Serious US move to deprive Iran of Iraq’s money

Serious US move to deprive Iran of Iraq’s money

1-15-2023

A remarkable financial development took place in Iraq at the end of 2022, with the decision of the US Federal Bank to stop suspicious and fictitious financial transfers from Iraq abroad, which caused an increase in the exchange rate of the dollar and an increase in commodity prices, as it deprived many countries surrounding the country of billions of Iraqi dollars.
In a strange paradox, a severe financial crisis has engulfed Iraq these days, as a result of the consequences of the decline in the exchange rate of the dollar against the dinar, reaching unprecedented record levels, despite the large financial surplus available to it as a result of the high prices of Iraqi oil source and the lack of a budget for the year 2022.
The rise in the exchange rate of the dollar came from 1450 dinars per dollar to reach about 1600 in the parallel market, due to the lack of supply of hard currency, followed by a significant rise in the prices of all goods and services in the Iraqi markets, which constituted additional new pressure on the purchasing power of citizens and the stagnation of the market movement. Amid the government’s inability to deal with the situation and its exposure to embarrassment, as it promised to reduce the exchange rate of the dollar within the program of the government of Muhammad al-Sudani, which has been around for two months.

The causes of the crisis

There is no doubt that the direct cause of the new financial crisis is due to the US Federal Bank’s banning of fake and suspicious financial transfers from Iraq abroad, especially to Iran and its allies in Syria, Lebanon and Yemen, as these Iraqi financial transfers are a lifeline of support for the economies of those countries that are under pressure from sanctions. International and stifling financial blockade.
The US Federal Reserve Bank had imposed amendments to the procedures for Iraqi transfers that pass through the “Swift” system to include an audit of the source of funds until the final recipient, in a measure that reflects political motives, after repeated US warnings to Iraq not to breach the sanctions on Iran. On the other hand, several parties bought dollars from the market to compensate for stopping their dealings with the Central Bank of Iraq, which led to an increase in commodity prices.

Parliamentary movement

In the face of the widespread popular discontent and the stagnation of activities in the markets due to the huge rise in prices, many deputies moved to convene a session of the House of Representatives and address the problem. At the forefront of the initiators were the representatives of the Tishreen reform movement.
The “Humans Movement” took the initiative to collect parliamentary signatures to hold a parliament session, to discuss the serious repercussions of the high dollar exchange rate and to find out the government’s measures towards it. While the head of the political bureau of the “Emtiad movement”, Raed Al-Saleh, criticized what he described as the “appreciated silence” by the government regarding the exchange rate of the dollar, referring to “efforts to interrogate Prime Minister Muhammad Al-Sudani over the failure to control the exchange rate of the dollar and other issues.”
In a statement, the Deputy Speaker of the House of Representatives, Shakhwan Abdullah, called on the government, the Ministry of Finance and the Central Bank to “reconsider financial policy, take measures and increase the opening of foreign currency sales outlets in banks and at the government rate, in order to prevent a rise in the exchange rate of the dollar.” He called for “not enabling those who control the black markets to benefit from exchange rate turmoil, and to cordon off wrong monetary practices that harm the economy and commercial activity throughout the country.”
However, the former politician and deputy, Mishaan al-Jubouri, was more frank when he explained, “The US treasury revealed operations to smuggle currency out of the country and demanded that the Iraqi government make sales only for real credits and through documents.”
Al-Jubouri said during a televised interview, “The US Treasury followed up the issue of currency smuggling abroad and activated its office in Baghdad, and learned that the dollar is smuggling to Iran despite the sanctions it imposes on it, and in order to control this situation, the Iraqi government demanded that sales be only for real credits.” Through documents.
He pointed out that «the US Federal Reserve put a lot of Iraqi banks and companies that were found to have dealings in this aspect in the black list and prevented them from buying the currency». Pointing out that «a lot of the money sold by the central bank goes to Iran through fake companies and banks, and then forged documents come in exchange for this smuggled money».

