N. Z. MOSAKI

Candidate of Historical Sciences

Federal Tax Service

Keywords: Iraqi Kurdistan, Turkey, Iran, banks, insurance companies, stock exchange, audit, middle class

In Iraqi (Southern) Kurdistan (IR), until 1992, i.e., until the period when the so-called "security zone" was created on its territory, which marked the beginning of "Free Kurdistan"¹, all financial and credit institutions were branches of Iraqi banks, whose activities were mainly concentrated outside the borders of the country. Kurdistan Region.

Iraqi Kurdistan has traditionally been characterized by a lower level of infrastructure development, especially financial and credit, than in the rest of the country. This was due to the de facto colonial position of Kurdistan.

Baghdad viewed the region primarily as a raw material appendage of the Iraqi economy. Therefore, financial and credit institutions have not received almost any development here, and the presence of a small number of them in the region was only due to the maintenance of some local projects.

The branches of banks and the National Insurance Company of Iraq in the largest cities of Iraq - Erbil, Sulaymaniyah and Dohuk-that were operating during the control of the territory of Iraq by the Iraqi authorities, i.e. actually before 1991, were closed on November 28, 1991 during the withdrawal of all state institutions from Kurdistan by the decision of Saddam Hussein. Thus, by the end of 1991, Iraqi Kurdistan was left without any financial and credit structures at all.

THE EMERGENCE OF THE BANKING SYSTEM (1992-2003)

A few years after the creation of the "Free Kurdistan", in the second half of the 1990s, the beginnings of a banking system began to emerge here. This process began after 1996, when the fratricidal war between the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK)continued in 1994-1996.² Two Kurdistan Regional Governments (Per IR) were established with centers in the cities of Erbil and Sulaymaniyah, respectively.

South Kurdistan was effectively cut off from the Iraqi financial and credit system. However, the leaders of Southern Kurdistan were aware of the need to develop their own banking system. But international illegitimacy (in terms of the possibility of participation in international financial transactions), along with the blockade by the Iraqi authorities, has not allowed this process to develop in any way.

In fact, in the 1990s, only money changers ' offices operated in Kurdistan. There were no financial and credit institutions that could accumulate money and help to mobilize savings. All this limited the possibilities of developing credit. People applied for a loan either to relatives or to loan sharks.

In 2001, the PKK in Erbil established the "Central Bank (CB) of the Region" [Kurdistan Region]. However, this bank, despite its name, did not carry out and still does not carry out any operations that are inherent in central banks (this has always been the prerogative of the Central Bank of Iraq), but only serves the operations of the budget departments of Kurdistan. The same" Central Bank of the Region " is available in Sulaymaniyah. Formally, they are considered to be departments of the Central Bank of Iraq (along with those in Basra and Mosul), but they do not actually report to it.

The first full-fledged IC bank was Emerald Bank, which opened in July 2001 in Dohuk. The Bank provided various services, including money transfers, through intermediaries in Turkey. Since September 2003, the head office of Emerald Bank has moved to Erbil, and the bank has significantly expanded the scope of its activities. It soon became the first bank in Kurdistan to provide consumers with debit card and ATM services.

AFTER THE OVERTHROW OF SADDAM HUSSEIN

In fact, the development of the Kurdistan banking system as an integral part of the banking system of Iraq began after the overthrow of Saddam Hussein in 2003 and the beginning of the return of Kurdistan to the legal space of the Iraqi state (although with the fixing of the status of Kurdistan as a separate region). It should be noted, however, that immediately after the occupation of Iraq by the United States in 2003, the banking system in both Iraq and Kurdistan effectively ceased to exist, and all payments were made only in cash.

June 23, 2004, a few days before

Table*

Banks and branches/branches of banks in the Kurdistan Region of Iraq

* Compiled by the author.

Days before the handover of power to the Iraqi government (June 28), $1.4 billion in cash was flown by the Americans from Baghdad to Kurdistan by helicopter, according to an agreement between the Interim Coalition Administration and the Iraqi Kurds, and flown from Erbil by car to various parts of Kurdistan to provide financial support to the Kurds. RegPC in Erbil received, in particular, $798 million, RegPC in Sulaymaniyah - $602 million ³. These funds were part of the Kurdish authorities ' share of the oil-for-food program. It is still a mystery how the funds brought to Kurdistan were spent. Money from Baghdad to Kurdistan was subsequently regularly transported by the Americans in various ways,including by road.

