February 28, 2014
By Natalia Zinets and Sabina Zawadzki
The bank also banned non-deliverable forward contracts in the currency market.
Dealers said the hryvnia was trading around 9.80-10.10 to the dollar after weakening as far as 11.20-10.10 on Thursday.
Central Bank governor Stepan Kubiv said on Friday depositors of foreign currencies would be limited to withdrawals equivalent to 15,000 hryvnia a day, or around $1,500.
He also said central bank staff would look into the trading of 16 unnamed banks to see whether they had illegally speculated in their currency trade operations.
“It was all speculation and the moment the market felt a peak (in the dollar), offers (of the dollar) started to appear,” said one dealer.
Dealers said activity in the non-deliverable forwards market usually rises during times of volatility. The central bank did not give data on the forwards market or say how large a market it is.
Investors have been concerned about Ukraine’s ability to repay its sovereign debts after upheaval that has removed from power President Viktor Yanukovich and raised doubts about a $15 billion life-line from Russia.
Ukraine’s 2017 dollar bond was trading at 92.7 percent of its face value, up 1 point on the day. Most other issues also rose slightly on the day.
State energy firm Naftogaz’s dollar bond due Sept 2014 fell 1 point however, possibly reflecting fears that some short-dated bonds may have to be rescheduled.
Earlier, Prime Minister Arseny Yatseniuk said Ukraine hoped to begin receiving international financial aid soon and was determined to fulfill conditions needed to secure support from the International Monetary Fund (IMF).
“It seems like some emergency funding will be made available and that will sustain Ukraine for the immediate period. The national bank putting curbs on some deposit withdrawals may also have had an impact,” said Neil Shearing, head of EM research at Capital Economics in London.
“But the hryvnia probably needs to weaken further towards 11 per dollar to put the balance of payments picture on a more sustainable footing.”
Ukraine’s new leaders have said the heavily indebted country needs at least $35 billion to stave off bankruptcy.
Feb 19 (Reuters) – Iraqi Kurdistan has agreed to export crude via the country’s main oil marketing body, Deputy Prime Minister for energy Hussain al-Shahristani said, potentially removing a major sticking point in a resource row with the central government.
The autonomous region’s prime minister and top energy official travelled to Baghdad earlier this week, intensifying efforts to settle the long-running dispute over exports of oil from Kurdistan via a new independent pipeline to Turkey.
The region has previously insisted it will export crude on its own terms, bypassing Iraq’s State Oil Marketing Organisation (SOMO), but Shahristani said the Kurds had finally relented.
“After hours of meetings, we have agreed that our brothers in the region will be represented in SOMO and agreed that this is the sole national outlet responsible for exporting oil,” Shahristani said in an interview on Iraqi state television late on Wednesday. “This is an important step forward”.
Baghdad has repeatedly threatened to sue Ankara and slash Kurdistan’s share of the national budget if exports go ahead through the pipeline without its consent.
The pipeline was completed late last year, and oil has since been pumped through it into storage tanks at Turkey’s Ceyhan, but exports from the Mediterranean port are on hold to give diplomacy a chance.
Negotiations have carried on for months with little progress and Shahristani said differences remained over revenue-sharing.
“The second issue that is still unresolved is that they want the revenue from oil exports to be deposited in a private account for the region in the DFI (Development Fund for Iraq),” Shahristani said.
Revenue from the sale of Iraq’s oil is paid into the DFI in New York for Baghdad to disburse.
Kurdistan is entitled to a 17 percent share, but says it in fact receives far less than that, and in recent weeks has accused Baghdad of withholding funds, leaving civil servants in the region unpaid.
Shahristani said the finance ministry had now sent enough cash to cover the salaries of Kurdish government employees for January, but faced a liquidity crisis and would not be able to pay in February or after that unless the region resumed oil exports.
“The Finance Ministry said it will not be able to keep paying salaries whilst the region is still not delivering oil,” he said. “The ministry has stopped payments to the region and the only solution for this real problem if for the region to start exporting oil”
Crude from Kurdistan used to reach world markets through a Baghdad-controlled pipeline, but exports via that channel dried up due to a row over payments for oil companies operating in the northern enclave.
