Is This the Real Reason US Troops Can Leave Iraq?
Updated: 11 minutes ago
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Paul Kix
AOL News
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(Aug. 31) -- President Barack Obama will address the nation tonight to mark what his administration is calling the end of combat operations in Iraq. And already scholars are revisiting how a war once compared to the Vietnam quagmirereached this point of tentative success.
Ali Al-Saadi, AFP / Getty ImagesAn Iraqi man checks the authenticity of a 25,000-dinar bill before using it in a shop in central Baghdad.
The
most intriguing theory comes from Peter Berck and Jonathan Lipow,
academics at the University of California, Berkeley, and the Defense
Resource Management Institute, respectively. In a recent paper, they argue that it was the Iraqi dinar,
and its almost obscene appreciation, that played a crucial role in the
decline of insurgent activity, ushering in the current period of
relative peacefulness. "[The dinar] played perhaps as large a role as
the Surge," Lipow tells AOL News.
Prior to the invasion, sanctions imposed against Iraq
kept the dinar "unusually cheap," Lipow says -- so cheap that, during
the first throes of the uprising against America's presence, foreign
terrorists easily used their more lucrative foreign currencies as a way
to recruit insurgents. Mercenaries in Iraq received as much as $5,000
(U.S.) per attack, the study says, the equivalent of three months'
income for the average Iraqi family.Terror reigned.
But
then the price of oil shot up. By July 2008, it had reached $134 a
barrel, an increase of $107.33 from January 2004. This had an
appreciative effect on the dinar. As did, frankly, the U.S.'s
involvement in Iraq. The journal Military Review estimates
that U.S. armed forces flooded the Iraqi economy with well over $20
billion in goods and services between 2003 and 2009. As a result, the
dinar quadrupled in value, Berck and Lipow write.
This really
hurt the Iraqi insurgency. When the dinar rose, the spending power of
foreign currencies in Iraq declined; the Saudi riyal, for instance, buys
today only a quarter of what it did in 2003 in Iraq, the study says.
And so the insurgent groups in the country had to rely more and more on
the dinar, which meant they had to find a way to keep their operations
afloat using the domestic currency. The best way for the insurgents to
do that was to "tax" the locals: basically, extorting and robbing them, and sometimes killing them for failing to pay up.
The
locals didn't like that. And so, the authors argue, they quit
supporting insurgent groups. Thereafter, the violence decreased: Average
civilian fatalities declined from 72 per day in 2006 to 7.2 by the end
of last year.
Berck's and Lipow's conclusions raise important questionsfor
what happens next in the country. If Iraq got to this point because of
oil prices and the economic benefits of heavy U.S. involvement, what
happens when the price of oil is no longer $134 a barrel and less than 50,000 U.S. troops (and the money they represent) are in country?
Possiblynothing
good. A depreciation in the dinar "seems almost inevitable," Berck and
Lipow say in their paper, which was released in June. Indeed, it's already happened: The Wall Street Journalreported
last year that Iranian imports are flooding the country, from bricks to
buses to rice, because it is once more cheaper to import into Iraq.
That means fewer jobs for Iraqis. The Journalquotes an Iraqi
brick-factory owner predicting "bad things" will happen if he has to
close his shop and lay off the young men who need to support their
families. Berck and Lipow write, diplomatically, that what this means
for Iraqi national security remains "unclear."
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