Iraqi unrest fears as fuel prices soar

[Sporter]

Iraq's government has sharply raised the price of fuel and other petroleum products this month, sparking discontent and protests and worrying experts who say the increases could hurt millions of poor and throw the country into further turmoil....

http://www.thestandard.com.hk/news_detail.asp?pp_cat=17&art_id=8743&sid=6060168&con_type=1

[messiah]

Sporter:

I truly believe that for action there is an opposite reaction! Can you say reval? ;)

[Sporter]

Sporter:

I truly believe that for action there is an opposite reaction! Can you say reval? ;)

Messiah,

If I were an Iraqi my head would be spinning!. First my Country is torn apart, we have daily violence, I have voted three time in one year and now I'm paying for fuel I can't afford; "spit the bit" something has got to give!.

[messiah]

Sporter:


If I were an Iraqi my head would be spinning!. First my Country is torn apart, we have daily violence, I have voted three time in one year and now I'm paying for fuel I can't afford; "spit the bit" something has got to give!.

Indeed! The transformation the country has gone through since the war must be mind-boggling. I'm quite sure most Iraqian's (is that a word) welcome change. Others are less convinced that such a change is what's best for Iraq.

Only those that see the complete picture will understand that there must be changes in subsidies in order for the country to succeed fiscally. :wave:

[MEALTICKET]

Sounds like oil and transport would be a good ides to buy on the ISX when it opens agian.
They will not have high to long I think and change is hard to accept. But it will work for what is best.
Can we say re-vaule th money now!:rolleye03

[Sporter]

Sounds like oil and transport would be a good ides to buy on the ISX when it opens agian.
They will not have high to long I think and change is hard to accept. But it will work for what is best.
Can we say re-vaule th money now!:rolleye03


The Iraqis only wish they had the information we have. I pray that the get it right!.

[dreamscometrue]

it was poenly talkeda bout here ins come circles that is the first of several increases to happen this year in fuel. if they hit the target they are talking abour or I am hearing (just under 1.90) a gallon then something has to give .

I cannot fathom a local paying around 1.90 a gallon unless their si some kind of R/v even 1.00 a Gallon .I just wonder whihc way they will do the R/v .Lots of Options I have heard some good (for us ) and some will not so good. As yet its all a guess but if the above hold true ( again this is Iraq ) then something will break this year and "soon".Just praying they dont drop the zero's lol:(

[MunnyBaggs]

Great arguement for a re-val. Maybe a bit higher than some of us believe???

[stayfrosty5]

They could reval..... or just raise all the salaries.... which would suck for us.

frosty

[Jetsa]

The raising of fuel prices had to be done to stave off the smuggling of Iraq fuel to it's neighboring countries, and it should have been done long ago. But I believe the "timeline" that has been set and adhered to allowed for the current administration in Iraq to "do the dirty deed" of raising the prices. Now, we have a new administration incoming that is going to look like all that is gold to the average Iraqi citizen if/when they "ease their pain" by whatever means. You can forget lopping zero's as this would be the proverbial straw that broke the camels back to the Iraqi's at this point. And that leaves only a couple of options in my book. Either lower the prices again, which totally defeats rhyme or reason, or what I feel is the most plausible idea is to make the average Iraqi's dollar (dinar) worth more at the pump (and everywhere else too).

It's coming I do believe, and a lot sooner and better than most think. They can't leave the average citizens in this state very long as the damage done would most likely dwarf the insurgency. They cannot have the average Iraqi up in arms at this stage and there are not that many ways out of what they have created with the raising of fuel prices. There is an incedible adherance to the "timeline", kind of like the domino effect. I think it is totally possible that the whole scenario was set up right at the time of Saddam's fall or quite possibly even before, but the plan has been expertly laid out and followed. And the kicker, I dont think we nor anyone below "plan-level" knows the end-goal. Sure someone could have guessed it and posted it as a best-guess scenario, but no one truly knows beyond the master planners.

Kudo's to someone, whomever it may be. Probably GW;)

[tattatu]

A baker said that his prices would go up 50% -- loaf of bread went from 250 to about 400 Dinars.

A taxidriver that uses an SUV to take passengers from Baghdad to Syria charges $25 / passenger says that he will need to charge more.

