Originally Posted by
goldraker
Is it a good idea to start the `new` Iraqi economy with a note of 25,000 Iraqi dinars?
KurdishMedia.com - By Rizgar Khoshnaw
Yesterday, I read the text of Mr. Paul Bremer’s address to the Iraqi people regarding the budget and the new bank notes that will be in circulation on October 15, 2003. In detail, he outlined all of the funds to be allocated for all sectors of the economy as well as the new denominations of the incoming Iraqi dinar.
It is a bad idea to start our new economy with such large notes of the new dinar that has a low value in the international arena.
--------------------------------------------------------------------------The new currency will replace the old "Swiss" dinar-used in Kurdistan, as well as "printed" dinars that is used for the rest of Iraq. Mr. Bremer told the participants of the economic forum that the new Iraqi dinar will be printed a range of denominations: in 50s; 250s; 1,000s; 5,000s; 10,000s and 25,000s respectably.
Mr. Bremer’s decision on the new currency came after "consulting" with the Iraqi politicians. He said, "Everywhere I traveled in recent weeks, Iraqis have told me about these problems. So I have consulted with Iraqi political, economic and business leaders to find a solution." Furthermore, he said, " The solution is to print new bank notes."
I am extremely happy to hear that Mr. Bremer is helping my people, but in the back of my mind I am questioning his intentions and truthfulness. What do I mean by truthfulness? What I mean is that there is no way in the world that Mr. Bremer can convince me, and I hope other Kurds as well, that he created the new Iraqi notes, their value and he chose the denominations of the currency.
Americans at the treasury department are the ones that decide what currency will be used for Iraq, not Mr. Bremer.
--------------------------------------------------------------------------I have a very difficult time believing that the American government has given Mr. Bremer this unprecedented power to choose the new currency. When it comes to understanding finance, the Americans at the treasury department of the United States are untouchable, as they are extremely intelligent people. They are the ones that decide what currency will be used for Iraq, not Mr. Bremer.
Many Iraqis might not understand the complexity of the power, or lack of power, of a country’s currency could mean to the economy and the future trade with foreign countries, but they should study it prior to giving it their seal of approval. The value of currency is very well connected with the country’s economic strength and therefore, a strong economy needs to have a strong and stable currency. If Iraq is going to prosper; it needs both a strong currency as well as a strong economy.
In my honest opinion, it is not Mr. Bremer that decided on the new Iraqi notes, but the US government looking after its own future in Iraq. It is no secrete that the US will be the largest trading partner with Iraq in the coming years and therefore, they are looking a head to see how they can have a much stronger leverage when it comes to trading products and services with them. Of course, the US will make sure that the Iraqi currency will never be stronger than the dollar as it was twenty years ago when one dinar was equal to three dollars. They want to make sure that the Iraqis will never ever have an advantage against the Americans in every aspect.
Few years ago, when Europe adopted the new currency, the Euro, they took the dollar into consideration prior to determining its value. In the end, the Euro was trading at parity with the dollar- and now it is hovering at the same level since it’s inception. Such trading value indicates a strong and stable Europe.
One the other hand, the Turkish currency has depreciated over ten percent a year since 1997. Such decline in value has paralyzed the Turkish economy. On my first trip to Turkey six years ago, one hundred dollars was worth eighteen million Turkish Liras. On my trip last month, one hundred dollars bought me one hundred and fifty million Turkish Liras. As we can see here, the currency does affect the country’s economic strength and vise-versa.
I am fully aware of the fact that Mr. Bremer is in charge of Iraq, but to approve a nine trillion dinars budget for Iraq, to be financed mostly by Iraqi oil revenue, is ridiculous. In his speech he said, "I have just approved the Iraqi budget for the remainder of this year." I hope that our politicians in Iraq do not "just approve" whatever he tells us! He should not be the ONE man to decide what is spent and how much it in Iraq. This should be the job and responsibility of the Iraqis and not one single man. There should be a team of experts inside Iraq to set a budget that is feasible to the Iraqis and implement it. Since the Kurdish politicians have such experience, I think this responsibility should be given to them to set the budget.
Coming up with a budget for a country of 25 million inhabitants does not happen in a meeting or two or by one or two individuals. It is an extremely complex process and needs a great deal of time to have an accurate budget, or even close to an accurate one. We are talking about a country, not a small "Mom and pops" grocery store! In America, it takes hundreds of highly educated and experienced individuals many months to have a budget proposal established. In Iraq, it appears that it takes one man, a couple of meetings and few hours to determine the country’s budget! I cannot help but feel pessimistic about the future of Iraq if this is how we are going to start.
Finally, I hope the politicians and the business leaders in Iraq will study the new currency very closely prior to signing off on the new notes. I personally think it is a bad idea to start our new economy with such large notes of the new dinar that has a low value in the international arena. Our politicians need to put some serious thoughts into this before the notes are printed. :ro_emote: