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Iraqi central bank says assured of independence

BAGHDAD (Reuters) - The head of Iraq’s central bank said on Tuesday he was not worried the bank’s independence may be compromised by a court ruling placing it under the cabinet, despite having warned Iraq’s overseas assets could be at risk.

The Iraqi supreme court last month ruled that several ostensibly independent institutions, including the central bank, the anti-corruption watchdog and the electoral agency, should be supervised by the cabinet, and not by parliament.

The decision was prompted by a request for clarification from Prime Minister Nuri al-Maliki, and the decision sparked accusations from critics that the Shi’ite leader was trying to consolidate power after being reappointed in December.

Maliki, whose government is trying to pull Iraq out of the chaos wrought by the 2003 U.S.-led invasion, pledged on Monday it would not curtail the independence of the institutions or attempt to use central bank reserves to fund spending.

“The central bank will insist on its independence, but there is no harm in coordinating our work with the cabinet,” the head of the Central Bank of Iraq, Sinan al-Shabibi, told Reuters.

“The bank is independent, financially and administratively, and therefore all procedures and policies that it adopts are independent,” he said after meeting lawmakers in parliament.

The bank earlier issued a statement after the court ruling warning that any loss of independence could expose its overseas assets to the threat of confiscation by Iraq’s creditors.

Lawmakers discussed the ruling on Tuesday and decided to appoint a committee to consider its implications. Parliament would then issue an opinion, said speaker Osama al-Nujaifi, a member of the Sunni-backed Iraqiya coalition that is a part of Maliki’s government but often critical of him.

“This ruling may not affect democracy in Iraq now as the current government is inclusive,” Faraj al-Haidari, head of the Independent High Electoral Commission, told Reuters.

“But what if a new majority government forms in the future and a single party dominates? That is the real risk of bringing the electoral commission under the executive power,” he said.

Reporting by Waleed Ibrahim and Suadad al-Salhy; Writing by Waleed Ibrahim; Editing by Michael Christie and Elizabeth Fullerton