Writer: Dr. Lecturer Firas Hussein Ali/ head of the Crisis management Department

Translated by: Hiba Abbas Mohammed Ali

The world has enough resources for a basic standard of living for humankind, but people in countries like Burundi, the Central African Republic, or the Democratic Republic of the Congo (the world’s three poorest countries) still live in absolute poverty.

The mathematician Elie Khmarov says that poverty is like punishment for a crime  did not commit. Authoritarian and corrupt governments can turn very rich countries into poor ones. The same thing with the history of exploitative colonialism, the weakness of the rule of law, war, social unrest, extreme weather conditions or aggressive neighbors; It is difficult to identify the cause of persistent poverty, which is why economists point to the need for “cycles” of poverty. A heavily indebted country cannot afford to build good schools, and a poorly educated workforce will be less able to solve problems and create conditions that attract foreign investment.

The social and economic consequences of Covid-19  will be on poor people around the world, over the past twelve months, it has affected the poorest and most needy, The World Bank Group’s latest analysis suggests that the pandemic led 88 million people  to fall into absolute poverty and it could rise to 115 million, so the group expected that the  largest group of “New poor”  will be in south Asia then  south Desert in Africa .

On the other hand, The IMF explained in its own modernization Of the  World Economy’s prospects for October 2020″ COVID-19 killed 1 million person since the beginning of 2020 and continues to rise, and the number of people affected by the disease is much more,And 90 million people are expected to be severely deprived”, As for the level of the Fund’s expectations on the short term horizons: The world growth is expected to reach -4.4% in 2020, and  5.2% in 2021, The level of global GDP is expected to be in 2021 above 2019 by a modest 0.6%, Growth forecasts refers to significant negative output gaps and a rise of unemployment rate in 2020 and 2021 , so  (IMF) add that closures in countries with a high level of informal employment  has led to unemployment as well as sudden losses for many workers.

This applies in 10 poorest countries in Africa, The average purchasing power per person is $1181. By contrast, in the richest ten countries, this figure amounts to more than $90,000. The decline in commodity prices has led in recent years To blow up their chance of progress, as well as political instability, disputed elections and ethnic or religious conflicts but the number of people affected by COVID-19 is less. According to the United Nations study in December 2020, more than a billion people may live in absolute poverty in 2023 because of COVID-19.

And if the  economic crisis continue we will reach this number, and Over the next ten years, another 44 million people will be below the poverty line.

But in-spite of that we can prevent poverty rising through Investments in social welfare, governance, digitization and eco-economy programs,  and will lift  146 million people out of poverty. Akim Steiner, the UNDP director, said “COVID-19 is a turning point, the leaders chooses may be take the world to different ways, We have an opportunity to invest in a business that helps people recover from COVID-19 and redefine the development path of peoples toward A more just, flexible and environmentally friendly future.

The United Nations confirm on the relationship between  poverty and human rights through :-

According to poor people , many human rights are elusive , like learning, medical services, and safe drinking water as well as excluded from participation in political process, pursuit of justice when it related to violations of their human rights .

Absolute poverty can be a cause of human rights violations because the poor are forced to work in unsafe and unhealthy environments, and when children are unable to escape poverty because the state does not provide adequate access to education.

The eradication of absolute poverty must be seen as an urgent human rights issue. Its persistence in countries that can eliminate it leads to a clear violation of human rights.

http://kerbalacss.uokerbala.edu.iq/wp/blog/2020/12/31/مؤشرات-ظاهرة-الفقر-عام-2020/

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Author:M. Hamad Jassim Muhammad Al-Khazraji

Researcher in the Crisis Management Department

Center for Strategic Studies – University of Karbala

September 2020

Translation: M. Muayyad Jabbar Hassan

Investigated by Dr. Tawfeeq Majeed Ahmed

After the nuclear agreement between Iran and the 5 + 1 group (the United States, Russia , China, France, Britain and Germany) under the supervision of the United Nations in 2015, and the issuance of Security Council Resolution No. 2213, according to mutual commitments between the two parties called the Joint Action Plan that included many items, the most important of which is to reduce the rate of enrichment Uranium in Iran from 20% to 3.6%, to keep an amount of enriched uranium estimated at 300 kg. and to allow IAEA employees to enter the Iranian nuclear facilities. In return, all international sanctions on Iran have been lifted, countries and companies can deal with Iran in the field of Energy, whether by investing or purchasing oil and gas, and international banks are allowed to deal with Iran in the field of financial transfers. Most countries in the world have welcomed this agreement as a peaceful way to resolve the Iranian nuclear program crisis, which could establish an international course of action in the future away from tension and threat.

