My interview with an American forum moderator about the removing of the three zeros from the Iraqi Dinar and its effects

By Ward Welch

Erbil, Kurdistan, Iraq  April 12, 2012

Ward Welch: Mr. Aziz, thank you very much for taking my questions today.

For years now we've been hearing about the CBI's plan to "remove the zeros" from the Iraqi Dinar and equalize the value of the IQD with the other major currencies of the world, including the American Dollar. With the success of the recent Arab summit in Baghdad, and the imminent release of Iraq from the United Nations sanctions (Chapter 7), what are your thoughts concerning this subject?

Raber Aziz: I think the removing of the zeros will have its own benefits and consequences for the country alike. It will be good for Iraq to remove the zeros because this address; when the Iraqi dinar is strong in the face of US dollars it will help keep inflation down as much as possible. It will also facilitate, for Iraq, economic cooperation with the international banks as it will increase the international confidence and credibility of it the new Iraqi Dinar. Also, it will reduce the size of the bank notes in circulation and will simplify Iraq's payment system.

But the having a new and strong Dinar is expected to have consequences as well. one of the consequences will be money laundering. The CBI has said the zero-removing process, which is expected to take place in September as it has announced, will see the bank  re-print 30tr dinars ($26bn) and the process of switching currency will last a full year where both the old and new currencies will be dealt in the market. This is too long a period and could witness lots of money laundering, as well as fraud.

Ward Welch:  With Iraq taking its place in the world as a completely sovereign nation and a major power in the Arab world, how can Iraq continue to trade with the world using a highly undervalued currency? Certainly the impetus of the GOI and the CBI must be to rectify this condition very soon or risk losing billions of dollars (trillions of IQD) in foreign investments in Iraq.

Raber Aziz: Iraq cannot continue to trade with the world using the current undervalued currency. Iraq's current money, printed after the 2003 US-led war, is 150 times bigger in quantity than the Swiss edition of the Iraqi Dinar used in the country. Iraq's smallest bill used in the markets is the 250 Dinar bill (approximately US$0.2) and this is definitely not a good currency for the country that sells over 2 million bpd of oil (roughly over 6 billion US Dollar per month). Besides, Iraq is planning to increase its oil production to reach at least 6 million bpd in the next few years and ultimately 12 million bpd. That's even three times and six times the size of Iraq's current revenues. This will mean Iraq's annual revenues will hit US$210 in the coming days and over US$400 billion ultimately. And for this, Iraq requires a currency with strong value in the world market.

Ward Welch: With this new economic power in hand, will this increase the desire of Kurdistan to gain complete independence and sovereignty?

Raber Aziz:   The desire of the Kurds to become independent is, and has always been, there with or without the economic power in hand. Every single Kurd dreams of an independent Kurdistan state. Though economic boom is a factor for any nation to proclaim independence, in the case of Kurdistan there are other factors that determine whether the Kurds want to be independent from Iraq or not. The first of these factors will be an international recognition of a Kurdish state. Who is ready to recognize a Kurdish state in north of Iraq? Kurds first need guarantees that if they proclaim independence their state will be recognized on an international level and be protected by some of the world's super powers, among them the US. Another factor will be the Kurds' relations with the regional nations. Kurdistan, I mean the greater Kurdistan that spans Turkey, Syria, Iraq and Iran, and the Kurdish part of Iraq as well, is a landlocked country. Kurdistan cannot survive without strong friendly relations with these countries in case they wanted to become independent.

Ward Welch: How will this rebirth of economic power in Iraq effect the relationship between the political blocks? (Will the new wealth encourage them to put religious, secular, and tribal differences aside and truly work together?)

Raber Aziz:  I don't think that it will result in the political blocs putting their differences aside. Iraq's Prime Minister Mr Nouri al-Maliki who has been controlling power over the past few years has unfortunately been playing on a very sensitive cord, namely sectarianism. He has appointed many of his Shiite Dawa Party officials as ministers or high-ranking officials in the government and has been running many other ministerial and senior positions like the ministries of interior, defense, national security as acting minister despite him being the PM. He has been rejecting candidates of the rival al-Iraqiya list, the main Sunni bloc in Iraq, for the empty ministries each time with a different excuse since the end of 2010 when the political blocs finally, after an 8-month impasse came to a power-sharing deal, in Erbil, to form the new cabinet. And, last year, his Shiite dominated government started removing Sunni academics on charges of belonging to the former Baath Party. They detained about 600 former Iraqi army officials on charges of planning a coup by the end of 2011 when the last US troop left Iraq, and also started hunting down other top Sunni leaders in the country on terror charges, among them VP Tariq al-Hashimi for involvement in 150 armed attacks. Therefore, it is not easy to undo these, and thus the sectarian disputes which are in fact the core of the political disputes as well, will remain.

Ward Welch:   Thank you very much for your valuable time sir.

Raber Y. Aziz is a Kurdish journalist and blogger from Erbil, the capital of the semi-autonomous Kurdish Region. He works for AKnews as English News Editor and is formerly their Managing Editor. You can follow his blog at http://kurdishobserver.blogspot.com/