Tishwash: Removing zeros and revaluing the Iraqi dinar
Ali Daadoush
The concepts and scientific names in economics differ according to the specialization and the branches derived from it. When talking about the exact specialization, economic variables must be named by their scientific names. One of these names is the term redenomination, or as it is called (removing zeros from the currency).
Countries usually resort to it to address rampant inflation and the decline in the value of the local currency, as the old currency is replaced with a new currency at a fixed price by removing at least 3 zeros from the old currency.
Currency revaluation becomes necessary when it comes to hyperinflation because it takes a very large number of old banknotes to facilitate trade, especially in local markets, and small banknotes become useless, as an individual needs millions of banknotes to buy simple or necessary household or food needs, an example of this is what happened in 2006 when Zimbabwe renamed its currency at a rate of (1000 old Zimbabwe dollars) for a new Zimbabwe dollar.
In addition, deleting zeros from a currency can also happen when a country joins a monetary union, as happened in the eurozone, and begins using a currency like the euro instead of its local currency. When the euro was introduced in 1999, member states first used the new currency for electronic payments and accounting, then switched from their local banknotes and coins to the euro in 2002.
There are several reasons behind renaming the currency (removing zeros), and they can be summarized as (controlling inflation, facilitating trade and the economy, political factors such as a change in government, for example, in addition to technical considerations such as updating financial systems, which are usually part of a larger project to update the country’s financial systems, such as converting to new digital systems for dealing with the currency).
From what has been mentioned, we find that (deleting zeros) is not carried out randomly, but rather is implemented after a comprehensive study of the economy and the challenges it faces, and it must be accompanied by other economic and financial measures to protect the economy from financial fluctuations. Therefore, renaming the currency is a complex decision that requires a comprehensive study of the economy and politics in the country, and it must be implemented while minimizing the potential negative effects on the economy and citizens. link
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Tishwash: Three Obstacles to Iraq’s Accession to BRICS
Professor of International Economics, Nawar Al-Saadi, revealed today, Tuesday (October 22, 2024), the reasons for Iraq not joining the BRICS group.
Al-Saadi told Baghdad Today, “Iraq has not joined the BRICS group yet for several reasons related to the current economic and political situation, in addition to the fact that Iraq does not meet the conditions for joining, the most prominent of which is that it be among the major economies in the region.
However, Iraq’s economy is primarily rentier and depends solely on oil exports as a primary source of income, which makes its economy less diversified compared to the group’s founding countries such as China and India.”
He added: “The second important question is that Iraq should have absolute financial sovereignty over its economy, and not as it is now, where it is subject to the rules and conditions of the US Federal Reserve in granting financial shares .”
“Iraq’s trade relations with some BRICS members, such as Brazil and South Africa, are not strong enough to support it in this direction. In addition, Iraqi foreign policy is still balanced between competing global powers, including the United States, which is cautiously looking at BRICS expansion and its geopolitical influence,” he said, noting that “in the future, these dynamics may change, especially if economic diversification is enhanced, internal political stability is achieved, and absolute financial sovereignty is achieved.”
He noted that “if Iraq joins, it may benefit from expanding opportunities for economic cooperation with countries such as China and Russia, including investments in infrastructure and non-oil sectors, which may help reduce dependence on oil and diversify sources of income .”
The professor of international economics concluded his statement by pointing out that “there are some potential harms to Iraq joining BRICS and entering a bloc that challenges Western hegemony, especially the United States, which may lead to diplomatic or economic tensions with the West, which negatively affects Iraq’s current trade and political relations with Western countries. Also, dealing with some of the founding countries of BRICS, such as Russia, which faces international sanctions, may put Iraq in sensitive positions on the international scene.”
BRICS is a group of nine countries: Saudi Arabia, Russia, China, South Africa, India, Brazil, the UAE, Iran and Egypt
The number of members of the bloc, which focuses on economics before politics, has increased and seeks to break Western “hegemony” over the international system, but many factors make this a long and thorny path, according to experts.
Russia, the group’s founding state and embroiled in a brutal war with Ukraine, is hosting more than 20 leaders at the annual summit, setting an ambitious agenda, most notably “dedollarization” and alternative financial mechanisms. link
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Tishwash: Report: Iraq has concluded an important agreement that consolidates its strategic role and international status
A Western website reported that Iraq has concluded an “important” agreement to enhance its position in regional trade, noting that it consolidates its strategic role as a transit center and supports the vision of expanding non-oil sectors.
The “RO” website stated in a report translated by “Mill” that “Iraq, after joining the International Road Transport Agreement, is now ready to strengthen its position in regional trade after signing an important customs agreement.”
He added, “The Republic of Iraq has achieved a major milestone by signing the guarantee agreement between the General Authority of Customs and the National Association for International Land Transport,” indicating that “this agreement paves the way for the implementation of the United Nations System for International Land Transport in Iraq.”
He stressed that “the international road transport system significantly reduces border waiting times by enabling goods to be shipped from the country of origin to the country of destination in closed loading compartments controlled by customs through a multilateral and mutually recognized system.”
He explained that “international road transport allows trucks to cross borders efficiently and safely without having to wait for hours and days on end, and provides a financial guarantee managed by the International Road Transport Union to pay customs duties and taxes.”
He pointed out that “Iraq’s accession to the International Land Transport Agreement consolidates its strategic role as a transit center and supports the country’s economic vision to expand its non-oil sectors.”
“The TIR system, globally recognised for its 75 years of high safety standards and efficiency, is rapidly expanding in the Middle East, from Oman and the UAE to Saudi Arabia and, most recently, Qatar, where TIR is already reducing border crossing times by up to 92% and costs by 50% while boosting trade in the region,” he explained. link
