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Regimental Combat Team 5 dealing in cold hard Iraqi dinar

9 Aug 2006 | Gunnery Sgt. Mark Oliva

Greenbacks are out.  The currency of choice for doing business with local Iraqis here is now dinar.

Regimental Combat Team 5 commanders recently made the switch to paying out local contractors in Iraqi dinar instead of American dollars.  The switch is meant to boost the flow and confidence in the Iraqi economy. 

“We decided to pay out the contracts in dinar so the money could be easily disseminated to the local economy,” said 49-year-old Master Sgt. Ed F. Maxian, 3rd Civil Affairs Group detachment chief with RCT-5.  “It’s an important step.  The money can now go directly to the people and bump up their economy.  This is their money and this is what we should be paying them with.”

Marines with RCT-5 were formerly paying out contracts in American dollars.  That money was given in cash.  Each week, Maxian and his Marines meet with contractors in Fallujah to pay out contracts for projects ranging from acquiring hospital supplies for Fallujah’s two hospitals and several medical clinics to school repairs and upgrades and even construction of playgrounds.

Payouts for contracts often range from $50-60,000, Maxian said.  The tendency was for that money to stay among contractors and Fallujah’s more affluent community.  Getting dinar directly to the laborers on the sites was slow because contractors had to exchange the money.  Now, the dinar payments made by Marines will ease the burden of changing the money over.

Still, several of the contractors, who spoke on the condition their names not be revealed, said they preferred payments in dollars.  The cash payouts are easier to handle in dollars due to the bulkiness of dinar, they explained. 

The exchange rate is 1,476 dinar to $1.  Contractors use to walk out with a wad of $100 bills.  Now, they walk out with a small bag with a lump of bills ranging from 100 dinar notes to 25,000.

“Dollars are better,” said one Iraqi contractor through an interpreter.  “Dollars are easier to carry.  I also do business with companies in Jordan.  I have to change all the money over to dollars anyway because only Iraqis use the Iraqi dinar.”

Another contractor said although the money is bulky, he does use the dinar directly within his own business to pay his employees.  And if he has to exchange money, it’s easy to do inside Fallujah and Baghdad, but in cities like Ramadi, he said he has no place to change over the money. 

Carrying large amounts of cash is a concern for many of the contractors, too.  Crime – from petty theft to murder – is always a threat.  Iraqi police are making inroads and building their force but must spend a significant amount of their time fighting terrorists instead of hunting down common criminals.

“With dollars, I could hide the money on my body.  There’s nowhere I can hide this,” one contractor explained, showing off the large block of bundled Iraqi cash.

Even though contractors had concerns, they’ve taken the change in stride.  Maxian said none refused to be paid in the local currency.

“The value is the same, whether it’s dinar or dollars,” another contractor said.  “I can exchange it very easily.”

That contractor said he’s watched the value of the Iraqi dinar plummet.  A skilled engineer, he’s done business locally and internationally since the 1980’s.  Before the Gulf War, he said the $3 was roughly equal to one dinar.  Since the Iraqi invasion of Kuwait, though, sanctions, war and Saddam Hussein’s lack of upgrades to local businesses and infrastructure have taken their toll.  Still, he has hope the Iraqi dinar will gain its strength.  He said for more than a year, the dinar has been stable at its’ current exchange rate.

“I have hope in the future,” he said.

That hope is what Maxian said he’s trying to foster by paying out contracts in Iraqi dinar.  It demonstrates that Marines trust the economy will continue to grow and put more spending money in the pockets of the locals.

“For us to do this is a measure of faith in the economy,” explained Maxian, from California.  “As long as they have the money, they’re happy.  As long they still have the business, they still have money coming in.

“Our hope is that this will help boost the local economy,” he added.  “It will be easier to get the flow of money to the people who are looking for work.”