we ought to crack down predatory lending. I don't think we need new law, we ought to enforce the law on the books.

And then I think we ought to let the market work. People are reassessing risk. And there is — the good news is we have got ample liquidity in our society to be able to, you know, deal with this current issue. And.

CAVUTO: But I think what Senator Clinton is saying, Mr. President.

BUSH: Well, let me put it more bluntly. No, I'm not for a federal bail-out.

CAVUTO: OK. Because that is what she is essentially looking at.

BUSH: Right.

CAVUTO: And what she is saying is that because there were some duplicitous lenders out there that you can't just let that go. And people who were hoodwinked into these mortgages now have to be rescued.

BUSH: Oh, I thought you said the lenders as opposed to the lendees. First of all, I believe that, you know, there is enough liquidity to encourage refinancing. No question we ought to be cracking down on predatory lenders. And we will.

CAVUTO: So to be clear, sir. If someone was a victim of a predatory lender, who gave them sort of a song and dance on a mortgage, and they took that song and dance and they took that mortgage, and now they risk losing their homes, would you say it is not the government's job to rescue that person?

BUSH: Well, actually there is a place for people to refinance, and that is at the FHA. And therefore it is important to reform the FHA to make sure it has got a more extended reach. There are refinancing mechanisms at the federal level available for homeowners.

CAVUTO: Do you think the mortgage crisis, as it is being called, is overblown?

BUSH: I think anytime anybody's homes are threatened is something we ought to be concerned about. I do believe that we are adjusting from a plethora of capital that came rushing — or liquidity that came rushing into our system. And we are watching it very carefully and you know, paying attention to, you know, the — whether or not there is enough ample revenues in our society, ample cash in our society to help — for there to be a natural adjustment through the marketplace.

CAVUTO: I heard someone describe it, sir, as President Clinton presided over the Internet bubble, President Bush presided over the real estate bubble.

BUSH: Well, I think the verdict is still out on the real estate bubble. There is no question that there has been a correction. I think the good news so far is the correction has been what one would call a soft landing as opposed to precipitous decline.

I would point out that the economic growth in the second quarter was 3.4 percent. And I would remind people that this economy is pretty darn strong given the fact that the job picture remains strong. And so there was a correction.

And you know, markets tend to correct. And the fundamental question is, will they correct is such a way as to not derail the good, strong economic growth that we are seeing?

CAVUTO: So when Barney Frank, in the House Financial Services Committee, is looking at going after essentially the brokerage houses for packaging or providing support for these kind of loans, now his counterpart in the Senate, Chris Dodd, is against that, but what do you think of that?

BUSH: I think it comes — government tends to overreact at times with laws that will be counterproductive. That what we ought to be doing is encouraging markets and taking care of those who can't help themselves.

And for me that is the best policy. Markets tend to adjust. And if government throws up, you know, special laws that will prevent it from adjusting in an orderly way, it will be counterproductive.

CAVUTO: Let me ask you, sir, you have been moving up in some of the latest polls.

BUSH: Oh yes?

CAVUTO: You are in the mid 30s. I know you say you don't pay attention.

BUSH: I wouldn't know.

CAVUTO: But a lot of that has to do with, depending on the poll, fatigue over the candidates, Democrat and Republican. Do you think we have started this race way too early?

BUSH: Look, I started in June of 1999, it was when my first trip out of…

CAVUTO: Right.

BUSH: …Texas. I went to Iowa and New Hampshire. On the other hand, I had — during our legislative session there, you know, we had people come down, and a lot of policy people, and some financial people all setting the ground work for a run.

It is hard for me to tell whether it is too early or not. I don't know. I'm just glad I'm not out there running.

CAVUTO: It is interesting, though, in the latest Republican debate, they seemed to be piling on you, not as much as the Democrats, obviously, but what do you think of that? Do you shake your head or what?

BUSH: I didn't see any pile-on. I mean, there may be some candidates who probably won't be the nominee of the party, for example, using the immigration debate to make points. But I think on the big issues, keeping taxes low, Republican candidates understand it is the right policy.

