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Iraqi Dinar Buzz Updates

Enorrste take as of 7/28/10: The GET Team
2010-07-29 12:14:50

As we approach another week having passed with no completion of the forming of the government, we see our frustration levels rise another notch. This is certainly understandable given the strange and unprecedented tactics used by the Iraqi leadership.

Did I say unprecedented? Actually that is not quite accurate. In 2006 this same scenario was played out and it took 210 days to form the government that Maliki led for the last 4 years.

Given that record, we should not be surprised to see this run all the way into September before the Government is formed. This is a very sad prospect indeed, but it is one that should be considered, and especially so since they did it this way before.

However, due to the Vortex of forces that have come to Iraq and centered around the reinstatement of the IQD to its former level of $3.22 from the early 1980s, I feel fairly confident that the process will be resolved before that time. Let me try to explain my thinking on this matter for you all.

We will start essentially where Willie left off on our last call on Sunday evening. In that call Willie brought us all up to date from the prior week’s events. Unfortunately we have not seen anything resolved since that time. However, there has been some minor movement as well as some continued arm twisting.

First, we are now seeing that the support for Maliki is falling by the wayside day by day. The Saudi Arabian government actually had the audacity to invite Iraqi leaders to their country. However, the invitation specifically EXCLUDED Maliki. It is hard to imagine more direct shunning of a world leader, and especially so in the Middle East!

Added to that we have the clear statement from the INA, the Iraqi National Alliance, that they categorically reject Maliki for a second term. What is amazing about this statement is the fact that the INA is still merged with Maliki’s State of Law coalition in the super coalition called the National Alliance.

Therefore, the National Alliance is showing serious signs of stress and will almost assuredly break prior to the full meeting of parliament. In fact it was stated by Member of Parliament Hasan al-Shimmery that, and I quote, “The INA will go to parliament as INA rather than as part of the NC.”

This means that the National Alliance, which was formed after the election to become the largest political block, will once again revert to the INA and the State of Law, two separate coalitions.

It will also allow the INA to align itself formally with Allawi’s Iraqiya List.

There is a potential problem with this realignment as well, unfortunately. The fact is that the INA is fully Shiite and believes that the government should be largely Shiite in its new configuration. In saying this they are indicating that they don’t mind an alliance with Iraqiya and Kurds, which I have predicted here before many weeks ago, but that they don’t want Allawi as the Prime Minister. Instead, they are offering a “compromise” candidate for the PM slot, most notably the leader of the National Coalition and a former oil minister Ibrahim Bahr al-Ulum, or the leader of the National Congress, Ahmed Chalabi.

In short, the INA has made it clear that Maliki is not being considered for a second term as Prime Minister.

So what will they do with Maliki? There are discussions among members of parliament that have been posted in the news that indicate that he may be offered the position of President of the Republic, which Talabani currently holds, or President of Parliament, which is now up for grabs. Of course this is by no means Maliki’s first choice, but under the circumstances beggars can’t be choosers.

Since we have seen that there is a general consensus already developed to keep Talabani as President of the Republic, this having been announced just a day or so ago, it appears that the only position left for Maliki, other than behind bars, will be the presidency of the Parliament.

This leaves us with the following possible solution to the government problem: Talabani would be president of the republic, Maliki president of the parliament, and either Allawi or one of the two other Shiite candidates as Prime Minister.

This brings us to the question as to whether Allawi will be able to convince the INA to accept his rightful position as the prime minister.

What we are seeing here is more than just a sectarian arguing among brothers, as I alluded in my last talk. It has become more complicated, in my opinion, than that. Clearly the sibling rivalry that I alluded to exists. But it is compounded by deep seeded feelings over the personalities involved as well as distrust of the players themselves.

It is not yet clear whether Allawi will be able to convince the INA to recognize his rightful position as PM. Furthermore, it is highly unlikely, as I see it, that Allawi will step aside in favor of one of the compromise candidates.

This brings us to the place we are today. The players remain at an impasse with no one stepping forward to offer a realistic compromise.

However, the UNSC has made its point clear that time is running out for Iraq. The UNSC will meet on August 4 to determine the fate of the removal of Iraq from Chapter 7. I believe that their intention is to remove Iraq from Chapter 7, but I also believe that they will do this ONLY if the leadership of the new government is announced beforehand.

If that announcement is NOT made by August 4, I expect the UNSC to extend the sanctions of Chapter 7 indefinitely. In doing so the UN will retain effective control over the country and will be able to install an interim government of their own choosing.

It is not entirely sure whether they can do this legally, though, since the UNSC has issued several documents stating how happy they are that Iraq is now a “sovereign nation”. Having said this they are possibly reneging on their own prior statements. It is not clear to me that they will be able to do this without some serious kickbacks from the people of Iraq.

This brings me to Breitling’s position. He left Medic’s site recently for professional business reasons and is now going to be posting on Dinar Daddy Tidbits only. He is a very intelligent analyst and has some high level contacts in the Middle East.

It is his position, based on these contacts, that the RV/RI will not occur until October 17. He is not adamant on this date but says that his contacts are. He has posted this himself, incidentally, so I am not revealing anything that I shouldn’t.

I bring this up because I don’t accept the logic, even though it has been presented quite well by Breitling. Along with a few of my friends we are of the belief that the situation in Iraq is so serious that an extension that far into the future will not be possible.

As I have stated two calls ago, there is a Vortex that has been formed with Iraq in its center. I identified 8 reasons why this vortex is so potentially explosive. I also identified 6 reasons why the RV/RI would have to occur quickly to avoid even more serious problems, not just for Iraq, but for the world economy as well.

I will not repeat that speech. It is available on the forum for you all to review. After having done so, if you agree with me, then you will see that timing is now becoming critical.

Therefore, in conclusion, I expect to see a resolution come from within Iraq before the August 4 deadline. I believe it will have Allawi as the prime minister and the other presidencies as I’ve outlined above. I believe it will come at the very last possible moment, but that it will happen. will create an interim government for a 2 year period. It is not important for our investment who the players will be in this government, but I suspect Allawi will still be on top. It will involve members from all four of the largest coalitions.

More to the point for our purposes, however, whether Allawi pulls it together in time or whether the UNSC forms an interim government, I believe that the RV/RI will follow almost immediately after the government announcement. In any case, I do not see this moving into Ramadan, which begins August 11.

Of course I could be wrong!