Wish I read this headline -- prices of fuel in Iraq exceed subsidized prices in Iran. Reverse the flow of capital. Lower unemployment. Raise the per capita income. Create shortages in Iran -- then the rhetoric will change. No news is a good sign, I believe the press has got this one wrong again. This might be the trigger.

[bloptaptap]

good or bad for us?

[tattatu]

FO:HI:B
http://www.russianeconomy.org/comments/121505.html

"Win stomachs and pocketbooks in Iraq. People in the region will see. Win their eyesight, win their vision. That's bigger than hearts and minds."

[ISX_TIME]

Sporter:

I truly believe that for action there is an opposite reaction! Can you say reval? ;)

Rodin would be proud of your Avatar.....What a perfect way to sum up the discontinuation of the oil subsidy "for every action there is an equal or opposite reaction"

Other then the IMF requirement there was NO need to end the oil subsidy NOW at this point in time....

Why would the USA and or Iraq Governement want to alienate the citizens if there isn't a plan to give something back to the people.

The longer they wait, more dissention grows with every passing day. That "trickle down" effect of the higher price of fuel and propane will soon be a tsunami of inflation of goods and services.

REMEMBER Hurricane Katrina ? Our gasoline went up $3.00 to $4.00 a gallon (25%)..."vegetable produce" skyrocketed within that week to more then double the retail price.

[tattatu]

This has nothing to do about the weather and everything to do with profit incentives. The problem with subsidies is that they undermine the economy. People are not motivated to grow their own food, if it is given to them. The fuel shortages were created by the subsidies. Be careful of the hand that feeds you. This Iraqi economy was not self-sustaining, only a tyrant could control it, and only he and his next door neighbors benefited by it.

[dreamscometrue]

FO:HI:B
http://www.russianeconomy.org/comments/121505.html

"Win stomachs and pocketbooks in Iraq. People in the region will see. Win their eyesight, win their vision. That's bigger than hearts and minds."

Yes that is the fight that will determine who wins this battle .Their are going to have to be some hard calls at first for the Iraq goverment but if they weither the storm then they can make it happen .I guess that is the the million dollar question .

[tattatu]

what other country oppressed 2/3's of its people.
fought three wars -- would have lost against Iran had it not been for the US.
socialist regime that created a communist state.
exported wealth by setting an artificially high exchange rate.

like giving your teenager the credit cards and waking up years later to find you'd not only lost the house, but enough money to buy three houses. Not to mention the neighborhood going to h***.

hurricanes create temporary shortages, prices came down quickly because supply exceeded demand -- subsidies create shortages because supply will never meet demand -- there's no incentive, because prices undermine the profit motive.

[Javabear]

They could reval..... or just raise all the salaries.... which would suck for us.

frosty

Raising the salaries would create hyper-inflation and we all know what that leads to! The Iraqi government doesn't want to see inflation sky high either.

[tattatu]

is not caused by raising salaries. Salaries were raised to keep up with hyperinflation. In Germany 1923 you were paid every hour so you could go out and spend it before it became worth less. Hungary had the highest hyperinflation in history -- 1946. Prices tripled every day

[lance]

Great arguement for a re-val. Maybe a bit higher than some of us believe???
I second that Money, I cannot believe they adjusted fuel in one swoop. I believe this is a deliberate attemp to unify the country. The Sunni's are upset about not winning enough votes, everyone is upset about being promised economic relief and being handed higher fuel prices. The government steps in with a strong peg or signifigant managed float and makes themselves Iraq's hero. It is classic politics mis-direction and slight of hand. Before they know it the Sunni's will be republicans. (truth be told they already are and just dont know it). They are protesting in the streets, like well managed citizens. All they need now is the money. Don't get me wrong all of them won't sell out, but enough will to make the country work. Thats all we need. Lance

[tattatu]

before a revaluation can be done. eg. food subsidies should be replaced with incentives. Allawi said end of 2006 before debt reached a manageable level.

last comment on hyperinflation ... caused by an increase in the money supply (gov prints money) to pay down debt, in effect gross taxation of people's savings.

[tattatu]

for instance, a sequence of events that increases the rate of return from foreign investment. Removing the ceiling on prices for food and fuel will encourage investment. As demand for funds increases, Dinars will appreciate.