Since then, the Kurds have been exporting smaller quantities by truck across the border whilst building the pipeline to Turkey and negotiating a multi-billion dollar energy deal with Ankara. (Writing by Isabel Coles, editing by David Evans)
February 6, 2014 | 1410 GMT
The Iraqi government and the Kurdistan Regional Government are nearing a resolution to their dispute over oil revenue sharing, Genel Energy President Mehmet Sepil said, Reuters reported Feb. 6. Sepil said the sides still need to determine whether oil sales will be done by Baghdad’s oil market company or Arbil’s, which bank account will receive deposits and how to handle oil payments owed to companies operating in the Iraqi Kurdistan region.
February 3, 2014 | 1914 GMT
BAGHDAD (AP) — Iraqi officials have begun recruiting thousands of Sunni fighters on the government payroll, supplying weapons to other volunteer tribal fighters and pledging millions of dollars in aid to restive Anbar province as they try to beat back extremist Sunni jihadi militants.
The militants are battling for control of mainly Sunni areas west of Baghdad in a key test of the Shiite-led government’s ability to maintain security more than two years after the withdrawal of U.S. troops.
But the push to expel the jihadis — members of the Islamic State of Iraq and the Levant, until recently al-Qaida’s powerful affiliate in Iraq — is complicated by divisions among the tribes that form the social fabric of the besieged city of Fallujah and other parts of Anbar, raising questions over whether the government needs to make a bigger investment to win over Sunni skeptics.
Many in the Sunni province of Anbar, whatever their views on the militants, harbor deep resentments stemming from years of perceived discrimination, government neglect and a lack of access to civil service jobs that are the backbone of the Iraqi economy.
“The problem in Anbar goes far beyond funds or services. It is a problem of mistrust and marginalization,” said Sunni lawmaker Hamid al-Mutlaq.
Prime Minister Nouri al-Maliki’s government nonetheless has begun spending more on the minority Sunni community, particularly after militants seized control of Fallujah and other areas in the province six weeks ago.
The United Nations refugee agency estimates that as many as 300,000 Iraqis have been displaced because of insecurity in Anbar.
Iraqi officials have pledged at least $20 million to cover immediate aid needs, according to government spokesman Ali al-Moussawi. They have also provided weapons to tribesmen fighting the militants and promised that their families will receive the same state benefits as fallen soldiers if they are killed.
The Iraqis are reviving the Sahwa, the Sunni tribal militias that joined U.S. troops against al-Qaida at the height of the Iraq war and were credited with helping turn the tide against the insurgency.
Al-Maliki’s adviser for reconciliation and Sahwa, Amer al-Khuzaie, said authorities have recruited 4,000 Sahwa fighters in Anbar, 9,000 in areas around Baghdad and another 1,500 in the northern flashpoint town of Tuz Khormato since the current unrest began in late December. They are being paid the equivalent of about $430 a month.
Other tribesmen who have volunteered to fight alongside government forces are being given weapons from the caches of security forces, he said. Those volunteers aren’t being paid, however, because doing so would require additional bureaucracy and government budget allocations, and it is unclear if they are interested in long-term Sahwa service, he said.
Some influential tribal leaders like Ahmed Abu Risha, whose brother led the formation of the original Sahwa until his assassination in 2007, still see value in fighting the militants despite political differences with the central government.
“Our top priority now is to fight al-Qaida. After we finish this battle, we will ask the government to meet our demands,” he said.
Some 23,000 former Sahwa fighters who are loyal to him were integrated into the Iraqi security forces and are now prepared to take on the extremists in Anbar, Abu Risha said. But he warns they are no match for their better armed adversaries, who he says have longer-range heavy machine guns and are using local civilians as human shields.
“We need to recruit 10,000 more in order to control the situation,” Abu Risha said in a recent interview. “The battle will be long.”
