Oil revenues: Washington freezes $500 million in financial aid to Iraq
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The Wall Street Journal quoted the US State Department as confirming that Washington expects Iraq to take concrete steps to dismantle these groups, stressing that Baghdad's "failure" to prevent attacks targeting US interests and its allies in the region casts a negative shadow on bilateral relations between the two countries.
Wall Street Journal: Washington freezes $500 million of Iraqi funds
The Wall Street Journal revealed on Wednesday that the United States has halted the transfer of $500 million destined for Iraq, along with freezing a number of security cooperation programs with Baghdad, in a move aimed at increasing pressure on Iranian-backed groups.
The newspaper quoted informed sources as saying that the US Treasury Department had frozen the transfer of about $500 million from Iraq’s accounts at the Federal Reserve Bank of New York, funds resulting from the sale of Iraqi oil.
She explained that this shipment is the second that Washington has suspended since the start of its military operation against Iran, as part of escalating economic and security measures.
She also noted that US authorities have suspended funding for a number of training programs for Iraqi military forces and counter-terrorism units, in a move that reflects a trend to restrict security cooperation between the two countries.
According to the report, these measures are part of US efforts to pressure Baghdad and reduce its level of relations with Tehran, in light of escalating regional tensions.
The newspaper noted that Iraqi oil revenues have been deposited in accounts at the Federal Reserve Bank of New York since 2003, while the United States had previously temporarily suspended cash transfers to Iraq in 2015, due to concerns that some of those funds might reach ISIS.
Parliamentary Finance Committee: No need for borrowing if a fully empowered government is formed
The Parliamentary Finance Committee expressed its position on Wednesday regarding borrowing from the Central Bank to finance domestic expenditures, indicating that this matter is linked to the formation of the government. Committee member Ribwar Karim told the official news agency that "the proposal to borrow from the Central Bank to finance domestic expenditures is contingent upon the formation of the government."
He added that "there is a conviction among political parties and blocs that there are serious efforts underway to appoint the next prime minister as soon as possible." He explained that "if the government is formed, there will be no need for borrowing, as a fully empowered government will begin its duties," noting that "borrowing from the Central Bank is merely an opinion put forward by some members of parliament." He stated that "this proposal is fundamentally linked to the formation of the government, and if that happens, there will be no need for this proposal."
Kujer: Salaries are temporarily secured, and Iraq faces austerity or printing money.
During his appearance on the program “On the Ruler” broadcast by Al-Furat satellite channel, Kujer said: “The dollar issue in Iraq is linked to two aspects: technical, administrative, and political.” He explained that “the currently influential aspect is the cessation of dollar shipments due to the war conditions and the disruption of air traffic, and not because of a problem with the US Federal Reserve,” noting that “no official US announcement has been issued to stop the transfer of shipments.”
He added that "the effects of the drop in oil prices will appear after three months, but the cash reserve is still better compared to previous periods," stressing "conviction in the government's ability to secure salaries during the next six months, given that oil revenues are received three months after the sale, with options including printing money despite the risks of inflation."
He pointed out that "the United States is waging a solitary conflict that may have repercussions on the global economy," indicating that "the rise in fuel prices in the American markets reflects the magnitude of the effects," and suggesting that "it will be a limited military confrontation."
Kujer said that “Iraq may be forced to adopt an austerity policy or resort to printing money, which requires a fully empowered government to manage the phase,” criticizing the three-year budget, describing it as “a backbreaker after it turned the planned deficit into an actual deficit that exceeded $133 billion.”
He predicted that "oil prices will continue to rise even if the war stops," noting that "the 2026 budget may be presented in the form of a law with the possibility of adding a supplementary budget, or resorting to legislation similar to the food security law to cover emergency expenses and secure salaries."
Regarding the National Service Law, Kujer noted that "the law is unlikely to be passed at the present time due to the lack of political consensus and clarity in its features, despite the importance of introducing it in the long term."
Reassurance to employees: Expert says there is no need to worry about salaries despite the disruption in dollar shipments.
