- As U.S.-led coalition blows up $500 million in Islamic State cash
The naira took a downward swing on Thursday after federal government’s disclosure that there was “no yuan swap” deal signed by Nigeria and China.
The naira, which traded between 315 and 317 on Wednesday, sunk sharply to a position between 320 and 322 on Thursday after the disclosure at the federal executive council meeting on Wednesday.
Earlier, Nigeria was reported to have agreed a yuan-swap deal with China, although it has not been finalised. Godwin Emefiele, governor of the central bank of Nigeria (CBN), had spoken about the deal, adding that it would be concluded by the People’s Bank of China, with the Industrial and Commercial Bank of China (ICBC), the world’s biggest lender, as CBN’s representative.
He said the deal will take pressure off the dollar in Nigeria and help conserve Nigeria’s foreign reserves. However, Geoffrey Onyeama, minister for foreign affairs, said the deal was not a currency swap, but a deal for the flow of the yuan into Nigeria, adding that the dollar is still in use for international trade.
“It’s not really a swap. What it takes is that as the Chinese economy goes strong, there is some pressure on them from the trading partners, international financial institutions. They agreed that the money should be internationalised,” he said while briefing the press after FEC meeting on Wednesday. “They started that for a while. They were protecting it also. They did not allow it to be fully exchangeable. But now, their economy is fully strong, they are looking for a way to internationalise the currency.
“They were saying essentially that they wanted to segment it. For Southern Africa, South Africa is going to be the sort of a hub for the currency. So, they are going to be the focal point for the Chinese to make that available for trade in that area. “In West Africa, they are looking for a hub. Ghana is interested in being the hub for the currency, to circulate it for those who want to use it. It is not compulsory. But Nigeria is a bigger country with bigger economy. So that does make sense, they became a kind of attracted to Nigeria to be the hub.” He said the currency gives Nigeria flexibility in buying Chinese goods with yuan rather than dollars, corroborating Emefiele’s stance.
“We still use the dollar. But if it not enough and there are some people who want to invest in the country, instead of crying that they cannot take dollar out, there might be yuan that they would be happy to take out because it is now internationalized as a currency and they can use it. So, it gives us a much larger option.
“As you know, a lot of importers now are complaining that they are not able to access the dollars to buy good and things like that. So, if we have in addition to dollar, we have yuan, then they can also have that available.” The deal has not been totally consummated by all parties involved, but the prospects are bright for Nigeria as remnibi hub in West Africa.
In the meantime, the U.S.-led coalition air campaign has incinerated about $500 million of the Islamic State’s cash stockpiles and cut its oil revenues by an estimated 50%, according to a senior defense official.
The Islamic State has been forced to ration fuel in some areas and cut pay by half to its fighters and government officials in regions it controls, according to the official, who asked not to be named in order to discuss intelligence issues.
U.S. officials have said the air campaign combined with local ground forces in Iraq and Syria have dealt the Islamic State setbacks in recent months, saying the terror group has lost 40% of the territory it once controlled in Iraq. “We’ve got the momentum,” Defense Secretary Ashton Carter said last week.
The statistics for the first time quantify the impact the air campaign and U.S.-backed local ground forces have had on the Islamic State’s finances and its military capabilities.
Two years after the Islamic State swept into Iraq, capturing large swaths of territory and defeating a large portion of the Iraqi army, the terror group remains badly weakened and on the defensive.
At its peak, it moved forces and equipment boldly around the battlefield and established its often brutal rule over towns and cities. The group posted videos of its fighters killing captured Iraqi soldiers. Foreign fighters flocked to the group in Iraq and Syria, where it pledged to set up a caliphate and appeared unbeatable.
Today, the group has to move around Iraq and Syria in small teams to avoid airstrikes and is increasingly shifting to guerrilla tactics.
The Islamic State, which is also called ISIS or ISIL, is struggling to replace its fighters who are now being killed at a rate of 1,500 to 2,000 a month, the official said. Only enough foreign fighters enter Iraq and Syria to replace about 25% of those who are being killed every week.
That has forced the Islamic State to replace fighters by conscripting men in areas they control. As their territory shrinks they have been turning to younger and less experienced fighters and have also had to press some government officials into military service, the official said.
Alarmed by the losses, Islamic State’s leaders in Raqqa met and decided to overhaul much of their military hierarchy, firing some combat leaders and executing others, the official said. Some of those who were executed were combat leaders in eastern Syria, where the Islamic State has suffered recent defeats at the hands of U.S.-backed opposition forces.
The official cautioned that the Islamic State is not defeated and remains a potent threat in the region that is also capable of striking in Europe and elsewhere. The Islamic State still controls Raqqa, a city that serves as its de facto capital in Syria, andMosul, Iraq’s second largest city. They have dedicated fighters, many of whom would fight without a paycheck.
Analysts agree. “ISIS is getting weaker, but that doesn’t mean their demise is around the corner,” said Stephen Biddle, a professor at George Washington University and an analyst at the Council on Foreign Relations.
The official and analysts said the group has been forced to make some tough decisions about what terrain is worth defending, since it is spread too thin to protect everything it once controlled. “It looks like a strategic choice to marshal resources in areas that have more economic importance,” Biddle said.
Last year, Iraqi forces backed by U.S. airstrikes took Ramadi from Islamic State militants, in a major defeat for the militant group. The militants held the city as long as they could and then withdrew when they realized they were doomed.
Iraq’s forces have continued to drive militants out of the Euphrates River Valley westof Ramadi, most recently recapturing the town of Hit.
“Hit was a linchpin for ISIL,” Army Col. Steve Warren, a spokesman in Baghdad, said. “Clearing Hit hampers their ability to move foreign fighters and supplies into the Euphrates River Valley, and sets the stage for future offensive operations.”
Iraq’s U.S.-backed forces face a more formidable challenge in Mosul. They will likely experience a militant force of about 6,000 fighters, 10 times the size of the militant force in Ramadi. Any final assault in the city is likely months away, though initial operations to isolate the city have already begun.
Unlike al-Qaeda and other terrorist groups, the Islamic State has seized and attempted to govern territory and manage resources. This gave the group a propaganda advantage, because it claimed to be restoring an Islamic caliphate, but it also provided the coalition with more opportunities to attack them.
Last year the U.S.-led coalition expanded its air campaign to target the group’s revenue sources. The terror group was hauling in about $80 to $90 million a month last fall, the official said. About 50% of it came from oil revenue.
By targeting the Islamic State’s oil infrastructure, the coalition estimates it has reduced production by 30% and the group’s oil revenue by 50%, since most of what it is selling now is inferior quality, the official said.
It has also targeted the group’s large stores of cash, which is mostly in U.S. dollars. The coalition has targeted cash warehouses and distribution sights about 15 times in recent months. Intelligence estimates range from $200 million to $1.3 billion, the official said. He said the most plausible estimate is $500 million.
The Cable with additional report from USA Today