Saddam's dinar ploy bankrupts Kurds

IT WAS a simple but dastardly move, more proof that President Saddam Hussein of Iraq still possesses a sharp if malignant intelligence. Once again the Kurds of northern Iraq were caught completely unprepared.

The cancellation of the Iraqi 25-dinar note on 1 May did not at first sight seem important. In fact, it has thrown the 3 million Kurds into confusion, depriving them of their principal means of commercial exchange.

The dinar crisis is only part of President Saddam's inexorable tightening of his economic blockade of Iraqi Kurdistan, mysterious attacks on relief workers and the continual testing of the Kurds' military front line.

More worrying, it coincides with growing Western donor fatigue. A grandiose dollars 500m ( pounds 325m) UN project has fallen flat, with virtually no response, making it necessary to reduce the number of UN security guards in northern Iraq drastically. Even a modest 22m Ecu package put together for the European Community by non-government aid agencies may be cut right back.

Much has changed in the two years since a US-led operation brought the Kurds back to the homeland they had fled to in the mountains of Turkey and Iran when President Saddam tried to destroy their post-war rebellion. A new government for the 'local administration of northern Iraq' was sworn in on 25 April under 'prime minister' Abdulla Rasoul, a former guerrilla leader. The devastation wrought by President Saddam in the 1980s is slowly being repaired.

The main guarantee of their safety is still the allied Operation Provide Comfort, whose planes are also known as the Hammer Force. Kurdish officials expect Turkey to overcome its hesitations and decide to renew the force's mandate in June for another six months.

Iraqi Kurdistan is increasingly under the influence of Turkey, which allows relatively free border crossings, trade and use of its currency. But the Kurds' economic links are still with Iraq, as shown by the dinar crisis. The Kurds trusted the pre-1991, Swiss-printed currency in denominations of 5, 10 and 25 dinars. High denomination post-Gulf war notes from Baghdad were avoided and got only two- thirds of their face value.

President Saddam's cancellation of the old 25-dinar notes hit the heart of Iraqi Kurds' savings and trade. Shop shelves have suddenly become bare, hoarding is rife and some shops have closed.

Iraqi Kurdish officials are desperately seeking Western help. They are floating schemes such as supplies of food to the administration that could then be sold off for the old 25-dinar notes or an international bond to back the 25-dinar notes.

'The trouble is, there are millions of these notes in Kuwait, Jordan and Saudi Arabia as well,' said Safeen Dizayee, a Kurdish spokesman in Turkey. 'Nobody in their right mind would back them.'