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Last Updated: Monday, 30 June, 2003, 16:57 GMT 17:57 UK
Meeting Iraq's demand for dinars

By Mark Gregory
BBC business correspondent in Iraq

Among the many economic problems currently facing Iraq is a shortage of the so-called Saddam dinar notes.

Saddam dinars
Piles of dinars are what's needed
This paper currency was in circulation before the recent conflict and it is still used in financial transactions throughout the country except the Kurdish area.

The notes all feature a picture of Saddam Hussein. Not the paunchy, flabby faced figure we saw on TV in the run up to the war, but an idealised much younger image of the former dictator as he looked, or wanted to look, 20 years ago.

The picture is actually a bit odd. He looks a bit nervous and seems to be licking his moustache.

Eventually the Saddam dinar will be replaced with a new currency, but for the moment the old one stays in place.

The problem is that you need so many of the notes to actually buy anything.

The 250 dinar note used in most transactions is equivalent in value to just 10 British pence (15 US cents).

To do any serious shopping in Iraq you need to carry around massive wads of local currency which are a real nuisance to lug about.

For example, to pay for modest lunch of chicken and rice the other day I had to count out 88 of my 250 dinar notes.

Credibility gap

There is in fact a higher denomination 10,000 dinar note but most Iraqis refuse to accept them.

They're seen as tainted and lack credibility because so many of them were looted from banks after the war.

The mint director was keen to get his hands on a machine gun
Mark Gregory
BBC business correspondent

A money changer will give you little more than half their face value if you try to swap them for other currency.

Everybody wants you to pay with low value 250 dinar notes and you need lots of them to make a purchase.

Not surprisingly there's a big shortage. In war-ravaged Iraq only one group of workers is more or less guaranteed a job - staff at the national mint. It's running at full tilt to keep up with demand.

I went to the mint with a US army reserve sergeant named Tom Werges.

He's been given the job of assessing the state of banks and other financial institutions in the Baghdad area.

Before he joined the army he worked as a stockbroker on Wall Street. He signed up out of a sense of patriotic duty after the events of 11 September.

His financial skills are being put to good use - his next job will be to draw up a new set of rules for the Baghdad stock market.

Hot metal

The mint is housed in a dilapidated complex of buildings in a dusty suburb of Baghdad.

Iraqi oil workers, who lost their jobs following the fall of Saddam Hussein, demand employment from the new US administration
Jobs in Iraq are hard to come by
When we arrived the Iraqi staff refused to let us in.

Sergeant Werges told them that he wasn't just any old soldier off the street. His authority came from the US Treasury department.

That seemed to do the trick and we got through the door to be ushered into a cavernous warehouse.

It was dark, noisy and stiflingly hot. In one corner was an ancient printing press churning out 250 dinar notes with a great clack-clacking noise.

The director of the mint told me the press had been originally designed to print newspapers not banknotes.

I'm no expert on forgery but the notes struck me as pretty easy to copy.

Given half an hour and a decent colour photo copier I reckon I could run off a few myself, although it's probably not worth the hassle as they're worth so little.

Financial firepower

Sergeant Werges asked lots of questions about the state of the mint's facilities.

Inevitably security was high on the agenda as part of the mint had been badly damaged by looters.

The director said there were 12 security guards, but they only had one gun. It was an old one he said and it only fired one bullet at a time.

Sergeant Werges checked whether the weapon was a original Kalashnikov or an copy of an AK47. In Iraq right now details like this are very important.

The mint director was keen to get his hands on a machine gun - Sergeant Werges said he'd get back to him on that later.

Twenty years ago Iraq was a fairly wealthy country. It could be so again.

It has oil and plenty of educated brain power.

But if my day at the mint is anything to go by, it'll be a tough job to unlock that potential.

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