Iraqi Dinar Discussion Board

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History of the Kuwaiti Dinar:


Sure, here are 2 articles from the New York Times.


AFTER THE WAR; Quick Kuwaiti Recovery Is Seen, With the Cost Less Than Thought

By YOUSSEF M. IBRAHIM, Special to The New York Times

Published: March 18, 1991

KUWAIT CITY, March 17— Kuwait's economy, far and away the strongest among the oil-producing countries before the Iraqi invasion in August put it into a coma, is expected to revive and move back to boom times within two years, say many economic and financial experts on the region.

In scores of interviews here in the last week, Kuwaiti, American and Western financial specialists, including business executives and economic planners, estimated that the cost of reviving the emirate's economy, including the devastated oil industry, would be far less than earlier estimates.

With Kuwait holding about $80 billion in financial reserves abroad, it is more than capable of getting back on a sound economic development track, these specialists say. 'Catastophic but Not Fatal'

"There is no economy now," said Wynne Fuller, who heads the emergency operations division of the United States Army Corps of Engineers here. "We are looking to two to five years to re-establish an economy that resembles what the Kuwaitis used to have."

The Corps of Engineers is to evaluate the damage to the Kuwaiti economy and begin a repair program.

"When all is said and done," Mr. Fuller said, "what you have here is catastrophic but not fatal. The only way I can compare this is to Hurricane Hugo in the States, which cost $4 to $5 billion to repair. So you are looking here at $5 to $10 billion outside the oil sector."

Other officials, including the country's Finance Minister, Sheik Ali al-Khalifa al-Sabah, estimated the cost of reviving the oil industry, sabotaged by Iraqi occupation troops, at $10 billion to $20 billion. Fires Halt Oil Industry

These new and more authoritative estimates are far below others advanced over the last few weeks by a variety of foreign experts living outside Kuwait. Some had suggested that Kuwait's revival might cost as much as $100 billion.

The latest estimates also reflect the growing appreciation here that the damage to Kuwait's roads, power stations, stores, banks and hotels, while substantial, can be repaired through cleaning and patching on a huge scale rather than major reconstruction. Even that work will require skills and coordination that Kuwait cannot muster alone.

The oil industry, source of most of the country's revenue, has been brought to a halt by fires set in most oil wells and refineries. The country's commercial and business centers have been destroyed or looted, immobilizing what was once the Middle East's most active system of private enterprise.

There is no Kuwaiti currency: the Kuwaiti dinar has no fixed value and the Central Bank and other banks have yet to tell people what will happen to their savings or to find records of millions of accounts. Free Food and Gasoline

For now, people living here are getting free food and gasoline. But no salaries are being paid, and a large-scale review of employment records, with a view to eliminating foreign workers like the Palestinians, has yet to get under way.

A variety of currencies, including United States dollars and Saudi rials, are preferred to the Kuwaiti dinar, which is to be replaced with a new one whose exchange rate has yet to be established by the Central Bank.

Yet with the approximately $80 billion in financial reserves held outside the country and with the help of many foreign construction companies, there seems little doubt that the Kuwaiti economy will start rolling again.

"I am very confident about the fact that we will have a boom here," said Michel Shalhoub, a French businessman of Lebanese origin who operated a franchise business selling luxury items from Western companies like Du Pont, Chanel and Lacoste.

Mr. Shalhoub was directing workers repairing two of his shops in the lobbies of what used to be luxury hotels.

"My personal losses are typical," he said. "We had seven stores in Kuwait which were all looted. We salvaged some of the goods in storage facilities. Altogether, I would say our losses are about $6 million, or about 30 million French francs, which represents one-third of my assets here and the equivalent of five years of profits."

Mr. Shalhoub said Kuwaitis would need, and could afford, to buy millions of consumer goods to replace what they lost, including luxury items.

Before too long, people will be buying freezers, air-conditioners, furniture, carpeting," he said. "It will be even bigger than before because those people who kept much of their money outside Kuwait for fear of things just like the Iraqi invasion now know for sure that this country is 100 percent secure and that it will be protected by the West's best armies and a reliable defense alliance to preserve its integrity and freedom." Workers' Future Debated

Before anything that resembles a big economic takeoff can take place, however, the Government must get people back to their jobs, a task that is complicated by some political imperatives dictated by the Persian Gulf crisis.

