The dollar’s dominance over Iraq’s economy: Will the Washington visit open the door to banking independence?
The dollar’s dominance over Iraq’s economy: Will the Washington visit open the door to banking independence?
7-14-2026
Information/Report…
The United States has maintained its dominance over the Iraqi banking sector since 2003, imposing sanctions on a large number of private banks in recent years. Observers see this as an obstacle to building an independent Iraqi banking system free from American influence. The US Treasury Department and the Federal Reserve Bank of New York imposed restrictions on more than 30 Iraqi private banks, representing approximately 43% of the private banking sector, preventing them from dealing in US dollars, citing violations of banking standards and regulations.
According to experts, these measures have reduced the supply of dollars in the markets, widening the gap between the official exchange rate and the parallel market rate. This has led to a rise in the prices of many imported goods, particularly food and medical supplies. The Central Bank of Iraq contracted with several companies to review the files of the sanctioned private banks, including Oliver Wyman, which undertook a comprehensive review of the banks barred from dollar transactions, with the aim of developing a plan for their reintegration into the global financial system.
The company presented three options to banks during 2026: merger, increasing capital to 400 billion dinars, or exiting the market.
The Central Bank also contracted with the American company K2 Integrity, specializing in financial integrity and compliance, to handle auditing programs and monitor foreign transfer operations, in addition to implementing a three-year agreement to restructure Rafidain Bank.
The work of these two companies has drawn widespread criticism. Economic expert Mustafa Faraj, in a statement to Al-Maalomah News Agency, asserted that the US Federal Reserve dominates the Iraqi banking system, noting that Washington has imposed sanctions on more than 30 private banks under the pretext of violating banking regulations.
He added that “approximately 80% of the banks subjected to sanctions adhere to international banking regulations, yet the US restrictions have not been lifted.”
He further explained that “Oliver Wyman is reviewing the procedures of the sanctioned Iraqi banks, but has not taken any steps to lift these restrictions, despite most banks’ compliance with the regulations and instructions.”
He pointed out that “the United States dominates the financial and banking sector in Iraq by controlling the dollar and influencing exchange rates in the parallel markets, which causes economic instability and negatively impacts the investment climate.” He emphasized that “this banking chaos is driving investors away from investing in the Iraqi banking sector.”
Calls for al-Zaidi to End Washington’s Domination: Concurrently with Prime Minister Ali al-Zaidi’s visit to Washington, political and economic voices called for leveraging the visit to pressure for an end to American domination of the Iraqi banking sector.
In this context, Hussein Mardan, a member of the State of Law Coalition, affirmed that the United States dominates the banking sector in Iraq.
Mardan told the Al-Maalomah news agency that “Washington dominates the banking sector and is trying to prevent Iraq from establishing a banking system independent of its control, which is why it is imposing sanctions on Iraqi banks.”
He added that “imposing these restrictions on Iraqi Islamic and investment banks, in particular, aims to eliminate local competitors from the market, paving the way for American banks to monopolize the Iraqi banking sector.”
Mardan called on Prime Minister Ali al-Zaidi to “pressure Washington, during his ongoing talks there, to end the dominance of American banks over the Iraqi financial system.”
Observers believe that Iraq’s success in ending American dominance over its banking system depends on the outcome of the Prime Minister’s discussions in Washington, as well as Baghdad’s ability to proceed with building an independent and sovereign banking system free from any external control.
almaalomah.me
