Nations re-establishing direct trade relations with Iraq to prepare for the removal of international trade sanctions
Jun 22, 2013
In the week after Saddam Hussein invaded Kuiwait, the United Nations Security Council imposed trade sanctions on Iraq and blocked them from accepting or making payments through the world banking system. This succeeded in crashing their economy. The value of their currency plunged from $3.22 per dinar to 1/4000 of a cent. No one wanted Iraqi dinar because it could only be spent in Iraq itself, and even there its value had crashed.
But times are changing. Kuwait and Iraq have patched up their differences and signed agreements allowing them to apply jointly to have Iraq released from the sanctions. Last week they presented their petition and agreement to Ban Ki Moon, the General Secretary for the UN, who then approved it and then recommended that the Security Council release Iraq from Chapter VII sanctions.
Nations are now beginning to re-establish trade relations with Iraq, knowing that the resumption of direct trade is inevitable. Up until now, the only way Iraq could sell its oil was through a fund managed in other nations, such as Switzerland. So they have been engaging in trade, but only under the restrictions imposed by the UN. None of the trade was allowed to be direct, but only indirect.
Canada is now moving to re-establish direct trade relations with Iraq and even to help them become a full member of the World Trade Organization:
Baghdad (NINA) – Vice President, Khoda'yir al-Khuza'e, discussed with the Trade Minister of Canada, Ed Fast, trade relations between Iraq and Canada and means to develop them.
A statement issued on Friday, June 21, by the Vice President's Office, quoted Khuza'e stressing the necessity to implement trade agreements concluded between Iraq and Canada during the early 1980s, calling on Canadian firms and businessmen to invest and participate in the reconstruction of Iraq.
For his part, Fast asserted his country's keenness to develop and consolidate trade relations with Iraq; he promised to exert his efforts to accept Iraq as a full member in the World Trade organization (WTO).
He expressed desire to form a high level economic delegation, consisting of Canadian businessmen and representatives of Canadian companies to visit Iraq soon. / End.
Other reports indicated that Iraq still owes $11 billion to Kuwait in reparations. The Central Bank of Iraq has close to $80 billion in its reserves at the present time. As part of the deal, Iraq has agreed to pay the remaining $11 billion on or by June 25, so that the UN General Assembly can formally remove the sanctions when they meet next week. At present, the vote is scheduled for June 27. They want to get this done by July 1, because that is the most opportune time at the start of a new fiscal quarter.
If all goes well, they can revalue their currency at the start of the new quarter, so they won't have to change all of the bookkeeping in the middle of the quarter from the old dinar value to the new.