Al-Marsoumi said, during his appearance on the “On the Ruler” program broadcast by Al-Furat satellite channel, that: “There are two narratives regarding the issue, the first links it to the circumstances of the war and the difficulty of transferring funds, while the other indicates that it is a measure related to Iraq’s position on regional tensions,” explaining that “this will not significantly affect meeting the demand of travelers, as it represents only about 7% of the total dollar funding and can be covered for several months with the availability of cash reserves at the Central Bank.”
He added that "the continuation of the disruption and its transformation into an American decision may affect the parallel market, especially with about $30 billion deposited in international banks," warning that "the real fear lies in the possibility of stopping bank transfers, given the direct impact this would have on imports."
He pointed out that "the decrease in the number of travelers and the volume of remittances due to the security situation in the region will limit the effects of the crisis," suggesting that "the repercussions of the rise in the dollar exchange rate will be limited at the moment."
He added that "Iraq is incurring daily financial losses as a result of the war," noting that "salaries are secured through the Central Bank's reserves, with options including printing currency, despite the inflationary risks it carries."
Regarding the energy file, Al-Marsoumi stressed that "the cooking gas crisis in Iraq is real as a result of the decline in oil production," noting that "increasing crude oil production will contribute to addressing the gap between supply and demand, while the shutdown of some oil fields and the difficulties in rehabilitating infrastructure have contributed to the loss of significant oil revenues."
Al-Marsoumi concluded by saying that “relying on exporting oil via tankers is a poor, expensive and dangerous means of transport, in addition to causing traffic jams; but it is the only option currently available to Iraq in the absence of alternatives,” indicating that “the cost of transport and shipping reaches about $15 per barrel.”
Parliamentary Finance Committee: The proposal to borrow from the Central Bank is linked to the formation of the government!
The parliamentary finance committee expressed its position on Wednesday regarding the proposal to borrow from the central bank to finance domestic expenditures, noting that this issue is linked to the formation of the next government.
Committee member Ribwar Karim told Al-Mada that “the proposal to borrow from the Central Bank to finance internal expenditures is contingent on the formation of the government.”
He added that “there is a conviction among the political parties and blocs that there are serious attempts to appoint the next prime minister as soon as possible,” explaining that “if the government is formed, there will be no need to borrow, as a fully empowered government will begin its duties.”
He explained that “borrowing from the Central Bank is merely an opinion put forward by some members of parliament,” noting that “this proposal is mainly linked to the formation of the government, and if that happens, there will be no need for this proposal.”
In a related context, economic expert Sadiq Al-Azraki warned against expanding the policy of domestic borrowing, in light of regional turmoil and its impact on oil supply chains, and the pressures that may accompany this on the general budget.
Al-Azraki said that “these developments reinforce fears of a move towards forced austerity and the government resorting to maximizing internal borrowing to secure operational expenses, especially the salaries of employees and retirees, at the expense of investment expenses,” indicating that “the government was resorting to this approach even before the current crises.”
He explained that “the danger of domestic borrowing lies in the fact that it does not generate an economic return, as it is done for consumption purposes and not to finance productive projects or infrastructure capable of paying off the debt in the future,” noting that “the ratio of domestic public debt to GDP has begun to approach critical levels, exceeding 38% in some estimates during the years 2024 and 2025.”
He pointed out that the government relies heavily on withdrawing liquidity from government banks and the central bank by discounting treasury transfers, which “turns banks from tools for financing development into treasuries for the state’s deficit,” and causes “liquidity depletion and creates a permanent crisis in circulating cash.”
He explained that “most of the oil revenues are consumed in the salaries item, and any decline in oil prices or disruption in exports puts the treasury in front of a direct deficit,” adding that “loans are not free, but rather entail increasing annual interest that is deducted from the budgets of future years, which is what specialists describe as a financial black hole.”
He pointed out that “domestic borrowing also puts pressure on the private sector, as it drains liquidity from banks and limits the ability to finance projects, leading to economic stagnation and rising unemployment,” warning that “any expansion of monetary financing without productive cover may be reflected in prices and purchasing power.”
Despite this, Al-Azraki pointed out that “the Central Bank has good foreign reserves estimated at about $108 billion, capable of covering imports for up to 12 months,” but he warned that “the danger lies in borrowing turning from an emergency tool into a permanent practice.”
