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Last Updated: Thursday, 15 January, 2004, 10:56 GMT
Saddam taken out of circulation

By Barbara Plett
BBC correspondent in Baghdad

There is a billion US dollars-worth of Iraqi dinars filling a warehouse at the edge of Baghdad.

But this is old money that loses its currency at the end of business hours on Thursday.

Note bearing Saddam Hussein's image
Another vestige of Saddam's reign is consigned to history
That is when dinar notes featuring Saddam Hussein's face cease to become legal.

This is the climax of an ambitious effort to usher in new money for the new Iraq.

But a British treasury official who has served as a policy adviser on the currency exchange says it is much more than an effort to erase symbols of the old regime.

"We spent $200m doing this, we don't spend that sort of money simply for public relations purposes," said Jacob Nell.

"This provides a foundation for Iraqi prosperity and growth, because it provides the right conditions for increased trade and investment."

Those conditions, according to Mr Nell, are a single, stable and secure currency.

Single because the northern Kurdish part of the country had been using different banknotes than the rest of Iraq.

Secure because the old dinars were easy to forge.

Delicate balance

The logistics of changing a country's money have been formidable.

Old dinars being thrown into furnace

Ten thousand tons of the old bank notes were collected, much of which still has to be destroyed.

And 3,000 tons of the new currency have been distributed across the country to more than 250 banks.

The occupation forces and their Iraqi allies have been careful to strike a balance that is anti Saddam but pro-Iraq.

The new money is printed from plates designed by Iraqi artists in the past and used by the Iraqi authorities before 1991.

They contain symbols of the country's culture and history.

New security features have been embedded in the notes, and the currency is backed by central bank reserves as well as some $18bn allocated by the US Government for reconstruction.

Lingering distrust

Many Iraqis have welcomed the new banknotes, although they are more interested in the continued fluctuation of the exchange rate than the removal of Saddam Hussein's face.

It makes no difference if they put Saddam Hussein's face on the banknotes or not, because he exists in our hearts
Safana Tarek, Iraqi woman
"This money is better than the old because there are no fakes," said one money changer.

"What we care about is the value of the money," said another.

Other Iraqis have expressed scepticism about the motives for the change - people here are still suspicious about how much economic control the occupying forces are prepared to give them - and distrust in the authorities that authorised the new currency.

"It makes no difference if they put Saddam Hussein's face on the banknotes or not," said Safana Tarek, a young woman waiting to exchange notes at the bank, "because he exists in our hearts. And anyway, maybe the next president will put his picture on new money."

So Saddam Hussein is out of circulation.

But the system he built, the divisions he left behind, and the allegiances he still commands, will be harder to erase.


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