In addition to that, the obligations imposed on Iran were set with specific time limits, as the agreement stipulated that the conventional arms embargo on Iran will continue for ten years ending in October 2020, and the restriction of uranium enrichment at low rates, will expires after 15 years, i.e. in 2025. Thus, these periods were sufficient from the international point of view to verify Iran’s commitment to this agreement and not to violate its clauses, in addition, Iran itself does not suffer from a traditional armament problem neither it needs to enrich uranium at higher rates during this period as much as it needs to improve its economy. Lifting the sanctions that have had an impact on the Iranian economy, since Iran is one of the rich countries in energy (oil and gas), which requires large investments by international companies to increase production and export.

Despite the contrast of the nuclear agreement by an international resolution from the UN Security Council no. 2213, the divergence of views between the US and the international position, at a time when different countries of the world have expressed their desire to deal with Iran and arrival of a large number of different companies to Iran, especially the main European Korean, Japanese and Indian energy companies, and the mutual visits of officials between all parties, the United States continued to impose some economic sanctions on Iran in addition to the US Congress’s refusal to lift the sanctions as stipulated in the nuclear agreement, then the most advanced US step in the field of sanctions came. It is the withdrawal of the US administration headed by the President (Donald Trump) from the nuclear agreement on 5/8/2018, and re-imposing and tightening all economic sanctions, so that it included even countries, companies and individuals that deal with Iran. The purpose of that, according to the US President’s statement, is to reach the export of Iranian oil to zero. All that is to force Iran to return Negotiate again. Despite the rejection of most of the countries in the world, especially the countries of the nuclear agreement, the United States ’withdrawal from the agreement and the imposition of sanctions, but the latter continued to tighten Sanctions and threats against Iran. The last of these procedures is when the United States submitted a request to the Security Council in mid-August 2020 to extend the arms embargo on Iran, which ends in November 2020, claiming that Iran threatens international peace and security, and lifting the arms embargo will make Iran stronger by possessing advanced military technology. It may outperform most of the countries in the region, especially Israel, but the American project did not receive the required support when 11 countries abstained from voting , with an objection from Russia and China, while only one country supported the American request, which is the Dominicans. After that the United States threatened to use the method of (re-trigger), which is a text within the agreement In the year 2015, according to which any country can request the re-imposition of all sanctions on Iran in case that Iran does not adhere to the nuclear agreement, which is what the United States seeks to impose on members of the Security Council.

This contradiction in attitudes toward Iran in general and its nuclear program and the 2015 agreement in particular made it difficult for the United States to impose a certain position on the rest of the world countries. There is an international desire to lift the arms embargo on Iran due to several reasons, including:

Most European countries, including allies of the United States of America, have become dissatisfied with the actions and decisions of the current US administration, particularly those related to the trade side, after the US administration imposing many trade restrictions on the countries of the European Union states and Canada, which was considered a contrast to the laws of the World Trade Organization and against trade freedom, which prompted these countries to put pressure on the US administration , to stay away from it, and not to reconcile with it in imposing sanctions on Iran.

Security Council Resolution 2213 in 2015 was an international resolution with the approval of Security Council members in addition to Germany and under the supervision of the United Nations.  It is a binding resolution for everyone. There is no concrete evidence in the Trump administration against Iran that it violated this resolution or that it supports terrorism in the region. What The US Secretary of State proposed as the accusations against Iran, in the view of other Security Council countries, are allegations without a real evidence, which is considered a political accusation to Iran. Thus, America cannot use the trigger mechanism, that is, the automatic return of international sanctions.

According to the viewpoint of most countries in the world, the 2015 nuclear agreement was the peaceful and correct way to solve the international issues through international negotiations  and agreements. It is also the desire of European countries and their companies to invest in Iran, which is rich in natural resources that needs development. This agreement pushed them to move towards stabilizing the nuclear agreement and helping Iran in reducing the US sanctions . Any cancellation or retreating from the agreement may lead to chaos in the region that will cause devastating consequences, especially that the world is currently suffering from economic crises due to the Corona pandemic.