He explained that the continued high dependence on oil makes the economy vulnerable to shocks, noting that “every month of export disruption could cost Iraq between $7 and $8 billion in revenue.”
He concluded by saying that “domestic borrowing may remain a helpful tool in times of crisis, but it does not address the root causes of the problem unless it is coupled with economic reforms, diversification of income sources, and reducing dependence on oil,” stressing that “salary stability in the short term is possible, but the real challenge lies in long-term financial sustainability.”
The Finance Committee links the borrowing proposal to the formation of the government... and economic warnings about its repercussions.
The Parliamentary Finance Committee expressed its position on Wednesday regarding the proposal to borrow from the Central Bank to finance internal expenditures, stressing that this issue is primarily linked to the formation of the next government.
Committee member Ribwar Karim stated that the borrowing proposal remains contingent upon the formation of a government, noting that political forces are inclined to expedite the appointment of a prime minister. He added that forming a fully empowered government would eliminate the need for borrowing, clarifying that the current proposal is merely an opinion put forward by some members of parliament.
In the same context, economic expert Sadiq Al-Azraki warned against expanding the policy of internal borrowing, in light of regional challenges and their impact on oil supplies, and the pressures that this may cause on the general budget.
Al-Azraki explained that relying on borrowing to cover operational expenses, especially salaries, comes at the expense of investment projects, noting that this type of borrowing does not yield any future economic returns. He also pointed out that the domestic debt ratio is approaching alarming levels, with liquidity being withdrawn from banks, which negatively impacts the private sector and economic activity.
He explained that the Iraqi economy remains vulnerable to shocks due to its heavy reliance on oil revenues, warning that any decline in prices or disruption to exports could lead to a direct financial deficit.
Al-Azraki stressed that domestic borrowing may be a temporary solution in crises, but it does not represent a radical solution, calling for the implementation of real economic reforms and diversification of income sources to ensure long-term financial stability.
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The bill for the new regime: Will Washington turn dollar shipments into a "veto" that shapes the features of the next stage?
While the State of Law Coalition describes the news of the hard currency shortage as a “major rumor” aimed at political pressure, the Progress Party believes that the stability of the dollar flow is exclusively linked to the quality of the relationship with Washington, which puts the state before the challenge of balancing sovereignty and international obligations.
Big rumor
Khaled Alwan Al-Shallal, a member of the State of Law Coalition, says that “what is being circulated about the cessation of the flow of dollars from the United States to Iraq is somewhat exaggerated,” explaining that “there are strategic framework agreements between Iraq and the United States of America that guarantee the political, economic and even military situation, and therefore the country is facing a great rumor.”
He adds, “Even if there are occasional disagreements about the process of changing or delaying the flow of dollars, it does not reach the point of interrupting dollar payments or halting the wheels of the economy in Iraq to the extent that some expect.”
A senior US State Department official, as quoted by Alhurra website, said that dollar shipments to Iraq “have stopped and will not resume until the features of the new government become clear and the commitment to preventing the use of the dollar to finance attacks against Americans is verified,” stressing that what is happening “is not a break but a response.”
According to two government sources in the Iraqi cabinet, dollar shipments represent the main source of liquidity in the Iraqi market, as Iraqi oil revenues are deposited in an account with the Federal Reserve in New York. The Central Bank of Iraq and the US State Department denied that those shipments had stopped.
Advanced understandings
Al-Shallal believes that “this is like politics and its affairs are related to the existence of actual pressures on the process of forming the government and imposing external wills and agendas, but the Iraqi political situation is of a high degree of responsibility,” noting that “there are meetings between the leaders of the blocs, the latest of which was a meeting at the house of His Eminence Sayyid Ammar al-Hakim, where understandings were reached at a high level, and I expect things to proceed during Wednesday, and an agreement will be reached on a specific candidate who will be announced by the coordination framework.”
cautious anticipation
A member of the State of Law Coalition believes that “the issue of the factions comes in light of a truce between the United States and Iran, with clear anticipation and caution. If the negotiations with Iran and America succeed, the situation will move towards calming down and things will proceed correctly. But if the war returns, then every incident will have its own story.”