Not only is it the right policy — I mean, it is the right policy because it has worked. Ours is an administration that in 2002, you know, acted — 2001 and 2003, excuse me, acted to the conditions created by a recession as well as a terrorist attack.

And not only has there been strong economic growth as a result of tax cuts, but we are — the deficit is shrinking. And the deficit is — as a percent of GDP, is below the 40-year average.

I mean, in other words, when candidates get up there and say, I want to keep your taxes low, it is not only nice political rhetoric, but it happens to work. And that is what we have proved.

CAVUTO: But they are all running against you, and you are not up for election.

BUSH: Are you talking about the Democrats?

CAVUTO: In this case.

BUSH: Well, I'm an easy target, yes.


BUSH: But you can't win an election if the vision is, I'm against somebody. It is very important for candidates from both political parties to say what they are for.

And you know, I'm confident our candidates will win this election — our candidate will win this election. Because I believe the candidate who will be the nominee will have articulated a plan to keep America safe and to keep America prosperous.

CAVUTO: But the tone is nasty. I know you have addressed this before, Mr. President, but I know when you were running for president, I don't remember you coming close to disparaging Bill Clinton to the degree even leaders disparage you today.

BUSH: Yes. I didn't talk about President Clinton a lot, because I wanted people to know what I was for, and was on my mind. Now I did differentiate myself from my opponents, flip-flop or, you know, whatever the.


CAVUTO: Right. But I don't remember you ever doing — Majority Leader Reid referring to you as the worst president ever, Nancy Pelosi, incompetent.

BUSH: Yes.

CAVUTO: You have to sit down in the Oval Office with these guys.

BUSH: Yes.

CAVUTO: So how does that go?

BUSH: It is called the test of leadership, Neil, whether or not one has the capacity to continue to do what is right for a country or whether or not I will allow the office of president to get drug into the, you know, mudslinging of politics.

And I made the decision to keep the office out of that kind of politics and to work as best I can with people from both parties to keep the country safe and to keep the country prosperous.

CAVUTO: It doesn't get a little bit hard?

BUSH: I have been around long enough to be able to understand how it works and — yes, look, nobody likes to be called names, on the other hand, there is — we have got a bigger enemy than name callers. That is al Qaeda or people losing jobs.

And so it is — I don't view people as enemies in politics. I don't hate. I'm a person who tries to understand where the other person is coming from and then work toward accomplishing big goals. And what people I think have learned is I'm not going to compromise my principles in accomplishing those goals.

CAVUTO: Let me ask you. There is a report out now that says a lot of the recent attacks on U.S. soldiers have clearly, almost indisputably come from Iranian-backed sources. That they might in fact be Iranian weapons themselves. Yet we continue to talk to the Iranians.

BUSH: We have made it clear to the Iranians that there will be a consequence when we catch your people moving weapons into Iraq, that is what we told them.

CAVUTO: And what is the consequence?

BUSH: Well, they will be brought to justice.

CAVUTO: Would the consequence involve ever going into Iran?

BUSH: This is a battle for Iraq and we are — made it very clear to the Iranian government that — that is the reason you meet with them, is that you are moving materials that are affecting the stability of Iraq and, more importantly for American families, causing death, and there will be a consequence for doing it.

CAVUTO: Separately, sir, there is a report that was in the U.K. Telegraph that the Chinese, very concerned about possible sanctions that might be slapped on them, would consider the so-called nuclear option, that is, selling a lot of dollar-denominated assets. I guess they hold close to a trillion dollars. Are you worried about that?

BUSH: Trying to do what? Trying to crater our economy?

CAVUTO: Right.

BUSH: That would be foolhardy of them to do that. That is why — first of all, I don't know who put out that report. I doubt it came from the president's office.

CAVUTO: Well, I guess that — because what happens is it comes through university sources, which is usually the way word gets out of potential government thinking.

BUSH: Oh really? Well, one of the reasons why we have got this Paulson-led economic dialogue with China is to particularly work — is to talk about those kinds of, you know, threats, if that is, in case, the position of the government. It would be foolhardy for them to do this. It would be.