The U.S. paid Sunni militiamen about $300 each per month before later handing over responsibility for the groups to the Iraqi government.
About 44,000 former Sahwa fighters eventually received government jobs, according to al-Khuzaie. But many more did not, leaving them feeling neglected and mistrusted by Baghdad since the 2011 U.S. military withdrawal.
“Those fighters who defeated al-Qaida were left to become victims of both arrest by government forces or assassination by al-Qaida,” Sunni lawmaker Ahmed al-Misari said. “Now, the scattered Sahwa people are too weak to confront the well-armed and well-organized al-Qaida militants.”
Baghdad-based political analyst Hadi Jalo said a plan aimed at improving services and living conditions in Anbar would go a long way in winning some trust in the province. But he cautioned that the “problem of mistrust between al-Maliki and the Sunni tribes is bigger than money.”
“Unfortunately for al-Maliki, the scope and depth of cooperation he will receive from Sunni tribal leaders will be limited because Sunni threat perceptions are caught between al-Qaida and his Shiite-dominated government,” said Ramzy Mardini, a Mideast expert at the Washington-based Atlantic Council think tank.
That mistrust is perhaps most acute in Fallujah, where support for extremists and sentiments against the government and security forces run high. Tribal loyalties there are split. Some tribal leaders are backing the fight to oust the insurgents and others are either on the fence or joining the rebellion.
Sheik Fakhir al-Taie, a leader of a group of anti-government tribal fighters there that he insists has no links to the jihadi militants, told The Associated Press that his men “are here either to die or to achieve victory over al-Maliki’s forces” and would not compromise in their rebellion.
“We are not people who can be bought with money,” he said.
U.S. Marines fought two major battles in Fallujah beginning in 2004, the second of which saw American forces going house-to-house for weeks to clear militants in some of their heaviest urban combat since the Vietnam War.
The U.S. fight against insurgents in Anbar in the years that followed benefited significantly from the support of influential Sunni tribal leaders, who eventually came to see the Americans’ interests aligned with their own.
Neither wanted Islamist extremists calling the shots, and — in the case of tribal sheiks — undermining their authority and control of business enterprises. Iraq’s Sunnis also saw an alliance of convenience with the Americans as leverage against the Shiite-dominated government in Baghdad.
Violence has spiked in Iraq since last April, when security forces cracked down on a Sunni protest camp north of Baghdad in clashes that left 45 dead.
The situation deteriorated significantly in late December, when security forces dismantled a protest camp near the Anbar provincial capital of Ramadi. To defuse the tension, the security forces withdrew from Ramadi and nearby. Militant jihadis promptly took over parts of Ramadi and the center of Fallujah.
The Iraqi government and allied tribes launched an offensive on Jan. 26 to wrest control of the cities back from the militants. Sporadic clashes are still continuing around Fallujah and in some parts of Ramadi, with only limited success by security forces.
Current plans to end the standoff in Fallujah call for the Iraqi army to try to control the outlying areas while tribal fighters try to secure the city neighborhood by neighborhood, the U.S. deputy assistant secretary for Iran and Iraq, Brett McGurk, told U.S. lawmakers last week.
American military advisers are in touch with their Iraqi counterparts to offer recommendations, he said, while acknowledging that “we know from experience how difficult this will be.”
Schreck reported from Dubai, United Arab Emirates. Associated Press writer Sameer N. Yacoub contributed reporting from Baghdad.
Jan 27 (Reuters) – Iraq’s state finances are increasingly vulnerable to a drop in oil prices and the government could have difficulty financing this year’s budget plan, an International Monetary Fund official said on Monday.
“There is a structural problem. The fiscal policy depends crucially on oil revenues and that dependence has been increasing,” Carlo Sdralevich, the IMF’s mission chief for Iraq, told a financial conference in Dubai.
“This trend is concerning because the break-even price has been increasing in the last few years.”
Iraq, which depends on crude oil exports for some 93 percent of government revenues, needed an average oil price of $106.1 per barrel in 2013 to balance its budget, up from $95 in 2011 because of rising expenditure, the IMF estimated last October.
