Is­lamic state flips gold coins to break Fed ‘en­slave­ment’

The Pak Banker - - 6BUSINESS -

FOR­GET the print­ing press. In ready­ing for the roll­out of Is­lamic State's new money, gold­smiths and sil­ver smelters have been toil­ing away. The ji­hadist group touted "the re­turn of the gold di­nar" in an hour­long video is­sued by its media wing, al Hayat. Is­lamic State's pol­icy-mak­ing Shura Coun­cil last year tasked its Beit al Mal, or trea­sury, with mint­ing the coins, which come in sev­eral de­nom­i­na­tions made of gold, sil­ver and cop­per.

The cur­rency is meant to break the shack­les of "the cap­i­tal­ist fi­nan­cial sys­tem of en­slave­ment, un­der­pinned by a piece of pa­per called the Fed­eral Re­serve dol­lar note," the group said in the video. It didn't ex­plain where the coins were be­ing minted, nor how they'll be dis­trib­uted or re­place cur­ren­cies cir­cu­lat­ing in the ter­ri­tory the group oc­cu­pies in parts of Iraq and Syria.

Is­lamic State first an­nounced its in­ten­tion to is­sue its own money in Novem­ber, five months af­ter it seized the north­ern Iraqi city of Mo­sul and its leader Abu Bakr al-Bagh­dadi an­nounced a caliphate. The move was seen by an­a­lysts as part of the group's ef­forts to build the in­sti­tu­tions of a func­tion­ing state. The ji­hadists have amassed a war chest of mil­lions of dol­lars, partly through col­lect­ing taxes, and by seiz­ing oil re­finer­ies. Bank and jew­elry store rob­beries, ex­tor­tion, smug­gling and kid­nap­ping for ran­som are other im­por­tant sources of rev­enue for the group, which metes out bru­tal pun­ish­ment to any­one who op­poses its rule, in­clud­ing be­head­ings and cru­ci­fix­ions.

Bagh­dad-based economist Basim Jameel said the an­nounce­ment is an at­tempt to boost the morale of Is­lamic State fight­ers, who have suf­fered bat­tle­field set­backs in re­cent months, in­clud­ing the loss of Tikrit in March.

Mint­ing the coins is rel­a­tively easy, Jameel said, as gold­smiths in Mo­sul im­ported ma­chines from Italy in re­cent years, each one able to pro­duce about 5,000 coins a day. The met­als prob­a­bly come from banks the group seized, ran­soms, the homes of Chris­tians and other mi­nori­ties who fled, he said. In the video, Is­lamic State refers to Caliph Abd al Ma­lik ibn Mar­wan, who in­tro­duced the first Ara­bic-script coinage of the Is­lamic em­pire, free of fig­u­ral rep­re­sen­ta­tion, in around 696 AD.

The group said its 21-carat 1-di­nar coin weighs 4.25 grams, while the 21-carat five-di­nar coin weighs dou­ble that. Three dom­i­na­tions of sil­ver dirhams and two of cop­per coins were minted for smaller trans­ac­tions, it said. Each coin bears an in­scrip­tion that reads, "The Is­lamic State, a caliphate based on the doc­trine of prophecy." The 1-di­nar coin also shows seven stalks of wheat, which the group said is meant to rep­re­sent "the bless­ing of spend­ing in the path of Al­lah." The five-di­nar coin bears the im­age of a map of the world.

The Pen­tagon said in Fe­bru­ary that il­licit oil sales are no longer the main source of fund­ing for the group. A U.S.-led bomb­ing cam­paign that be­gan last sum­mer re­duced the num­ber of fields un­der its con­trol and sev­eral neigh­bors, in­clud­ing Tur­key and Kur­dis­tan, have cracked down on smug­gling routes.

Res­i­dents in­ter­viewed by phone from Mo­sul and Ra­madi, the western Iraqi city cap­tured by Is­lamic State in May, said so far they hadn't seen any coins, re­ceived de­tails of how the cur­rency swap would work, or been told what the pre­vail­ing ex­change rate might be. They said fam­i­lies have been pre­par­ing for this mo­ment for some time.

One Mo­sul res­i­dent, who asked not to be iden­ti­fied, said his fam­ily and oth­ers will ex­change a cer­tain amount of old money into the new Is­lamic State cur­rency to pay house­hold ex­penses. Some will keep back a por­tion of the old cur­rency to ex­change into dol­lars in ar­eas that re­main un­der gov­ern­ment con­trol, he said.

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