If the government runs a deficit, but savings remains unchanged, money is borrowed to finance the deficit, interest rates rise, Iraqi investments become more attractive to foreign investors who demand more Dinars to buy Iraqi assets.

[tattatu]

then demand for workers goes up and wages improve.

The only other event I see occurring is achieving parity with neighboring countries. Usually a country devalues to make its products competitive with its trading partners. Hence the goal of economic unions and world trade organizations --

In this case, another justication for strengthening the Dinar, might be to attract products, like fuel, from other countries. Since gas could be sold for a higher price. The problem would then be that other products from Iraq would become more expensive. Net exports would decrease, so unemployment in Iraq might increase if the economy was not growing sufficiently.

Politically, its much easier to devalue a currency. Its easier to get elected.

[tattatu]

three types of inflation:
1. cost-push first stages of growth cycle, benign.
2. demand-pull, mid-stage, workers demand more wages, a bit dicey.
3. hyperinflation: Zimbabwe

What is happenning in Iraq is cost-push -- prices of fuel are pushing prices up for everything. This will encourage foreign investment which is good for employment and the Dinar.

[tattatu]

Mugonomics -- inflation passed 800% this year; Unemployment 70%; 38% infected with HIV.

So little foreign money left that government cant afford to import the ink and paper needed to print more currency. Zimbabwe will be the world's greatest disaster of 2006.

[Javabear]

Mugonomics -- inflation passed 800% this year; Unemployment 70%; 38% infected with HIV.

So little foreign money left that government cant afford to import the ink and paper needed to print more currency. Zimbabwe will be the world's greatest disaster of 2006.

Stick a fork in them! They're done!

[onenomad]

http://abcnews.go.com/International/wireStory?id=1452786

and the beat goes on

[ISX_TIME]

before a revaluation can be done. eg. food subsidies should be replaced with incentives. Allawi said end of 2006 before debt reached a manageable level.

last comment on hyperinflation ... caused by an increase in the money supply (gov prints money) to pay down debt, in effect gross taxation of people's savings.

Your saying Allawai said "before a revaluation can be done" and that this is a full quote from Allawi ?

Do you have a link to this quote ?

[tattatu]

What happens when you dont have Democracy. Mugabe took over what was then Rhodesia in 1980. Of all things, he was a former teacher.

Endless business opportunities:
1. Rent-a-cadaver to buy fuel. Morticians have privileged access to petrol.
2. Electronic money counter operator. Machine must count 1500 bills per minute to be practical.
3. Save-a-place in line. Willing to sleep all night in front of bank if needed to withdraw money. Bus riders need not apply.
4. Sesame seed importer: Needed to sprinkle on loaves of bread to avoid price ceiling imposed on bread.
5. Gas siphoner: Transfer fuel between incoming and outgoing planes.
6. Customs agent -- 50% of export sales must be exchanged for Zimbabwe currency at "official rates" Lucrative tipping.
7. Need Zimbabwe currency -- black market basement prices.
8. Hire-a-Mercenary -- 11,000 troops recently back from Congo. Just say Kuwait.
9. Teachers needed for the "Green Bombers" a youth militia -- 50,000+ enforce rules by harrassing and chasing other people.
....

Are there any investors out there?

[tattatu]

would be caught saying what you just inferred I said was a full quote. Allawi said (quoted on this website today) or words to the effect that a manageble debt level of $30 Billion would be reached by the end of 2006. That is a reasonable statement.

My point was that more things needed to be done before a revaluation could occur. More than likely replacement of the food subsidies will be the next step.

[Adster]

Feel they can't continue screwing the Iraqi people with increased price in fuel etc for too long or they will have a civil war on their hands. The new government have to start off as the good guys and that will include a revalue by end of March 06 IMO.

[tattatu]

The Other Way to Win Iraq (12/15/05)
This is a great link:
http://www.russianeconomy.org/comments/121505.html

This is from the Hoover Institute => Stanford => Condoleeza Rice => Powell => Shultz=>.... Highly regarded and has been advising presidents since Pres. Reagan.

I call this the roadmap. Doing away with subsidies to screw the people is a misnomer spun by the media. Replacing wasteful programs that serve the purposes of terrorists and renegade militias is more accurate.

Attracting foreign capital with incentives, will strengthen the economy, create employment, increase the demand for Dinars. Imposing an exchange rate is exactly what the new government is trying to avoid.

