Iraqis Line Up to Trade Old Dinars for New Notes

It didn’t take long Wednesday for a crowd to gather around Abdul Qadar Husan as he stood in front of Iraqi Middle Eastern Investment Bank inspecting his newly exchanged dinars.

Husan, a 65-year-old contractor, was one of the first customers in line to swap a bag of Saddam Hussein-era money for the new U.S.-developed currency, which doesn’t carry the deposed leader’s portrait. “I just wanted to get rid of that guy’s picture,” he said.

“They’re so small,” said Sabah Hussein, 30, a deliveryman, marveling at the Monopoly-money-sized Iraqi bills. “It’s good. I like it. They will be easier to carry.”

Much to the relief of the U.S.-led administration, Iraqis by and large embraced Wednesday’s launch of the new dinar. There was no panic, no terrorist attacks against banks, and only some modest griping about standing in lines in the sun, even though citizens have until Jan. 15 to carry out their exchanges.

After a string of car bombings and political setbacks, the currency debut gave U.S. officials a much-needed boost in their efforts to rebuild Iraq, restoring some goodwill with an increasingly wary Iraqi population and giving the Bush administration an opportunity to demonstrate back home that it’s making progress.

“We are laying the groundwork for the private sector in Iraq,” said Commerce Secretary Don Evans, who flew to Baghdad to usher in the new currency.

The carefully orchestrated media event at Baghdad’s international airport underscored how fervently the White House is working to manage perceptions about progress in Iraq. In recent weeks, the Bush administration has launched a public relations counteroffensive to what it called negative media portrayals of the U.S.-led occupation.

Before Wednesday’s event, an administration advance team arranged burlap sacks of old currency around a forklift carrying boxes of the new bills.

“I’m not fearful of my security,” Evans declared in an interview with Fox News, though he traveled with about a dozen heavily armed guards and a military convoy.

After the event, Evans made a surprise visit to the media bus to chide reporters for their coverage. “The American people have a different impression of the environment here than what really exists,” he said.

Throughout the day in Baghdad, customers arrived at banks with heaps of old cash -- the dinar currently exchanges at 1,970 to the dollar -- carried in plastic trash bags, suitcases, burlap rice sacks and bulging pockets.

Since it’s largely a 1-to-1 exchange (the so-called Swiss dinar of the largely autonomous Kurdish region of northern Iraq is considered stronger and more stable and is exchanged at 1 to 150 national dinars), most customers left with similarly cumbersome stacks of new, plastic-wrapped money.

Security at banks was sharply increased. U.S. tanks were stationed in front of most exchange centers, and some remained even after banks had closed. Customers were patted down and searched. Security cameras and Iraqi police kept watch inside.

The U.S.-led Coalition Provisional Authority spent $170 million to design, print and roll out 6 trillion new dinars, carting the currency around in plywood boxes on 747 airplanes. Old bills are being incinerated.

Fears that those opposed to the U.S. occupation would attack bank branches were heightened by a string of suicide car bombings, including three over the past week.

“I’m just hoping that nothing happens today,” said Zuhair Njimi Aldin, 24, as he exchanged 7 million old dinars at Al Zuwya Bank in Baghdad.

Most of the crowds were orderly and patient, according to teller Kawkab Thyab, who noted that many people had already deposited their cash over the past few weeks so that their account balances would automatically convert.

“Actually, people were more anxious and nervous before today,” she said.

Taxi driver Abbas Hamad Oubaid said he had kept 3 million dinars hidden at home since the war. The arrival of the new currency convinced him to open an account at the bank.

“But it’s taken three days just to bring it all in,” he said, holding a plastic bag of bills in line.

Experts predicted that Iraqis would welcome the new currency’s safeguards against counterfeiting and the promise of greater stability. About 2 out of every 1,000 existing dinar bills are fake, coalition officials estimated. Counterfeit 10,000-dinar notes are such a problem that they are exchanged at a 25% discount.

“I think most of the activity is going to happen over the next few weeks,” said Jacob Nell, a currency advisor from Britain. He predicted that merchants would prefer the new currency’s counterfeit protections and might start to discount all the old bills to offset the risk.

The new currency is the latest step to get Iraq’s economy on its feet and instill greater confidence among investors and business owners.

The coalition recently began thrice-weekly currency auctions to set the exchange rate against the U.S. dollar. The first auction had one bidder, the last had eight. But by Jan. 15, officials hope a competitive market will help stabilize the currency.

Separately Wednesday, at an undisclosed location near the Syrian border, elements of the Army’s 82nd Airborne Division saw a small group trying to cross into Iraq, the U.S.-led military said.

When challenged, the intruders fired small arms and rocket-propelled grenades at the Americans, the military said.

An official said the infiltrators were apprehended or killed. There were no U.S. casualties, but a helicopter was disabled when struck by small-arms fire, he said.

Syria denied that an infiltration attempt had taken place from its territory.

*

Times staff writer David Lamb contributed to this report.