Sent: Sunday, January 4, 2015 1:47:50 AM
Subject: Dinar
Subject: Dinar
Iraq and Saudi
Arabia Cooperate To Boost The Dinar
Saudi Arabia officially left Iraq in 1990 when it closed its embassy in Baghdad in order to protest Saddam Hussein’s invasion of Kuwait. Of course, that was followed by a multitude of sanctions and international outrage against the Iraqi regime.
Obviously, the international sanctions against Iraq had a negative effect on Iraq’s economy for the next several years. Worst of all, many of Iraq’s long-time regional friends and allies were forced to abandon the country while Saddam remained in power.
Once Saudi Arabia had closed its embassy, Saudi Arabia didn’t appoint a non-resident ambassador to Iraq until 2012. Recently, Saudi Arabia’s Prince Saud Faisal announced plans to reopen its embassy.
Nowadays, Iraqi-Saudi business relationships are flourishing once again. We’ll explore how this new rebirth of cooperation between Iraq and Saudi Arabia will increase foreign investment and boost the Dinar’s value going forward.
Developing stronger trade ties
The Iraqi-Saudi economic relationship will continue to improve, since both countries agree there is a need to work cooperatively. Historically, trade between the two countries was often a one-way street in which Iraq imported goods from Saudi Arabia, especially under the oil-for-food programs during the sanctions era.
Even as early as 2002, Saudi Arabia was at the forefront of normalizing trade with Iraq according to the United Nations’ oil-for-food programs that allowed Iraq to sell its oil to purchase food, medicine and other important supplies.
It was reported that about $300 million worth of food and other products were exported to Iraq by Saudi Arabia businesses at the onset of the program.
A comprehensive breakdown of trade transactions shows that Saudi firms signed contracts worth $298 million for the export of miscellaneous goods to Iraq after their offers were approved by the United Nations. Of that amount, $117 million was for food exports, $104 million for machinery and spare parts, and $77 million for medical supplies.
Then-Trade Minister Muhammad Mahdi Saleh indicated that Saudi companies have exported goods worth more than $1 billion to Iraq since the start of the oil-for-food program.
Benefits of better trade relations:
The “warming” in official relations between the governments of Iraq and Saudi Arabia is already having a positive impact on Iraq’s balance of trade. For instance, Saudi Arabia can bring new petroleum-based industries to Iraq.
Iraq has the fourth largest proven reserves of oil globally and it is the second largest exporter of crude oil (after Saudi Arabia) in the Organization of Petroleum Exporting Countries (OPEC). Saudi Arabian companies include some of the largest global petrochemical industries, since the country is the largest petrochemical producer in the Gulf Cooperation Council (GCC).
Iraq currently exports most of its oil in the unrefined (crude) form to refineries outside the country, where non-Iraqi oil companies have first crack at the most-valuable upper hydrocarbon fractions. In fact, about 70% of Iraq’s natural gas is lost due to flaring. It could be used to manufacture plastics instead.
In sharp contrast,
Saudi Arabia has a vibrant petrochemical industry. With increased cooperation
between the two countries, Saudi Arabian companies can foray into Iraq’s petrochemical
industry and help retain more value from refined products at home, instead of
exporting crude.
The Economic Information Center of Iraq estimates that the trade exchange between Iraq and Saudi Arabia is already $1.3 billion annually. This amount could grow quickly once Saudi bankers and business people become more aware of the opportunities in Iraq.
Dergham Mohammed Ali, Director of the EIC, said that bilateral trade between the two countries might rise above “three billion dollars in the event of improvement in bilateral relations, in addition to the possibility of entering Saudi investments… in the sectors of manufacturing, housing, construction and extractive sectors.”
It seems apparent that increased trade and business development between Iraq and Saudi Arabia will contribute to the recovery of Iraq’s economy going forward.
The Economic Information Center of Iraq estimates that the trade exchange between Iraq and Saudi Arabia is already $1.3 billion annually. This amount could grow quickly once Saudi bankers and business people become more aware of the opportunities in Iraq.
Dergham Mohammed Ali, Director of the EIC, said that bilateral trade between the two countries might rise above “three billion dollars in the event of improvement in bilateral relations, in addition to the possibility of entering Saudi investments… in the sectors of manufacturing, housing, construction and extractive sectors.”
It seems apparent that increased trade and business development between Iraq and Saudi Arabia will contribute to the recovery of Iraq’s economy going forward.
A two-way street:
As the central governments of Saudi Arabia and Iraq continue to develop stronger trade relations, Iraq has called on its regional governorates to end their boycott of products from neighboring countries, mainly from Saudi Arabia.