The head of the International Atomic Energy Agency (Rafael Grossi) confirmed during his visit to Iran on August 26, 2020, that the latter allowed agency inspectors to enter two new sites, which is an important development indicating the existence of cooperation between the two sides, especially that the Iranian President (Hassan Rouhani) told the head of the agency that Iran will continue to cooperate with them in all fields In return, the head of the International Atomic Energy Agency stressed during the visit that the agency does not have new questions or requests in the future other than those announced.  On this base, the way has been cut off any Israeli or American claims about Iran’s nuclear file. This shows the extent of cooperation Between Iran and the IAEA, where there is no justification for returning or extending any sanctions against Iran.

Most of the conventional weapons covered by the embargo are within Iran’s reach through importing  from friendly countries such as Russia and China, or through local manufacturing that has reached very advanced stages. Thus, continuity of imposing of the arms embargo is useless.

According to most of the UN Security Council countries, The United States does not have the right to ask the Security Council to extend the arms embargo or to activate the trigger mechanism because it became outside the nuclear agreement after withdrawing from it in 2018. This made the United States in a position with which it cannot freely urge The Security Council to extends the sanctions against Iran, as before. In addition, the US administration’s effort to extend the arms embargo on Iran was aimed at supporting President Trump in the upcoming elections, especially by the Jewish in the United States of America.

What has been achieved within the 2015 nuclear agreement cannot be easily reversed by other signatory countries. They know well that the goal of the United States is its own interests and not as it claims world security, in addition to the need for industrial countries for investments, especially in the field of energy with the spread of the Corona pandemic, the stagnation of the markets, and that Iran could be a huge market for international companies, particularly in the field of armaments, after America had reserved arms markets for the Arab Gulf states to buy its weapons. This in addition to the presence of tensions between China and America in the South China Sea, the matter that prompted Beijing to rely on Iran more for its need to oil resources first and to  gain a foothold in the region second, besides Russia is also seeking to establish its presence in the region from the Gulf to Syria through direct Iranian support.

Therefore, the international stand will have the final word in any decision that the United States of America may take or seek against Iran in the future.

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Author: Dr. Firas Hussain Al-saffar

Center for strategic studies/ Crisis management Department

Translated by: Hiba A. Mohammed Ali

Reviewed by: Lecturer. Hussain B. Abdulameer

Iraq is suffering from a severe financial crisis due to oil prices fell to levels below $30, disrupting the local economy by the three-month government measures to curb the spread of coronavirus, as well as the failure to approve the budget law of 2020 due to the complicated political situation after the wave of October demonstrations and the resignation of Adel Abdel-Mahdi government.

Despite the formation of a new government headed by Mustafa Al-Kazemi, the 2020 general budget has not been discussed so far to be sent to the parliament for voting because of the financial deficit as a result of depending on Oil price at  56 dollar per barrel and oil export rate close to 3800000 barrels per day in the draft that prepared by Abdul-mahdi government, accounting to OPEC agreement, since May Iraq should reduce the export quantity  volume by about one million barrels per day, which means that the general budget will be difficult to be approved under the size of the public expenditure.

Oil market changes deepened the sense of danger that double crisis in public finance and the balance of payments in Iraq. Especially with the possibility of oil prices may be still lower than 40 dollar next few months as well as difficulty of imports and demands for foreign currency.

In a rentier economy, such as the economy of Iraq, where oil resources dominate nearly 60% of GDP, this contribution rises to approximately 92% of the general budget resources and 99% of the reserves of the Central Bank of Iraq and the government reserves in foreign currency. We must know the relationship between foreign currency and salaries, and whether there is a direct relationship between both of them, or is it indirect, and to clarify that, It will display the mechanics work on the management of the central bank’s foreign currency due to the laws that prohibit dealing and possession in ministries and public bodies other than the central bank.

Conclusion

 – In iraq foreign currency affected by oil resources revenues that depends on crude oil price and quantity as well as foreign borrowing

– Operational and investment expenditure effect on demands foreign currency and loans.

– The official and parallel exchange rate define the relationship between demand and supply of the foreign currency, the Central Bank of Iraq is the main controller, after that, the government bank and its financial advisor.

– Foreign-currency reserves rise when the central bank gets more money in its currency auction and fall when the opposite happens.

– There is no direct relation between foreign borrowing and employee’s compensation, rather, there is indirect relation related with demand and supply of the foreign currency. after employees’ compensation, the bulk of the operating expenses of the general budget.