government actions

Within the framework of the government’s move to confront the crisis, the Iraqi Prime Minister, Muhammad Shia’ al-Sudani, called for “activating steps to sell foreign currency at official prices to citizens,” stressing the need to take the necessary measures to prevent illegal speculation, and everything that harms the local market and leads to higher prices.
In a statement, he urged the importance of “activating steps to sell foreign currency at official rates to citizens through purchasing with electronic cards, opening sales outlets for travelers, or clients outside Iraq, or financing foreign trade, in accordance with the fundamentalist contexts and international standards for opening documentary credits and remittances.”
Al-Sudani also acknowledged that “exchange rate fluctuations and their impact on the Iraqi economy made us adhere to the inevitability of economic reform, support for agriculture, industry, tourism and trade, instead of Iraq being a market for imported goods and a passage for smuggling hard currency and money laundering.”
As for the procedures of the Central Bank of Iraq, observers considered it below the level of the crisis, as the central bank decided not to collect customs duties and tax amounts in advance on imports, and sold dollars to patients traveling for treatment and students abroad, and pumped dollars to some banks to sell them to citizens.
The economic advisor to the Prime Minister, Mazhar Muhammad Salih, considered that the rise in the exchange rate in favor of the dollar is not caused by a problem with the adequacy of foreign reserves, indicating that “Iraq’s reserves of foreign currency exceeded 100 billion dollars, and the percentage of the current account surplus amounted to about 15 percent.
He added, “What happened in terms of increases is a temporary phenomenon dictated by regulatory conditions in the procedures for conducting external transfer requests (submitted by local banks) on foreign currency,” noting that “work was carried out a while ago with an advanced electronic platform linking the request for transfers by local banks with correspondents.” From international banks and relevant global compliance bodies at the same time.
And the economic advisor acknowledged: “During the start of the experiment a few weeks ago, it became clear that there were shortcomings and informational shortcomings that were not consistent with the governance of the flow of remittances through the global banking system, which led some of them to be returned again or rejected to complete the standard submission requirements and follow the standard foundations in disclosing the final beneficiary and other conditions.” Banking disclosure and compliance.

Attack on America

In an attempt to cover up the real causes of the crisis, Shiite parties and factions launched a violent attack on the United States, blaming it for raising the price of the dollar and accusing it of meddling in Iraqi affairs.
The leader of the State of Law, Haider al-Lami, said in a statement, “America has punished the four private Iraqi banks and warned 30 other banks based on suspicion indicating that these banks are smuggling money outside the country and money laundering operations.” Claiming that «Washington does not have any evidence about these banks.
While the leader of the State of Law coalition, Ibrahim al-Sakini, accused America of creating tensions for the Sudanese government by interfering in the policy of the Central Bank and removing some banks from the currency auction, accusing America of seeing itself as a guardian of the people in imposing its own interests.
There is no doubt that the new financial crisis widened the differences between the Sudanese government, which announced the status of combating corruption and currency smuggling among its priorities, and between parties and factions that own banks and exchange shops that annually transfer billions of dollars to allied countries, through the dollar sale window in the Central Bank of Iraq, deliberately exploiting governments Iraq turned a blind eye and ignored advice from inside and outside the need to control this window to prevent smuggling.
It is noteworthy that all Iraqi funds received from its oil sales are deposited in the US Federal Bank, which in turn releases financial transfers to the Iraqi Ministry of Finance, due to the fact that Iraq is still subject to US tutelage over Iraqi funds. Therefore, specialists fear the possibility of returning Iraq to the provisions of Chapter VII, amid leaks about the tendency for American advisors to supervise and monitor the performance of the Central Bank to prevent widespread smuggling of currency.
In fact, the recent American move was expected, as it was no secret to the United States that the ruling Iraqi political forces provided huge sums of money to Iran and its allies to help it face US sanctions. And that those forces are ready to serve their allies, even at the expense of exposing the economy and the Iraqi people to dangers, crises and suffering. While observers agree that the American decision constituted a very effective blow to Iran by cutting off the most important financial resource for it and its allies in these extremely difficult circumstances for it.

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