WASHINGTON — In the Persian Gulf port of Umm al Qasr, where local dockworkers are now being paid in U.S. dollars instead of "Saddam" dinars, the transformation of Iraq's economy has already begun.
It won't stop there. An advance team of 13 Treasury Department specialists is about to enter Iraq to gather intelligence about its cloistered economy. In Washington, the World Bank and International Monetary Fund have assigned task forces to lay the groundwork for a wide range of postwar monetary, fiscal and private sector reforms.
The overarching objective is no less ambitious than the war itself: to restore a once-vibrant economy reduced to Third World status by decades of war, sanctions, graft and blunder. Experts say it will take longer -- and probably cost more -- than the U.S.-led military offensive that ended Hussein's authoritarian regime and its command-and-control economic policies.
Many experts and officials say the place to start is on the street, where the necessities of life are denominated in dinars, about 3,500 to the dollar at last count.
"One of my colleagues from the State Department was asking, 'What do we do the first month? How do we pay the salaries?' "said Salah Al-Shaikhly, who ran Iraq's central bank in the 1970s.
His advice: Show up with stacks of dollars. Ones and fives, nothing bigger. Use them to pay the estimated 1.5 million Iraqis who work for the government and often hold second and third jobs as well. They do most of their daily business in cash and, if that revenue stream is interrupted, what's left of Iraq's economy could implode.
"Many salaries are no higher than $5," said Al-Shaikhly, who teaches economics at St. John's College in Oxford, England, and has been advising Bush administration officials on postwar reconstruction. "They'll go to the market and change it [for] dinars, which is a decent month's salary."
That's what has been happening at Umm al Qasr, one of the first sites secured by U.S. and British troops. Locals have been lining up for temporary jobs and receiving their pay in dollar bills. The practice is expected to spread to other sites as the grunt work of reconstruction begins in earnest.
"They definitely need to keep that money flowing," said Rubar Sandi, an Iraqi American investment banker in Washington who is being sent to Baghdad to help coordinate reconstruction activities.
