How much will $15 billion IMF loan really cost Iraq? -Al Monitor

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With everyone’s focus on ISIS, little attention is paid the other dimensions of Iraqi politics in the Western press. Between the struggle with ISIS, low oil prices and rampant corruption, Iraq is facing a financial crisis. Baghdad has recently signed a 15 billion, 3 year bail out package with the IMF (International Monetary Fund).

“The IMF will help provide the loan to Iraq from several parties: The IMF will provide $830 million; the World Bank, about $5 billion with an interest of 1.5-3%; and the rest will come from other organizations and countries and will be guaranteed by the IMF at an interest rate of 7.5- 8%, provided that Iraq repays the loan and its interest in a very short period of seven years,” Mashhadani said.”

As usual, the deal involves structural adjustment policies (SAPs):

“Among the conditions set by the IMF is that the government decrease subsidizing fuel prices and reformulate the budget terms and fund allocations to reduce government spending, especially in the operating budget.”

Not surprisingly, there is push-back in parliament. Iraq signed a similar deal in 2004 and could not live up to its commitments. The nature of post-Saddam Iraqi politics also makes the deal problematic. There are questions about how the money will be distributed. For instance, will it be split up on a regional basis with the Kurds getting an independent share or will it all go to Baghdad? There are also concerns that the money could simply disappear into a black-hole of corruption. The deal is also being signed at a point where intra-Shi’a politics are breaking down. Shi’a protests against corruption have been organized by Muqtadā al-Ṣadr. While the complaints are legitimate, al-Sadr has been opportunistic in his exploitation of the situation. No doubt, the deal with give him more ammunition to work with.
Read more: http://www.al-monitor.com/pulse/originals/2016/05/iraq-imf-loan-conditions-lift-subsidies.html#ixzz49uIkEMvS

U.S. Support for Al Qaeda-Linked Rebels Undermines Syrian Ceasefire -Huffington Post

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  • “State Department spokesperson John Kirby expressed concerns that U.S.-backed Syrian opposition factions such as Ahrar al-Sham have been cohabitating with the Nusra Front.”
  • “Ahrar al-Sham along with Jaysh al-Islam, another Western-sponsored faction, not only have zero inclination to respect the ceasefire, they have aspirations that completely contradict the U.S. stated goal of ushering in a Jeffersonian democracy to replace Syrian President Bashar Assad.”
  • “Which prompts a fair question that goes beyond simply upholding a fragile ceasefire: How in the world does the U.S. government believe for a second that a post-Assad regime in Syria will be secular to any degree based on the current makeup of the opposition’s negotiating team, whose members by and large have openly proclaimed that they want to establish an Islamist state? The unfortunate answer is that the U.S. government has never absorbed the lessons of previous policies based on the credo, “the enemy of my enemy is my friend.”

 

The point being made in this article is nothing new. Since the US was pulled into Syria by the rise of ISIS, it has had to maintain a balance between a group of partners (allies is perhaps too strong a word) that are incompatible with each other, and in some cases, hostile toward the United States. The problem cropped up before when Turkey began bombing the PKK and Russia began bombing the FSA. It was also evident right from the start that Iran and Saudi Arabia were not going to be on the same page.

Nevertheless, the article over simplifies the US dilemma, and in particular, Washington’s goals. The author is correct that the US desire for a “whole, unified, pluralistic, nonsectarian Syria,” is incompatible with its present policies. However Washington’s most pressing goal is to isolate and defeat ISIS, preferably in a way that does not undermine what can only be described as a coalition of the wary. That means beating ISIS without ceding Syria to Iran or the Kurds. Only then will Washington set its sights on Jeffersonian democracy. Therefore, as long as ISIS still controls large tracks of Syria and Iraq, the logic of “the enemy of my enemy” will continue to dominate American planning, even if it becomes increasingly complex and in the long term, will likely prove unworkable. The problem is not that Washington does not see this, it is that there does not appear to be much alternative.

For the full article, see: http://www.huffingtonpost.com/michael-hughes/us-support-for-al-qaeda-l_b_10089410.html

Rouhani’s greatest win on the verge of becoming liability -al Monitor

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There has been a great deal of concern expressed in the western press about Iran’s continuing missile program. For critics of the JCPOA (the nuclear deal), Iran’s missile tests have been taken as a sign that Iran still cannot be trusted and that the deal was a mistake. The same dynamic is taking place in Tehran. Iran still is having trouble doing business with the international community

  • These challenges have meant that the flow of money into and out of Iran remains largely paralyzed. US Secretary of State John Kerry has admitted that Iran has been unable to access much of its own unfrozen assets in offshore accounts. Back-to-back visits by foreign officials and hundreds of trade delegations to Iran have culminated in stacks of agreements that have little prospect of materializing insofar as they lack financial backing.
  • Although the US administration has taken some positive measures to ease the concerns of Europe’s banking sector, these steps have so far failed to sufficiently reassure companies that they will not be explicitly or implicitly penalized for permissible business with Iran.
  • European banks are also concerned that the US Congress will impose fresh secondary sanctions over Iran’s non-nuclear-related behavior. In addition, the post-2008 US restrictions on dollar-denominated transactions with Iran — transactions necessary for processing most major deals — pose serious impediments for European investors.

Just like in the US, this is putting the Iranian moderates who supported the deal in a politically vulnerable position. It is also giving hardliners lots of rhetorical material to work with, and allowing them to regroup after several years of political disarray.

