My Million

Back in 2003, in a fit of patriotism, optimism, faith (in markets) and humor, I bought a million New Iraqi Dinars. At the time, I thought one of three things could happen.

1) Iraq would peacefully transition into a global oil powerhouse, and I would make a lot of money.

2) Iraq would devolve into a spectacular mess, at which time I could take the opportunity to re-wallpaper my bathroom with lovely, fresh currency notes.

3) (and most likely) Iraq would muddle along in semi-poverty, corruption and incompetence, until one day I could fly into Kurdistan and blow my wad.

Some may argue that the spectacular mess scenario has actually come to pass and I should be looking for a paper hanger. But with the Iraqi Dinar up 10% in the last quarter, wages up 100% since the end of the war, and GDP growth averaging 15% over the last two years, I tend to see things more in the "muddle along" scenario.

Of course you will never have heard anything positive about the Iraqi economy if you limit your news sources to the European and American press. For them, if "it bleeds, it leads." But having put down my stake, I periodically check the exchange rate and examine the underlying economic activity for signs of life.

Today the Kuwaiti Times has worthwhile read on the state of the Iraqi economy. Some salient points:

- Because Iraq is the only major Arab country (here not including Dubai and Bahrain) allowing the free flow of capital in and out of the country, foreign direct investment is quite strong.

- The number of private companies operating in the country increased from 8,000 to 35,000 in 2006 alone. Growth in the private sector is predicted to maintain that pace in 2007.

- Low gasoline ($.56) and labor costs are helping attract investment.

- Global oil markets continue to support relatively high prices, which in turn helps the oil centric Iraqi economy.

Of course the violence and internecine warfare is not only a human tragedy, but it also manages to keep the economy from really taking off. But as long as my million dinars of sentimental support for the Iraqi people doesn't start attracting glue, there is hope that a normal national life for Iraq is still possible.

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