The impetus for the creation of normal banks was the acquisition of "Iraqi legitimacy" by the Kurds, i.e. Kurdistan banks, becoming Iraqi in 2003, were able to open correspondent accounts outside of Kurdistan and even Iraq, fully integrating into financial and credit systems of various levels. In addition, a significant increase in the Kurdistan Region's budget (almost entirely due to transfers from the Iraqi budget) and an increase in the standard of living of the population in this region played an important role in the development of banks.

Kurdistan's banking sector, although slow, has developed. 11 After 2003, several banks were established in Iraq and branches and branches of Iraqi and foreign banks were opened (see Table).

Jihan Bank started operating in Erbil in 2009 and soon opened branches in Baghdad, Sulaymaniyah, Zaho, Kirkuk, Mosul, Basra and Nejef. It is part of the Jihan Group holding and operates on the basis of Sharia principles, i.e. it does not pay interest on deposits and does not receive interest on loans, but carries out these operations under the guise of transactions in which its share of profit is fixed. Erbil Bank is headquartered in Erbil and has branches in Sulaymaniyah and Baghdad.

Kurdistan International Bank for Investment and Development (KIB)*is the largest investment bank in the country. It has been operating since 2005 and also operates on the basis of Sharia principles. Among its shareholders, in addition to individuals , are the largest Iraqi banks: Rashid Bank, Middle Eastern Bank for Investment and Development, Gulf Commercial Bank, Iraqi Investment Bank, and Iraqi Islamic Bank for Investment and Development.

KIB has more than 15 branches and branches in various cities of Iraq and in Baghdad. In the near future, it is planned to open several dozen branches of the bank in other cities of Kurdistan. By the beginning of 2013, its paid-up capital was $250 million. The bank employed: in 2006 - 168 employees, in 2008 - 325, in 2012 - about 500**.

* It is noteworthy that the bank's 2008 report shows a map of Greater Kurdistan, including all four parts, with the inscription "Kurdistan".

** Information received by the author from the bank's management.

For the most productive period of its work - from 2006 to 2008. - net profit increased more than 20 times: from $ 0.6 billion to $ 13.3 billion. USD 0.5-USD 12 million, which in 2011 exceeded USD 24 million.⁴ In 2007 KIB has established 5 companies (including construction, brokerage and insurance) with a total capital of 6 billion dinars (almost $5 million).

Iraqi banks are also opening branches in Kurdistan. Back in 2005, North Bank for Finance and Investment opened its branch in Sulaymaniyah, which became the first branch of this capital bank. Its offices in Erbil and Dohuk were opened in 2006 and 2008, respectively. In early 2006, the Commercial Bank of Iraq, which operates in Baghdad, established its branch in Erbil. Established in 1999 and considered the first commercial bank in Iraq, Uarka Bank has 9 branches in all provinces of Kurdistan.

One of the largest Iraqi banks, Rashid Bank (started operating in 1988), also operates in Iraq. In February 2007, Ashur International Bank for Investment (established in 2005) opened its branch in Sulaymaniyah, and later in Erbil. It is noteworthy that although Ashur Bank is located in Baghdad, it carries out the largest projects in the Kurdistan region.

An Iraqi Investment Bank also opened a branch in Sulaymaniyah in late 2008. There are branches of the Commercial Bank of Iraq (TBI) in Erbil and Sulaymaniyah. A branch of Dar Es Salaam Investment Bank, a Baghdad-based bank owned by HSBC in London, also operates in the Kurdistan region's capital.

Although the increase in the money supply in the Kurdistan region has caused some growth in banking transactions, this process has not yet become widespread. The financial situation is characterized by a predominance of cash turnover, which is due to a number of reasons, including the fact that Kurds are not used to using banking services. Even when purchasing real estate, payment is made with a large amount of cash. The system of bank cards is almost undeveloped; only a few large shopping centers accept them to pay for purchases. The country is experiencing a shortage of ATMs.

