MENASource|News, Analysis, Perspectives

October 23, 2015
The Islamic State (ISIS or ISIL) is raking in up to $50 million a month from selling crude oil from fields under its control in Iraq and Syria, according to Iraqi intelligence and US officials. Washington spoke to regional governments, including Turkey, about its concerns over importing energy infrastructure into ISIS-run territory in Syria, including equipment for extraction, refinement, transport, and energy production, a senior US official said. The official called ISIS's management of its oil fields “increasingly sophisticated.” It sells the crude oil to smugglers for discounted prices, sometimes as low as $10 a barrel, who then sell to middlemen in Turkey, Iraqi intelligence officials said. ISIS is believed to be extracting about 30,000 barrels per day (bpd) from Syria and between 10,000 and 20,000 bpd from Iraq. In total, Iraqi officials believe the group makes $40 to $50 million a month from sales. A report by ISIS’s Diwan al-Rakaaez (the group’s version of a finance ministry) shows that revenues from oil sales from Syria alone last April totaled $46.7 million. The report put the number of oil wells under ISIS control in Syria at 253 and said that 161 of them were operational. Turkish and Kurdish maintenance crews travel overland into ISIS held territory under heavy security to work on the wells and the refineries, according to the Iraqi officials. They also said that ISIS employs senior officials from Iraq's state-owned, northern-based oil companies. [AP, IBT, 10/23/2015]

Can Egypt's new central bank chief calm currency crisis?
New leadership at the top of Egypt’s Central Bank (CBE) has raised hopes of impending change to a monetary policy that has failed to stabilize the pound, angered importers, and become personally associated with current CBE governor Hisham Ramez. Tarek Amer, who begins his four-year term on November 27, is seen as a dynamic and collaborative manager credited with transforming the fortunes of Egypt's largest bank. Bankers and importers say Amer’s arrival gives the CBE an opportunity to reverse some existing policies without losing credibility. However, Amer has difficult choices to make. While the CBE faces pressure to devalue the pound, many oppose such a move, fearing it appeases business but stokes inflation in an import-reliant country. When President Abdel Fattah al-Sisi named Amer to take over the CBE, he stressed the need to prioritize vulnerable Egyptians by controlling inflation and ensuring their access to food, medicine, and fuel. Calls by some businessmen to link the pound to a trade-weighted basket of currencies or to float the currency altogether carry considerable risks. On Thursday, the CBE fixed the price of the dollar against the pound in the first tender being offered to sell dollars to banks since Ramez’s resignation. [Reuters, 10/23/2015]

World Bank, AfDB reaffirm commitment to boost Egypt's economy
A World Bank and African Development Bank (AfDB) delegation met on Thursday with Egyptian Prime Minister Sherif Ismail to reaffirm commitment to assisting the country's economy. Representatives from several of Egypt's ministries also attended the meeting. Ismail stressed the Egyptian government's determination to cooperate with international financial institutions in order to revive Egypt’s economy and improve the investment climate, Cabinet Spokesman Hossam Qaweesh said in a statement. Last week, Egypt started negotiations over a $3 billion loan from the World Bank, in addition to $1.5 billion from the AfDB to support development programs in the state budget. The government is negotiating the exact value of the loans. [Amwal Al Ghad, 10/22/2015]

Turkey rout ends as traders get over fear of political uncertainty
Turkey’s economic rebound may signal growing optimism that the country’s political parties will scrape together a coalition should the November 1 snap election fail to produce a clear winner. Since elections in June, the lira weakened to a record low, bond yields soared to the highest in six years, and five-year credit default swaps jumped 50 percent. However, the country’s two-year bonds have performed better than any others in emerging markets since the start of this month, while the cost of insuring against a debt default has fallen significantly. In theory, Turkey could be forced back to the ballot box for the third time in a year if the election results are inconclusive, although investors say the possibility is remote. “We assume that pragmatism will prevail,” one analyst said. “Holding third elections within less than a year would cause even more damage to an already fragile economy and would send the lira to a new all-time low.” [Bloomberg, 10/22/2015]

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