Shortly after the announcement of the transfer of power to the new Iraqi government, France announced It would normalize business relationship with Iraq.
Complete economic ties with the new government will be restored immediately following the exchange of power.
The new directive, which cancels the 1990 degree suspending all trade with Iraq, will take effect immediately and will restore transactions between France and Iraq without the required French government approval.
Oil prices fell as traders speculated that the transfer of power will reduce the orchestrated attacks on Iraq’s oil production industry.
The decline in oil prices signals a hopeful sign that the world oil supplies may be increased due to the future increase in oil production in Iraq.
Although unlikely to dissipate the insurgants, the transfer of power to the Iraqi people may reduce the willingness of some of the population in Iraq to support the opposition groups.
“Have confidence and faith and you will succeed,” Blair said in an interview on Iraqiya television on Tuesday, a day after the transfer of power to the interim government of Iraq.
Blair insisted that the coalition had transferred complete sovereignty to new interim Iraqi government. NATO has pledged to assist Iraq in training its security forces, both inside and outside or Iraq. “The best guarantee of security for Iraq is Iraqi forces and we can help in that.”
“Of course I would like visit Iraq and I would like the people in Iraq to know that they have got a friend in my country,” he said, although he did not know when such a visit might take place.
The U.S.-led coalition transferred sovereignty to an interim Iraqi government on Monday, accelerating the move in an attempt to prevent sabotage by insurgents who oppose the rule of the new Iraqi government.
The new interim government was sworn in six hours after the handover ceremony.
With their right hand on the Quran, members of interim Prime Minister Iyad Allawi’s Cabinet vowed to execute their new duties with sincerity and impartiality. A bank of Iraqi flags lined the podium behind them.
“Before us is a challenge and a burden and we ask God almighty to give us the patience and guide us to take this country whose people deserves all goodness,” said President Ghazi al-Yawer. “May God protect Iraq and its citizens.”
Sovereignty documents were transferred earlier by outgoing U.S. administrator L. Paul Bremer to Allawi in a ceremony attended by about a half dozen Iraqi and coalition officials in the heavily guarded Green Zone. “This is a historical day,” Allawi said. “We feel we are capable of controlling the security situation.”
Bremer leaves Iraq
Bremer left Iraq two hours after the ceremony. Bremer was accompanied by coalition spokesman Dan Senor and members of his staff. The interim government will have full sovereignty, yet it will operate under major restrictions, some imposed at the behest of the influential Shiite clergy, which whis to limit the powers this administration.
The Iraqis can in principle ask the foreign troops to leave — although it is unlikely this will happen.
The United States and its coalition partners are hoping that the transfer of power will serve as a boost for Iraqis, who have resisted foreign military occupation. Now that the country has returned to Iraqi control, U.S. officials hope Iraqis will quell the insurgency and work to restore internal stability.
In March, the Coalition Provisional Authority published the Central Bank of Iraq Law, which is far more than a law — it’s a primer on central banking.
Subject to those objectives, the CBI shall also promote sustainable growth, employment, and prosperity in Iraq.
The new law provides for an independent central bank whose objectives are to achieve and maintain domestic price stability, foster and maintain a market-based financial system and promote sustainable growth, employment and prosperity.
The CBI is required to maintain its independence from the Government of Iraq and, except for the provisions set out in the law, will not take instructions from any other persons or entity, including government entities.
The new CBI law has been reviewed by the Iraqi Governing Council, acting on the recommendation of its Economic and Finance Committee.
The law has also been reviewed by the International Monetary Fund and calls upon the CPA to promote economic reconstruction and the conditions for sustainable development in Iraq.
“Since the new, post-Saddam Iraqi Dinar is a public currency that is backed up by the government of Iraq, it is valid as currency throughout the world.”
“There are no prohibitions against purchasing this currency or against reselling it, so long as you are in accord with the local laws wherever you may be.” Quoted in a memorandam by Mr. Pearse Marschner, Coordinator, Regional Arabic Media for the Coalition Provisional Authority.
On March 10, the Pentagon awarded the first contracts in its $18.6 billion, U.S.-funded reconstruction program, which officials say should create hundreds of thousands of jobs for locals. The spending will fix sewage treatment plants, bridges and all manner of broken infrastructure.
“We’re seeing a big increase in consumer goods flowing into the country,” said Maria Khoury, chief of research for Atlas Investment Group, a Jordanian investment bank.
Iraqi living standards are higher than at any time since the 1990 Gulf War. Oil revenues, which fund the government and its social safety net, are near prewar levels. The World Bank estimates that the economy will grow by 30 percent this year, after shrinking last year.
Underemployment is chronic. Iraq may have the world's best-educated taxi drivers and waiters.
The coalition authority can boast of notable successes that U.S. officials argue have laid the groundwork for Iraq’s prosperity.
The most important one may have been the changeover last September to new paper money, minus Saddam’s portrait. While many postwar countries suffer from hyperinflation and currency devaluation, the Iraqi dinar has gained value against the dollar since last fall.
“Iraqis would not be placing their savings in this currency and buying more of it if they didn’t believe in its future,” said Olin Wethington, a top coalition economic adviser.
The Coalition Provisional Authority and the Governing Council also passed a new investment law allowing 100 percent foreign ownership in most sectors.
Last month, three foreign banks were granted licenses to open branches. Coalition officials also have helped write a commercial banking law and a central banking law, and have begun work on reopening the Baghdad Stock Exchange.
Mitsubishi Motors announced in January that it would open a Baghdad dealership within two years and has already selected a site.
In January, Pepsi announced a deal with that company to rebuild the factory and begin selling Pepsi by June. The plant will employ up to 2,000 workers.
The Sultan Center, which operates some of Kuwait City’s biggest malls, has put forward a proposals to Iraq’s trade ministry for plans for a hotel and shopping complex, in Baghdad’s al Monsour neighborhood.
“We think this can be open in two years,” said Muthunna Darwish, the Sultan Center’s Iraqi-born company representative. “We see huge potential here.”
The Bush administration, trying to attract companies into Iraq in order to rebuild the economy, said the country offers numerous investment opportunities even in the face of continuing security risks.
“We are getting lots of good feedback from companies from around the world that are going in there and beginning to set up businesses,” Commerce Secretary Don Evans said in an interview with The Associated Press. “There are small pockets where terrorists attack and that is what you see on television and the news, but you have to step back and realize that 95 percent of the country is a secure environment,” Evans said in the interview.
He said that despite the security threats, many companies from the United States and other nations were eager to set up operations in Iraq. “Business conditions are improving every day in Iraq, creating a greater opportunity for U.S. businesses to explore virtually an untapped market,” said Evans.
The Commerce Department held a “Doing Business in Iraq” conference with over five hundred companies participating, including a number of Fortune 500 enterprises, have participated to learn more about how to set up operations in Iraq.
Among the companies were the Boeing Co., Caterpillar Inc., DaimlerChrysler, Microsoft, IBM, Motorola, Nortel Networks, Procter & Gamble Co. and engineering giants Bechtel and Fluor.
Evans said Iraq was doing its best to offer a friendly climate for foreign investment by allowing 100 percent foreign ownership of a business in Iraq, offering low corporate taxes and promising a well-educated work force. The secretary said multinational companies he has spoken to “tell me that their Iraqi workers are among the very best they have in the world.”
Evans, who made an official tour of Iraq last October, said he was impressed with the free-market spirit already in evidence. He said many business executives had told him the same thing. “There are literally thousands of companies that have gone in there and have started to look and establish the relationships they need” to set up operations, Evans said.