This situation is caused, firstly, by the low level of trust of the population of Kurdistan in banks. People do not trust banks, despite the deposit insurance, and prefer to keep cash. A significant part of the population is not even interested in interest rates on deposits. Only a small part of Kurdistan residents open deposits in banks. In 2010, only 20% of the adult population 'used bank accounts', although by mid-2013 this figure reached a third.

Several scandals involving the embezzlement of millions of dollars from banks, as well as rumors of problems with payments to depositors and small businesses due to the fact that high-ranking members of the NSC were withdrawing funds from banks after J. R. R. Tolkien's illness, did not help to reduce public distrust of banks in Kurdistan. Talabani*'.

Secondly, the development of banking credit institutions is hindered by the low level of development of Kurdish business. The predominant role in the economy of IC is played by foreign companies, which, of course, work with the banks of their own countries. Weak development of entrepreneurship limits the development of the credit system. Since almost the entire population of IK is state employees and recipients of benefits, it does not really need the credit and banking system at all. Banks are mainly used only by merchants and for issuing salaries to state employees, they play a minor role in the economy - the share of the banking sector in business activity in the region does not exceed 2% ⁷.

Kurdistan's private banks are mainly engaged in long-distance and international money transfers. At the same time, a significant part of transfers was made and is still being made by private individuals, who charge customers for these services up to 5% of the transferred amounts. Their monopoly was somewhat shaken by payment systems, in particular, the Western Union global system, as well as large Kurdistan banks. However, conducting money transactions through private individuals is still common due to the fact that Kurdish society is not yet used to banks.

Therefore, it is no coincidence that, despite the presence of banks in Kurdistan, the true "financial center" of Erbil (and Kurdistan as a whole) is called the millennial market near the Erbil fortress in the Sheikh Allah district. A wide variety of financial transactions are carried out there, including currency exchange and money transfer anywhere in the world.

This "center" played a particularly important role during the isolation of Kurdistan in 1991-2003.* In 2007, the daily turnover of currency exchange in the Erbil street market, where there were about 150 currency exchange bureaus, reached $4-5 million. ⁸ Now this figure exceeds $30-35 million. The same currency and exchange market is available in Sulaymaniyah, which has a daily turnover of about $10 million.

A small number of Kurdistan region banks do business "in the traditional way", i.e. they issue loans to commercial companies and implement investment projects. A multiple increase in the money supply in the IC seems to create opportunities for the growth of household savings. However, the consumer boom and inflation are hindering savings growth.

The regional authorities are trying to organize consumer and mortgage lending systems in Kurdistan. However, this is hardly possible without the development of appropriate economic foundations.

In Kurdistan, there is almost no middle class that could become the main counterparty

* A few months after the international coalition created a "security zone" in Iraqi Kurdistan, on November 28, 1991, Saddam Hussein declared an economic blockade on the region, removing all Iraqi institutions from there: lethal financial transactions were to be conducted through Iraqi banks. Thus, the institutions and the population of the IC in 1991-2000 could not use banks legally.

the banking system. Although there has been a lot of talk recently about the need to create a middle class, in reality, this is often understood in the EC as an increase in public sector incomes due to an increase in transfers from the Iraqi budget as a result of higher oil prices. Their share in the budget here is about 95%, i.e. the Kurdistan budget has virtually no revenue within the region and, accordingly, has no tax base.

The government understands the disastrous situation when almost the entire regional budget is spent on paying salaries and benefits, and budget revenues are not based on taxes due to the lack of added value. However, the RegPK is forced to pursue such a clearly populist policy, fearing a sharp surge in public discontent, which from time to time manifests itself, especially in youth and student circles.

The underdeveloped banking system in the Kurdistan Region is considered by its authorities as one of the main obstacles to the development of the economy ^of this region and attracting foreign investment. Mainly in Kurdistan, there are branches and branches of various banks that have an executive office outside of it. Their number now exceeds ¹⁵⁰ people, most of which are state - owned.

Kurdistan banks (meaning those banks whose head offices are located in Kurdistan) are only "Emerald", "Jihan Bank", "Erbil Bank" and KIB. For comparison, in 2013, there were 7 state-owned, 32 private and 15 foreign banks operating throughout Iraq. At the same time, about 90% of Iraq's banking business is carried out by the two largest state - owned banks, Rafidain and Rashid Bank11: they alone have a nationwide network of branches throughout the country.