Sources quoted an unnamed Iraqi security minister as saying that “suspending coordination meetings is harming Iraq,” noting that Washington had stipulated that those responsible for the recent attacks on the US embassy and a base at Baghdad International Airport be identified before coordination could resume.
US Treasury Secretary Scott Bisent said that the United States “will not allow Iranian-backed militias to threaten American lives or interests,” while State Department spokesman Tommy Piot called on Baghdad to dismantle Iranian-linked groups, coinciding with the US Embassy issuing a Level 4 travel warning for Iraq.
According to the sources, “The message from Washington is clear: Iraq does not follow Iran.”
A necessary relationship
For his part, Anwar Al-Alwani, an advisor and member of the Progress Party, says that “economic alternatives and solutions between Baghdad and Washington require a good relationship with the American side,” explaining that “Washington is responsible for the flow of dollars, and therefore any dispute or setback in the relationship between Baghdad and Washington will harm the country’s interest in general, and especially the Iraqi citizen, especially in light of the financial and economic challenges that followed the events between Iran, America and Israel.”
He adds that “developing the relationship with Washington is a necessity for the Iraqi government,” expressing his hope that “there will be concrete steps taken by the Iraqi Foreign Ministry and the Baghdad government, while giving sufficient space for negotiation with the American side and presenting economic alternatives, in a way that contributes to getting Iraq and Iraqis out of any political conflict in the near future.”
Political solutions and channels
Al-Alwani points out that “Iraq’s financial situation is not good, and that imposing any economic sanctions by Washington in the event of a major dispute will harm the country’s higher interests,” stressing that “the interest requires all political blocs and leaders to work on finding solutions and opening political channels with the American side, as well as with neighboring countries such as Turkey and Iran, to get out of the suffocating financial crisis.”
Earlier, the US Embassy, in a statement, accused parties linked to the Iraqi government of providing “political, financial, and operational cover” for armed factions, renewing its Level 4 travel warning for Iraq, which states “do not travel for any reason,” and calling on US citizens in the country to leave immediately.
Government advisor: Demand for dollars to finance foreign trade is being managed normally without interruption
The Prime Minister's advisor, Mazhar Muhammad Salih, confirmed on Wednesday that talk of the cessation of dollar flow from the United States to Iraq pertains to a very limited part that does not exceed about 5%, while he indicated that the demand for dollars to finance foreign trade is being managed normally without interruption.
Saleh told the Iraqi News Agency (INA): “There is a fundamental difference between the cash dollar allocated to travelers through airports, which has a ceiling of about $3,000 per traveler, and the financing of foreign trade, which is done through remittances and the global banking system.” He explained that “what is being circulated in some circles regarding the cessation of the flow of dollars from the United States to Iraq relates to a very limited part of the demand for dollars, not exceeding about 5%, which is related to meeting the needs of travelers in cash.”
He added that "this part was affected by purely logistical factors, most notably the limited air traffic and the closure of most airports, which led to difficulties in shipping dollars in cash via air transport, especially with the disruption or reduction of flights in the region," noting that "this stoppage is temporary and short-term, and is related to operational conditions that do not reflect a flaw in monetary policy or in the availability of foreign currency in general."
He added that “the largest part of the demand for dollars—estimated at about 95%—which is allocated to financing foreign trade (importing goods, services and various benefits), is still being managed normally through official banking channels, without significant interruption,” noting that “the need for foreign currency for travelers can be covered by modern alternatives, such as electronic payment cards in foreign currency, which allow their holders to make payments and withdrawals outside the country easily, thus reducing dependence on direct cash dollars.”
An official at the Central Bank of Iraq comments on Washington's suspension of cash shipments to Baghdad.
Reuters reported on Wednesday, citing an official at the Central Bank of Iraq, that no notification had been issued by Washington to halt any cash shipments to the country.
The Iraqi official said that "a shipment that was expected to arrive in April has not yet arrived, and the status of another shipment that was expected to arrive in May is unclear."
A source in the Iraqi Foreign Ministry said that "Washington warned Baghdad through diplomatic channels that it will no longer tolerate the government's failure to rein in the pro-Iranian militias, which have representation in parliament and the government."
