(Ed. Note: This chat was at PD, and NOT PTR as we reported in our Recap Email)
This is not a tidbit…it is a buffet!!! This is from Juni and Hoggey. I am posting this so you can read some facts!!!
A fully seated GOI, fully representative of all key players, is a requirement for movement into Art. VIII, and upon doing that, I would expect an RV.
A fully seated GOI is NOT a requirement for just a within program rate Art. XIV RV.
How to tell the difference?
A quick and easy answer is when you see the change on the CBI or forex, go try to buy using Ameritrade or other brokerage account. Right now you can’t do that because they are in the artificial program rate. Once they go international Art. VIII, you will be able to buy and sell dinars easily on forex.
That’s the quick and easy way.
Read More Button on right
However, I would venture to say that they are not going to let this type of news — stepping out on world trade scene — without any fanfare. If it is truly coming out international, I would expect them to coincide it with WTO accession and major announcement.. That’s just my opinion.
If it is just an RV in the program rate they are in, you will see 1170 change to (say) $3.41 (Rich’s post), but you will not be able to buy it on forex or through a brokerage acct, etc. If this happens, please proceed cautiously. Go to this post, http://peoplesdinar….__1#entry356139 , and start at post #76 (Hoggey). Read his comments and mine to understand what the alternative possibility is.
Hoggey may want to chime in and answer here in a more professional way, as his experience is directly in this. I’ll ‘ping’ him and see.
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Hey Juni, thanks for the invitation to participate in this discussion. I’m sorry it has taken me so long to reply but I just couldn’t respond any sooner. Anyway, you’ve already done an excellent job explaining the process. So I’m not sure where to begin or what I can add with respect to Articles XIV & VIII or an “in-country” under Article XIV. And we’ve covered the UN and Chapter VII and its significance.
But there seems to be a lot of confusion lately regarding which organization is responsible for an RV under Article VIII (or for that matter in country under XIV). But before anyone can understand the Articles, you really need to understand the differences between the UN and IMF. The bottom line is that the IMF is concerned with the global financial system ,and the behavior of exchange rates & exchange rate regimes. Whereas the UN is concerned with global security and how to maintain peace and prevent the outbreak of war regionally and worldwide. As such, the UN is concerned with the behavior of governments & ruling regimes.
Chapter VII of the United Nation’s Charter explains the enforcement powers, specifically the Security Council’s power to authorize economic, diplomatic, and military sanctions, as well as the use of military force, to resolve disputes. While the UN can impose economic sanctions on a country and its currency, the UN is not specifically concerned with global financial systems or the stability of exchange rates. That’s the IMF’s job – overseeing the global financial system, which includes the stability of international exchange rates.
So when Iraq moves out of an Article XIV Agreement with the IMF, and finally accepts the terms of Article VIII, that will come umder the purview of the IMF’s Articles of Agreement, and not the United Nation’s Charter.
Now I cannot tell you the protocol for disclosure or any proceedures for announcing the transition from Article XIV to Article VIII. However, I’ve enclosed a copy of the IMF’s announcement of Tajikistan’s acceptance of Article VIII
Press Release No. 05/58
March 10, 2005 International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA
Republic of Tajikistan Accepts Article VIII Obligations
The government of the Republic of Tajikistan has notified the International Monetary Fund (IMF) that it has accepted the obligations of Article VIII, Sections 2, 3 and 4 of the IMF’s Articles of Agreement, with effect from December 9, 2004.
By Article VIII, Sections 2, 3 and 4, IMF members undertake not to impose restrictions on the making of payments and transfers for current international transactions, and not to engage in, or permit any of their fiscal agencies to engage in, any discriminatory currency arrangement or multiple currency practice, except with IMF approval.
A total of 164 of the IMF’s 184 members have now accepted the obligations of Article VIII, Sections 2, 3 and 4.
By accepting the obligations of Article VIII, Sections 2, 3 and 4, the Republic of Tajikistan signals to the international community that it will pursue economic policies which will make restrictions on the making of payments and transfers for current international transactions unnecessary, and will contribute to a multilateral payments system free of restrictions.
The Republic of Tajikistan joined the IMF on April 27, 1993. Its quota1 is SDR 87.0 million (about US$133.9 million).