– Iraq needs short, medium, and long-term solutions to change the local economy situation through decreasing budget deficits, reduce inflation rates through financial and monetary Policy to rebalance economy in total level.

The post Does iraq need foreign borrowing to pay employees’ salaries? first appeared on kerbalacss Website.

Translated by: Hiba A. Mohammed Ali

Reviewed by: Lecturer. Hussain B. Abdulameer

17-5-2020

Governments of developing countries face today a threat_ no less dangerous than Coronavirus_ of the medical Waste in hospitals and health care centers where patients with Corona disease are lying there or the pioneers of health-care centers as well as household Waste and other quarantine zone, which in its entirety, medical waste is dumped from contaminated masks, gloves, used medicines, syringes, and other contaminated and carrying equipment for viruses and microbes.

In Iraq, under unstable economic, social, and political conditions, people don’t feel that the government care about this matter. Because of the medical Waste is treated like normal Waste, throw it without sorting or cutting, no burning plants, no landfill sites, no chemical treatments to lessen its dangerous, this will puts the environment and community health at risk of Coronavirus and other diseases transmission to people and animals.

“There are many children in hospitals were infected because they collecting the recyclable materials from garbage to sell it to recycling facilities in order to get money” pediatrician in Al-Sadr city said.

UNEP indicated that the amount of medical Waste from hospitals was 0.5 kg per day, which refers to increasing of quantities under Coronavirus pandemic and this will lead to an environmental and health crisis requires managing Waste that will cause a nature pollution, transmit the disease from Waste to the animals and people those living on Waste scapegoat or workers who transfer these Waste. So we should put an urgent solutions to deal with these Waste as well as follow basic methods to manage medical Waste from collection and separation to transfer and disposal of as well as take care of workers’ health and provide protective clothing.

Basel agreement showed the importance of following technical methods for the disposal of medical Waste, guiding developing states how to manage these Waste according to right ways keep citizens and nature through handling and disposal Waste in four ways thermal, chemical, radiological and biological processes, this will be the responsibility of the State and its institutional mechanisms.

النفايات الطبية في عهد كارونا

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Writer:  Assistant Lecturer. Ali Murad al-Abadi

Center for strategic studies/ Crisis management Department

Translated by: Hiba Abbas Mohammed Ali

Reviewed by: Lecturer. Hussain B Abdulameer

10/5/2020

Terrorist organizations activities have been based on using many techniques to achieve their goals through short ways, these organizations still depend on sleeper cells as a clandestine cell, by throwing their individuals or recruit others to carry out certain tasks, as well as Integrating with the incubator environment and carrying out specific attacks without using a large forces able in order only to burnout the security forces, these organizations are active in areas under government control, as soon as appropriate conditions exist to attack , as we have seen with Al Qaeda network earlier, and then ISIS organization in Iraq.

This concept emerged -in Iraq- practically after the occupation of Mosul by a few groups of ISIS and then quickly moved to large and distant cities – with the security forces faltering- after giving orders to the sleeper cells to spread and turn to be active.

Iraq’s ability to control the cities that occupied earlier by ISIS hand, his incubators retreat,  disbanding it’s cells, the collapse  of its organization and his leader have killed, all these issues has made the organization retreat and unable to finance itself, but earlier this year the organization did many operations at the high ways out of cities and desert roads  and remote areas and “Hamrin Basin” before forming small groups attacking  countrysides of big cities like Mosul, Kirkuk, Salahuddin, Diyala and Baghdad outskirts.

After the last attack that took place on 2/5/2020, ISIS managed to reached inside the city’s, and engage the security forces and the popular crowd, to carry out its attack that killed more than ten martyrs in addition to the death of the executed group, then the security forces controlled “Mkeshefa” city, the scene of the attack, according to security experts, ISIS aims to return to the international media front, increasing access to finance and sending a message of assurance to its fighters that it is still active, so “Ramadan” is the best month for the organization to attack. The return of the organization comes after the American reports published in different sites refers to the spread of more than 2000 fighter along the border strip with Syria, its adjacent areas, deserts and hideouts, moving throw tunnel system as well as incubators near big cities.

ISIS uses smuggling, royalties and donations to finance its activities, so it is maybe use some money in quick-win projects like fish lakes and land cultivation, therefore the Intelligence services must follow these Networks and dismantle them and implementing border control and follow up the organization’s media sites to prevent the requirement of new groups to work in the organization’s area.