But Brent crude oil, now around $107, is expected to drop gradually in the next two years, to $103 in 2014 and $100 in 2015, as a shale boom in the United States and increasing output in Iraq keep the market well supplied, according to a Reuters poll of analysts.
“Another concern is that spending is pretty rigid. There is a lot of current spending and when the government does not have enough revenues it ends up cutting investment, which is of course negative for the long-term growth,” Sdralevich said.
The IMF estimates the state budget of Iraq, which has been hit by a fresh surge of sectarian violence, slipped into a deficit of 0.7 percent of gross domestic product last year, the first deficit since 2010, from a surplus of 4.1 percent in 2012.
Sdralevich said this year’s budget draft, which is currently being discussed by parliament, was very expansionary in its present form and might be difficult to finance.
Earlier this month, Iraqi Kurdish ministers walked out of a cabinet session in a revenue dispute involving the draft 2014 budget, which is estimated at 174.6 trillion dinars ($150.1 billion).
The head of parliament’s Treasury committee told Reuters that the budget, swollen by extra expenditure, would “collapse” if the state kept paying Iraq’s northern Kurdistan region its 17 percent share of oil revenues even as the Kurds withheld oil export proceeds.
He said the draft budget projected a deficit of about 21 trillion dinars – assuming the Kurds paid the Treasury the revenue from budgeted oil exports of 400,000 barrels per day. Industry sources say that target far exceeds Kurdistan’s current export capacity of around 255,000 bpd.
In a previous report, the IMF criticised Iraq for poor budget planning and execution, large off-budget spending, low investment execution rates, and serious deficiencies in fiscal reporting.
Sdralevich also said Iraq should ensure the central bank’s (CBI) independence from government policy, keeping the CBI’s reserve management separate from the Development Fund for Iraq (DFI).
“The crucial point which we really insist on is maintaining the current architecture,” he said, echoing comments in an IMF report last July.
“Maintaining independence of the CBI…is very important. It really underpins the stable exchange rate which in the context of Iraq’s economy is a crucial anchor.”
Reserves in the DFI, which the government uses for public investments, plunged to $6.5 billion at the end of 2013 from $18.5 billion in 2012, Sdralevich said.
That, together with rising budget spending, triggered concern that the government might eventually use the central bank’s $77 billion of foreign currency reserves to finance state expenditure, which could weaken the currency and spur inflation.
Fighting al Qaeda won’t solve the sectarianism that is tearing my country apart.
Iran and other world powers have reached an agreement on how to implement a nuclear deal struck last year, according to reports. The deal means Iran will limit its uranium enrichment to 5 percent.
TEHRAN, Iran — Iran has agreed to limit uranium enrichment and to open its nuclear program to daily inspection by international experts starting Jan. 20, setting the clock running on a six-month deadline for a final nuclear agreement, officials said Sunday.
In exchange, the Islamic Republic will get a relaxation of the financial sanctions that have been crippling its economy.
The announcement that Iran and six world powers had agreed on the plan for implementing an interim agreement came first from Iranian officials and was later confirmed elsewhere. Some U.S. lawmakers have been leery of the agreement, calling for tougher sanctions against Iran, rather than any loosening of controls.
Iran’s official IRNA news agency quoted Iranian Deputy Foreign Minister Abbas Araghchi as saying the deal, which sets the terms of a landmark agreement reached in November, would take effect from Jan. 20. The agency said Iran will grant the United Nations’ watchdog International Atomic Energy Agency access to its nuclear facilities and its centrifuge production lines to confirm it is complying with terms of the deal.
Araghchi later told state television some $4.2 billion in seized oil revenue would be released under the deal. Senior officials in U.S. President Barack Obama’s administration put the total relief figure at $7 billion.
In a statement, President Barack Obama welcomed the deal, saying it “will advance our goal of preventing Iran from obtaining a nuclear weapon.”
