Saddam notes still circulating widely
Friday, July 11, 2003
By Douglas Birch ~ The Baltimore Sun
BAGHDAD, Iraq -- Every day, with the blessing of U.S. officials, Iraqi government printing presses produce 4 million portraits of Saddam Hussein.
Saddam is rendered in purple ink against a filigreed pink and blue background, in a pose reminiscent of George Washington. One difference is that he is depicted wearing a business suit and striped tie.
The portraits, printed by the mint, are on Iraq's 250-dinar notes, probably the most widely circulated paper currency in Iraq.
The reasons the United States has been forced to approve mass-produced portraits of this country's fugitive leader while offering a $25 million reward for his capture suggest how complicated the reconstruction of the country now seems.
L. Paul Bremer III, the American civil administrator in Iraq, announced Monday that authorities would print a new currency, in new denominations and without Saddam's portrait, to begin circulating Oct. 15.
The change might help banish the nagging sense that Saddam is relaxing by a swimming pool, waiting for his chance to return. In the long run, it should end confusion for consumers, who are coping with three generations of Iraqi currency in circulation at the same time.
It should also end a serious economic bottleneck, the refusal of many Iraqis to accept the largest bill now in circulation, the 10,000-dinar note. It has a face value of about $7.
After the fall of Baghdad, billions of dinars were stolen from banks, many of them in the form of the large-denomination notes. Perhaps because they feared that banks would stop honoring the large bills, Iraqis started shunning them. But they still accepted the only other denomination used in this part of Iraq, the 250-dinar note. It is worth about 16 cents.
Nobody writes checks in Iraq, and credit cards are useless. It is strictly a cash economy. U.S. authorities balked at the prospect of lugging huge piles of the 250-dinar notes around to pay salaries and buy goods and equipment. And by the Americans' logic, there was nothing intrinsically wrong with the large-denomination bills.
American authorities tried to encourage a return to 10,000-dinar notes by using them to pay the salaries and pensions of civil servants and by urging banks to issue them to customers withdrawing money.
But resistance to the notes has been stubborn. Merchants and money-changers accept the bills only at a steep discount ranging from 60 percent to 80 percent of face value. Ordinary Iraqis are bewildered and upset. To help them, U.S. authorities asked banks to change the 10,000-dinar notes at full value.
Maj. Lawrence Tubbs of the 354th Civil Affairs Brigade, based in Riverdale Park, Md., part of a team trying to resurrect Baghdad's banking industry, said 4 million of the 250-dinar notes are being printed every day.
But the shortage remains so chronic that bank managers are supposed to change only five 10,000-dinar notes at a time per customer.
Customers say money-changers and merchants are bribing bank employees to change large numbers of 10,000-dinar notes. The practice generates huge profits for businessmen who accepted the bills at a discount.
Ibrahim Sadak, a 57-year-old retired worker with the Iraqi social security system, said he and scores of others waited in line for eight hours to change a few 10,000-dinar bills, only to see one man walk away with bags of the smaller-denomination currency.
"A merchant came with 1 million in 10,000-dinar notes," he said. "They changed all of them for him."
Later, bank officials told everyone to go home; they had run out of the small notes.