Therefore Al- khadimi should filling security gaps, address previous failures, intensifying the efforts of refugees return in some camps, border control, and coordination with international coalition for air coverage. This will be on of Al-khadimi priorities especially after last attacks, We may be witnessing a reorganization of sectors in the coming days, especially after the chase operations by security forces against ISIS members in Al Anbar desert toward Al-Nukhib in Karbala borders, there is a need to reactivating these operations in another cities and intensifying the intelligence effort to prevent the return of  the  ISIS activities.

http://kerbalacss.uokerbala.edu.iq/wp/blog/2020/05/10/هجمات-داعش-الأخيرة-ما-بين-الخلايا-النا/

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Author: Assestant lecturer. Saad Muhammad Hassan al-Kindi

Researcher at the Department of Crisis Management – Center for Strategic Studies

Transulated by: lecturer. Hussain Bassim Abdulameer

January  2020

Despite two years or more since the Arms Law have passed, but its implementation on the ground remains as a dream for every Iraqi citizen seeking to build a civil state with professional institutions, The obstacles that prevent the application of the law are many, including those related to the nature of the armed Iraqi society since the establishment of the modern state in Iraqi (1921) to the present day. Including what relates to the lack of seriousness of successive governments since 2003 till (the resigned government of Adel Abdel-Mahdi) in controlling or limitation arms to the state hand, which has become a real threat to the security and safety of civil peace and a threat to the national security as well.

In order to develop a law that accommodates the developments that have taken place, and to establish new controls for the possession and carrying of weapons, and the rehabilitation of the citizen technically to carry weapons, and determine the age of the person authorized to possess, or bear arms, and the organizing the devolution of the weapon, which the court decides to confiscate, has enacted the Arms Law No. 51 of 2017, which was considered effective from the date of its publication in the Official Gazette on 20/3/2017.

The law defines the types of weapons with firearms, war weapons, and also gear fiery, war materiel. it is possible to determine who can possess weapons according to what is stated in the law in the following points: The legislator specified the types of licenses to carry and possess weapons and to open weapons repair shops and the issuing authority is by the Minister of Interior. The law specifies the conditions for possession and bearing of arms that the person has completed twenty-five years of age. Be of good conduct and has not been convicted of a felony or misdemeanor involving moral turpitude and is suffering from a physical disability or mental or psychological illness that prevents him from using the weapon, provided that this is supported by a report from an official medical committee. To be technically qualified to carry a weapon or to practice the profession of selling or repairing according to a test run by the issuing authority. The legislator stipulates a prison sentence for anyone who smuggles weapons, their parts or equipment and trades in them without permission, and the penalty shall be death or life imprisonment if the crime was committed with the intention of spreading terrorism or disturbing national security or supporting any armed rebellion against the state and imprisonment for a period not exceeding 3 years and a fine of no less than one million iraqi denar and not more than five million denars everyone who was accused of carrying a firearm and had a license to carry it, and carried it while participating in demonstrations and gatherings against the government, While the penalty shall be imprisonment if carrying a weapon without a permit and with imprisonment for a period not exceeding one year, whoever carries, sells or repairs firearms without have a license from the issuing authority, and punished with imprisonment and a fine of no less than one hundred thousand Iraqi dinars and not more than two hundred and fifty thousand dinar or one of these two penalties for anyone who violates the provisions of this law or the instructions or data issued pursuant to it.

The law exempted the President, his deputies, the Speaker of the House of Representatives, his deputies, the Prime Minister, his deputies, judges, and public prosecutors from authorizing possession and carrying arms and authorizing heads of administrative units, judicial investigators, executives, bank managers, and employees of the rank of general manager and above to possess and carry the weapons by a document issued by the Minister of the Interior, and the foreigner may carry the firearm according to the reciprocal rule. The Minister of the Interior may loan government weapons to non-employees when the necessity and the public interest are fulfilled and they are retrieved from them when the justified reasons for that are disappear, And it is permitted for army officers, internal security forces, employees of the counter-terrorism and national security apparatus, the Popular Mobilization Organization, and the intelligence and peshmerga agency to carry arms with a document from the competent authority. This law has great importance in preserving peace and security, because it specifies the users of the weapon in an official manner, and this law came after demands that the weapons must be restricted to the state.

