- The big news today is the plummeting value of the US
dollar in Iraq. Here are some figures to give you an idea of the current
financial crisis in Iraq:
- 2 months ago: 1$ = 1950 Iraqi Dinars (ID)
- The value continued to drop, and 2 days ago the value
was: 1$ = 1410 ID
- Yesterday: 1$ = 1100 ID
- Keep in mind that all Iraqis working for the CPA are
paid in US dollars. In addition, all of the severance pay for Iraqi ex-Army
personnel, unemployment payments, and a large percentage of Iraqis are
paid in US dollars.
- When an Iraqi ex-Army man was being paid 60$ per month
by the CPA, this translated to 120,000 IDís 2 months ago. Now he
makes 60,000 IDís. At the same time the cost of basic food products
has been rising, and continues to rise. How is this man going to make ends
- Imagine if your pay scale remained the same at your job,
yet in two months time the value of the US dollar dropped by 50%, so it
now took you twice as much money to buy food and pay your mortgage? Getting
a second job would be impossible, because unemployment is 60% in your country
- Khalil Abrahim works as a carpenter. He had a business
agreement with a man to repair his home and make him some furniture. They
agreed on an amount to be paid for the work at 1,100,00 Iraqi Dinars ($550
US), made a little over two months ago when the exchange rate was 2000
IDís per US dollar. Khalil was advanced 400,000 ID ($200), and used
this money to buy his supplies.
- He finished the job the day before yesterday, and went
to collect his money. The man told Khalil he would pay him the remaining
amount, ($350), at the rate of exchange that day, which was 1410 ID per
US dollar. So both men lose money. If Khalil is paid at the rate of 1410
ID, he will lose $103.25 (205,500ID). If the man who hired him pays him
at the original exchange rate of 2000 IDís per dollar, he will lose
the same amount.
- Unable to reach a compromise thus far, Khalil remains
unpaid, and doesnít know how to resolve the situation.
- This is but one example of a problem plaguing businesses,
big and small, in Iraq on the day, ironically, that Iraqi currency with
the face of Saddam Hussein on it is no longer valid.
- Where will this lead? How will this be resolved?
- Mr. Shuker is a Jordanian business man who does much
work with the Iraqi government. He bought several containers of televisions
to import to Iraq to sell, at $20,000 per container of TVís. If
he sells these in Iraq, he will lose money on his merchandise now. He told
me he cannot do any business now with the dollar so low. Any transaction
he makes will lose him large amounts of money.
- When the ID was over 2000 per US dollar, businesses and
the government of Kuwait bought heaps of them and took them out of the
country. Now, because of the physical lack of IDís in Iraq, their
value has risen strongly against the US dollar. Think about the disparity
now caused that businesses in Iraq have to deal with.
- If the CPA does not step in to resolve this economic
crisis, the likelihood of crime increasing in an already abysmal security
situation is very high.
- Meanwhile, food costs continue to rise and there is no
solution to the rampant unemployment problem.
- All of this with the backdrop of tens of thousands of
people (mostly Shia) demonstrating in Basra today, demanding democratic
elections within the next 2 or 3 months. At the demonstrations Ali al-Hakim
al-Safi, a senior Basra cleric, told the crowd that the Shia people would
seek their goals by peaceful means at first, but were prepared for other
measures if necessary. He stated,
- "We do not need to use violence to get our rights
while there are still peaceful ways we can work together, but if we find
peaceful means are no longer available to us we will have to seek other
- Thus, the specter of Jihad looms over Iraq.
- At the same time, violence continues to the north of
Baghdad. 14 people died in various attacks on US troops. 8 Iraqis were
killed during an attack on US troops near Samarra. On a road between Samarra
and Tikrit guerrillas attacked vehicles carrying KBR employees, killing
three men as well as wounding a US soldier and US civilian.
- Also last night, a soldier with the 101st Airborne Division
died in a 'non-hostile incident' in Mosul.