Before we can see the IMF announce Iraq’s acceptance of Article VIII, I suspect Iraq will have to complete the reforms specified by agreement with the IMF. And it is my understanding that Iraq still has a few structural reforms it needs to complete before I would expect it would even be allowed to make application to an Article VIII. Juni and I’ve already mentioned the necessity of forming the government – and according to terms already defined in the Erbil/Power sharing Agreements. And yes, that includes the security ministers. Incidentally, that is a subject where the IMF and UN share mutual concern – Iraq’s inability to finish forming its government. And UN Res 1483 makes it absolutely clear the Iraqis have to form an internationally recognized representative government, the definition of which has been modified by the Erbil/Power Sharing Agreements. Ironically though there seems little, if any unanimity among investors about the necessity of the Iraqis forming their government. Now Hmmmm? What do you suppose these “investors”…know(?) that the global authorities don’t regarding the significance (or not) of a fully formed government????????
So then it should come as no surprise that Iraq has other chores, including the much needed structural reforms in the Financial Sector (includes banking system reform and reforms @ the CBI) also with Iraq’s Tax Collections, and Tax collection systems (see Greece & taxes). I’ve mentioned these in previous posts. So I don’t want to belabor the point in this post. But it has always been the IMF’s plan to have Iraq under an Article VIII Agreement. And if Iraq hadn’t gotten itself into so much financial trouble, it might…well never mind, the point is Iraq got into some very serious finacial trouble and couldn’t pay its debts. In a nutshell, Iraq was virtually bankrupt and had to turn to the IMF for help. When regimes change and/or go bankrupt, there’s a high probability the currency will become WORTHLESS! I’ll repeat: WORTHLESS! That kind of reality will quickly be revealed in the forex markets as the currency’s value declines steadily as that particular nation goes deeper and deeper in the hole, until it simply can’t pay. And at that point – probably sooner – nobody wants it (the currency) – AND WHY? – BECAUSE IT’S WORTHLESS!
All these things are interrelated and have a significant impact on the eventual revaluation of this currency under Article VIII. Not every country will experience this kind of an ordeal in moving through the “transitional” phases to get into an Article VIII Agreement with the IMF. But Iraq (Saddam Hussein in particular) dug the hole especially deep. Fortunately when you dig holes in Iraq your chance of finding oil…The fact so much had to be done is what made it possible for us (the investor) to invest at a fraction of a penny – $0.0008457. When the reforms are complete or their completion within sight, this currency will be on the launching pad and fueled for takeoff. IMO, the dinar is destined for a much higher rate of exchange under Article VIII. When? Like everyone else I would like “soon” but I’d much rather understand what’s going on (and I do) and then have a high degree of confidence in its ultimate revaluation under Article VIII. And I’m confident the IQD is heading for an Article VIII revaluation – Iraq and the IMF have made that abundantly clear, which gives me a high degree of confidence in its ultimate revaluation under an Article VIII Agreement.
There are no guarantees with speculative investments. But this one is quite unique. And quite so because the UN, IMF, USA, Paris Club, G-7, G-20 Iraq and et al got into their own bind with respect to the dinar and Iraq’s international reserves. They had to convince investors with valuble-usable foreign reserve currency (dollars, euros, yen, pound) to invest in Iraq’s unusable and virtually worthless Article XIV currency. So the spotlight is on them. How this plays out will speak volumes for or against the intergrity of the UN, IMF, USA and… Did they plan on doing right by their investors, or did they consult with Bernie before the deal was packaged? The point is to finish forming the government so that government (Maliki’s Cabinet), along with Parliament can begin to fix the economy with favorable economic and tax policies. In other words, get this the ball rolling. Iraq has made great progress – amazing progress.
For some reason (Maliki) they can’t get the GOI done. Until they finish the government, they will have no stability. And it will be extremely difficult for Iraq to attract the level of foreign direct investment, FDI, that is needed to grow the economy, create new jobs and of course, pay off the mountain of debt owed by this nation. From the standpoint of the IMF, Iraq needs to finish forming its government so the government can finish REFORMING Iraq’s economy. That’s the point and why it is so IMPORTANT to any RV under Article VIII. Get it done Maliki.