The warning noted "attacks attributed to Iraqi factions against American targets, including repeated strikes on the U.S. Embassy in Baghdad and the U.S. Consulate in Iraqi Kurdistan, as well as missile and drone attacks on Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait, Jordan and Syria."
The Wall Street Journal revealed earlier on Wednesday that the administration of US President Donald Trump has suspended dollar shipments to Iraq and frozen funding for security cooperation programs with the government.
The newspaper quoted officials as saying that the US Treasury Department recently blocked the transfer of an air shipment of about $500 million in banknotes,proceeds from Iraqi oil sales, from Federal Reserve Bank accounts in New York to Iraq, due to US concerns about "Iraqi factions."
Reuters: Washington intensifies financial pressure on Baghdad
link from Kurdish news too
Reuters news agency, citing informed Iraqi sources, revealed that shipments of cash in US dollars, which were scheduled to arrive from the United States to Iraq during April, have been delayed.
This sudden halt comes at a time when Washington had issued strongly worded warnings to Baghdad about the activities of armed groups (factions), indicating an American tendency to tighten sanctions and use the "dollar bill" as a tool of political pressure.
Sources reported that the cash amounts the Iraqi government was expecting from the US Federal Reserve this month have not yet arrived.
She added that the ambiguity not only surrounds this month's shipment, but also extends to shipments scheduled to be sent next month, as the American side has not provided any information or assurances regarding their fate.
A senior official at the Iraqi Foreign Ministry confirmed to Reuters that these financial developments go beyond purely economic dimensions and are closely linked to the political and security situation in the region.
The official explained: “The American warnings regarding the activities of armed factions were very clear and explicit,” indicating that freezing the transfer of funds may be a direct response to the failure to contain those activities.
Observers believe that this measure may present the Iraqi economy with new challenges related to the availability of cash liquidity and the stability of the exchange rate, given Washington's use of mechanisms to control financial flows to exert pressure on political and security decisions in Baghdad.
Al-Kadhimi: Halting dollar shipments is American blackmail that infringes on Iraq's sovereignty.
The former member of the parliamentary finance committee, Mu'in al-Kadhimi, described the recent US decision to halt dollar shipments to Iraq until a new government is formed as "political blackmail" and an attempt to interfere in Iraq's internal affairs. In
a statement to Al-Ma'louma, al-Kadhimi said, "The US decision to freeze or delay sending Iraq's hard currency entitlements represents a serious violation of the financial and political sovereignty of the Iraqi state." He explained that "Washington is using the dollar as a tool of political pressure to impose its will on Iraqi decisions."
He added that "linking financial matters and Iraq's monetary needs to the course of political agreements and government formation is a blatant and unacceptable interference," noting that "this measure aims to destabilize the economy and affect the daily livelihoods of citizens."
Al-Kadhimi stressed "the necessity of taking serious governmental and parliamentary steps to end US control over Iraqi funds," pointing to "the importance of finding monetary alternatives and liberating the national economy from the grip of the conditions and restrictions imposed by the US Treasury Department." Earlier, The Wall Street Journal, citing Iraqi and American officials, reported that the administration of US President Donald Trump had suspended dollar shipments to Iraq until a new government was formed.
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The US extends waivers for Iranian oil sales, and Iraq faces complications in the Strait of Hormuz.
US Treasury Secretary Scott Bisent announced the extension of waivers related to Iranian and Russian oil, stressing that it came after requests from countries at risk .
In conjunction with these US exemptions, Iraq is unable to sell most of its oil due to the closure of the Strait of Hormuz by the Iranian Revolutionary Guard and the US imposition of a naval blockade on Iranian ships
During a Senate hearing, the US Treasury stated that easing sanctions on Russia and Iran prevented oil prices from jumping to $150.
Bisnett's remarks came during hearings before the Senate Appropriations Committee, where he defended the administration's decision to extend licenses allowing the continued sale of Russian and Iranian oil, despite sharp criticism from Democrats.
"When I came here, oil was at $100," Bisnett said. "If we hadn't eased sanctions, it would have reached $150." He indicated that this policy helped maintain stability in the global market.
