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Al-Ahram Weekly 28 Jan. - 3 Feb. 1999 Issue No. 414 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 28 Jan. - 3 Feb. 1999 Issue No. 414
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Focus Economy Opinion Culture Features Living Travel Sports People Time Out Chronicles Cartoons Letters Sanctions' millionaires
By Khaled DawoudWith the dinar becoming almost worthless, Iraqis are having to carry around ever larger piles of notes to buy basic goods.
Before the United Nations sanctions, imposed after Iraq's 1990 invasion of Kuwait, one dinar equalled three US dollars. Now one dollar buys between 1,730 and 2,000 dinars.
The exchange rate can fluctuate by the minute according to news coming from the White House or the UN's latest pronouncement on the lifting of sanctions.
When I arrived in Baghdad on 9 January the rate was 1,950 dinars to the dollar. Two days later, after France announced new proposals to deal with sanctions and weapons monitoring, the dinar strengthened to 1,850 to the dollar.
The Iraqi 250-dinar note, despite its unusual size, values less than 15 cents. Thus, money dealers at Al-Kifah Street (below) need a store-room to keep piles and piles of the worthless Iraqi currency
photo: Khaled Dawoud
Last Thursday, following a statement by US Defence Secretary William Cohen in which he said that Washington would not bomb Iraq immediately after the end of Ramadan, it rose further, reaching 1,730 to the dollar.
Al-Kifah Street was originally a market dealing in local and imported cigarettes as well as construction materials. However, following the imposition of sanctions, the narrow and crowded street has turned into the de facto Iraqi central bank.
"In order to import cigarettes or any other goods you need dollars. That is why we gradually turned into the main market for dealing in currency because some of the major importers are located here," says Amer Al-Sameraie, owner of Al-Taqwa exchange office on Al-Kifah, which means "the struggle".
Sameraie vehemently denies that he and other dealers harm the Iraqi economy by speculating on the dollar, insisting that the laws of supply and demand prevail.
On Al-Kifah Street, which can be hazardous for foreigners because of thefts and the risk of receiving forged dollar notes, the price of dinars is determined.
Runners for dealers like Al-Sameraie, surrounded by crowds, tout for trade, shouting, "100 dollars! How much? How much?" Others respond with offers until a price is agreed.
From Al-Kifah telephone calls relay the price to the rest of Baghdad. This often changes by the hour. When word spreads of a price change, particularly a downward one, the street dealers cease trading for an hour or two until the new situation becomes clear.
To cope with the sharp deterioration of the dinar, the government has had to print notes of larger denominations. Now the smallest note is 25 dinars and the largest 250 dinars. Officials refuse to print still larger notes, apparently so that Iraqis do not lose hope that the dinar will one day regain its former glory.
The 25-dinar note is now virtually useless: the most it will buy is two locally-made cigarettes. Probably by design the 25-dinar note is also the only one which does not bear the picture of the smiling "leader granted victory by God, President Saddam Hussein", as Iraq's media is obliged to call him.
Changing 100 dollars in Baghdad requires a large plastic bag to carry away the pile of at least 800 250-dinar notes. Matters become worse when the money dealer insists on using 100-dinar notes which like the 250-dinar note are large in size. The plastic bag soon bulges and attracts the attention of young children forced by hardship to resort to street theft.
Five hundred dollars turns you into a millionaire. With the help of Al-Ahram Weekly's allowance I joined this select band but the transformation was soon reversed on returning to Cairo Airport.
Inexperienced outsiders usually spend a long time counting notes simply to pay for dinner. In the gold market, however, where a ring or bracelet costs millions of dinars, the rich traders have no time to count. They simply weigh the money.
Money dealers typically trade in 25,000-dinar bundles weighing nearly 125 grams each.
Meanwhile, ordinary Iraqis who can barely determine how much they need to shop are at the mercy of the currency movements.
In 1995 after the oil-for-food deal, traders dealing in dollars and those with dollar savings suffered from a fall in the dollar. A money dealer in Al-Kifah who spoke on condition of anonymity explains: "After the United Nations signed the oil-for-food deal with Iraq in 1995, the dinar strengthened against the dollar from 3,000 dinars to 600 dinars. This was a real disaster for many people and some even committed suicide."
How do Iraqis cope with all these ups and downs? "They get used to them and they don't care anymore. One day they buy something for 1,000 dinars, and the next day it is 1,300. The cause is that of all our problems: the sanctions. This is the reality of our lives," says Al-Sameraie, sitting in his office surrounded by piles and piles of Iraqi dinars. And he is a real millionaire.
Related articles:
Minds under siege
An Iraqi Bay of Pigs?