On the 16th floor of the Industrial Bank here, the chairman, Saleh M. al-Youssef, met over the weekend with his top advisers to determine how they will call their employees back to work, given the Government's edict that expatriates from countries that sided with Iraq must be dismissed.

While the bank's officials have decided to call back their employees this week, other important offices, like the Ministries of Defense, Interior, Information, Oil and Finance, have not yet figured out how to resume operations without many of the foreigners.

"We will decide on a common policy," Mr. Youssef said in an interview. "There are employees we do not wish to keep. They include Palestinians, Yemenites and Sudanese. We will give them their due, of course, but their departure is a political decision. I think the idea is to put pressure on the Palestine Liberation Organization."

There is little doubt that ridding major institutions of thousands of Palestinians will be disruptive to the economic reconstruction of Kuwait. But there is also no doubt of the Government's determination to make sure they go. Change of Attitude Needed

The magnitude of the problem is evident in the makeup of the Kuwaiti population before the occupation. Of two million or so people living here, only 700,000 were Kuwaitis while the others were expatriates, including about 450,000 Palestinians. These did jobs like running hotels, keeping books, repairing cars and working the night shifts.

The country's Planning Minister, Suleiman al-Mutawa, said it was necessary for Kuwaitis to undergo a transformation in attitude, divorcing themselves of the notion that they work only as managers or state employees collecting large salaries with others doing the work.

In the process, Kuwait will have to do away with the whole structure of a sort of welfare state based on prosperity that it has become used to.

"I think there will be a review of all our policies based on what happened on Aug. 2," Mr. Mutawa said. "The questions that have been flushed to the surface are where we can keep expatriates and where we cannot."

"Many of these expatriates have no genuine interest in Kuwait and have, therefore, collaborated with the Iraqis," he continued. "In vital sectors, we may pick up some of the cost overruns to pay Kuwaitis to do those jobs they will not do for the same low salaries that expatriates accept. This is where Government subsidies should go into the private sector to encourage them to hire Kuwaitis instead of expatriates."

"The bottom line," Mr. Mutawa said, "is that the welfare state was mother and grandmother, and when you have that waiting for you at home, you tend to become very spoiled." Records Need to Be Found

Then there is the problem of activating the banks and circulating the new Kuwaiti currency. The Government says it has printed notes, but it is far from clear how the money will be distributed and on what basis.

Bankers said they understood that Government policy will be to consider that everything in Kuwait will revert to where it stood on Aug. 1, the day before the Iraqi invasion. That means that people who held bank accounts then will preserve the value of their money. But the problem is how to locate bank records and find enough employees to carry the policy out.

"What about all the Iraqi money we had to deal with?" asked a merchant who asked not to be identified. "I sold much of my stuff to Iraqis because I had no choice. Does this mean that when I go to give them the Iraqi money, they will not give me Kuwaiti money in return? What happens to the values of the goods I sold?"

For the moment, the entrepreneurs of Kuwait have not yet returned from exile and there are still 400,000 Kuwaitis out of the country. Much of the repair work is being done by foreign companies contracted by the United States Army Corps of Engineers.

Mr. Fuller said the corps had already given out seven contracts totaling $46 million. The contracts are for repairs to buildings, roads, electric cables and sanitation. Where Contracts Go

They have gone to non-Kuwaiti companies, including Shand of Britain, al Harbi of Saudi Arabia and several United States companies, including Blount, American Dredging Company and Brown & Root.

In addition, contracts worth tens of millions of dollars have been given to firefighting companies, largely American, that are preparing to put out fires at an estimated 600 oil wells.

But to get the emirate's economy rolling, Government spending will have to be directed at Kuwaiti companies in the building and rehabilitation business and this cannot begin until the banks are back in business and the Kuwaitis start to return home.

Along with debt, there are fears of inflation. Before the invasion, the inflation rate in Kuwait was kept at low levels -- 1 to 2 percent. With reconstruction, there are fears that political pressure will force the Government to abandon caution and cause inflation to rise to unacceptable levels.