Read more: http://www.al-monitor.com/pulse/originals/2016/05/iran-joint-comprehensive-plan-of-action-rouhani-liability.html#ixzz49G4jpOmK

Saudi Arabia’s Vision 2030 -Various

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The new Saudi King, Salman bin Abdulaziz Al Saud, and his son, Deputy Crown Prince Mohammed bin Salman have drawn up a plan to reform the Saudi economy and wean the country away from its reliance on oil as the main source of income. The details of the plan are covered in this Bloomberg article:

http://www.bloomberg.com/news/articles/2016-04-25/key-elements-of-saudi-arabia-s-blueprint-for-life-post-oil

Economic diversification is not a new idea for the Saudis, political scientists, economists and even Saudi politicians have been talking about it for years. For an economic argument for diversification and neo-liberal reform, see:

http://www.mckinsey.com/global-themes/employment-and-growth/moving-saudi-arabias-economy-beyond-oil

The problem has always been that economic reform in Saudi Arabia could be politically destabilizing. Oil is not just the backbone of the Saudi economy, it is one of, if not the most important political pillars of the state. Oil money (referred to in the poli-sci literature as rents) provides approximately 95% of government revenue. This not only provides money for services etc… it provides the regime with a large degree of economic and therefore political independence from society. The al Saudi do not have to tax Saudi citizens. Instead they redistribute money back to society in the form of generous social benefits and patronage spending. While it may be an oversimplification to say no representation without taxation, the re-distributive nature of the Saudi economy reduces a great deal of pressure for democratization. Not only does the government in effect pay it citizens, oil wealth has been used to build a new middle class beholden to the regime for government handouts. The use of foreign workers also means that organized labor has little or no power.

The Saudi political system cannot be reduced to oil rents, but economic reforms are extremely risky. Even if everything works as planned and the result is economic growth, diversification could very well mean more independence for the middle class and labor. Although the al Saud deny it, reform may also lead to taxation. As the country becomes more economically liberal, there may also be calls for social and cultural liberalization, which would threaten one of the regime’s other pillars of political support, its relationship with the conservative religious establishment.

If King Salman actually follows through with his economic plan it will lead to new political dynamics within the regime, dynamics that the institutions of the Saudi state may have a hard time coping with.

For more, see:

http://uk.reuters.com/article/uk-saudi-economy-conference-idUKKCN0V32DI

http://theconversation.com/what-will-saudi-arabias-vision-2030-mean-for-its-citizens-58466

 

Public Uncertain, Divided Over America’s Place in the World -Pew Research Center

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The results from recent surveys conducted by the by the Pew Research Center suggest increased public  support for US military spending, continuing skepticism concerning internationalism, and deep partisan divisions of foreign policy issues.

1. Defense Spending: “With the United States facing an array of global threats, public support for increased defense spending has climbed to its highest level since a month after the 9/11 terrorist attacks, when 50% favored more defense spending.

Currently, 35% say the U.S. should increase spending on national defense, 24% say it should be cut back and 40% say it should be kept about the same as today. The share favoring more defense spending has increased 12 percentage points (from 23%) since 2013.”

 

2. Internationalism: “57% of Americans want the U.S. to deal with its own problems, while letting other countries get along as best they can. Just 37% say the U.S. should help other countries deal with their problems. And more Americans say the U.S. does too much (41%), rather than too little (27%), to solve world problems, with 28% saying it is doing about the right amount.

The public’s wariness toward global engagement extends to U.S. participation in the global economy. Nearly half of Americans (49%) say U.S. involvement in the global economy is a bad thing because it lowers wages and costs jobs; fewer (44%) see this as a good thing because it provides the U.S. with new markets and opportunities for growth.”

 

3. Polarization: “This shift underscores the deep partisan and ideological divisions in attitudes about U.S. foreign policy – differences that extend to how to deal with terrorism, the nature of global threats, views of the Israeli-Palestinian conflict and how deeply involved the United States should be in the world.

On each of these measures, Republicans express greater skepticism about U.S. international engagement than do Democrats. Roughly six-in-ten Republicans (62%) say the United States should deal with its own problems and let other countries deal with their problems as best they can, compared with 47% of Democrats. And 55% of Republicans view global economic engagement negatively, compared with 44% of Democrats.”

Americans way of global involvement

 

4. The Trump Effect: “Trump’s primary campaign supporters stand out for their negative assessments of U.S. involvement in the global economy. Fully 65% of Republican registered voters who prefer Trump for the Republican presidential nomination say U.S. involvement in the global economy is a bad thing, compared with only about half of those who prefer Cruz (49%) or Kasich (46%).”

5. Global Threats: “In the view of the public, the top global threat facing the United States is ISIS – a concern that was not on the radar when the prior America’s Place in the World study was conducted three years ago. Currently, 80% say the Islamic militant group in Iraq and Syria known as ISIS is a major threat to the well-being of the United States, while 72% view cyberattacks from other countries as a major threat and 67% say the same about global economic instability.

There are partisan differences over a number of global concerns, but the widest gap, by far, is over the threat to the United States from global climate change. Nearly eight-in-ten Democrats (77%) view global climate change as a major threat to the U.S., compared with just 26% of Republicans.  ..Among Republicans, climate change is the lowest of the eight threats included in the survey.”

For more details, see: http://www.people-press.org/2016/05/05/public-uncertain-divided-over-americas-place-in-the-world/