In general, there is a shortage of banking institutions in Iraq: one institution accounts for 60 thousand people, while, for example, in Saudi Arabia - for 3.5 thousand.¹² At the same time, a shortage of banks causes a very high rate of profit. For example, in 2011, KIB's revenues exceeded its expenses by more than 2 times ¹³.

Despite the difficulties and shortcomings in their development, local banks are gradually becoming a factor in everyday economic life. At the same time, commercial banks are developing mainly, whereas previously only state-owned banks operated in Kurdistan, and in Iraq as a whole. Most banks in Kurdistan operate on the principles of Islamic banking. Very few banks operate on a non-Islamic basis.

Only a few Kurdistanis use banks to safely store their funds. However, the intra-Iraqi migration of Christians and Muslims from other parts of Iraq to Kurdistan has slightly increased the volume of deposits in Kurdistan banks.

South Kurdistan banks have begun to gradually switch to electronic transactions ¹⁴. Bank card issuance begins ¹⁵.

All banks in the IC are actually commercial banks. There are no specialized banks in the region, i.e. they specifically finance agriculture, industry, real estate operations, and the tourism industry. ¹⁶ Although there has been some progress in this direction recently. The banking sector is also becoming one of the largest recipients of investment. As of May 2013, one-sixth of all investments in the region were directed to the banking sector (about $2.3 billion).¹⁷.

FOREIGN BANKS: HOW MANY ARE THERE, WHAT DO THEY DO?

A few years after the Ba'athist regime was overthrown, from about 2005 to 2006, foreign banks began to show interest in Southern Kurdistan, as well as in Iraq as a whole. Initially, foreign investors acted cautiously, not resorting to full-scale expansion, but acquiring stakes in Iraqi banks.

Turkish and Lebanese banks have also shown interest in working in Kurdistan. In 2006, one of the largest Turkish banks, Ziraat (Agricultural Bank of the Republic of Turkey), was granted permission to work in Kurdistan, but for several years it did not open a branch here and began working only in 2009.

The first foreign bank to open a branch in Kurdistan-in Erbil-was the Lebanese IBL (Intercontinental Bank of Lebanon) in 2006.On May 16, 2007, a branch of Byblos Bank, also Lebanese, began operating in the capital of Iraqi Kurdistan. In 2009, there were already three Lebanese banks operating here - also VVAS (Bank of Beirut and Arab Countries)¹⁸. Iraqi Kurdistan has become a gateway for Lebanese banks to expand into Iraq. Due to the low level of security, Lebanese banks initially opened their branches only in Erbil, and after the relative normalization of the situation - in other major Iraqi cities. Since 2010, they have also been working in Baghdad and Basra.¹⁹

While many foreign investors did not make much of a distinction between the Arab part of the country and Iraqi Kurdistan, fearing to start operating in Iraq due to security concerns, Lebanese banks took into account the difference between the two regions.

In January 2008, the PKK issued a license to operate in Kurdistan to a Kurdish-American bank, whose main purpose was to facilitate foreign, primarily American, investments in Kurdistan. However, the bank never started working. Americans don't invest much in Kurdistan at all.

At the end of the last decade, a full-scale expansion of Turkish banks in Kurdistan began. This happened because at that time Turkish business took a leading position in the economy and K. Turkish companies account for about 70% of all foreign companies in this region. Turkey's exports to South Kurdistan amounted to

2009-2012: $6-10 billion. This is, by the way, comparable to the volume of Turkish exports to Russia ²⁰.

At the same time, the final normalization of Turkish-South Kurdish relations took place. Ankara has stopped its rhetoric of hostility towards Southern Kurdistan. Turkish leaders have visited the PKK and regularly receive its leaders in their country. In fact, the process of Iraqi Kurdistan's entry into the Turkish economic space has begun.

