CBSN

Troops Seize Cash Cache

U.S. Special Forces make an arrest of a suspected bank robber they claim was using a torch to try and cut into a bank vault inside the gutted interior of an bank in Baghdad Thursday April 17, 2003.
AP
In the past week, U.S. troops have recovered more than $600 million in American bills in Iraq.

The finds, while accidental, assist a larger effort to track the resources of Saddam Hussein's deposed regime. They also point to the need to establish a new, post-Saddam currency for occupied Iraq.

On Tuesday, U.S. soldiers trying to stop looting in Baghdad ran into a huge cache of cash — more than $600 million in $100 dollar bills hidden behind a false wall.

Using forklifts to handle the heavy, tightly-wrapped packets of new bills, soldiers from the 3rd Infantry Division hauled the money away for safekeeping, the U.S. Central Command confirmed Tuesday.

The Los Angeles Times reported last week that the 3rd Infantry found $656 million in a Tigris River neighborhood where senior Baath party and Republican Guard officials lived.

Last Thursday, a riot broke out at a Baghdad bank after thieves blew a hole in the vault and dropped children in to bring out fistfuls of cash. U.S. troops arrested the thieves and removed $4 million in U.S. dollars for safekeeping.

The successes on the ground mirror an international effort to track the personal fortunes of regime leaders.

Last month, Treasury Secretary John Snow announced what he called "a financial offensive against the regime of Saddam Hussein."

President Bush signed an executive order seizing Iraqi assets in the United States, to be used "for the benefit and welfare of the Iraqi people," Snow said. Saddam's personal fortune is estimated to run into the billions.

The U.S. also issued a worldwide call for banks to freeze assets belonging to Saddam and his cohort. Snow threatened "countermeasures and sanctions" against banks that do not comply.

"The world must find, freeze, and return Iraqi money for the Iraqi people and their future," Snow said. "This effort will ensure that the assets and funds belonging to the Iraqi people are dedicated to the well-being and benefit of their nation."

Meanwhile, part of the U.S. reconstruction push is introducing a new Iraqi currency that — officials hope — will hold its value and undoubtedly be expunged of the mustachioed former dictator.

Establishing a stable currency is seen as key to rekindling Iraq's tattered economy and rebuilding a national identity. But many hurdles remain, including the lack of an Iraqi government and a general mistrust of anything other than U.S. greenbacks.

The dinar was officially pegged at a rate of just over 3 to the dollar. But it traded at around 2,500 to the dollar on the black market before the war and has plummeted to 3,500 with the ousting of Saddam. Merchants who have opened shops are already jacking up prices to compensate for the currency's hollowed-out value.

Disgusted Iraqis have been known to tear up wads of the cash, as much in protest of Saddam's portrait as its sliding value.

As a stopgap, the United States flew in $20 million of its own currency last week to pay firefighters, police, electrical workers and other civil servants.

Public employees returning to work will get an "emergency payment" of $20 as early as next week, said an official at the Office of Reconstruction and Humanitarian Assistance, which is revamping the Iraqi monetary system.

"The overriding priority is to get Iraq back to normal and to get people back to work," he said, speaking on condition of anonymity. "And to get people back to work, you have to pay them in some currency that has real value and purchasing power."

The cash injection comes from the $1.6 billion in Iraqi assets seized last month by Mr. Bush.

In the long run, however, Washington wants the new Iraqi government to pick its own currency, much as Afghanistan adopted a new one after the fall of the Taliban, U.S. Treasury spokesman Taylor Griffin said.

Treasury officials are already consulting with the interim Iraqi administration led by retired U.S. Lt. Gen. Jay Garner on how to phase out dollars and phase in something new.

A semblance of Iraqi government is crucial to getting any currency off the ground. With U.S. troops still encountering scattered resistance and electricity and food scarce, it could be weeks or months before that happens.