[JJLL]

Interesting article...

As for, "Imposing an exchange rate is exactly what the new government is trying to avoid."

China has been doing this for a LONG time now. They keep their currency artifically low so that labor and overhead stay low.

Its a cheap trick to make the rich richer and the poor poorer.

[tattatu]

China encouraged foreign investment by pegging their currency below the dollar. But that does not explain why the rich get richer and the poor stay poor. In the US, despite a growing economy, the median income has declined for 4 straight years and yet we have more millionaires than before. SH and Mugabe (syphillis rot his brain) created high exchange rates and exported their countries wealth into private bank accounts. Just read Zimbabwe reverted back to the "steam age" -- no more diesel or spare train parts, so they're resorting to coal. As of today --
street value; $z 100,000 = $1 USD
Mugbug says officially its 800:1, so who do you believe.

[tattatu]

I was quoting prices in 2003, so I was off but not by much. Mugabe is switching currencies this year. Presently coins used as gambling tokens in the casinos. Highest rate of inflation in the world 502% (2005). Hungary (1946) inflation was over 800% in one month.

If you visit the Zimbabwe Central Bank website. The exchange rate for dollars is $Z 83,810.40 to $1 USD. Overnight interest rates 540%. CPI = 40758.

Mission statement: "Express itself through leadership....fighting inflation, stabilisation of the internal and external value of Zimbabwe's currency."

[tattatu]

Attracting foreign capital has improved the lives of Chinese. Per capita income has increased. China has the highest rate of savings in the world. That has contributed to real growth. There is still an income disparity, but that's not caused by the exchange rate.

http://www.gwu.edu/~econ270/Taejoon.html

"The rise in income level of both rural and urban employees have considerably improved the livelihood of these residents, and at the same time have brought about a large increase in their bank savings. The amount of savings of urban and rural residents have increased over 71.4 per cent from 21.06 billion yuan in 1978 to 1,520.35 billion yuan in 1993. "

The difference between the Russian and Chinese economies (Why one has failed, the other succeeded) has been the Chinese propensity to save. Perhaps because they have nothing to purchase (who knows) -- in this case the Chinese would benefit from a higher exchange rate. But without substantial savings there is no benefit to a stronger currency.

Raising prices in Iraq, not a stronger currency will increase foreign investment and improve the economy.

[tattatu]

http://middleeastreference.org.uk/

M. Al-Uluum survived an assassination attempt Oct. 03. Associate of Chalabi. This is a news account of a reunion with his father and family in Najaf. Gives you an idea of the complexities of Iraqi life.

"As the Sayyed arrived at the gates of the shrine, flocks of people gathered in a matter of seconds, cheering his arrival. The pressure of the crowd was so great that the 77-year-old Sayyed almost fainted. But he managed to do the religious visitation and offered a brief prayer before leaving the shrine to greet the surviving members of the Bahr al-Uluum family who had gathered to meet him at the house of his martyred brother, Grand Ayatollah Sayyed Ala? el-Deen Bahr al-Uluum. Overcome by emotion on entering the house, Sayyed Mohammed fell to the ground in tears. Seventeen members of the Bahr al-Uluum family were executed by the regime of Saddam Hussein. Many more were sentenced to death and fled the country. Only a few male members of the family are alive today. A descendent of the Prophet Mohammed, Sayyed Mohammed stood against the regime and was put on Saddam?s most wanted list in 1969 because of his role in the spiritual leadership of Grand Ayatollah Sayyed Mohsen al-Hakim"

Al-Uluum in interviews agrees with the idea of privatization and says US oil corporations should be a part of redevelopment. His disagreement with the removal of fuel subsidies I believe is out of concern for the people. Just as many religious conservatives believe. And that is at the heart of this debate.

[tattatu]

I've found at least 4 different spellings for Al-Uloom. This story is from 12/19/05. Both Al-Uluum and Sadr are cousins is my interpretation. What makes them significant is their connection to ...

Muhammad Baqr al-Sadr (now an Ayatollah, the only Arab of the 8 living Shi'a maraji').

http://www.chron.com/disp/story.mpl/world/3533842.html

In Najaf, south of Baghdad, demonstrators took to the streets, many gathering in protest outside the home of Oil Minister Bahr Alum and tearing down election posters bearing his image from nearby walls. Fiery cleric Muqtada al-Sadr emerged from his home down the street and calmed the crowd, witnesses said. Similar demonstrations occurred in the southern cities of Amara and Kut.