In addition, the rapid growth of incomes of the population of Iraq and Iraq as a whole contributed, among other things, to an increase in the volume of imports from Turkey. In the period from 2004 to 2011. Iraq's GDP per capita has grown 40-fold , from $100 to $4,000 ²¹. Per capita income in IK is slightly higher than the average Iraqi indicator - by about 20%, according to our estimate. At the same time, it is obvious that the prospects for increasing the income of Iraqis are not exhausted. In addition, there are practically no poor people in Kurdistan. As in the rest of Iraq, 23% of the population is below the poverty line, while in Kurdistan it is no more than 3% ^.22

In 2010, a branch of another Turkish state - owned bank, Vakif Bank, opened in Iraqi Kurdistan. In February 2011, the Turkish branch of Ishbank started operating in Erbil. Its head was Ozer Oto, who previously headed the branch of Ishbank in the unofficial capital of Turkish Kurdistan - Diyarbakir.²³ Thus, Ishbank became the first Turkish non-state bank to start operating in Iraqi Kurdistan.

In April 2012, a branch of the Turkish "Al-Barak", which is part of the structures of the famous Islamic figure F. Gulen, was opened in Erbil24. Notably, the Erbil branch was the first foreign branch ^of this bank25.

In November 2012, Asiya Bank opened its branch in Erbil, which also became its first branch abroad. Asiya, like Al-Baraka, operates on the principles of Islamic banking ²⁶.

Another 6 Turkish banks are planning to open branches in Kurdistan, due to the presence of a large number of Turkish companies that occupy an important place in the region's economy.²⁷

It is not difficult to predict that Turkish banks will sooner or later take a leading position in the banking industry and the rest of the world. They will be mainly engaged in servicing and financing several hundred Turkish firms operating in various segments of the South Kurdistan economy, primarily in construction and trade, and will also support exports. It can be assumed that Turkish banks will try, first of all, to get customers of South Kurdistan enterprises close to the authorities. They will undoubtedly move capital out of the Kurdistan region, attracting contributions from the oil-rich population of that region in Iraq.

In the eastern part of Iran, in the Sulaimani region, where Iran's strong economic influence has been observed since the early 1990s, Iranian banks operate.

Immediately after the overthrow of the Ba'athist regime in Iraq, they launched an active expansion in Sulaymaniyah. In March 2004, the Commercial and Export Banks of Iran opened their branches in this city, which became the first Iranian banks to start operating in Iraq. They provide services to Iraqi merchants, exchange currencies, and issue loans.²⁸

However, in general, the expansion of the Iranian banking sector has now slowed down, and now Iranian banks operate mainly only in Baghdad. But Tehran is keen to boost the activities of Iran's B and K banks. At the March 2012 meeting of the Iran-Iraq Chamber of Commerce, which was attended by representatives of most Iranian banks, the establishment of a joint Iran-Iraq bank was discussed. They also spoke about the need for more active work of Iran's banking institutions in Iraqi Kurdistan.²⁹ It should be borne in mind that Iranian banks face serious difficulties due to US sanctions against Iran. In particular, they are not connected to the international interbank information transfer and payment system SWIFF, which seriously complicates their work.

Major international banks are also showing interest in ICS. Thus, Standard Chartered Bank opened its representative office in Erbil, which is active in the markets of Africa, Asia, and the Middle East. The bank applied to open its branch in the capital of Iraqi Kurdistan, Baghdad and Basra on ³⁰ June.

It is planned to open several branches of Chinese banks in Kurdistan*, which would serve the export of goods from China and the activities of Chinese workers in Kurdistan.

GOVERNMENT PLANS: HOW WILL THE BANKING SECTOR DEVELOP?

The Government of Kurdistan attaches great importance to the development of banking activities, rightly believing that it is the banks and the financial sector that should play a key role in the economic development of Kurdistan.³¹ Prime Minister of the Kurdistan Region Pechirvan Barzani regularly pays great attention to the problems of functioning and development of banks at meetings of the Kurdistan Economic Council (this advisory body was established under the regional government). Although the Kurdistan region is seeing the development of the banking sector, this process is slow.

The regional government is trying to position the Kurdistan region as a financial and commercial gateway to Iraq, but in fact the only advantage of Erbil and Sulaymaniyah over Baghdad is relatively high security. In the event of a final normalization of the situation in Iraq, special attention will be paid to-

* Information obtained by the author from sources in the Kurdistan Regional Government.

but in Baghdad, Kurdish cities with the current level of infrastructure development, including financial and credit, will not be able to compete with the Iraqi capital, which is traditionally one of the largest cities and business centers in the Middle East. In addition, it is already difficult for South Kurdistan banks to compete with branches of Turkish banks.

