Staging an Iraqi Dinar Revaluation (RV): A Unique Background of Events

This is Section 1 of: The Ultimate Guide to Every Economic and Political Reason for an Iraqi Dinar Revaluation (RV)

Amidst years of speculation, rumors, and expectations surrounding an Iraqi Dinar Revaluation (RV), there exists a base case to be made deserving serious consideration.

However, it is crucial to ground any discussion in the real economic, financial, and political environment surrounding Iraq today.

While the speculative nature of previous claims may not align with economic reality, it is important to acknowledge the continuous improvements witnessed in Iraq’s economic development.

These advancements provide a legitimate rationale in support of considering the eventual revaluation of the Iraqi Dinar.

This report outlines a comprehensive set of factors contributing to this perspective, aiming to provide a thorough analysis of the landscape surrounding the case for an Iraqi Dinar revaluation (RV).

1.1 The Evolution of the Iraqi Dinar

The history of the Iraqi Dinar dates back to its introduction as Iraq’s official currency in 1932. At its inception, the IQD was at par with the British pound, reflecting a stable economy and strong financial position.

However, the subsequent decades witnessed a series of significant events that led to the devaluation of the IQD.

1.1.1 The Impact of Wars on the IQD

The Iran-Iraq war (1980-1988) and the subsequent Gulf War in 1991 had profound effects on Iraq’s economy and its currency.

These prolonged conflicts strained resources, disrupted economic stability, and resulted in the devaluation of the Iraqi Dinar.

See related article: IQD History: CBI Governor Speaks Publicly About Currency RV/RD in 2011

1.1.2 Economic Sanctions and Trade Restrictions

Economic sanctions, imposed by the international community due to various political and security issues, have played a pivotal role in the fluctuations of the Iraqi Dinar’s value.

Sanctions often limited Iraq’s ability to engage in international trade, leading to a decline in foreign currency reserves and contributing to the devaluation of the IQD.

1.2 Popular Reasons Fueling Speculation around an IQD Revaluation

Despite these challenges, speculations about the potential revaluation of the Iraqi Dinar have persisted.

Proponents of an Iraqi Dinar RV often highlight several primary arguments supporting their position.

These include:

1.2.1 Iraq’s Abundant Oil Reserves

Likely the most popular reason supporting expectations of an Iraqi Dinar revaluation is that Iraq possesses one of the world’s largest oil reserves, and the successful exploitation of these resources should significantly boost its economic potential.

This substantial oil wealth is a critical factor in the potential revaluation of the IQD.

1.2.2 Iraq’s Prospects of Economic Growth

Another popular reason offered in support of an IQD revaluation is Iraq’s potential for continued economic growth.

Underpinned by its oil resources and untapped economic potential, the community of IQD RV’ers has continued to grow over the years with committed interest.

Certainly there is a valid case to be made for a successful Iraqi Dinar revaluation being closely tied to Iraq’s ability to harness its economic potential.

Does Iraq now have a robust economic credentials to support a stable, high-value exchange rate?

A detailed analysis of Iraq’s key economic indicators will be presented in Section 3 of this report (link).

1.2.3 Political Stabilization in Iraq

Finally, Iraq’s purported progress in establishing political stability is another popular argument made in support of a significant currency revaluation.

Iraq’s journey towards political stability has been marred by challenges like corruption, security concerns, and political instability.

As Iraq takes steps towards establishing lasting political stability and independent governance, the probability of a major currency revaluation (RV) would definitely increase.

Yet, has the government of Iraq (GOI) really made significant inroads to political stability?

This subject will be outlined in Section 3 of this report.

1.3 International Agencies and their Effect on Exchange Rates

It’s important to clarify that international agencies, such as the United Nations Security Council (UNSC) and the International Monetary Fund (IMF), do not possess the direct authority to arbitrarily set a country’s currency exchange rate (valuation).

This means that no international agency can mandate that the Iraqi Dinar (IQD) be changed from $3.00 per IQD to $0.0007 per IQD – or visa versa.

Currency exchange rates are primarily shaped by market forces, economic indicators, and the nation’s own financial policies.

While these agencies do not directly dictate exchange rates themselves, they do exert influence through mechanisms such as economic and geopolitical sanctions which may significantly impact a nation’s currency value.

1.4 Executive Orders and Economic Sanctions were a backdrop for an Iraq Dinar Revaluation

In the aftermath of the Gulf War and during the reconstruction of Iraq, a series of Executive Orders were issued to address assets, legal issues, and economic stability.

These Executive Orders collectively aimed to protect Iraqi assets, maintain the stability and security of Iraq, and support post-conflict reconstruction and development. Notably:

1.4.1 Executive Orders Effecting Iraqi Economic Reality

Here’s a list of every EO and U.S. Treasury Sanctions related to Iraq.

1.4.2 Specifics Regarding Executive Order 13303

There is much speculation over Executive Order 13303, issued by President George W. Bush in 2003, regarding the revaluation (RV) of the Iraqi Dinar.

Aimed to safeguard the Development Fund for Iraq and protect Iraqi petroleum-related assets, this order prohibited the attachment, judgment, or lien against these assets, aiming to facilitate Iraq’s reconstruction and stability.

• Executive Order 13303 has been continuously extended beyond its initial issuance in 2003.
• On May 16, 2023, a notice was issued to extend the national emergency with respect to the stabilization of Iraq, originally declared by Executive Order 13303 on May 22, 2003.
• The order aimed to prevent obstacles to the orderly reconstruction of Iraq, the restoration of peace and security, and the development of political, administrative, and economic institutions in Iraq.
• Executive Order 13303 does not directly mention the Iraqi Dinar currency or address a potential revaluation of the Iraqi Dinar but plays a role in protecting Iraq’s economic interests.

1.4.3 Economic Actions and Sanctions Levied Against Iraq by the U.S. Treasury

There were a number of Actions and Sanctions-related documents issued by the U.S. Treasury against Iraq. Below is a summarized explanation of each document.

The Termination of Iraqi Sanctions and Removal from Chapter V of 31 C.F.R. (September 13, 2010)

In September 2010, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) marked a significant milestone by formally ending economic sanctions on Iraq. This marked the removal of the Iraqi Sanctions Regulations from 31 C.F.R. Chapter V and introduced the Iraq Stabilization and Insurgency Sanctions Regulations (ISISR).

This transition was in line with several Executive Orders, including Executive Order 13303 (May 22, 2003), Executive Order 13315 (August 28, 2003), Executive Order 13350 (July 29, 2004), Executive Order 13364 (November 29, 2004), and Executive Order 13438 (July 17, 2007).

On September 13, 2010, the ISISR replaced the earlier Iraqi Sanctions Regulations, and as of that date, there were no comprehensive economic sanctions remaining against Iraq.

The ISISR contain the current OFAC restrictions related to Iraq and Iraqi property. As of the date of this document, there were no broad-based sanctions against Iraq. However, specific individuals and entities associated with the former Saddam Hussein regime were subject to prohibitions and asset freezes.

These individuals and entities were determined to have committed or posed a significant risk of committing acts of violence that could threaten the peace, stability of Iraq, the Government of Iraq, or undermine efforts for economic reconstruction, political reform, or humanitarian assistance in Iraq.

On September 13, 2010, the ISISR replaced the earlier Iraqi Sanctions Regulations, and as of that date, there were no comprehensive sanctions against Iraq.

Summary

This section has provided a detailed historical context surrounding the Iraqi Dinar, including its evolution, the impact of wars, the role of economic sanctions, the popular reasons for speculations regarding an Iraqi Dinar revaluation, and the role of international agencies and Executive Orders in currency exchange rates.