Former Iraq central bank ‘chief’ says government wants reserves Baghdad needs $1 trillion to rebuild: official

BAGHDAD, Nov 9, (AFP): The ex-chief of Iraq’s central bank has dismissed charges against him as baseless in an interview with AFP and said authorities had compromised the bank’s independence to access its reserves. Sinan al-Shabibi said the government had been “spoiled” by a stable exchange rate for several years, and a warrant for his arrest for suspected mismanagement of the Central Bank of Iraq and currency manipulation had blown relatively minor foreign exchange fluctuations out of proportion. Shabibi’s remarks come weeks after he was replaced as governor while overseas and warrants were issued for his arrest and those of other bank officials in what diplomats and analysts have interpreted as a power grab by Prime Minister Nuri al-Maliki. The premier’s office has insisted it was not behind the moves.

“Since 2009, they wanted to fire me, and they wanted money from the reserves,” Shabibi said in a telephone interview from Geneva. “I think the main problem... is basically the reserves, because they thought we have a lot of reserves, and they want to use it for financing.” He added: “The government wanted some money from the central bank... Of course, the law does not allow that, the central bank law. “And of course, they say that there are differences in exchange rate policy. I don’t think these differences require firing the central bank governor.” Asked if the warrants for him and other officials affected the bank’s independence, Shabibi replied: “I’m sure, yes.”

He declined to name any government official directly, but said: “They always have been talking about the fact that they should supervise the monetary policy, they should actually decide on many, many, many components of that policy, all these things.” The 70-year-old economist, who worked for two decades at the UN trade and investment body UNCTAD and had been central bank governor since 2003, has been described by analysts as a capable technocrat who fought to maintain the bank’s independence. But Iraq’s cabinet decided last month to replace him with Abdelbassit Turki, the head of the Board of Supreme Audit, on an interim basis, after a parliamentary inquiry accused him and other bank officials of currency mismanagement.

Shabibi said he intended to return to Iraq to fight the charges, but would only do so if the arrest warrant was lifted. He noted that the government could not fire him, a power which by law rests with parliament. He also dismissed the charges of currency manipulation or mismanagement as trumped up, comparing relatively minor fluctuations in the value of the Iraqi dinar to greater changes to the values of the US dollar or the euro. “I told them (the government) the central bank was not the reason for this fluctuation, that it is part of the range,” he said. “Eventually we succeeded in stabilising the exchange rate, only two or three percent difference.

Iraq needs up to $1 trillion (784 billion euros) over the next 10 years to rebuild its crumbling infrastructure and battered economy, its investment chief said in an interview on Thursday. Sami al-Araji’s remarks come during the Baghdad International Fair, Iraq’s biggest trade showcase in more than 20 years, as the government looks to court foreign investment, diversify the country’s oil-dependent economy and reduce unemployment. “We are talking about the reconstruction of Iraq, a minimum requirement of money ... is about $600-700 billion dollars, and could go all the way to $1 trillion” in the years to 2022, said Araji, director of the National Investment Commission.

Araji said much of that money could come from Iraq’s rocketing exports of crude oil, which account for the lion’s share of government income, but “some will have to come from foreign and domestic direct investment.”
The figure is a marked increase from $186 billion targeted for 2010-2014 — $100 billion from oil sales and the balance from private investment. Araji said officials were looking to raise investment targets for the 2013-2017 period. For now, however, investment levels remain sharply lower than those the investment commission chief predicts will be necessary. According to Araji, Iraq had granted investment licences to both foreign and domestic investors in the past three years worth around $32 billion, most of which was from local sources. “That’s what we’re banking on — both oil sales will go up, and hopefully the investment climate will improve a great deal (so) that it (investment) will be more,” he said.

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