In conclusion, it is impossible to restore security and stability to Iraq in light of the presence of arms in the hands of groups and organizations that are outside the control of the state, whether these groups or organizations are friendly or hostile to the state and its security services, because the weapon that was not directed today against the institutions of the state may direct in the future, and this is a serious challenge facing the state of Iraq, from here we see that there are many calls from various segments of Iraqi society to the necessity of restricting arms to the hand of the state, And this demand is still an essential demand required by the demonstrators today, because they are more likely to be targeted by the weapons of irregular armed groupes whos become known as (the third party), It has witnessed several incidents including (sniping for demonstrators, assassinations and kidnappings of activists, armed robberies, and the “Sinak” bridg massacre, and other incidents that confirm the danger of weapons remaining in the hands of unruly people whos do not respect law and order.

On the other side, the high religious authority in Najaf has has stressed the necessity of restricting arms to the state’s hand, due to it’s dangers that it forms on the civil peace, It can also be said that keeping weapons outside the control of the state is a real obstacle to all the reform steps that Iraqies aspire as they rising against corruption and public funds thefts, and more than that uncontrolled weaponse raises the state of chaos in a peaceful society.

The post Restrict the arms to the state: from legislation to implementation first appeared on kerbalacss Website.

The Iraqi economy is facing many economic, social and political problems that negatively affect its growth and development. Unemployment is one of the most important problems, as many graduates suffer after completing their studies due to the lack of employment opportunities for appointment in the state departments since state institutions suffer from slouch in their cadres. In addition, the job opportunities in the private sector are limited compared to the large and continuous increase in the supply of labor, the low demand in the labor market, along with the low wages provided by the private sector institutions. There are also other reasons for the high levels of unemployment in Iraq, including the dumping of goods resulting from the entry of large quantities of goods  into the country at cheap prices that compete with the local industry and caused to freeze factories and workers and then close many Iraqi factories and layoffs. In order to combat this phenomenon, economists stress the need to support the private sector to eliminate unemployment, because it is impossible for the public sector alone to absorb this number.  There are other reasons that led to the current situation and exacerbated this problem, including the lack of planning and coordination between the outputs of educational institutions (graduates) and the labor force available in the market (the quantity of labor supply) and jobs available within the government and private sector (quantity required) In the labor market.  So, if we not direct the budget in the write way to establishing investment projects that would creat new jobs or supporting the private sector and establishing  mixed institutions that would provide an opportunity for graduates to work in these institutions and the absence of such investment projects and directions by the government to attract graduates and eliminate unemployment, as well as, In recent years, the Iraqi labor market has attracted many different nationalities most of them  are non- arabic,  if Commercial centers, private sector establishments, shops and homes were filled with workers, mostly from Bangladesh, and their numbers are constantly increasing  because that the employers contract with them for their simplicity, commitment and  extreme discipline,  In spite of some legal obstacles that the government started to put in place recently in order to control the entry of expatriate workers, the pace of their arrival is increasing, Iraqis are accustomed to seeing them in public places and dealing with them normally, especially since most of the expatriates have learned Arabic and the contact with them has become easy. And that many owners of companies and employment offices prefer the foreign worker over the Iraqi because Lack of wages and increase the number of hours of work relative to the Iraqi worker, who was not used to practice some professions rarely such as domestic work and raising children and others.  Economists think that the increasing dependence on foreign labor is the cause of the widespread phenomenon of unemployment in Iraq, which increased significantly after 2003, these cheap labor has become a favorite in the labor market and the Iraqi economy suffers from chronic unemployment, which is difficult to solve only through direct and effective state intervention by legalizing the introduction of foreign labor to Iraq. According to the impact of unemployment on the economy by allowing the introducing of foreign labor in the labor market in iraq, it has had a significant impact in the depletion of foreign exchange resources in the country and transfer it from iraq to those countries that export manpower as a result of converting the salaries  of foreign workers to foreign exchange, and if the economy not lose these high prices every year the foreign exchange will increasing, The increasing turnover caused by the large influx of labor has caused the weakening of the national currency and the scarcity of foreign exchange, which has led to economic problems plaguing the country so far.  all these reasons were motivated the graduates  not to work in the private sector but seek to work in the government sector waiting for the allocation of functional grades for them within the budgets and holding sitins and demonstrations in front of the ministries and parliament for the purpose of appointing them .  The best solution to avoid these problems is to formulate the competent authorities strict laws to reduce the flow of cheap foreign labor to Iraq, as well as the allocation of part of the public budgets to invest and establish productive projects that will provide jobs for the unemployed as well as the intervention of the Trade Union to provide employment opportunities to run local manpower.  http://kerbalacss.uokerbala.edu.iq/wp/blog/2019/10/31/مستويات-البطالة-المرتفعة-في-الاقتصاد/

