The Iraqi dinar pays the bill for the confrontation between Washington and Tehran

The Iraqi dinar pays the bill for the confrontation between Washington and Tehran


The Iraqi dinar pays the bill for the confrontation between Washington and TehranBAGHDAD – The crisis of the collapse of the Iraqi dinar’s exchange rate against the dollar has returned to the forefront, prompted by US sanctions against 14 Iraqi banks that Washington believes constitute a vital artery for the flow of hard currency to Iran, while the Iraqi government is powerless to curb the escape of the parallel exchange rate.

The Finance Committee in the Iraqi Parliament intends to summon the Governor of the Central Bank, Ali Mohsen Ismail Al-Alaq, and the Minister of Finance, Taif Sami Muhammad Al-Shukraji, next week, to find out the reasons for not controlling the parallel exchange rate, but it does not seem that this will solve a problem that Iraq has previously experienced in the midst of the declared confrontation between Washington and Tehran.

And every time the US Treasury Department takes measures to surround financial flows to Iran in hard currency, Iraq finds itself in the heart of a crisis because there are suspicions of manipulation by Iraqi banks related to dollar sales (buying dollars from the central bank and reselling them to Tehran outside legal frameworks).

In the second crisis affecting the Iraqi dinar in a few months, it seemed clear that the Iraqi economy is the one driving the confrontation and rivalry between the United States and Iran.

Previously, US restrictions on Iraqi banks for the same reason triggered a crisis in Iraq and prompted thousands of Iraqis to demonstrate in the street, condemning the collapse of the dinar and the government’s failure to move to stop the financial hemorrhage.

Iraqi sources said that the exchange rates of the dollar rose against the Iraqi dinar in the markets of Baghdad and in Erbil, the capital of the Kurdistan region, after Washington imposed sanctions on 14 Iraqi banks, in a crisis similar to that of last year.

The matter is related to the parallel price, that is, the exchange rate of the dollar in the market and exchange offices, and not the official rate set at 1132 dinars per dollar, according to the decision of the Board of Directors of the Central Bank of Iraq, which was approved by the Council of Ministers.

“The government tried to control the exchange rate by reducing the dollar from 145 to 130, and was able to provide remittances to countries to which remittances can be sent,” the Iraqi Kurdish “Shafaq News” agency quoted MP Moein Al-Kadhimi, a member of the Finance Committee, as saying.

However, he added, “But there are other countries from which Iraqi merchants import, and US sanctions prevent sending these remittances, forcing them to obtain dollars from the parallel market.”

He pointed out that this matter “leads to the dollar’s ​​price remaining high in the market, and the recent measures of the US Federal Reserve not to deal with a number of private banks had an impact on the rise in the dollar’s ​​price, to reach 155.”

Al-Kazemi said that the Parliamentary Finance Committee will host the governor of the Central Bank and the Minister of Finance during the next week to find out the real reasons for the inability to control the parallel price.

He attributed the lack of control over the parallel exchange rate to the US punitive measures that affected 14 private banks, adding that “the sanctions imposed by the United States on countries such as Iraq, Syria, Iran, Lebanon and even on some Turkish companies lead to an increase in the black market demand for the dollar.”

US punitive measures prevent these banks from conducting transactions in dollars as part of a comprehensive campaign to transfer US currency to Iran.

This was not the first time that the US Treasury Department imposed sanctions and restrictions on Iraqi banks as part of an attempt to surround and curb financial flows in hard currency from banks in Iraq to the Iranian Revolutionary Guard or the bodies and groups associated with it inside and outside the Islamic Republic.

Tehran had previously accused Washington of conspiring against Iraq and held it responsible for the crisis of the collapse of the Iraqi dinar last year in return for the high exchange rate of the dollar in the Iraqi arena, a crisis that triggered a wave of protests in which Shiite militias loyal to Tehran participated.

Last November, the US Treasury Department prevented four other Iraqi banks from accessing the dollar and imposed, in cooperation with the Central Bank of Iraq, stricter controls on financial transfers in the country in general.

The American Wall Street Journal quoted a US official as saying, “We have strong reason to suspect that some of these money laundering operations may benefit, either to individuals covered by US sanctions or to people who may be covered by sanctions,” adding, “The main risk of sanctions in Iraq is definitely related to Iran.”