The Kurdistan Region authorities consider the possible development of the banking sector, as well as the financial infrastructure in general, as an independent process. However, I believe that the banking system here will receive a strong boost only if the region's economy as a whole develops rapidly enough. At the same time, due to the tightening requirements of the Central Bank of Iraq, banks in this country in general and in Kurdistan, in particular, are forced to expand their activities. Thus, from the second half of 2011, the minimum capital of banks was set at at least 100 billion dinars (about $80 million), from the second half of 2012-150 billion dinars, from the second half of 2013-200 billion dinars. For comparison, the capital of KIB, as of October 2010, was only 50 billion dinars, but over the next two years it increased 6 times!³² The growth of wealth in the Kurdistan Region makes the development of the banking sector inevitable. Thus, even though the majority of the population continues to distrust banks, the volume of deposits in KIB doubled in 2012 alone.³³

INSURANCE AND AUDIT

The Kurdistan region authorities want to revive the insurance system, which did not exist here at all after 1991, and before that was represented only by a few branches of an Iraqi insurance company. The Kurdistan Region Insurance Organization Committee has been established under the Ministry of Finance of the PKK. The main goals of the committee are to create rules and conditions for licensing companies, to establish insurance protection of business and consumer rights.

After the overthrow of the Ba'athist regime in Kurdistan and up to 2008, only one private insurance company was established here - Star Insurance Company. It received a license from the RegPC and the Ministry of Finance of Iraq. This company provides insurance for cars entering Kurdistan through the Ibrahim Khalil customs points-on the border with Turkey and Haji Om Ran - on the border with Iran. In 2007, it signed a cooperation agreement with a major European reinsurance company - Munich Reinsurance Company, which allows the Kurdistan company to expand its business. Which is still difficult due to the lack of qualified personnel ³⁴.

Currently, there are only three insurance companies operating in the Kurdistan region. An impetus to the development of this business in Kurdistan can give an increase in the insurance culture of the population and the development of civil liability insurance.

Local insurers believe that the Kurdistan Region's investment laws infringe on their rights by allowing foreign investors to insure their projects with both Kurdistan and international companies.³⁵

One of the obstacles to the development of the insurance business is the position of some authoritative Islamic religious figures who deny the need for insurance, while they refer to the well - known postulate - "All is the will of Allah"³⁶.

Nevertheless, the South Kurdistan insurance market, as well as the Iraqi one in general, can be considered promising. The key to the inevitable development of the financial and credit sector in Kurdistan and Iraq is the rapid growth of incomes of the population.

The world's largest audit firms have also started working in Kurdistan - this is an important indicator of the presence and certain development of the banking and financial sectors there. PricewaterhouseCoopers, for example, has about 30 audit staff in Erbil; it also develops projects for government agencies "stationed" in the region.

STOCK EXCHANGE AND EXCHANGE BUSINESS

The Erbil Stock Exchange (ESX), established in February 2010 on the model of the Dubai and Abu Dhabi Stock Exchanges, plays a significant role in the development of the region's economy.³⁷ The exchange started operating in 2012. Given the predominance of foreign companies in Kurdistan, which practically do not need a financial infrastructure in Kurdistan, and the absence of large local enterprises (except for 2-3 telecommunications companies and several trading firms), as well as a full - fledged banking system, the creation of a stock exchange here is nothing more than a propaganda step. However, local authorities believe that the Erbil exchange will become the largest in the country in the future. It is expected that IPOs of the largest Kurdistan companies - telecommunications firms Korek and Asiacell, KIB and Jihan Bank banks, as well as 38 cement plants-will be held on ^ESX.