“I have no illusions about how hard it will be to achieve this objective, but for the sake of our national security and the peace and security of the world, now is the time to give diplomacy a chance to succeed,” Obama said.
Under the November agreement, Iran agreed to limit its uranium enrichment to 5 percent — the grade commonly used to power reactors. The deal also commits Iran to stop producing 20 percent enriched uranium — which is only a technical step away from weapons-grade material — and to neutralize its 20 percent stockpile over the six months.
In exchange, economic sanctions Iran faces would be eased for six months. During that time, the so-called P5+1 world powers — Britain, China, France, Germany, Russia and the United States — would continue negotiations with Iran on a permanent deal.
The West fears Iran’s nuclear program could allow it to build a nuclear bomb. Iran says its program is for peaceful purposes, such as medical research and power generation. Iran’s semi-official ISNA news agency reported Sunday that under the terms of the deal, Iran will guarantee that it won’t try to attain nuclear arms “under any circumstance.” However, Araghchi stressed Iran could resume production of 20 percent uranium in “one day” if it chose.
The senior U.S. officials said U.N. inspectors would have daily access to Iranian nuclear sites and would make monthly reports. Iran will dilute half of its nuclear material during the first three months of the agreement, the officials said, and all of it by the end of the agreement.
In exchange, Iran would have access to parts for its civilian aviation, petrochemical and automotive industries, as well as be allowed to import and export gold, the officials said. The deal also gives Iran access to international humanitarian and medical supplies, though Iran still could not use U.S. banks and the majority of sanctions would remain in place, they said.
The senior U.S. officials spoke on the condition of anonymity because the specific terms of the agreement were not released publicly.
European Union negotiator Catherine Ashton praised the deal in a statement, saying “the foundations for a coherent, robust and smooth implementation … have been laid.” German Foreign Minister Frank-Walter Steinmeier called the deal “a decisive step forward which we can build on.”
U.S. Secretary of State John Kerry also welcomed the deal in a statement, saying further negotiations “represent the best chance we have to resolve this critical national security issue peacefully, and durably.”
But Kerry cautioned that despite a fledgling detente with Iran, the nuclear negotiations have all but exhausted both sides’ time, keeping them from being able to work on other shared global interests, including the civil war in Syria.
“We have been so focused and so intent on the nuclear file that we really have not dug into (Syria) in any appreciably substantive way,” Kerry told reporters in Paris, where he was meeting with other Western foreign ministers and the head of the main moderate opposition group seeking to oust Syrian President Bashar Assad ahead of peace talks scheduled in just over a week in Switzerland. Iran is the main backer of Assad’s regime.
Suspicions remain high in both Tehran and Washington after decades of hostility dating back to the 1979 Islamic Revolution in Iran that ousted the U.S.-backed shah dynasty. Iran’s new reformist president, Hassan Rouhani, has reached out to the West, but must depend on support from Iran’s top decision-maker, Supreme Leader Ayatollah Ali Khamenei, for his initiatives amid criticism from hard-line factions.
Obama must fend off efforts by U.S. lawmakers, including many of his fellow Democrats, who want to pass new sanctions legislation. The measure proposes to blacklist several Iranian industrial sectors and ban banks and companies around the world from the U.S. market if they help Iran export any more oil. The provisions would only take effect if Tehran violates the interim nuclear deal or lets it expire without a follow-up accord.
However, that has caused anxiety in Iran, where hard-liners have already called the deal a “poison chalice” and are threatening legislation to increase uranium enrichment. Araghchi also said any new sanctions would halt the deal.
In his statement, Obama said “unprecedented sanctions and tough diplomacy helped to bring Iran to the negotiating table,” but cautioned against implementing any more.
“Imposing additional sanctions now will only risk derailing our efforts to resolve this issue peacefully, and I will veto any legislation enacting new sanctions during the negotiation,” he said.
Associated Press writers Philip Elliot in Washington, John-Thor Dahlberg in Brussels, Geir Moulson in Berlin, Lara Jakes in Paris and Jon Gambrell in Cairo contributed to this report.