The change from USD to IQD in Iraq
From Army Times author Kris Osborne (no link provided):
U.S. slows cash flow into Iraq, Afghanistan
By Kris OsbornThe U.S. government is slowing the flow of dollars into Iraq and Afghanistan as part of a push to build up the local currencies, banking systems and economies.
In the effort by the State and Treasury departments and the Army, all U.S. payments to local vendors in Iraq and Afghanistan will be made by electronic transfer starting Oct. 1, said Brig. Gen. Phillip McGhee, director of resource management, Third Army.
In recent years, billions of U.S. dollars has flowed into the countries.
“There was no banking structure, there were no financial institutions. They either didn’t exist to begin with or they collapsed after the start of Operation Iraqi Freedom,” McGhee said. “We went for years reverting back to what we know and can do very well, and that is put a lot of cash out there.” But that approach invited corruption and theft, tied up U.S. troops as security guards and gave insurgents a key financial tool.
“Insurgents and al-Qaida prefer to use U.S. currency,” McGhee said. “They can use that anywhere in the world, so the sooner you get that out of there, they will have to find another currency.” But the primary reason for the switch, the general said, was to give Iraqis and Afghans more control of their recovering economies. Using local currency boosts confidence in local governments, one analyst said.
“For the long term, this is good for the country to the extent that people see the Afghan and Iraqi governments as providing stable institutions. It does build some confidence,” said Keith Crane, who directs environment, energy and economic development programs at Rand Corp., a California based think tank.
The flow of U.S. cash is already drying up. U.S. payments will move through a web-based Defense Department service called “Wide Area Work Flow.” That allows the government to “write contracts to the vendors in U.S. currency that are paid in local currency,” McGhee said. “If you are a contractor and your contract was written through [electronic funds transfers] — you can see where your payment is in the system.” The funds will be sent to local banks that have been certified ready to handle e-transfers, where they will be available for the vendors to withdraw in local currency. Reducing cash payments saves the Army money. Each transaction costs about $32 a payment, according to an Army news release.
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