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Author: Dr. Lecturer Firas Hussein Ali/ head of the Crisis management Department

Translated by: Hiba Abbas Mohammed Ali

Reviewed by: Lecturer. Hussain B Abdulameer

The monetary policy is the main tool for the central bank intervention in the economic activity of any country, weather developed or developing country, in order to achieve certain objectives, one of them is price stability, increase growth rates in the economy, increase use of available resources, treatment of balance of payments imbalances, contributing to reducing unemployment. Monetary policy reforms are linked to all policies that will contribute to increasing monetary policy capacity levels in achieving their key objectives. Many current studies agree that monetary policy should be primarily concerned with providing an environment conducive to long-term economic growth by providing price stability that increases confidence levels among economic actors and supports consumption and investment levels.

In this context, many studies confirm the existence of a disciplined and inverse relation between inflation rate and long-term growth, as high inflation adversely affects economic growth, leads to increased levels of uncertainty and weakens purchasing power levels and thus negatively affects consumption and savings, especially after the inflation rate exceeded specific levels. High volatility in inflation also weakens price mechanisms and reduces productivity and economic growth. On the other hand, other studies have concluded that there is an acceptable level of inflation to drive economic growth and hence a positive relationship between the two variables, especially in developed economies. The rise in prices leads to a decline in real wages for workers, which motivates producers to employ more workers and increase production.[i]

Mechanism of the impact of monetary policy on economic activity

The impact of monetary policy can be transferred to economic activity through the channels of monetary policy through which the impact of monetary policy transfer to the final target, and the mechanism of transmission of the impact of monetary policy is strongly influenced by the following variables:

• The flexibility of economic variables.
• The flexibility of variables within the structure of the financial system in the country.
• Macroeconomic
• Economic conditions in general

Many of economists tend to distinguish between what is known as:

• Transition of the monetary policy impact from the monetary perspective, thus from this perspective, monetary policy affects the demand side of financial resources (demand for credit) through changes in the interest rate.
• Transmission of monetary policy impact from a Credit Perspective, thus from this perspective, the transmission of the monetary policy impact is done by influencing the supply of financial resources (Credit offer). The money perspective is built on the interest rate channel but the credit perspective emphasizes the role of financial intermediation or banks in the impact of monetary policy on economic activity, where banks play an important role as the largest financial intermediation institutions in the economy.

Channels of the impact of monetary policy transmission to economic activity

First: the traditional channel of interest rates (monetary perspective) is a traditional channel for the monetary policy transition to the growth target, the traditional policy is working on push up nominal interest rates, which is working on the rise of it’s real price and higher the cost of capital, which leads to a reduction in demand for investment and then decline in total demand including the growth.

Second: The exchange rate channel, this channel is used on one hand to influence on exports and on the other hand, is used in addition to interest rates in attracting foreign investment.

Third: James Tobin theory explains how monetary policy affects the economy through its impact on stock valuation.

As the monetary policy affects the prices of securities through the decline in money supply, which leads to the reduction of interest or the deficit of cash balances in the family sector, which leads to the direction of units of the family sector to the stock market to sell their securities or not to buy securities, which means the decline in the demand for securities and the direction of the prices of these securities to decline and lead to the decline in share prices and then the decline in market value and then the decline of investment and then income.[ii]

Monetary Policy of the Central Bank of Iraq

During the previous period, the Central Bank of Iraq, followed used to adopt the policy of  holding the stick from the middle to achieve a balance between two contradictions the first the economy of the state and its relationship to this large rent economy and the other is keeping up the free market, It is a pale market that serving the internal marketing activity and the movement of money abroad regardless of the desired results in the [ building of an economic model generates the movement of inflows and outflows in foreign currency away from this bilateral or polarization between two different economies (State and market) and flows (foreign currency inflows provided by the state economy and outflows from that currency, which the private sector tends to one direction beyond the border without looking back). And used a policy of intervention in the exchange market to reach a stable level in the Iraqi dinar exchange rate in a successful attempt to test its tools to address inflationary expectations starting from the concept that modern monetary policies are the policies that determine the art of managing expectations.[iii]

The monetary policy in Iraq faces a number of other challenges and pressures, the most important is the (deficit in net non-oil revenues, state budget deficit, balance of payments deficit other than oil, external factors weakening the role of traditional monetary policy instruments in controlling the money supply.

