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Dollars to dinars: We did get the money to Iraq - Opinion - International Herald Tribune
John B. Taylor
Published: Monday, February 26, 2007
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CloseLinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalinkSTANFORD, California — Earlier this month, the House Committee on Oversight and Government Reform held a hearing that criticized the decision to ship American currency into Iraq just after Saddam Hussein's government fell.
As the committee's chairman, Henry Waxman of California, put it in his opening statement, "Who in their right mind would send 360 tons of cash into a war zone?" That attracted wide attention, feeding antiwar sentiment and providing material for comedians.
A careful investigation of the facts behind the currency shipment paints a far different picture.
The currency that was shipped into Iraq in the days after the fall of Saddam Hussein's government was part of a successful financial operation that had been carefully planned months before the invasion.
Its aims were to prevent a financial collapse in Iraq, put the financial system on a firm footing and pave the way for a new Iraqi currency.
Contrary to the criticism that such currency shipments were ill-advised or poorly-monitored , this financial plan was carried out with precision and was a complete success.
The plan, which had two stages, was designed to work for Iraq's cash economy, in which checks or electronic funds transfers were virtually unknown and shipments of tons of cash were commonplace.
In the first stage, the United States would pay Iraqi government employees and pensioners in U.S. dollars. These were obtained from Saddam's accounts in American banks, which were frozen after he attacked Kuwait in 1990 and amounted to about $1.7 billion. The second stage was to print a new Iraqi currency for which Iraqis could exchange their old dinars.
The final details of the plan were reviewed President George W. Bush and the National Security Council on March 12, 2003. I attended that meeting.
President Bush approved the plan with the understanding that we would review the options for a new Iraqi currency later, when we knew the situation on the ground.
To carry out the first stage of the plan, President Bush issued an executive order on March 20, 2003, instructing United States banks to relinquish Saddam's frozen dollars. From that money, 237.3 tons in $1, $5, $10 and $20 bills were sent to Iraq.
During April, U.S. Treasury officials in Baghdad worked with the military and the Iraqi Finance Ministry officials — who had painstakingly kept the payroll records despite the looting of the ministry — to make sure the right people were paid.
The Iraqis supplied extensive documentation of each recipient of a pension or paycheck. Treasury officials who watched over the payment process in Baghdad in those first few weeks reported a culture of good record keeping.
On April 29, Jay Garner, the retired lieutenant general who headed the reconstruction effort in Iraq at the time, reported to Washington that the payments had lifted the mood of people in Baghdad during those first few confusing days. Even more important, a collapse of the financial system was avoided.
This success paved the way for the second stage of the plan. In only a few months, 27 planeloads (747 jumbo jets) of new Iraqi currency were flown into Iraq from seven printing plants around the world. Armed convoys delivered the currency to 240 sites around the country, from where it was distributed to 25 million Iraqis in exchange for their old dinars, which were then dyed, collected into trucks, shipped to incinerators and burned or simply buried.
The new currency proved to be very popular. It provided a sound underpinning for the financial system and remains strong, appreciating against the dollar even in the past few months. Hence, the second part of the currency plan was also a success.
The story of the currency plan is one of several that involved large sums of cash. For example, just before the war, Saddam Hussein stole $1 billion from the Iraqi central bank. American soldiers found that money in his palaces and shipped it to a base in Kuwait, where the U.S. Army's 336th Finance Command kept it safe. To avoid any appearance of wrongdoing, American soldiers in Kuwait wore pocket-less shorts and T-shirts whenever they counted the money.
Advertise on NYTimes.com
Dollars to dinars: We did get the money to Iraq - Opinion - International Herald Tribune
John B. Taylor
Published: Monday, February 26, 2007
Sign In to E-Mail
Single Page
Reprints
Share
CloseLinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalinkSTANFORD, California — Earlier this month, the House Committee on Oversight and Government Reform held a hearing that criticized the decision to ship American currency into Iraq just after Saddam Hussein's government fell.
As the committee's chairman, Henry Waxman of California, put it in his opening statement, "Who in their right mind would send 360 tons of cash into a war zone?" That attracted wide attention, feeding antiwar sentiment and providing material for comedians.
A careful investigation of the facts behind the currency shipment paints a far different picture.
The currency that was shipped into Iraq in the days after the fall of Saddam Hussein's government was part of a successful financial operation that had been carefully planned months before the invasion.
Its aims were to prevent a financial collapse in Iraq, put the financial system on a firm footing and pave the way for a new Iraqi currency.
Contrary to the criticism that such currency shipments were ill-advised or poorly-monitored , this financial plan was carried out with precision and was a complete success.
The plan, which had two stages, was designed to work for Iraq's cash economy, in which checks or electronic funds transfers were virtually unknown and shipments of tons of cash were commonplace.
In the first stage, the United States would pay Iraqi government employees and pensioners in U.S. dollars. These were obtained from Saddam's accounts in American banks, which were frozen after he attacked Kuwait in 1990 and amounted to about $1.7 billion. The second stage was to print a new Iraqi currency for which Iraqis could exchange their old dinars.
The final details of the plan were reviewed President George W. Bush and the National Security Council on March 12, 2003. I attended that meeting.
President Bush approved the plan with the understanding that we would review the options for a new Iraqi currency later, when we knew the situation on the ground.
To carry out the first stage of the plan, President Bush issued an executive order on March 20, 2003, instructing United States banks to relinquish Saddam's frozen dollars. From that money, 237.3 tons in $1, $5, $10 and $20 bills were sent to Iraq.
During April, U.S. Treasury officials in Baghdad worked with the military and the Iraqi Finance Ministry officials — who had painstakingly kept the payroll records despite the looting of the ministry — to make sure the right people were paid.
The Iraqis supplied extensive documentation of each recipient of a pension or paycheck. Treasury officials who watched over the payment process in Baghdad in those first few weeks reported a culture of good record keeping.
On April 29, Jay Garner, the retired lieutenant general who headed the reconstruction effort in Iraq at the time, reported to Washington that the payments had lifted the mood of people in Baghdad during those first few confusing days. Even more important, a collapse of the financial system was avoided.
This success paved the way for the second stage of the plan. In only a few months, 27 planeloads (747 jumbo jets) of new Iraqi currency were flown into Iraq from seven printing plants around the world. Armed convoys delivered the currency to 240 sites around the country, from where it was distributed to 25 million Iraqis in exchange for their old dinars, which were then dyed, collected into trucks, shipped to incinerators and burned or simply buried.
The new currency proved to be very popular. It provided a sound underpinning for the financial system and remains strong, appreciating against the dollar even in the past few months. Hence, the second part of the currency plan was also a success.
The story of the currency plan is one of several that involved large sums of cash. For example, just before the war, Saddam Hussein stole $1 billion from the Iraqi central bank. American soldiers found that money in his palaces and shipped it to a base in Kuwait, where the U.S. Army's 336th Finance Command kept it safe. To avoid any appearance of wrongdoing, American soldiers in Kuwait wore pocket-less shorts and T-shirts whenever they counted the money.
Last edited by chittychittybangbang on Tue Sep 07, 2010 6:39 am; edited 1 time in total (Reason for editing : none)