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. Last Updated: 07/27/2016

Iraq Boosts Finances in $100s Scare

BAGHDAD -- When the United States introduced new $100 notes, Saddam Hussein's government seized on the announcement to give its embattled economy a boost.

"America Cancels $100 Bill,'' shouted the headline in the state-run Al-Jumhuriya newspaper, spreading panic among Iraqis who rely on the greenback as protection against hyperinflation. One paper even ran a picture of an old $100 note, with a big black "X'' across it.

Old dollars are still as valid as the new ones issued to foil counterfeiting, but in a rigidly controlled country where the government dictates the flow of information, its campaign was a huge success. Nervous Iraqis rushed to banks and black market money-changers to exchange dollars for previously shunned Iraqi dinars.

Saddam's government, desperate for hard currency due to tough UN sanctions, received an infusion of tens of millions of dollars, according to estimates by diplomats in Baghdad.

The dinar, which hit a record low of 3,000 to the dollar in December, has surged in value and is now relatively stable at around 700.

"Dealers in the hateful green currency are in misery,'' crowed Babil, a newspaper run by Saddam's son, Odai. "The 'dollarioun' [dollar people] were shocked by the revolt of the sleeping giant,'' the dinar.

Iraq remains one of the most troubled countries in the world. The Arab nation is an international pariah with no hope of rebuilding its wrecked economy until it can win a full lifting of the UN embargo, imposed in response to the 1990 invasion of Kuwait.

Iraq's economic crisis came to a head in December as the Iraqi currency sank by the day and the year's inflation rate reached several thousand percent.

On the streets of Baghdad, dirty, ragged children beg at traffic lights. In hospitals, there is an acute shortage of basic medicines.

The government claims that because of the oil-sale embargo, it does not have enough hard currency to buy the needed medicine.