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View Diary: the largest one-time cash transfer in the history of the New York Fed (192 comments)

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  •  My first thought.. (none)
    Why are they sending cash to Iraq?

    First, western contractors should be paid by check or bank transfer not cash, unless something underhanded is going on.

    Second, I can sort of see this as a means to transfer money held in the Federal Reserve for the Iraqi government to the Iraqi government to pay their expenses.  But, this just shows more incompetence on the part of the reconstruction effort.  Shouldn't one of the reconstruction jobs been to create at a least a temporary banking system?  Where the government could write checks to workers and they could get them cashed at a bank and that check would eventually be debited from the government's account at the Federal Reserve. Of course this means there is a paper trail for every transaction against the Iraqi government's account.  Makes it a lot harder to steal without getting caught.

    Of course, this is difficult in the outlying areas, and in places which are not stable. And, the banks would have to be well guarded.  It doesn't work so well with 67% unemployment because everything is being done by outside contractors. Because that means there are 67% of the people with no use for a bank. It would have worked extremely well with a lot of hiring of Iraqis to rebuild Iraq because then most Iraqis have a vested interest in the bank being safe, and would be pissed off if some one robbed the bank resulting in them not being able to cash their paycheck until more cash had been transferred to the bank.

    Is there even a working banking system in Iraq right now?

    •  Hmm... (none)
      You pose a good, simple question: Why were they paid in cash?

      If anyone has a plausible explanation, I'd like to hear it. Was it problematic for private parties to get cash into Iraq at the time? Granted, if I were your average security contractor wanting to cash my paycheck, I don't know where I would go in Baghdad for that. But if basic banking were not possible, why not pay the contractor through normal channels and make the contractors responsible for distributing cash to their employees as needed?

      It's almost like the whole system was actually designed to escape oversight...

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