Marines exchange money while shorting black market

19 Jul 2003 | Army Sgt. Troy Chatwin

Unlike in the United States, where big money rules, small denominations are most favored in Iraq because of a lopsided exchange rate. As a result, the black market is preying on residents' need for money in its most sought-after form - the 250 Iraqi dinar note.

While the 10,000 Iraqi dinar bill is legal currency and accepted in most stores, shoppers must either buy more than they need, or take a bad exchange rate - called discounting. Because of this, marketers and customers prefer the smaller currency.

This is where Master Sgt. Bernie Sahadi of the 3rd Battalion, 5th Marine Regiment steps in. Sahadi, a native of Downey, Calif., is the banking team leader for the Army's 432nd Civil Affairs Battalion from Green Bay, Wis., which supports the Marine battalion.

As the leader of the banking team, he recognized how black marketers were taking advantage of consumers and reacted.

"If the people don't have small bills, they have to go to the black market moneychangers," Sahadi said pointing to a shop across the street. "There, the people only get 7,000 dinars in exchange for the 10,000 dinar bill."

To fight the black market operators, Sahadi organizes money exchanges for the people in the Al Qadisiyah province. Once a week area citizens can exchange up to three of the 10,000 Iraqi dinar bills for an equivalent amount in 250 dinar notes.

"Our goal is to touch everybody," Sahadi said of the scope of his plans. "We want to reach the people, the local police, and the vendors. This will help squash the black market and promote commerce by getting the bills needed back into the city."

The previous money exchange rate on the street for 10,000 notes was between 7,000 and 8,000 Iraqi dinars. By exchanging more money this time, Sahadi hopes the rate will go as high as 8,500.

"This time we are exchanging about 200 million Iraqi dinar in this province; 75 million [in Ad Diwaniyah], and 125 million in three smaller, neighboring towns," he said. "If the rate gets high enough, the black market will go away."

The crowds of people that turned out in the hot day's sun for the exchange at the Rafidain Bank stopped traffic in the street. The local police and Marines had the customers organized into lines, which flowed out into the road.

"We helped about 2,000 people today," said Salih Mahdi, the bank manager. "How many people we help is only limited by the amount of 250 dinar bills we can get."

Some residents feel the economy of scale does not favor them.

"This is a merchant's trick to absorb the blood of the people," said Sheik Jasim Wahab, a local cleric at the Islamic University. "So the coalition forces solve the problem by directly exchanging the money."

"We limit the exchanges to 30,000 Iraqi dinar for each person so no one can get a corner in money racketeering," Sahadi said. "We didn't cause this problem.  We're just trying to work the system to help the people."