Compliments of Ocrush and his efforts in providing us with these facts.
Well as you are aware, as usual, many are questioning the history of the Kuwait Revaluation History. Some forums are trying to provide you with the "True Facts", but in this post we will provide you with the "Real Facts" with proof. You be the judge.
Here is the email sent to me by the one and only Ocrush:
Hello Steve and Ray......hope you and your families are well. I received an email from a fellow member yesterday if I knew the history of the kuwaiti dinar. She said its a hot topic on the board and was a little confused.
In response I explained to her I will find the facts for her and send them to you Steve. I wanted to be precise and factual:) You know me:))
All the articles below are from reputable news agencies (NYT, IPS and so on. I started with an article on the new iraqi dinar that was released in Oct. 2003 and what has happened to it when it was released those first few months.
Read More Link On Right
The next article is what happened to Kuwaits economy after there rv (4 months later) (dated July 23, 1991)
The next article dated march 25 1991 (monday) is when the kuwaiti dinar rv'd
The next article dated march 18, 1991 is what happened a few days before (7 days before the rv) in kuwait:)
The next article dated march 5, 1991 was a special news article from the NYT (I found this interesting myself)
The next article dated Oct. 14, 1990 is from market watch. Enter the Dollar. Just trying to be precise:)
and the last one is a timetable (you know how I love timetables;)
I put them in descending order. I hope this helps our members to understand Kuwaitis monetary change history:)
This are not my thoughts but the facts from reputable newspapers. A few more days left...I am sooooo excited!!!!!
Cheers Steve, Ray and All:))))
IRAQ: Dinar Falls Victim to Violence Cam McGrath
CAIRO, Jun 15, 2004 (IPS) - Egyptian speculators who stashed away "Bremer dinars" earlier this year in the hope their value would skyrocket have suffered enormous losses as the official Iraqi currency plummets.
"Many people sold anything they could to buy Iraqi dinars," Mohammed al-Abyad, chairman of the Egyptian Foreign Exchange Association (EFEA) told IPS. "When the dinar went down these people lost a lot of money."
The Iraqi dinar was trading at one Egyptian pound (16 cents) per 50 dinars on the black market before its value dropped sharply earlier this year on news of escalating insurgency in Iraq. The pound is now worth 210 dinars on the black market.
"The black market has narrowed and the currency has no liquidity now," said Shady Sharaf, head of market research at al-Shorouk Brokerage. "The people cannot sell the dinars they bought, which presses on demand."
The new Iraqi dinar banknotes introduced by the U.S. command last October replaced old banknotes bearing images of deposed Iraqi leader Saddam Hussein. Speculators believed the value of the "Bremer dinar" named after the U.S. civilian administrator of Iraq L. Paul Bremer would rise as the economy of war-devastated Iraq recovered.
Thousands of Egyptians working in the Gulf region brought home bags stuffed with the new Iraqi dinars. They stashed away the currency or sold it for quick profits to other speculators on the black market.
"They remembered what happened in Kuwait, and believed the same thing would happen in Iraq," al-Abyad said.
The value of the Kuwaiti dinar fell to less than 10 cents during the country's occupation by Iraqi forces in 1990, but climbed steeply after its liberation by coalition forces the following year. It now trades at 3.50 dollars.
"The situation in Iraq and Kuwait is very different," said al-Abyad. "Kuwait recovered in little time because its (infrastructure) remained intact."
The speculation was based on credibility, says Alaa al-Shazly, economics professor at Cairo University. "The dinar is backed by the U.S. and people wouldn't have thought the U.S. would get into something that would turn out to be a failure."
Egyptian law does not explicitly prohibit the possession of Iraqi currency, but authorities have taken measures to limit rampant currency speculation. The Central Bank of Egypt has prohibited banks and foreign exchange offices from listing or trading the Iraqi currency. Customs authorities say they have received orders to confiscate Iraqi dinars from arriving passengers.
"The government is more informed simply because they know the political situation is unstable," said al-Shazly. "It understands that the currency doesn't carry any weight."
A currency trader told IPS he was lucky to sell all his dinars before the exchange rate began to sink. He said many people are still holding on to dinars hoping the currency will recover.
"If the situation improves in Iraq maybe the dinar will go up again," he said, "but I won't keep them any more. It is too risky."
Mohammed Aboul Eyein did not get out in time. The farmer sold livestock to purchase dinars when they were at their highest value only to watch his investment crumble.
"Everyone was saying the dinar would increase ten times in value," he said. "Now nobody wants them."
Local experts say that if trading in the Iraqi currency were allowed in Egypt, a pound would fetch 235 dinars.