Knowing the nature of the state’s expenditure and its revenues, and what the local currency represents in contrast with the local revenues, is the important input to the structure and characteristics of the economy and public finance of the state. The general phenomenon that dominates the structure of the economy and public finance is that the state depends on covering its expenses on the dollars that derived from the export of oil by more than 90%, indicating a structural imbalance that does not achieve financial stability and financial sustainability, and indicates the inability of fiscal policy to create a necessary balance between the state revenue in local currency and its expenses in local currency, it also points to the large absence of real economic sectors and the diversification of their production.[iv]

Weakness of the role of traditional monetary policy instruments in controlling money supply

Monetary policy that usually uses its traditional tools to control the money supply, like:-

• Open market operations (buying and selling bonds, weekly and monthly deposits)
• Discount rate against re-deduction of commercial paper and treasury bills
• interest rate

The absence of an effective financial market, low financial depth (capital ratio of companies contributing to GDP) does not exceed 2%, the phenomenon of the monetary economy, the tendency to economize rather than saving, and the lack of public awareness. This environment weakens the role of monetary policy instruments in performing its tasks and to achieve its purposes in controlling the supply of money or directing it to serve economic objectives.

So, the sale of the currency (selling the dollar against the dinar) plays a key role in:-

• Sterilization of surplus cash (to prevent inflation), which is derived from the state budget expenditures.
• Maintain the stability of the exchange rate, as the central bank the monopolist of natural foreign currency (The oil dollar).
• Financing foreign trade, investors’ transfers and other purposes

On this basis, the national market enjoyed stable exchange rates and stability in the general level of prices and the fall of inflation to the tenth rank after the high levels that it reached previously, as well as the rise of the reserves of the Central Bank of foreign exchange to the two decimal places in dollar value, the highest in the history of the country, but the Central Bank has not been able to resolve the contradiction between the market economy and its aspirations and  profitability towards the aspiration of the state economy and its individuality in the search for social profit and lacks the economic vision of the movement of the economic system in Iraq. Thus a complex and lost equation has made the national economy and the search for its solutions as an economic ship without a captain. The rise or fall of the Iraqi dinar is not the product of weakness or strength in the financial sector of the state (public finance and the central bank), but it is the product of those who resolve the conflict and hold the helm of the master. A trend in the waters of the Iraqi economy rushing towards its estuaries beyond the borders.[v]

Conclusion

The Central Bank needs to think seriously to achieve other objectives other than stability in the exchange rate or targeting inflation, but it has to think of the next two goals comprehensive use and balance of payments, which are one of the most important goals of the Central Bank in the past. An acceptable rate of inflation would certainly contribute to increased economic growth and thus lower real wages for labor, which would encourage producers to employ more workers and increase production. In addition, the reduction of the real and nominal interest rate will stimulate investment, especially in the short term. The instruments owned by the Central Bank are capable of influencing economic activity through a variety of channels. While not ignoring the goal of price stability being one of the priorities of the Central Bank of Iraq.

References:

[i]– محمد اسماعيل وهبة عبد المنعم، دور الإصلاحات الاقتصادية في دعم النمو في الدول العربية، صندوق النقد العربي، الامارات العربية المتحدة ، فبراير، 2018، ص17.

[ii] – سامي خليل ، النظريات والسياسات النقدية والمالية، الجزء الاول ، شركة كاظمة للنشر والترجمة والتوزيع، الكويت ،1982، ص 172-ص182.

[iii] – مظهر محمد صالح، المعادلة الضائعة في الاقتصاد العراقي : من يحسم التناقض بين اقتصاد الدولة وهيمنة السوق الحر، بحث منشور على الموقع الرسمي للبنك المركزي العراقي.

[iv] – علي محسن اسماعيل، السياسة النقدية التحديات وسبل مواجهتها، بحث منشور على الموقع الرسمي للبنك المركزي العراقي،2017.

[v] – مظهر محمد صالح، المعادلة الضائعة في الاقتصاد العراقي : من يحسم التناقض بين اقتصاد الدولة وهيمنة السوق الحر، مصدر سابق.

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Dr.Lecturer Firas Hussein Ali/  head of the Crisis management

Department

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