Posted on 06/21/2003 6:53:20 AM PDT by Smile-n-Win
BAGHDAD (Reuters) - With sanctions lifted and no taxes to pay, Iraqi traders are getting back to business despite uncertainty over U.S. plans for the country two months after the fall of Saddam Hussein.
To Iraqis used to hardship and shortages, the markets now look like a paradise of goods. Everything from canned food, soft drinks and milk powder to television sets, computers, satellite dishes and refrigerators can be found.
"There are no restrictions on imports and the traders are free now to import all kinds of goods, including cars," said Salim Hassan, a trader in the Karrada area of Baghdad. "Most of the goods are coming from the North, Iran, Jordan and Syria."
The U.S. interim administration in Iraq has said it will waive tariffs on most items this year to help kick-start the economy.
Traders say that as well as being free from taxes, they no longer face the burden of bribing customs officials.
"Shipments of goods used to stay for days at customs offices and in order to get them we had to bribe officials," said trader Ahmed Abbas.
"Now there are no more bribes and no more taxes on imports, which were the main reason behind the rise in prices of most goods and put them out of reach of ordinary Iraqis. We are doing good business now. Goods are flooding the markets and we are making a profit."
EXCHANGE RATE HELPS
The rise in the Iraqi dinar against the dollar, caused by a huge influx of U.S. currency, has made goods more affordable.
"It used to be a luxury to drink a can of imported Pepsi," said Abbas Saad, a retired teacher. "It used to be sold at 1,000 dinars. Now it can be bought for 250."
The dollar now trades at around 1,500 dinars compared with more than 2,000 a few weeks ago.
Iraq was once a thriving Middle Eastern country with a prosperous middle class and claimed the region's highest living standards in the 1960s. But decades of dictatorship, war and sanctions left the country impoverished.
Today many of Iraq's 26 million people live in poverty and about 16 million depend on handouts from the U.N.-run oil-for- food program.
Under Saddam, the economy was run centrally, using fixed prices and wages. Bribery thrived.
A draft U.S. plan says the new Iraq will have a free-market economy, helped by a four-year project to privatize state-owned industries, a tax law rewrite to reflect international standards, and a modernization of the Baghdad stock exchange to allow electronic trading.
SHOPPING SPREE
Battered by decades of hyperinflation, Iraqis have gone on a shopping spree now that prices have fallen sharply.
Streets leading to the main commercial centers of the capital are packed, and traffic is regularly gridlocked.
One of the most popular items is satellite television equipment, which sells for $250 to $300 a set.
Possessing a dish during Saddam's rule was punishable by a fine of around $150 and even a six-month prison sentence, but in recent years the equipment was usually just confiscated.
Many who cannot afford the new luxuries come just to gape at them.
One problem facing many Iraqis is that many merchants refuse to redeem 10,000-dinar bills at face value, due to concerns that they may be declared worthless. The bills are regarded as easy to counterfeit and many were looted when Saddam's rule collapsed.
"What can I do? Nobody accepts the 10,000 bills at full face value and I was paid in 10,000 bills," said Shatha Abdulrahman. "Banks are announcing that there is nothing wrong with the bills, they are legal tender, but merchants are refusing to honor them."
About 1.4 million civil employees received wages last month in 10,000-dinar bills, the first salaries paid since the United States toppled Saddam on April 9.
This is the obligatory "Reuters Bad News From Iraq"(TM) that must be included in every article. So why doesn't this guy just go to a bank, have the bills changed, and stop whining?
"The Thieves of Baghdad" comes to mind.
It's amusing to read several paragraphs of great news describing how well a free market works--and then read about a poor whining nincompoop who is too dumb to take his bills to the bank!
I wonder if the author was aware of this effect, though...
And it does a terrific job of giving the economy the initial push it needs. (I purposely avoided "jumpstart"--it's so trite!) Say's law will soon kick in and, helped by oil revenues, Iraq will become a flourishing country.
All thanks to that "imperialistic American cowboy arrogance!"
The government has no business paying for schools or hospitals. Granted, the government has no business owning an oil field, either--but I'll be generous and let them have one so they can pay for the armed forces, the judicial system, and the roads.
The benefits of having absolute zero taxation are enormous. Freedom takes on a whole new dimension when you are free from government agents sniffling through your accounts.
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