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currency class war: damaged dinar notes result in bribery, injustice

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currency class war: damaged dinar notes result in bribery, injustice

| عربي | کوردی
niqash | Waheed Ghanim | Basra | 04.07.2013 It is mostly Iraq's poor and pensioners who are burdened with damaged bank notes.
Exchange shops, bank cashiers and savvy housewives are doing big business as they deal with Iraq’s dodgy, damaged, low-denomination notes - for a price. The losers? Pensioners and low-income earners who end up with cash they can barely use.
Every two months Makiya, a 65-year-old Iraqi woman, travels a long way to pick up her pension in cash. She lives 40 kilometres out of Basra and the journey is a difficult one for her. And then to her chagrin, whenever she gets her pension, it mostly comes in low-denomination notes that are damaged, torn or otherwise destroyed.
"The people who come to collect their pensions are not treated the same way as others,” Makiya complains. “To get clean, undamaged bank notes you have to pay the bankers a bribe.”
Additionally Makiya says that if anybody complains about the IQD3,000 that is usually deducted from the payments by the bankers –a service fee taken for no apparent reason, she says - they are punished by being given even more of the damaged or distressed banknotes.
“And then when you get the damaged bank notes you can’t do anything with them because nobody accepts this money,” Makiya says.
The descriptions “talef” and “naqes” are often used by people like Makiya when they talk about money. Respectively the words mean damaged and missing and are terms used to describe the smaller notes – the IQD1,000 notes and the half and quarter dinar notes – that those who can’t afford to pay for better, bigger banknotes end up with.  
And there’s big business being done around the damaged bank notes in Iraq. Yousef Nafea has an exchange shop in Basra’s central Ashar market and he’s well known for his proficiency at fixing the damaged notes; he says he mostly uses transparent sellotape and that he heats it slightly to make the repairs invisible. Visiting him, one immediately notices the piles of notes on his desk.
"I fix the damaged one, half and quarter dinar banknotes and sometimes I fix the hundred and the IQD1,000 banknotes too,” he explains. “If I am asked to fix the US$100 note then I have to take great care. Fixing these notes requires that the tape is cut in a special way so it doesn’t look like the bank note was damaged at all.”
This kind of repair business is also done by local housewives. Rabab Hussein is one of them and she says she uses sellotape and clear nail polish. “The bank notes are often not only damaged, they are also dirty,” Hussein says. “And they’re ugly. And they’re not good quality, which is why they get damaged so easily,” she concludes.
After the 2003 US-led invasion of Iraq that toppled Saddam Hussein’s government, new currency was introduced and the bank notes were printed by a British company, De La Rue. Despite repeated calls for the bank notes to be reissued and the currency to be re-denominated, this has yet to happen.
Hamid Ghani, the manager of the Iraqi Investment Bank’s branch in Basra believes that a vicious circle of profiteering has developed because of the damaged bank notes in smaller denominations. “The exchange shops make agreements with the bankers – and in some cases, with the bank managers – to replace the smaller notes with bigger ones, in return for a service fee,” Ghani explains. “The service fee is deposited at the bank, in the exchange shop owner’s account. He then withdraws that money in larger, undamaged denominations. In some cases, this equals millions of Iraqi dinars.”  
Indeed, exchanging one’s smaller bank notes for larger ones at local exchange shops – at a rate of IQD8,000 per million dinars – is common practice today.
An example is provided by one local, Ahmad Nofal, who arrives at an exchange shop with two large bags stuffed with Iraqi dinar notes, denominations of one dinar and a quarter dinar. “We usually do this when we receive our salaries. We exchange these for bigger notes because the smaller notes are a hassle to carry around and if they’re damaged, we pay for that with our own money,” Nofal explained.
After only a little research into this area, it is easy to conclude that when it comes to Iraqi currency, there are two social classes here. Those who earn good money and end up with clean notes like the red IQD25,000. And those who do not earn much and who are left with dirty and damaged notes in small, useless denominations.  
As Ayad Bader Sayah, another Basra exchange shop owner, tells NIQASH: "Customers who have accounts at the government banks come to an agreement with the cashiers and bankers and they are able to return the damaged, smaller notes and get IQD10,000 and IQD25,000 notes in return. Then the damaged bank notes are redistributed to those who can’t afford to pay for cleaner money, like the pensioners and low income families.”
Although he himself makes some profit in this area, Sayah doesn’t seem that enthused about the business model. “We always hear that the central bank is going to replace the old bank notes but up until now, nothing has happened,” he notes. “And We’re not really happy with the profit we’re making,” he says, “because we know the poorest citizens are paying the price.”

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Thank you Playa....this really explains the terrible situation that exists in Iraq regarding their paper currency. We can see why there has been a focus on increasing electronic banking. No matter what currency is used, electronic banking is severely needed.

"Do not wear yourself out to get rich" - Proverbs 23:4

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