Also Sunday, armed insurgents formed a makeshift checkpoint on a highway north of Baghdad, forcing 20 drivers and crews of five large trucks from their vehicles and shooting them dead, according to Ali Khayam, a police official.

... the terrorists know exactly what removing the subsidies means, they have to switch tactics and cut off the supply of gasoline going to Baghdad.

[tattatu]

http://iraqthemodel.blogspot.com/2005/12/international-observers-to-come-to.html

In Doukan/Sulaymanya, the talks between the UIA and the Kurdish alliance are still underway but seem to be reaching an end.
And from the statements coming from Talabani and al-Hakeem and the smiles on their faces it looks like they have reached some sort of an agreement. Al-Hakeem spoke warmly about the “historic relations between the two parties”.
Al-Hakeem defended federalism again and emphasized that federalism will strengthen the unity of Iraq instead of breaking its unity.

He has also denied the claims about a breakup between the major components of the UIA; it is known that the Sadrists and the Dawa Party did not send their envoys with al-Hakeem to Sulaymaniya and moreover, the Dawa party has officially announced nominating Jafari for PM but al-Hakeem still denies the presence of any conflict within the UIA.
Waledd al-Hilli from the Dawa Party said today that they in the UIA will resort to a voting process to determine the UIA’s candidate for the PM post which means that the UIA has been so deeply involved in talks with other parties that they didn’t have enough time to resolve their own internal differences.

[tattatu]

.... Jalal Talabiani attacked the rejecters of the election results and he addressed them by the name; answering a question about Salih al-Mutlaq, Talabani said “it is us who have conditions that al-Mutlaq must fulfill before he can join the government; we cannot accept those who join the terrorists at night and stand on our side in the morning” and commenting on Allawi’s position, Talabani said “we hope that Mr. Allawi goes back to his flexible attitude we used to see from him…” in general, Talabani said that anyone who wants to be part of the government must show a clear position regarding two crucial points; fighting terror and deba’athification.

Spoken like a poet.

[CashMan]

Munnybags
[QUOTE]Great arguement for a re-val. Maybe a bit higher than some of us believe???
__________________
[/QUOTE

Munny Bags are you starting to come over to our side of the Isle now. LOL :lmao:

[lonelyintexas]

Cashman,
I second that opinion with all the things going on. I think we could be hearing something on Monday or Tuesday. Looks like they need to start gearing up for this to start increasing as the price of fuel and other goods start up the chain.

[hilljack13]

Gas where I am at has already shot up .20 just this past week...so I believe we are feeling the hike of gas prices as well as the Iraqis.

[dreamscometrue]

more problems :(

01 Jan 06

BAGHDAD (AFP) - A bomb has blown up an oil pipeline near a Baghdad oil refinery, sparking a large-scale fire, a security official said.
http://news.yahoo.com/s/afp/20060101/wl_mideast_afp/iraqunrestoil

[BIG WAVE]

BAGHDAD, Jan. 1 -- Iraq's most productive oil refinery reopened Saturday after closing for 10 days under the threat of insurgent attacks, a move that might ease a fuel crisis that has worsened long lines of anxious buyers at gas stations across the country.

The Baiji refinery in northern Iraq reopened after police began escorting delivery trucks from the refinery, roughly 150 miles north of Baghdad, to gas stations all over the country, Ahmed Ibrahim, the distribution manager of the refinery, said in an interview.

The refinery had closed in December after insurgents threatened to kill drivers making deliveries of gasoline to gas stations around the country. Assem Jihad, an Oil Ministry spokesman, said last week that the shutdown was costing $20 million a day. Ibrahim said that the refinery, fully stocked with gasoline it could not ship out, was being forced to burn its supply of crude oil because trucks from Turkey and Jordan could not take it away.

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/01/AR2006010101080.html?nav=rss_nation/special

[tattatu]

http://newsfromrussia.com/cis/2005/04/21/59333.html

Ukraine's central bank strengthens currency against U.S. dollar, sparking public anger

20:00 2005-04-21
The central bank raised the value the national currency against the U.S. dollar in hopes of curbing inflation Thursday, a move that Ukrainians say will wipe out chunks of their savings.

