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The Associated Press January 25, 2011, 4:39PM ET

Iraq central bank chief warns on Cabinet oversight

Iraq's central bank chief warned Tuesday that a high court decision to put the financial institution under the supervision of the Cabinet instead of parliament could threaten the country's assets abroad.

The comments by Sinan al-Shebibi were part of a chorus of criticism over last week's ruling that the central bank, the Independent High Electoral Commission and the anti-corruption watchdog should be linked to the Prime Minister Nouri al-Maliki's government.

Al-Maliki's office said there had been problems in the administration of the agencies, leaving them open to possible corruption, and the prime minister had asked the courts to decide who should be in charge.

"The court decided who should be responsible because this matter should not be open to interpretation," his media adviser Ali al-Moussawi said.

Critics said the decision was political and had put the nonpartisan nature of the independent bodies at risk. Al-Shebibi made the comments during a meeting with parliament speaker Osama al-Nujaifi, according to a statement posted on the legislature's official website.

Both men stressed the need to preserve the independence of the central bank -- which is responsible for implementing monetary policy and managing state reserves. They said that independence is the only guarantee Iraq's financial resources abroad won't be seized.

Iraq owes Kuwait some more than $20 billion in debt related to Saddam Hussein's 1990 invasion of the neighboring emirate, which led to the Gulf War.

The controversy also raised new concern that al-Maliki is trying to consolidate power at the expense of rival parties and factions. His main political rival, the Sunni-backed Iraqiya bloc, called it "not only a coup against the constitution, but also democracy." The parliament speaker al-Nujaifi is a member of Iraqiya.

Iraq's Supreme Judicial Council ruled on Jan. 18 that the agencies should be linked to the Cabinet because their decisions are executive in nature and the constitution doesn't specify that they be overseen by parliament.

The decision is binding and cannot be appealed, according to Judge Ghadhanfar Mahmoud, the chief prosecutor of the Supreme Judicial Council.

Baha al-Aaraji, a lawmaker loyal to anti-U.S. Shiite cleric Muqtada al-Sadr, echoed the central bank concerns that the decision would make funds abroad vulnerable and said the decision "will bring disaster to Iraq."

The spat comes just five weeks after al-Maliki formed his new Cabinet. He brought Iraqiya and other rival factions into an uneasy coalition following months of bitter negotiations in the wake of an inconclusive March 7 election.

Al-Maliki has been accused of having authoritarian tendencies and was widely criticized last year when he successfully obtained a court ruling that the mandate to form a government goes to the largest bloc of parties -- rather than the single party that emerges with the largest number of seats in the new legislature.

Iraqiya spokeswoman said Maysoun al-Damlouji denounced the court decision as political in nature.

"We think it's against the spirit of the constitution," she said. "The federal court is putting too much power in the hands of the government and taking it away from parliament."


Associated Press writers Mazin Yahya in Baghdad contributed to this report.

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