Courtesy of CIA World Fact Book
Formerly part of the Ottoman Empire, Iraq was occupied by Britain during the course of World War I; in 1920, it was declared a League of Nations mandate under UK administration. In stages over the next dozen years, Iraq attained its independence as a kingdom in 1932. A “republic” was proclaimed in 1958, but in actuality a series of strongmen ruled the country until 2003. The last was SADDAM Husayn. Territorial disputes with Iran led to an inconclusive and costly eight-year war (1980-88). In August 1990, Iraq seized Kuwait but was expelled by US-led, UN coalition forces during the Gulf War of January-February 1991.
Following Kuwait’s liberation, the UN Security Council (UNSC) required Iraq to scrap all weapons of mass destruction and long-range missiles and to allow UN verification inspections. Continued Iraqi noncompliance with UNSC resolutions over a period of 12 years led to the US-led invasion of Iraq in March 2003 and the ouster of the SADDAM Husayn regime. US forces remain in Iraq under a UNSC mandate until 2009 and under a bilateral security agreement thereafter, helping to provide security and to support the freely elected government.
In October 2005, Iraqis approved a constitution in a national referendum and, pursuant to this document, elected a 275-member Council of Representatives (CoR) in December 2005. After the election, Ibrahim al-JAAFARI was selected as prime minister; he was replaced by Nuri al-MALIKI in May 2006. The CoR approved most cabinet ministers in May 2006, marking the transition to Iraq’s first constitutional government in nearly a half century. On 31 January 2009, Iraq held elections for provincial councils in all provinces except for the three provinces comprising the Kurdistan Regional Government and at-Ta’mim (Kirkuk) province.
Iraq has had a historically strong currency. From the 1970’s to the 1990’s the dinar was valued at around three U.S. dollars. Prior to United Nations sanctions, the Iraqi dinar traded at 3.35 per U.S. dollar, and prior to the war in Iraq, the Iraqi dinar traded at .33 U.S. Dollars. During major combat operations, the Iraqi dinar declined to an all time low. The “new” Iraq dinar was introduced in 2003 after the fall of Saddam Hussein. The new dinar was produced by De La Rue, a British company, and incorporates 5 integrated security features. After it was issued, the dinar experienced a rapid initial appreciation from a price of around 4,000 dinar per U.S. dollar to a high of 980 dinars per U.S. dollar.
It is expected that the dinar will rise against the dollar. International banks do not yet exchange the Iraqi dinar as there is not yet an international exchange rate for the dinar. The World Bank and the International Monetary Fund have a stated objective to make the dinar an international currency once again. It is expected for this to happen sometime within 2009-2010. The exchange rate is being monitored by the International Monetary Fund and the Iraqi Central Bank which has established a program of measured increases of the nominal value of the Iraqi Dinar.
Iraq has great long-term potential. The country of Iraq is currently rebuilding its infrastructure, which is expected to stabilize the country socially, politically, and economically. Iraq is also a country which is rich in oil and other natural resources and once it begins the recovery process, these factors should help lift the dinar. The new Iraqi government is also establishing a new monetary system that engages foreign investment.