10.1 | Reconstruction: March 2003 to June 2004

“ … In that atmosphere, it means that myths can grow very, very quickly and in very

dangerous ways. So one myth that grew, which is absolutely ludicrous … was that

the electricity was in fact being produced but it was being stolen by the Americans.”301

557. On 7 July, Ambassador Bremer announced:

• He had approved the interim Iraqi budget for 2003.302

• The Coalition would print and distribute new banknotes for Iraq, to replace

both the “Swiss Dinar” (used in the Kurdish North of Iraq) and the “Print Dinar”

(used elsewhere) by mid-January 2004. The Print Dinar was inconvenient to

use, coming in only two denominations, and easy to counterfeit. Swiss Dinar

banknotes had been in circulation since at least 1990, and were falling apart.

• The Central Bank of Iraq was now independent.303

558. Mr Brown was briefed by a Treasury official the following day that UK officials

had helped to develop the interim budget and the plan to print and distribute new

banknotes.304 Both decisions should help to establish macroeconomic stability in Iraq.

Earlier UK concerns over the legitimacy of printing a new currency had been met. The

UK had not been consulted over the decision to make the Central Bank independent;

the Treasury had not been expecting the announcement.

559. The Annotated Agenda for the 10 July meeting of the AHMGIR reported those

changes:

“Bremer has also announced the independence of the Iraqi Central Bank …

the announcement has taken all by surprise. It is not clear if De Mello was fully

consulted … We are trying to clarify the situation.”305

560. In July, the UK Government sought to replace Ambassador Olsen as Head of

CPA(South) with a British official but did not address the implications, including the

resource implications, of that decision.

561. Sir Michael Jay reported to FCO and IPU colleagues on 7 July that he had

discussed Ambassador Olsen’s future with his Danish colleague, Mr Friis Petersen.306

301 Public hearing, 6 July 2010, pages 23-24.

302 Coalition Provisional Authority, Press Release, 7 July 2003, Text of Ambassador Bremer’s Address to

the Iraqi People: Budget and Banknotes.

303 Coalition Provisional Authority, Order No. 18, 7 July 2003, Measures to Ensure the Independence of the

Central Bank of Iraq.

304 Minute Treasury [junior official] to Chancellor, 8 July 2003, ‘Iraq: Announcements on Currency and

Budget for 2003’.

305 Annotated Agenda, 10 July 2003, Ad Hoc Group on Iraq Rehabilitation meeting.

306 Minute Jay to Chaplin, 7 July 2003, ‘Ambassador Olsen’.

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