"Until now, the government could not legalise dinars because in order to trade in any currency you need to be able to transfer the currency to and from its respective country," said al-Abyad.
He points out that the Iraqi dinar recently began trading on the international market. This could give the Egyptian government fresh incentive to legalise dinar trading at banks and foreign exchange offices.
"Legalising the dinar would be good for the people and even the government because the money is already in the market," he said. "This would also allow people to trade it and put their money back (into circulation)." (END/2004)
Most of the Kuwait Economy Is Still in Suspension By JOHN H. CUSHMAN Jr., Published: July 23, 1991
KUWAIT CITY, July 19— At the Shamlan docks on the edge of Kuwait's business district, the traditional wooden dhows that Persian Gulf fishermen and merchants have sailed for centuries cram the piers every day, bringing fresh fruit, vegetables and fish to a market thronged with eager customers.
But across town, at the immense, modern commercial port of Shuwaik, the piers are empty, the cranes are still, and the harbor is desolate, awaiting the completion of dredging work to reopen the port. It was shut when the Iraqis sank vessels in the channel and wrecked the port's heavy machinery during the Persian Gulf war.
The striking contrast between the two ports is a telling one, for there are two views to be taken of the Kuwaiti economy five months after the end of the gulf war and nearly a year after the Iraqi invasion.
In ways the country is a beehive of activity, humming with the entrepreneurial opportunism of the street markets and witnessing a substantial boom in construction work as the Government tries to rebuild Kuwait's shattered physical structure.
But in other ways Kuwait is still in economic hibernation, its workforce depleted, its smaller enterprises looted and shuttered, and its commercial life in a state of suspended animation.
A Western Ambassador, asked what the country's biggest problem now is, answered: "The one that bothers me the most is the economy. If you have a stumbling, bumbling approach to the economy, I worry that you could have a lack of confidence."
A Kuwaiti businessman whose factory was destroyed by allied bombing but who now has products back on the market, said aimless government policies were the biggest obstacle he faced.
"It's a lack of decision making," said the businessman, who asked not to be identified. "You are on your own. You have to take risks and work without any shoulder to lean on. There is nobody to reassure us."
To revive consumer confidence, there is talk of the Government's making payments of up to $75,000 to each household, although no final decision on the size of the handout has been made.
The Government has already declared that it will forgive outstanding consumer loans worth a total of more than $4.5 billion, including money borrowed to buy homes, a boon to those who were deep in debt at the start of the war. But that did nothing for people who had paid cash for their property or paid back their mortgages, and it is still uncertain how much compensation will be paid for physical losses suffered by individuals and small businesses.
There are signs that commercial life is rebounding. For every shop that is still shuttered or looted on the main streets, another offers consumer goods like cameras, perfumes and clothing. And the big hotels are full of foreign business executives seeking deals to sell computers to schools or environmental expertise to the oil industry.
But much of the boom in the economy seems to be a temporary phenomenon made of two simple ingredients: the quick infusion of money and manpower dedicated to turning on the power and water, repairing damaged buildings and stopping the oil fires; and the rush of spending to replace goods stolen by the Iraqis, like automobiles for consumers and computers for businesses, schools and government.
Maj. Gen. Patrick J. Kelly, the American officer who has been leading the Defense Reconstruction Assistance Organization, an American project that organized the initial restoration of basic services like power and water to the city, said this work would be completed by the end of the year, by which time $400 million will have been spent. General Kelly's office, which is part of United States Army Corps of Engineers, has been hired by the Kuwaiti Government to manage several large reconstruction projects temporarily.
American engineering companies like Brown & Root International and Blount Inc. are playing a big role in this effort, as are large Saudi and Kuwaiti construction companies. All of them rely heavily on Filipino and other third world laborers.
But General Kelly added that turning the utilities back on and repairing the damage to public buildings like schools and government offices is only the first step in a task that the Kuwaitis will have to carry on for themselves. Industry Not Rebuilding
"Small industry has not begun to rebuild," the general said. "Large industry has not begun to rebuild. Private homes are not being rebuilt."
"That effort has not clicked. Because they are waiting for the fiscal and monetary policy," he said. "There is no borrowing going on, no investment going on."
In the small commercial sector, much of the resurgence of business seems to be a result of the efforts of opportunistic merchants who are putting little investment into the economy.
Some of them work in the huge open-air markets where peddlers are turning quick profits providing basic goods like carpets and furniture to Kuwaitis returning to their homes.