CAVUTO: In other words, they would hurt themselves more than us.

BUSH: Absolutely, I think so.

CAVUTO: You are right.

BUSH: And there are good ways to work through difficulties. Listen, we have a very complex trading relationship with China. I happen to believe it is very important for our economy that we have access to Chinese markets. And I think it has been beneficial, by the way, for consumers, that there be Chinese goods coming in which have helped hold down the cost of inflation, particularly in the face of rising energy prices. I would hope we could work out our differences in a cordial way as opposed to, you know, whatever the option you called it is. Or, frankly, legislation out of Congress that will affect our capacity to have a relationship. Now, having said that, when there is difficulties, we bring them up. I mean, we are — and we have used our powers with the — particularly through the Department of Commerce, to make it clear we expect to be treated fairly.

But yes, I mean, I — it is in the interest of the United States, Neil, in my judgment, that we encourage the Chinese to go from a savings economy to a consumer economy. And then have access to those markets so that U.S. producers and service providers can expand their businesses and therefore create more jobs here at home.


CAVUTO: All right. We are not quite done. The president kind of saving the best for last. He was running a few minutes for this interview because you know who he was on the phone with? Barry Bonds. And wait until you hear what they talked about. And more what he has to say about Barry.



UNIDENTIFIED MALE: And Bacsik deals. And Bonds hits one high! Hits it deep! It is out of here!



CAVUTO: Apparently we weren't the only ones watching that. Before he was president of the United States and a governor of Texas, George W. Bush was co-owner of the Texas Rangers baseball team.

So what did he thing about the controversy surrounding Barry Bonds' record-breaking home run?

Here now, my chat the most powerful baseball fan on the planet.


CAVUTO: Can I go to a not-so-serious subject?

BUSH: Sure!

CAVUTO: Barry Bonds.

BUSH: Yes!

CAVUTO: Hit the home run record last night. Do you recognize him as being the legitimate home run champion?

BUSH: Well, I just got off the phone with him. That is why I held up this interview, because I was on the phone with Barry Bonds. And I politely waited until the appropriate time on the Pacific Coast and called him to congratulate him. He is a great hitter. He broke the record of another great hitter, Hank Aaron. And I congratulated him on breaking that record.

There is a lot of speculation about Barry Bonds, and my only advice for people is to just let history be the judge. Let's find out the facts, and then everybody's opinion, one way or the other, will be, you know, verified or not verified. In the meantime, however, I — it is appropriate to recognize this man can hit the baseball.

CAVUTO: But if it is later proven that a lot of his strength in the mid years…

BUSH: Then baseball.

CAVUTO: …came from steroid use?

BUSH: Then baseball — there will be a lot of disappointed people, and baseball and the baseball writers will have to make the determination as to whether or not he would receive the highest accolade of all, which would be to be admitted into the Baseball Hall of Fame.

CAVUTO: But the record would still be there, right? Or would it have an asterisk on it?

BUSH: Well, that's going to be up to baseball. They are going to have to figure all these kinds of things out. And, you know, look, I'm — as you know, I love the sport. Obviously, I'm dead set against steroids being in baseball. I think it is bad for the game. I was the one who put it in the State of the Union address — the issue of steroids.

CAVUTO: That is right. That is right.

BUSH: I put it in there, because it is part of a larger context, and that is how we behave as adults will influence how children behave. And I was very concerned that it would be viewed as OK to use steroids if you are a high school kid or a junior high kid. And it is not; it will hurt your body. And as a result of that, Senator McCain, for example, took up the hearings in Congress and baseball has been adjusting their policy.

But in terms of how baseball reacts, it really depends on what the facts are, and it is going to be up to them to make the determination as to asterisk. But more importantly, it will be the Hall of Fame. That will be the ultimate decision point for the baseball writers. In the meantime, anybody who knows the game will tell you, Barry Bonds is a great hitter.

CAVUTO: End of story?

BUSH: Yes, sir!

CAVUTO: Mr. President, thank you very much.

BUSH: Thanks for coming.

CAVUTO: Thank you. Very nice speaking to you.

BUSH: Appreciate it. You bet.


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