Popular Speculation

Speculating in currency is hazardous business, an occupation usually engaged in by those in large glass buildings sporting suits. But speculation democratized is like anything else popular, it becomes domesticated. Many an Irish heir has encountered caches of old bank notes buried in boxes, stuffed in tea tins and under the mattress. Kurds in Northern Iraq have a habit of hoarding too.

Under Saddam's rule in Iraq, all bank notes came to bear his visage. The presses in Baghdad are so poor, however, that even the new notes look homemade and are easy to counterfeit. Prior to Hussein's rise to preeminence, the Iraqi dinar was a well-printed currency and did not bear the image of its autocratic leader. These notes were pulled from circulation after a time, so that Saddam could have a currency embellished with his face. Not
surprisingly, Kurds were loath to use these notes, preferring the older
variety. Still the Baathist regime attempted to supplant and penalize holders
of the old currency.

After the first Gulf war and the creation of the autonomous region in
Northern Iraq, the older notes became the de facto Northern currency,
although numerically few in the face of the onslaught of Saddamed dinars. The
old notes came to be called "Swiss dinars" because their value held as firm
as the Swiss franc. The Baathist dinars lacked that same stability. The Kurds
hoarded the "Swiss" notes hoping that some day the Baath party would fall.

That day has come and conversations swirl about a new Iraqi currency. "Swiss dinars" now trade at a premium against the U.S. dollar. Much favor has been shown to the old, tattered "Swiss dinar" because it is known. If this proves to be the final currency of choice -- and large firms are now cultivating contacts in anticipation of blossoming contracts to print the "Swiss" notes -- there will be a disproportionate quantity of cash in the North. Thrifty, speculating Kurds could end up being the bankers of Iraq.

James Clark

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(c) 2003 Millennium Relief & Development Services, vol. 2 no. 31
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