(Page 2 of 2)
A Saudi entrepreneur named Ghali Hamood al-Rashid, who is selling televisions, stereos, washing machines and the like in one such marketplace, said he sold five video players and televisions, an air conditioner and a tape recorder on Friday morning. He brings the goods by truck from Saudi Arabia, charging a 30 percent markup.
"At first, whatever you brought they would buy," he said. "Now, there are a lot of goods on the market, and it is slower."
Inflation is estimated to be at 50 percent or even 100 percent since the war, although nobody has an accurate measurement. Prices are distorted by government subsidies and by shortages. A 20-gallon tankful of gasoline, imported from abroad by the Government, sells for about $6. For the same price you can buy two Perriers in a downtown hotel.
At the same time, the Government faces a cash crunch until it brings oil production back.
On July 15, Kuwait said the Emir, Sheik Jaber al-Ahmed al-Sabah, had authorized the Government to borrow up to $30 billion on world markets to finance its operations. The loans are needed because the tax-free emirate used to get all its revenues from oil exports, which have barely resumed since the war. Banks Nearly Paralyzed
The Kuwaiti banking sector is in near paralysis. There is no lending between banks, and there is a severe credit squeeze for most businesses, which in turn have not been repaying their outstanding loans.
The banks were badly hurt because their biggest clients are unable to repay their debts with their businesses are destroyed, inventory unreplaced and customers out of the country.
When banks remove restrictions on how much money Kuwaitis may withdraw from savings accounts, the consumer economy may get a shot of financial adrenaline because consumers will have more to spend. On the other hand, bankers worry in private that the relaxation of rules limiting withdrawals to about $20,000 a month may lead to a sudden flight of capital.
And the future worth of the dinar, Kuwait's currency, is anybody's guess. Since the war, the currency has been propped up by extensive government intervention, and the absence of a black market in currency exchange shows that this intervention was effective. But the uncertainty over the dinar is another factor that restrains commerce in a society where almost everything on the market is imported.
Sheik Salem Abdulaziz al-Sabah, the governor of the Central Bank, urged Kuwaitis "not to rush to buy foreign currencies, as there should be no fear of a devaluation in the dinar."
Most people who want to buy cars must pay cash. Even so, Kuwaitis are lining up to buy new cars, and the automobile dealers expect to sell twice as many cars this year as they did in the year before the invasion. The Iraqis are said to have stolen or destroyed about 300,000 cars. Car Dealers Feel Pinch
But even the well-established car dealers, who have thousands of cars on the seas from the United States and Japan, face unexpected competition from smaller dealers who could move more quickly to import cars from inside the gulf region.
There is even a sort of black market for new cars, said Abdulhai al-Yaqoub, a car dealer who imports independently. But this kind of small enterprise does not impress many Kuwaiti economists, who are looking for a broader expansion before declaring the economy healthy.
A private Kuwaiti economist, Jassem al-Sadoon, head of Al Shall Economic Consultants, was quoted by Reuters as saying that as long as the economy is mainly based on government spending, paid for by state borrowing or by the dividends from the nation's $100 billion hoard of investment capital, its recovery is a mirage.
One of the biggest questions facing the country is how many people will come back to Kuwait and how soon.
The best estimate is that there are now about about 800,000 to one million people in the country, less than half its prewar population. Of these, some 350,000 to 500,000 are thought to be Kuwaiti citizens, meaning that about half the citizens are still out of the country. Expatriate Workers Gone
But Kuwaitis never accounted for more than a fifth of the labor force, and the economy is feeling the effects of the absence of hundreds of thousands of expatriates. Palestinians, who used to be the mainstay of the country's middle management and professional services, are being driven out of the country by the tens of thousands. There are also shortages of unskilled laborers, and it takes time to hire workers from Egypt, India, the Philippines and other traditional sources of labor.
Many owners of small businesses who have reopened their shops say they find it difficult to find customers.
Salama Ahmed, a Palestinian who runs the Grand Nurseries, a garden center, did just $700 of business one day last week, a third of his turnover on a typical day before the war. He brings in plants by air from the Netherlands, but customers are scarce.
"Most of them are still outside," he said. "The Kuwaitis are not here. No one is here."
Photo: Traditional dhows being unloaded at the Shamlan docks in Kuwait City, bringing fish and fresh produce to a market filled with eager customers. (John H. Cushman Jr./The New York Times) (pg. A6) Map of Kuwait showing location of Kuwait City. (pg. A6)
AFTER THE WAR; No Electricity but Kuwait Reopens Its Banks
By DONATELLA LORCH, Special to The New York Times Published: March 25, 1991
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."
AFTER THE WAR 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.
(Page 2 of 3)
"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?"
PART 2 LINK