I get asked this question all the time. My simple answer is YES. A currency is only as strong as the government that backs it. Take a look at this post. The original poster asks the question then gives their opinion. Then an AWESOME explanation comes in from a highly respected forum member...
Original post:
I have believed for a while, as Randy Koonce does, that the minister positions have been filled (but not announced).
However, I have recently changed my viewpoint.
I now no longer believe they are filled; because of all the news coming out of iraq about the search for ministers. I do not believe all the Iraqi news is spinning this story or creating smoke. I take their word.
HOWEVER: I DO NOT BELIEVE THE MINISTRIES NEED TO BE FILLED TO SEE THE RV.
I DO NOT BELIEVE THE RV IS DEPENDENT ON THE GOI BEING 'COMPLETED'.
I think it is completed enough for now; it is fully functioning; Maliki serving as the temporary minister of those 3 security ministries... Iraq is passing laws, measures, rulings, making decisions for the country, etc. They have the ONLY functioning democratic govt. in the Middle East.
The system they have (3 presidents, representing the 3 major groups of iraqi's, Kurds, Shia, and Sunni) with a Prime Minister over them, seems to work well. They have seemingly been content to go about normal daily business without these spots filled. Yes, they talk about the need to fill them, but there does not seem to be any real sense of urgency.
Also, to the claims that they exchanged one dictator for another (Maliki), I strongly disagree. The fact that one after another of Maliki's nominee's has been shot down by Allawi or another in the GOI proves that their system is in fact working, and no one person has all the power.
Again, I believe that Shabibi is far too smart to not have this figured out. I believe that he may have in fact said 'no way', when asked if the GOI being seated was a pre-requisite to the RV.
He strikes me as way too intelligent to leave this RV in the hands of Allawi, Maliki, or any of the other clowns running the country.
of course all this is just my opinion...
Response:
Until there is confidence in the GOVERNMENT, there will not be confidence in its CURRENCY. These go hand in hand, and is exactly why Shabibi said the issue of currency value will be dealt with after the GOI is complete. Being knowledgeable in economics, he knows it is a precarious situation when the former government was a dictatorship and the fragile new government could easily go that way again. Dictators can come in and scrap the currency, devalue it, print new currency, etc. Basically, Shabibi knows that until they have a fully representative GOI that is internationally recognized, it will not instill confidence in their government, and thus no confidence in the currency itself. One of the first things after a coup that a dictator will do is revamp the currency and do away with the old. Until there are very clear and firm assurances that they are truly on track for democracy, I do not believe he will take that chance. IMHO--- No GOI.... No RV.
Further, there can be no exit from Ch. VII without a fully representative and internationally recognized GOI (as per UN Res. 1483, paragraphs 21 and 22). No GOI..... No exit or release from Ch. VII.
Mark is correct concerning their working outside the confines of their own Constitutional mandate. While they initially called the GOI complete in December, in fact it was not. Legally, they should have required that Maliki step down and Talabani nominate another PM and give that person the same deadline to form a GOI. I believe that at the time all parties acquiesced to allow some more time to try to complete the GOI because they realize how difficult it is when all parties have to agree. They did this thru "creative interpretation" of the Constitution by calling it complete since Maliki put his own name in by proxy. Obviously "on paper" you could say the GOI is complete. After all, there are names in all of the slots. However in reality, you cannot really say that, as it is not truly representational (all parties having a DEMOCRATIC voice about who is in those positions). Until that happens, it really is not complete.
If you think about this from a democratic and economics view, then you have to conclude that they go hand-in-hand. We will not see the RV until the GOI is complete (in the democratic sense).