"Economically, we can do it," said Sheik Ali, the Finance Minister. "But how to do it in the most efficient way is the difficulty. There are political considerations that may blow away the spending plans which are cautiously structured." Un Unknown Quantity

Then there is the matter of political stability, an unknown quantity that could presumably influence economic recovery.

Last week, there was unhappiness here when the Government said it would not be able to restore electricity for three more weeks. Many people asked that the Government abandon its slow reconstruction plans and rush to import thousands of generators to supply homes.

"We need patience, but I can understand that people have suffered too much and do not have much patience to give," the Planning Minister, Mr. Mutawa, said. "The period of crossing from disaster to recovery is going to be a difficult one."

Photo: Although Kuwait's economy is virtually nonexistent now, experts expect it to revive and move back to the better times it enjoyed before the war within two years. A rare open business in a Palestinian neighborhood of Kuwait City did a booming carryout food business on Saturday. (Agence France-Presse) (pg. A9)

http://www.nytimes.com/1991/03/18/world/after-the-war-quick-kuwaiti-recovery-is-seen-with-the-cost-less-than-thought.html?scp=5&sq=Kuwaiti Dinar&st=cse&pagewanted=1


Then the next one that shows what happened:

AFTER THE WAR; No Electricity but Kuwait Reopens Its Banks
By DONATELLA LORCH, Special to The New York Times
Published: March 25, 1991

KUWAIT CITY, March 24— It still has no water and little electricity or food, but Kuwait revived its banking system today, introducing a new currency.

Banks reopened for the first time since Iraqi occupation forces shut them down in December. Thousands of people lined up to exchange their old Kuwaiti dinars for crisp new ones and to withdraw a limited amount of money.

Without electricity, the banks services were slow, limited to money exchange and withdrawal. There was no telex, no electronic money transfer and no telephones. The computers were unusable, so all transactions had to be entered by hand.

"It's like going back 20 years," said Mohammed al-Yahya, the manager of the Commercial Bank of Kuwait, the nation's second-largest bank. Seized Dinars Canceled

The Central Bank is canceling the value of Kuwaiti dinars that were seized from the Central Bank and put into circulation by the Iraqis. The invalid serial numbers were posted today in front of all banks in the city.

All other old dinars can be exchanged for new ones on a one-to-one rate until May 7, when the old dinars become invalid. The new official exchange rate is 3.47 American dollars for one new Kuwaiti dinar.

Although it is severly handicapped without electricity, the Commercial Bank, like many other major banks, was able to open for business because its records had been saved from the Iraqis. Mr. Yahya hid the bank's balance sheets in his home and sent its computer records to London via Syria with an Indian employee, who packed the tapes into the back of a trailer.

The banks also face serious personnel shortages. Only 11 of the Commercial Bank's 35 branches opened today, with 137 out of 1,300 workers.

Before the Iraqi invasion, only 17 percent of the bank's staff was Kuwaiti. Many of the foreign workers -- Jordanians, Palestinians and Indians -- fled and now cannot re-enter the country.

For those exchanging money today, there was little they could buy in Kuwait. Many of those in line said they planned to use their money for vacations or for shopping trips to Saudi Arabia to buy generators and food.

"I need to get away from this pressure," said Abdul Mohammed Hussein, a computer engineer in his early 40's who said he was withdrawing 1,500 new dinars to take a vacation in the United Arab Emirates. "Everywhere you go you find lines. At the supermarket, you find lines. To get petrol for the car, you find lines."

Abdul Hamed al-Atar, a 50-year-old retired Interior Ministry official, said this was the first time he had set foot in a bank since September, and he seemed relieved. "Kuwaits always keep a lot of cash with them," he said as he was handed crisp new piles of money that he stuffed into a small bag. "It's a comfort to have money in my hands."

Photo: As Kuwaiti banks opened for the first time in months, a group waited in line to change old banknotes for new. New currency was printed to replace stocks of previous notes looted during the Iraqi occupation. (Agence France-Presse)

http://www.nytimes.com/1991/03/25/world/after-the-war-no-electricity-but-kuwait-reopens-its-banks.html?scp=2&sq=Kuwaiti%20Dinar&st=cse