5-30-13 Darin (DV): People have to remember that the country itself, was for many years hindered by heavy sanctions. These sanctions prevented regular trade that many other countries were able to do.
Their only way of importing goods was through a Oil for Food program to feed their people.
With the lifting of economic sanctions, the country can now grow in other sectors.
When comparing the ratios of how big their oil sector is to other sectors, OIL will always "trump" the other sectors only because it is their biggest source of income.
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Darin Continues: So even as their crude exports increase, their private sector will increase while the ratio remains relatively the same. We don't have to view that as a bad thing, as the private sector grows it has a positive ripple effect.
As oil profits go into rebuilding the nation, more jobs are created which lowers unemployment. As unemployment decreases, more people are working & receiving an income.
They in turn, take that money and spend it for goods/services. What would be nice to see, is if they were to try to focus more on strengthening the private sectors as well..
Agricultural would be a good stand point along with manufacturing facilities so they can start creating goods themselves. Whatever route they take with their currency, I do believe that their region will see a higher standard of living in the future.
5-30-13 SWFloridaGuy (Response to TechChevy): My apologies for such a late reply. I had missed your question in the forum. Some of this will be review for the vets but I have done my best to try to add some additional information to keep it less monotonous.
If you remember a couple months back we found out that senior Iraqi officials were being trained intensively by the WTO for the sole purpose of WTO negotiations, protocol and the multilateral trading system.
This is very specific and necessary training that is directly related to the procedural steps regarding accession. This also includes economic development requirements.
Unfortunately, Iraq being the country it is, they have been difficult but they are slowly coming around to passing the necessary laws for their accession.
This application is a great sign for investors because a convertible currency is necessary for Iraq to join the WTO and I believe this is part of the development training/negotiations.
So, right now they are receiving training, laying out all their economic and trade policies that relate to WTO agreements and then the next step will be to submit a memorandum to the panel for consideration. When the principles and policies are in place, additional negotiations will commence between Iraq and member countries.
The terms will be finalized and submitted to the General Council. If 2/3 of the members vote in favor, than Iraq may accede to the WTO. The fact that they are even being considered right now tells me that they have already decided the direction that they are going take with their currency reform project.
I'm not saying an RV is a requirement. I'm not saying having a convertible currency automatically means an RV. They have many options, many of which could benefit us financially in a significant way. They may RV/change the peg to a PEP/broad based commodity, float or worst-case scenario.... a gradual appreciation over time.
In my opinion, this (gradual appreciation/few pips) is clearly the most unlikely scenario due to the urgency to fulfill these requirements (although some MPs oppose it), clearly they appear to be galvanized in a direction that will be to their advantage in the near term or they wouldn't be addressing this now so vigorously and speaking of making a possible move to stabilize their currency next month.
Those certain opposing MPs, who in addition to being the minority, also share the attribute of being the majority of the doltish officials who never show up for work and are responsible for the lack of quorum we hear about every week.
I believe it's important to realize that WTO membership is a coveted status symbol in the economic and trade world, especially for developing countries like Iraq. Among other things it will open up markets for their country’s goods and services and serve as a catalyst for growth.
Bottom line: I've said for quite some time now, no matter how long it takes for them to accede, the fact they are clearly moving forward toward negotiations that will eventually lead to their accession. This means they must have first envisage a sustainable way to achieve a convertible currency, go international and de-dollarize.
WTO accession may take years but that does not concern us. Implementing a stable currency reform project is a convoluted matter and, considering the global economic implications, it is no wonder that it has taken a decade to reach this level of economic and political reconstruction.
However, at this time, I believe they are ready to join the world stage and compete on an international level. These dilatory acts need to come to an end, not only for Iraq’s benefit, but for the sake of the international community.
We've heard a lot of positive economic news lately. I don't claim to know their plan but we know it will be a positive one. Shortly we will be entering into a very exciting month. Wouldn't you agree?
Currently, the Iraqi commerce members agreed Iraq needs WTO membership; but laws need to be amended. They are somewhere in their third round of bargaining, although clearly this will lead to the advancement of the national economy.
When this is finally accomplished (long after we see their currency has risen in value), Iraq will inevitably see economic improvements, increased employment and Iraqi industries will become more competitive on a global scale.
Iraq is not alone in this fight. The U.N. and the Department of Foreign Economic Relations Ministry of Commerce will be training Iraq over the next 2 years in order to strengthen the negotiations and technical skills required to improve Iraq's chances of increasing their economy and trade.
Which begs the question, why the sudden interest in ameliorating a war-torn country with no economic future and riddled with unsolvable political instability?
The answer is simple. It's not only pragmatic, it's profitable. I don't believe in an RV tomorrow. I don't even know if I believe in an RV at all. I'm not inferring a lop; simply stating that they have many options. Indubitably, Iraq's currency will eventually appreciate. If I have to wait a year, two years or next month, I will be holding onto this currency for as long as it takes.