It seems that a few Iraqi governorates like Basra and Baghdad have boycotted products from countries such as Saudi Arabia, Qatar and Turkey. And, the Provincial Council of Najaf was reported to have also boycotted Saudi Arabian commodities to protest what it perceives to be Saudi support for terrorists.
Still, trade between Iraq and Saudi Arabia continues to grow rapidly.
A stronger Dinar:
The balance of payments is a record of all economic transactions between the residents of a country and the rest of the world in a particular period, including transactions by individuals, firms and government bodies.
As the central governments of Saudi Arabia and Iraq continue to develop stronger trade relations, Iraq has called on its regional governorates to end their boycott of products from neighboring countries, mainly from Saudi Arabia.
It seems that a few Iraqi governorates like Basra and Baghdad have boycotted products from countries such as Saudi Arabia, Qatar and Turkey. And, the Provincial Council of Najaf was reported to have also boycotted Saudi Arabian commodities to protest what it perceives to be Saudi support for terrorists.
Still, trade between Iraq and Saudi Arabia continues to grow rapidly.
A stronger Dinar:
The balance of payments is a record of all economic transactions between the residents of a country and the rest of the world in a particular period, including transactions by individuals, firms and government bodies.
The increase in trade between Iraq and neighboring
countries will result in a favorable balance of payments for Iraq, and help
ensure its economic recovery and prosperity. The balance of trade and balance
of payments are among the important economic indicators to be considered by
monetary policymakers at the Central Bank of Iraq regarding revaluation of the
Dinar.
The upward revaluation of the Dinar is expected by nearly all Dinar investors. When it occurs, investors hope to harvest fat gains and very high ROIs. So, Iraq’s progress in strengthening its business relationships with Saudi Arabia, its wealthiest regional neighbor, bode well for the revaluation of the Dinar.
When Saudi Arabia and Iraq work together, the Dinar benefits
The increasing level of cooperation between Iraq and Saudi Arabia bodes well for the future of Iraq’s economy. The strong ties being forged with Saudi Arabia will encourage other countries throughout the region to open communication and trade lines with Baghdad in the short and longer term.
Iraq has everything to gain, and nothing to lose when dealing with Saudi Arabia. Saudi banks, oil companies and other institutions have enormous amounts of cash because of their own oil business.
So, they can afford to pour plenty of resources into Iraqi development.
The more Saudi investment in Iraq, the greater the demand for the Dinar, which is good news for investors.
The upward revaluation of the Dinar is expected by nearly all Dinar investors. When it occurs, investors hope to harvest fat gains and very high ROIs. So, Iraq’s progress in strengthening its business relationships with Saudi Arabia, its wealthiest regional neighbor, bode well for the revaluation of the Dinar.
When Saudi Arabia and Iraq work together, the Dinar benefits
The increasing level of cooperation between Iraq and Saudi Arabia bodes well for the future of Iraq’s economy. The strong ties being forged with Saudi Arabia will encourage other countries throughout the region to open communication and trade lines with Baghdad in the short and longer term.
Iraq has everything to gain, and nothing to lose when dealing with Saudi Arabia. Saudi banks, oil companies and other institutions have enormous amounts of cash because of their own oil business.
So, they can afford to pour plenty of resources into Iraqi development.
The more Saudi investment in Iraq, the greater the demand for the Dinar, which is good news for investors.
1 comment:
Upon reading this article, I have to say I have hope for the revaluation of the Iraqui Dinar. However, it seems abundantly clear that it is not going to happen any time soon. All these fools that claim, "Wednesday, Wednesday", or "It RV'd in December, we are just waiting for the UST to give the go-ahead", are fibbing. It's all prevarication, or for you less-than-bright "Dinarians", it's plain old bullshit. The Gurus keep telling us that groups have exchanged, wealthy individuals have exchanged, etc. and that the reason we have no proof is because "they had to sign NDA's." That's horseshit. Do you really think 85,000 newly wealthy, as one Guru claimed, could keep a secret and not let the cat out of the bag? And the story we heard about someone sending a picture of a new Ferrari, or whatever it was, sitting in his driveway doesn't prove a thing. A friend once sent me a picture of him sitting the cockpit of an F-16 Fighting Falcon. Anyone can pose for a picture if they have the will and a few contacts. The bottom line is, the RV of the Dinar is not anywhere close to reality yet. Just be patient and wait, like when you were a child with packages under the Christmas tree. Stop drooling, it makes you look like a fool. Oh, too late..............
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