The US Treasury Department announced last Saturday the extension of the license for Russian oil sales, covering seaborne crude shipments until April 17, with the license remaining in effect until May 16, a move reflecting a temporary flexibility in the application of sanctions.
This decision comes after a reversal in Bisnett's stance, who just two days earlier had stated he had no intention of extending the waivers. He later explained that the change was in response to requests from more than 10 countries considered among the poorest and most vulnerable in terms of energy security.
In contrast, the US Secretary of Energy faced sharp criticism from Democratic lawmakers, most notably Senator Chris Coons, who expressed concerns that these concessions would boost revenues for Iran and Russia. Coons pointed out that Tehran may have earned approximately $14 billion since the start of the war, while Moscow is reaping nearly $150 million daily to support its operations in Ukraine.
Bisnett dismissed these figures as "myths," categorically rejecting the notion that easing sanctions was a futile step. He emphasized that the current policy has ensured stable global supplies, with approximately 250 million barrels available on the market.
The Secretary acknowledged that Russia has benefited from these measures, but maintained that the American consumer has been the biggest beneficiary, as a significant increase in fuel prices has been avoided.
Regarding future prospects, Bessent predicted that gasoline prices would fall below pre-war levels once tensions with Iran end, noting that the oil market is currently experiencing what is known as a “sharp forward trend,” where future prices are lower than current prices, indicating expectations of lower prices in the coming period.
The US military announces the return of 29 ships as part of the naval blockade against Iran.
The US Central Command announced on Wednesday that it had turned back 29 Iranian vessels that attempted to pass through the Strait of Hormuz, asserting that reports of three vessels crossing in the past 24 hours were inaccurate.
The command said in a statement that "US forces have ordered 29 ships to return to port or turn back as part of the US embargo on Iran."
He added that "during the past 24 hours, media reports claimed that several commercial vessels circumvented the blockade, citing the ships (Hero 2), (Hedi) and (Dorina) as examples," indicating that "these reports are inaccurate."
He noted that "Hero 2 and Heidi did not sail through the blockade as part of a fleet transporting millions of barrels of oil to the market. In fact, the Iranian-flagged oil tankers are docked in Iran's Chabahar port, after being intercepted by US forces earlier this week. As for Dorina, it is being escorted by a US Navy destroyer in the Indian Ocean after its previous attempt to violate the blockade."
The military asserted that "American forces have global influence, working to impose blockades throughout the Middle East and beyond."
Bloomberg magazine, in a report published Wednesday, addressed the failure of part of the American maritime blockade, indicating that at least two Iranian tankers, fully loaded, left the Gulf waters this week and were able to breach the American blockade.
These ships are part of a fleet of oil tankers that bypassed the warships and transported about 9 million barrels of oil.
Data firm Vortexa announced that two Iranian-flagged supertankers, the Hero 2 and the Heidi, were the last vessels whose departure was detected by satellite imagery. They crossed the US-imposed blockade line on Monday, April 20.
The Pentagon says clearing mines from the Strait of Hormuz will take six months.
The U.S. Department of Defense estimates that clearing the Strait of Hormuz of mines could take six months and is unlikely to be completed before the Middle East conflict is finally resolved.
The Washington Post, citing Pentagon officials, reported that the Pentagon leadership informed Congress that completely clearing the Strait of Hormuz of mines planted by the Iranian military could take six months and that no such operation is likely to take place until after the U.S.-Iran conflict ends, meaning the economic impact of the conflict may become apparent later this year or even later.
Three officials told the newspaper that the report was presented during a closed-door briefing for U.S. lawmakers, and two of them indicated that the timing accurately reflects the likelihood that oil and fuel prices will remain high for a considerable period even after a potential peace agreement between Tehran and Washington.
According to the U.S. military's estimate, there are at least 20 mines in the Strait of Hormuz, and some may lack GPS technology, making them difficult to neutralize.
Earlier, CBS News, citing unnamed US officials, reported that there were at least 12 sea mines in the Strait of Hormuz. US officials also claimed that Iran had deployed its own mines, the Maham-3 and Maham-7 types, in the strait.