The 2.7 percent revaluation of the hryvna set the exchange rate against the dollar at 5.05 hryvna, as compared to 5.25 hryvna on Wednesday. Ukrainians, who mostly keep their money in dollar savings, called the move outright theft.

"Our money is being stolen," complained secretary Lena Levina, 29.

President Viktor Yushchenko's government had warned that it planned to strengthen the hryvna in an effort to fight double-digit inflation.

[buck74]

Cashman,
I second that opinion with all the things going on. I think we could be hearing something on Monday or Tuesday. Looks like they need to start gearing up for this to start increasing as the price of fuel and other goods start up the chain.

Sure seems like the Iraqi government will need to throw the people something to offset the effects of eliminating the fuel subsudies, and food will probably be next. Seems like a reval would be the answer to these problems? With more purchasing power they could afford these everyday needs.

[tattatu]

hyperinflation: taxation on domestic savings to finance deficit spending.

stronger currency: taxation on foreign savings to finance deficit spending.

Ukrainians were hedging by holding their savings in US$...

Just thinking, not sure if this works: One way for the Iraqi currency to strengthen -- create a deficit, then issue bonds that get purchased with dollar reserves (exchange dollars for Dinars). sounds inflationary.

[tattatu]

means that your purchasing power increases for overseas products. However, stronger currency makes domestic products more expensive, so investment capital decreases. Inflation slows, but at the expense of jobs and foreign savings (or USD reserves).

[tattatu]

Just thinking (dangerous) not sure if this works: One way for the Iraqi currency to strengthen -- create a deficit, then issue bonds that get purchased with dollar reserves (exchange dollars for Dinars) ....

above market interest rates, and then resold to foreign investors.

[messiah]

Iraqi unrest fears as fuel prices soar


The Iraqi government has sharply raised the price of fuel and other petroleum products this month, sparking discontent and protests and worrying experts who say the increases could hurt millions of poor and throw the country into further turmoil.

Due to Iraq's fragile economic state, the government will need to do something fast to prevent it citizens from total anarchy. Rising gas prices just doesn't support present income levels. :no: Thus, I do believe that a reval is imminent. :)

[tattatu]

http://allafrica.com/stories/200602030685.html

Last week the Central Bank of Zimbabwe moved to control their exchange rate -- currently around 90,000:1. Its interesting to read the Bank's comments with regard to foreign capital inflow and controlling inflation.

"Rate of exchange is overvalued....we need to allow the "Zimbabwe" dollar to depreciate to encourage exports."

I've written earlier about the heavy taxes levied on exporters and everybody else. Cant even withdraw enough money for a bus fare home.

Capital inflow fell .46% from last year, mostly due to falling productivity. ZDollar is currently "chasing" inflation +500%, when central bank set the rate -- presto, no more foreign capital inflow (below $US 5 million/ day).

Central bank figures cant move the exchange rate on the Interbank market unless there is a higher volume of exchange:
1. Below $US 5 million - no change in exchange rate
2. $US: 5 - 10 million - 1% appreciation
3. $US: over 10 million - 2% appreciation

Direct foreign investment probably means tourism.

[goldraker]

BAGHDAD, Jan. 1 -- Iraq's most productive oil refinery reopened Saturday after closing for 10 days under the threat of insurgent attacks, a move that might ease a fuel crisis that has worsened long lines of anxious buyers at gas stations across the country.

The Baiji refinery in northern Iraq reopened after police began escorting delivery trucks from the refinery, roughly 150 miles north of Baghdad, to gas stations all over the country, Ahmed Ibrahim, the distribution manager of the refinery, said in an interview.

The refinery had closed in December after insurgents threatened to kill drivers making deliveries of gasoline to gas stations around the country. Assem Jihad, an Oil Ministry spokesman, said last week that the shutdown was costing $20 million a day. Ibrahim said that the refinery, fully stocked with gasoline it could not ship out, was being forced to burn its supply of crude oil because trucks from Turkey and Jordan could not take it away.

http://www.washingtonpost.com/wp-dyn...nation/

What Iraq needs to do is this. They need to secure their oil fields. Just like the USA Government dose with area 51. If any of our fine service members see this post. Please pass this information on to General's and Government Officials. This was a no cost consultation from Goldraker.