-Dollar vs. Dinar; Smoking Gun = False Alarm; Shiites Demand Democracy

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Jan 15 – Dollar Sags vs. Iraqi Dinar, Leaving Economy Unstable

What most Western economists are referring to as the “strengthening” of the Iraqi dinar may be leading the Iraqi economy toward hardship. While it is good news for some currency traders and speculators that the new dinar is gaining value against the dollar, critics have noted that for many Iraqis, including those employed by the Coalition Provisional Authority and paid in US dollars, it amounts to less buying power per paycheck.

Agence France-Presse reported that currency traders in Baghdad were paying as little as 1,000 dinars per US dollar on Wednesday, whereas late last Fall the dollar garnered nearly 2,000 dinars.

The BBC cited unnamed analysts, plus one of its own employees, as crediting a simple increase in the number of transactions, the “gradual pick-up of the Iraqi economy” and “hopes of a surge of US funds into the country” for the dinar’s significant rise over the past two months.

But Iraqi economists are widely suggesting that currency speculators, mostly based in Jordan and Kuwait, are smuggling, buying and hording large amounts of the new dinar. The Deputy Governor of Iraq’s Central Bank, Ahmad Salman al-Juboory, told AFP there was widespread suspicion that 25,000 dinar notes were being carried across the border. There, it is suggested, foreign speculators hold onto the currency while Iraqis respond en masse to the jolt in value — itself caused in part by the speculators — and aggressively exchange dollars for dinars, causing a massive spike in the dinar’s exchange value.

In the short term, for Iraqis who are paid in US dollars, this translates into a drastic, nearly 50 percent reduction in the value of a paycheck. Journalist Dahr Jamail writes in Electronic Iraq that, combined with rising grocery prices resulting from food shortages and 60 percent unemployment, the situation threatens to lead to sharp increases in crime and even stronger opposition to the US-led occupation of Iraq.

For more information:
“Economic Crisis, Threats of Jihad and More Violence in Iraq” (Electronic Intifada)

See reporter Brian Dominick’s comments on this story: The Iraqi people are getting economically shafted, and the whole world seems to be applauding it, albeit while pretending everything is A-OK. I can picture the phony grins on the economists’ faces when they ignore bold-faced reality, re-write well-understood economic truisms, and somehow manage to say things like “the Iraqi economy is doing well.”

The full commentary is here:

“Iraqi Economics 101 (BBC Listen Up!)”

‘Mustard Gas’ Shells Turn Into Another Dead End, Head Inspector Quits

Initial laboratory tests performed by Danish and American scientists on Thursday have shown mortar shells thought to contain banned chemical weapons are in fact just another false alarm. The “discovery,” widely reported earlier this week as the uncovering of banned weapons in Iraq, is quietly being reported today as the latest in a series of false positives obtained by field tests only to be later disproved by laboratory checks.

On January 10, Danish troops claimed to have discovered some 50 mortar rounds, which they said initially tested positive for traces of a blistering agent known as mustard gas. The deeply buried, short range munitions, thought to date back to the Iran-Iraq War of the 1980s, were most likely rendered useless by heavy corrosion. Nevertheless, numerous Western observers referred to them as a “smoking gun” that “vindicated” proponents of the invasion of Iraq.

Further tests to be performed in the US are expected by US military officials to prove conclusively that the uncovered shells were conventionally armed and not laced with mustard gas or other chemical agents. According to the Associated Press, the Pentagon has conceded that tests used by Coalition forces in the field are set to err on the side of indicating positive results.

In a related story, Reuters cites an unnamed intelligence source as saying that David Kay, the CIA’s chief weapons inspector in Iraq, is refusing to return to Iraq and carry on the hunt for banned weapons following an extended stateside Christmas holiday. According to Reuters, this news is expected to be seized upon by critics as a sign that Kay has given up hope of finding chemical or biological weapons in Iraq.

Iraqi Protesters Demand Elections

Thousands of Shiite Muslims turned out Thursday in Basra to demand the popular election of an interim Iraqi legislature before the July 1 deadline set by the United States for the dissolution of the Coalition Provisional Authority (CPA).

The protests, which the AP says involved at least 20-30,000 participants, are a response to plans revealed by the CPA which would leave the appointment of Iraq’s first legislators of the post-Saddam Hussein era up to a “provisional caucus,” delaying actual elections for an additional two years. Outraged by this “transfer” plan, the demonstrators chanted slogans opposing continued United States involvement in the governance of Iraq.

Shiites, the majority ethnic group often characterized as supportive of US efforts in Iraq, have shown signs of increasing frustration toward Western nations’ presence in and governance of Iraq.

Smaller demonstrations were also reported in Ramadi, Baghdad and Mosul.