It’s complicated and unreliable and there would be clear security issues in trying to do it on any mass market basis
Posted in General on 12. Oct, 2010
It’s complicated and unreliable, and there would be clear security issues in trying to do it on any mass market basis. To realise Mr Verwaayen’s vision where you could wander freely around most big cities with your mobile seamlessly connecting to the nearest unseen BT landline socket requires one hell of a leap. But it’s coming, witness the fact that you can already get Wi Fi connections for your laptop in most outlets of Starbucks and airport waiting lounges.In any case, Mr Verwaayen sees Wi Fi as a way of bypassing cellular and connecting direct to the mobile customer. He may be on his own in pushing these developments, if only because other incumbents have a vested interest in sticking with cellular technology None the less, it may not pay to underestimate him.
Mr Verwaayen is a single minded and hungry operator, and although telecommunications as an industry remains deep in the dumps, the pace of change and intensity of competition is still as intense as ever. Turn your back for one moment and you’ll have missed the boat. Mr Verwaayen doesn’t plan to.Iraq’s dollarisation I was alarmed to read this week that the US is planning to pay hundreds of thousands of Iraqi civil servants in dollars in an effort to persuade them back to work. This is being billed as a stop gap measure to address the fact that the existing local currency, the Saddam dinar, has become largely worthless, or at least of indeterminate value.
The dollar, on the other hand, has long been seen as a store of value in Arab countries and indeed the commercial currency of choice, as anyone who has travelled the region will know.None the less, to begin paying everyone in dollars cannot help but be seen as a first step on the road to dollarisation of the economy, which is not obviously such a great idea. That’s not just because of the imperialist implications of imposing a foreign currency on a far-off land, but also because it is just bad economics. By accepting dollarisation, Iraq would surrender control over its own economic destiny.Supply of dollars would be determined by the US, the interest rate would be determined by the US, and in effect Iraq’s capacity to borrow would be determined by the US. It scarcely needs saying that what might be important to Iraq would not merit so much as a mention at the monthly meetings of the Federal Reserve’s Open Markets Committee to determine monetary policy. The Cincinnati Cat Fish Company would get a better look in than Iraq.The early establishment of a currency board, whereby the local currency is pegged against the dollar, the euro, or perhaps a basket of different currencies, might make for a better interim solution in restoring an element of economic stability to the country, but as Argentina has demonstrated, currency boards only work if accompanied by extreme fiscal discipline.
It’s questionable whether working within such a tight fiscal straitjacket is appropriate for Iraq given the costly reconstruction that the country now faces.That Saddam killed his own people is well known. Less well appreciated is that he impoverished them on a scale unmatched in the annals of modern history. In the late 1970s Iraq was one of the world’s richer nations, with average per capita earnings of $20,000 a year in today’s prices Today the equivalent figure is $1,000. In a country that still boasts universal education, at least for boys, infant mortality is on a par with the worst of the Third World – this in an oil rich country.For Iraq to realise its full economic potential again requires the re-establishment of a credible independent currency backed by an independently managed monetary policy.