EconSource: ISIS Making Millions Through Foreign Exchange
The Islamic State (ISIS or ISIL) is exploiting national banking operations in Iraq and could be making up to $25 million a month in Middle Eastern money markets, experts told a UK parliamentary subcommittee in February.

In notes published on Wednesday, Chatham House Associate Fellow David Butter told the committee, “The Iraqi central bank foreign currency auction systems are an area that needs to be investigated very strongly” as ISIS is using those systems to earn money on the foreign currency markets. Butter said Iraqi dinar funds taken from civil servant’s pensions and banks in Mosul were being siphoned off through Jordanian banks and then back into Iraq through Ramadi and “back into the Baghdad system.” He said that when the Iraqi government holds foreign currency auctions, ISIS money is inserted into that system, which allows the group to make a margin on the differences between different exchange rates. Other experts dismissed notions that ISIS’s main source of revenue is still oil, saying that the media had distorted the amount of money the group makes from its oil operations. [CNBC, The Telegraph, 3/2/2016]
Saudi Arabia has asked banks to discuss providing it with a major international loan of around $10 billion in the first significant foreign borrowing by the government for over a decade, sources said Wednesday. The invitation reflects growing pressure on Saudi state finances as it faces a slump in global oil prices. Riyadh ran a record budget deficit of nearly $100 billion last year. The government is being forced to turn to overseas capital markets to finance part of its deficit. Its domestic borrowing has started to strain liquidity in the local banking system, pushing up market interest rates. Bankers believe many institutions will be willing to lend to Saudi Arabia, given its low debt and massive oil reserves. The sources said banks participating in the loan will have a better chance of being chosen to arrange an international bond issue that Saudi Arabia may conduct as soon as this year. [Reuters, 3/2/2016]
Egypt’s Ministry of Civil Aviation said Thursday it had reached an agreement with the Central Bank of Egypt (CBE) over payments to foreign airlines. Several airlines have complained in recent weeks of being unable to repatriate earnings due to foreign currency restrictions. Airlines will be paid what they are owed in foreign currency through payment programs over “the coming period,” the ministry said in a statement. The airlines affected include British Airways, Air France-KLM, and Saudi Arabian Airlines. The CBE agreed to transfer 50 percent of what British Airways is owed and pay the rest in installments, advisor to the Tourism Ministry Gehad al-Ghazali said. Egypt also agreed to transfer EGP 30 million ($3.83 million) to Air France-KLM, out of a total EGP 120 million owed. Ghazali said negotiations are ongoing regarding the EGP 100 million owed to the Saudi airline. On Wednesday, a CBE source said Egypt had addressed the concerns of the airlines. Meanwhile, the Egyptian pound held steady against the dollar on Thursday but weakened significantly on the black market, with traders quoting 9.50 pounds to the dollar. Despite ongoing speculation that the CBE will devalue the pound, former Pacific Investment Management CEO Mohamed El-Erian told reporters Thursday that Egyptian officials should focus less on the valuation of the currency and more on reform and growth measures. [Reuters, 3/3/2016]
German tourists’ bookings for summer holidays in Egypt, Tunisia, and Turkey have dropped around 40 percent compared to a year ago, German travel association DRV said Thursday. DRV President Norbert Fiebig said that bookings for these destinations had significantly improved over the past two weeks and he expected a rally over the coming weeks. “Our goal is that bookings overall won’t be significantly below the 2015 level. But that is nearly entirely dependent on how these three volume markets develop, especially Turkey and Egypt,” he said. [Reuters, 3/3/2016]
Algeria plans to issue local debt as a source of financing to offset the collapse in global oil prices, Prime Minister Abdelmalek Sellal said. Algeria, which relies on oil and gas for 60 percent of its budget, has already started to cut back on public spending, infrastructure projects, and some state-subsidized energy services. Last month, the government sought Chinese financing for some projects, its first foreign funding in a decade. Sellal told reporters that the government has no plans to issue foreign-currency bonds, but will issue local-currency debt in April with an interest rate of 5 percent. He did not provide details of the size of the issue or its maturity. It was not clear if it would be open only to local Algerian businesses and banks. [Reuters, 3/3/2016]
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