Kurdistan Region officials say the Erbil Stock Exchange will become a "strategic axis" that, through local and foreign investment, will transform the entire Kurdistan region's economy, which is heavily dependent on oil revenues. They also believe that ESX should play an important role in attracting foreign investment to the Iraqi capital market, just as Hong Kong once became a" financial window " to China.³⁹

* * *

It follows from the above that the financial and credit sector in Iraqi Kurdistan is currently only at the beginning of its development. Nevertheless, over the past 15-20 years, financial and credit institutions in the region have come a long way. Although a significant part of the population still does not use the services of banking institutions, there are already several full-fledged banks established both directly in Kurdistan and as branches of Baghdad and foreign banks.

The volume and number of types of banking operations are gradually increasing. The rapid growth of the population's wealth and market size in Kurdistan, and in Iraq as a whole, due to oil revenues attracts foreign, especially Lebanese and Turkish banks, which have become the main players in the financial market of Iraq. These factors will also contribute to the development of the insurance sector.

Russian banks may also appear in Iraqi Kurdistan, especially if major Russian oil and gas companies step up their work in this region40. Moreover, the volume and prospects of the market here are much larger than, for example, in Georgia and Armenia, where the Russian VTB Bank has subsidiaries. By the way, the IR leadership is interested in the arrival of Russian business, which was confirmed during the visit of Kurdistan Region President Masoud Barzani to Russia in February 2013.41 and his participation in the St. Petersburg Economic Forum in June of the same year.

¹ In early 1991, after Saddam Hussein's defeat at Koina in Zadik, Iraq, the Kurds launched an uprising that was soon crushed by Iraqi forces, bringing Iraqi Kurdistan to the brink of a humanitarian catastrophe. In this regard, on April 5, 1991, the UN adopted resolution No. 688, which declared the territory north of the 36th parallel a "security zone" (non-flight zone), and the Iraqi army was forced to leave Iraq. As a result, a semi-independent entity under the control of the United Nations and the United States emerged on this territory (the former Autonomous Region called the Kurdish Autonomous Region), which was called "Free Kurdistan"in the Kurdish and world media. In fact, the "security zone" ceased to exist in 2003 after the overthrow of Saddam Hussein.

² The DNC and PUK, led respectively by Masoud Barzani (now President of the Kurdistan Region / Iraq) and Jalal Talabani (President of Iraq), have been the two main military and political forces in Iraqi Kurdistan for the past four decades. The main reason for their confrontation in the mid-1990s, which led to a bloody war, was the struggle for power and income. In 2006 The DNC and PUK signed a strategic agreement, according to which they became partners in the management of Iraqi Kurdistan, giving full authority. For more information about M. Barzani, see: Mgoi Sh. Kh. Masoud Barzani: Chairman of the Kurdistan Democratic Party / / Asia and Africa Today, 1998, N 2; O Jh. Talabani see: Mosaki N. Z. Kurdsky Machiavelli / / Asia and Africa today, 2002, N 1.

³ For more information, see: Mosaki N. Z. On the development of the banking sector in South Kurdistan - http://www.iimes.ru/?p-7127, 07.05.2008.

⁴ The Review Kurdistan Region of Iraq. Erbil, March 2013. P. 23.

^{O'Neill D.} 5 Middle Last: Welcome to Erbil, Iraq - hltp://www.euromoncy.com/Article/2711505/Middle-Last-Wclcomc-to-Erbil-Iraq.html, November 2010.

⁶ Подробнее см.: Cordoba A. Despite Progress, Hanks in Kurdistan Region Remain Underdeveloped and Mistrusted - www.rudaw.net, 21.0.5.2013.

⁷ Significant growth predicted for Kurdistan hanking and finance sector- http://web.krg.org Сайт Рег ИК, 17.06.2010.

^{Ismael W.} 8 Local markets send, receive, and exchange money // The Kurdish Globe, No. 138, 11.12.2007. P. 6.

⁹ See, for example: Kurdistan banks establish relations with European banks / / PUKmedia, 19.04.2008 Kurd.

¹⁰ At the beginning of 2010, there were 130 branches and branches of banks in the Kurdistan region. (Three Turkish banks to open in Kurdistan // AKnews, 05.07.2010.)

^{Hamdan S.} 11 Despite Challenges, Banks Look lo Set Up Branches in Iraq // New York times, 03.04.2013.

¹² Banks in Kurdistan & Iraq - www.inarcopolis.net, 15.01.2013.

¹³ The Review Kurdistan Region of Iraq...