The UN wants it for security and stability reasons. Simply put, the longer Maliki takes in forming their government, the more likely there will be an increase in sectarian violence. And if there’s an increase in sectarian violence, there’s going to be a likely increase in terrorist activity. And if terrorist activity increases as a result of Maliki’s inability to finish forming its government, then Iraq will be seen as a threat to global and regional security. So the political situation, the GOI, the economy, Financial Sector…they’re all interrelated.
And Yes Iraq’s economy needs a tradeable currency to grow. But the global currency markets are not about to take it on faith that the Iraqis will be able to work through their political differences to form the government. Iraq needs to finish forming the government so that that GOI can finish REFORMING the economy and…
The bottom line: Iraq has made tremendous progress and we are getting closer and closer to our goal. And regarding Iraq’s desire to move to an Article VIII agreement, that plan has already been disclosed in several IMF reports. The IMF has released the notice of Iraq’s plan for an Article VIII Agreement in several reports and notices already made to the public.
Hopefully that will answer Brad5860 and provide the kind of “elaborate” detail to understand where we are with respect to Article VIII and etc..
1) “what is the link or connection between un/imf/cbi
2) “what is the link or connection between un/imf/cbi re who will report we have an article 8 rv as opposed to the article 14 within rv”
3) “how does this all link together?
4) “do you feel once we are in article 8 we are their?
5) “is article 14/8 a imf or un or wto or ? requirement ?
6) “elaborate please
If anyone’s still confused about the UNSC and IMF, and their role in Iraq’s economic reformation and sovereign restoration, then please read the information below, courtesy of wikipedia. It gives a general overview of their respective function in the global economy.
United Nations Security Council
The United Nations Security Council (UNSC) is one of the principal organs of the United Nations and is charged with the maintenance of international peace and security. Its powers, outlined in the United Nations Charter, include the establishment of peacekeeping operations, the establishment of international sanctions, and the authorization of military action. Its powers are exercised through United Nations Security Council resolutions.
The Security Council held its first session on 17 January 1946 at Church House, London. Since its first meeting, the Council, which exists in continuous session, has travelled widely, holding meetings in many cities, such as Paris
Chapter VII of the United Nations Charter sets out the UN Security Council’s powers to maintain peace. It allows the Council to “determine the existence of any threat to the peace, breach of the peace, or act of aggression” and to take military and nonmilitary action to “restore international peace and security”.
Chapter VII also gives the Military Staff Committee responsibility for strategic coordination of forces placed at the disposal of the UN Security Council. It is made up of the chiefs of staff of the five permanent members of the Council.
The UN Charter’s prohibition of member states of the UN attacking other UN member states is central to the purpose for which the UN was founded in the wake of the destruction of World War II: to prevent war. This overriding concern is also reflected in the Nuremberg Trials’ concept of a crime against peace “starting or waging a war against the territorial integrity, political independence or sovereignty of a state, or in violation of international treaties or agreements…” (crime against peace), which was held to be the crime that makes all war crimes possible.
The International Monetary Fund (IMF) is an intergovernmental organization that oversees the global financial system by monitoring the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. Its objectives are to stabilize international exchange rates and facilitate development through the encouragement of liberalising economic policies in other countries as a condition of loans, debt relief, and aid. It also offers loans with varying levels of conditionality, mainly to poorer countries. Its headquarters is in Washington, D.C. The IMF’s relatively high influence in world affairs and development has drawn heavy criticism from some sources.
The International Monetary Fund was conceived in July 1944 originally with 45 members and came into existence in December 1945 when 29 countries signed the agreement, with a goal to stabilize exchange rates and assist the reconstruction of the world’s international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances. The IMF was important when it was first created because it helped the world stabilize the economic system. The IMF works to improve the economies of its member countries. The IMF describes itself as “an organization of 187 countries (as of July 2010), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.”
Global Financial System
The global financial system (GFS) is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level. The main players are the global institutions, such as International Monetary Fund and Bank for International Settlements, national agencies and government departments, e.g., central banks and finance ministries, private institutions acting on the global scale, e.g., banks and hedge funds, and regional institutions, e.g., the Eurozone.