¹⁴ Electronic system in Kurdistan Banks soon / / AKnews, 05.07.2010; BankCEn KurdistanCE derbasO sDstema bankCEn cOhanO dibin [ Kurdistan banks move to an international system of work - http://www.welal-ktirdisfan.com Mawlodi A. Financial sector developing in Kurdistan / / The Kurdish Globe, 10.07.2010.

¹⁵ Credit cards appear in Kurdistan-hltp:/ / www. kurdportal. net/abori/46-abori/205-edi-li-banken-kurdistane-kar-bi-kredit-kartan-di hete-kirn, 08.05.2010.

^{Khidhr Q.} 16 Engendering trust in banks // The Kurdish Globe, 28.08.2007.

^{Cordoba A.} 17 Op. cit.

^{Salihi M.} 18 "Lcbanification" of Erbil // The Kurdish Globe, 26.11.2009.

^{Anderson B.} 19 Lebanese banks lead entry into Iraqi market // The Daily Star (Lebanon), 24.04.2011.

^{Mosaki N. Z.} 20 Trends in Turkey's foreign trade: Iraqi and South Kurdistan trends - http://www.iimes.ru/nis/st.at/2012/10-05-12c.htm, 10.05.2012.

²¹ Iraq per capita income rises to $4000, unemployment drops to 11% -http://www.alsumaria.tv/news/58785/iraq-per-capita-income-rises-fo-4000-unemployment/e n, 21.06.2012.

²² The Review Kurdistan Region of Iraq. Erbil, March 2013. P. 23.

²³ Appointed head of the Erbil branch of the Turkish "Ishbank" / / AKnews, 24.11.2010 Kurd.

^Khoshnaw 24 // Turkish Albaraka Bank Opens Branch in Erbil - www.rudaw.net, 01.05.2012.

²⁵ See the bank's website: 2012 Q1 earnings presentation - http://www.albarakalurk.com.tr/images/yatirimei-iliskileri/2012_Q1_LP.pdf, p. 15.

^{Blaser N.} 26 Bank Asya opens doors in Northern Iraq's boom town // Today's Zanian. 21.11.2012; Turkey urged to seize Islamic banking chance // Horriyet Daily News, 21.03.2013.

²⁷ Celebi: 6 more Turkish banks will come to Kurdistan / / Aknews, 11.04.2011 Kurd.

^{Mosaki N. Z.} 28 Iran's Economic Relations with Iraqi Kurdistan - http://www.iimcs.ru/rus/stat/2012/31-01-12.htm, 31.01.2012.

²⁹ Iran and Iraq establish joint bank - http://news.iran.ru/news/78916, 12.03.2012.

^{Hamdan S.} 30 Op. cit.

³¹ See, for example: Significant growth predicted for Kurdistan...

³² See the bank's website: hltp://kiitse. com#ku.

³³ The Review Kurdistan Region of Iraq...

^{Mawloodi A.} 34 After long absence, insurance returns lo Kurdistan // The Kurdish Globe, 28.08.2007.

³⁵ Ibidem.

^{Mawloodi A.} 36 Kurdistan lo be insured // The Kurdish Globe, 28.09.2010.

³⁷ Stock exchange opened in Erbil - www.aknews.coin, 04.02.2010; Stock exchange to Open in Erbil, With a Little Help from Dubai - www.rudaw.net, 18.10.2012.

^{O'Neill D.} 38 Erbil stock exchange rivals burgeoning Baghdad - http://www.euroinoncy.com/Article/2711508/Erbil-stock-exchange-nvals-burgeoning-Bagiida d.html, November 2010.

³⁹ Erbil Stock Market to start in 2011 with startup capital of $10 million - www.eknrd.net, 07.09.2010.

⁴⁰ For more information on this topic, see, for example: Gazprom and Kurdistan Region discuss prospects for cooperation in the oil and gas sector http://www.gazprom.ru/press/news/2013/february/article156578/, 20.02.2013.

⁴¹ See, for example: Media report on the meeting between Russian Foreign Minister Sergey Lavrov and President of the Kurdish Autonomous Region of the Republic of Iraq Mohammad Barzani - www.mid.ru, 22.02.2013.

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