What are the consequences of Saudi Arabia’s decision on the global economy?
Professor of Economics at Al-Maqal University, Nabil Al-Marsoumi, revealed the implications of Saudi Arabia’s decision not to renew the economic agreement with the United States of America.
Al-Marsoumi stated in a blog post followed by “Al-Eqtisad News” that “Saudi Arabia’s decision not to renew the economic agreement, known as the ‘Petro-Dollar’ agreement, which was signed with the United States in 1974 for a period of 50 years and related to pricing oil in dollars, would encourage other oil-producing countries to sell oil.” In currencies other than the dollar.
He added, “It is expected that this decision, if actually implemented, will weaken confidence in the dollar globally, decrease its value, raise interest rates, increase inflation levels, and weaken the US bond market.”
Advisor to the Prime Minister: Iraq is safe from any international financial risks
Advisor to the Prime Minister, Mazhar Muhammad Saleh, confirmed today, Monday, that Iraq ranked distinguished among international groups that follow the best banking compliance systems, which makes it safe from any international financial risks, indicating that the international community also praised the solidity of the financial and banking system. .
Saleh told the Iraqi News Agency (INA): “Cash issuance mechanisms are one of the exclusive powers of the Central Bank of Iraq as it is the issuing bank based on its Law No. 56 of 2004,” indicating that “what is published here and there about problems with cash liquidity is far from the institutional basis.” The well-established monetary authority in Iraq, which is one of the most important authorities concerned with the issues of the availability of cash liquidity and the stability of the payments system, which contributes to the sustainability of the stability of transactions in the national economy.
He added, "Managing cash liquidity, building the monetary foundation, and controlling liquidity levels in the country are subject to the principle of a long-term plan that is consistent with achieving the operational objectives of monetary policy in order to achieve the intermediate goals of stability and sustainable economic growth and determine the stability of long-term cash flows."
He stated that "Iraq occupies a distinguished rank among the international financial groups that follow the best international banking compliance systems, which makes our country safe from any international financial risks," pointing out that "Iraq is a cornerstone of regional and international financial cooperation institutions in the scope of combating money laundering and money laundering crimes." Crime and terrorism."
He stated that "Iraq recently received clear, positive praise for its strong anti-money laundering policies at the Financial Action Organization conference for the Middle East and North Africa region, which was held in the Kingdom of Bahrain, and it is a testimony from the international financial community that confirms the solidity of the financial and banking system in Iraq with the principles of compliance and the integrity of financial and banking operations
Iranian Ambassador in Baghdad: Presidential elections will be held in 6 Iranian missions in Iraq
The Iranian ambassador to Baghdad, Muhammad Kazem Al-Sadiq, announced that several coordination meetings had been held in order to plan for holding the 14th presidential elections of the Islamic Republic in six Iranian representations in Iraq.
Al Sadiq explained, in an exclusive interview conducted by IRNA, that: “During the 13th round of the Iranian presidential elections, citizens residing in Iraq cast more than 20,000 votes, expressing his hope that the next elections will be held in Iran and abroad, including the State of Iraq.” "More wonderfully than in previous elections."
He added, "Given the coincidence of the presidential elections in Iran and the presence of Iranian visitors who flocked to Iraq to participate in the Arafa, Eid al-Adha, and Ghadir ceremonies, we hope that these visitors will record a more and more enthusiastic presence at the ballot boxes."
Al Sadiq continued, "For the fourteenth presidential elections, ballot boxes were monitored in Baghdad, Erbil, Sulaymaniyah, Karbala, Najaf, and Basra as well."
He explained, "Iranian citizens residing in Kadhimiya and Samarra will vote in Baghdad, and residents of Amara and Nasiriyah will vote in Basra Governorate. Funds have also been allocated for Iranian nationals residing in Babylon, Diwaniyah, and Muthanna Governorate."
Details of the memorandum of understanding signed between Iraq and Honeywell of America
Today, Monday, the Ministry of Oil clarified the details of the memorandum of understanding signed with the American company Honeywell to develop refineries, and while it indicated the Prime Minister’s directive to prepare a study to establish a pipeline network adjacent to the development road, it revealed projects that will enter service soon related to raising refining capacity.
Deputy Minister of Oil for Refining Affairs, Hamid Al-Zobaie, said: “There is a memorandum of understanding signed by the Minister of Oil under the auspices of the Prime Minister with Honeywell, which is one of the large specialized companies with extensive work in all activities,” noting that “a workshop was held with Company regarding refinery activity.
Al-Zobaie explained, “The memorandum that was signed aims to develop projects for developing refineries and to meet what was directed by the Prime Minister regarding the refinery capacity reaching 40 percent of the production capacity of crude oil,” noting that “raising the refinery capacity to 40 percent will add value to the crude oil produced and lead to To raise financial returns and thus support the national economy.”
He pointed out that "7 projects were discussed regarding refineries, with a capacity of 70 thousand barrels for each project, in the governorates of Maysan, Dhi Qar, Muthanna, and Najaf Al-Ashraf, in addition to the third unit in the Al-Dawra, Haditha, and Qayyarah refineries."
He pointed out that "the Ministry's plan was presented and discussed extensively with Honeywell during the workshop held, and it is hoped that a complete vision will be presented by the company regarding the process of developing the refineries with the proposed capabilities during the next two weeks."
He added, "Honeywell is known for its technical and technological expertise and capabilities, and it is important for gaining and transferring expertise to national cadres and developing facilities," stressing that "after completing the preparation of the projects, the implementation mechanism and time periods for their completion will be determined."
He noted that "the Prime Minister paid great attention to the refinery sector through development and raising the capabilities of refineries due to its great economic importance," noting that "great achievements have occurred in the refinery sector during the past short period, represented by the completion of the fourth unit in the South Refinery, which added 70,000 barrels of refining capacity, in addition to... About the Al-Azmra unit in the same southern refineries, which will be opened very soon, as it added about 1,200 cubic meters of high-octane gasoline, as well as the completion of the Al-Azmra unit in the Doura refinery and the rehabilitation of the North refinery in record time, which added refining capacity of up to 150,000 barrels.
He continued: "During the next few days, the CCR unit in the North Refinery will enter service and will add approximately 3,000,000 liters of high-octane gasoline. The Izmora unit in the North Refinery has also been operated," stressing that "all of these projects were completed in very short periods."
He continued, "The upcoming projects, which will enter service soon, will be a contributing factor in raising refining capacities and filling the local consumer need for some products, including the FCC unit in the southern refineries, as it is hoped to be completed in the first half of next year, as it will add gasoline production." High octane capacity of 4,000 cubic meters to 4,000,000 cubic liters, and we also have projects for refining capacity additions in Haditha refinery, during the current quarter of this year, adding 20,000 barrels.”
He pointed out, "The Prime Minister directed the Ministry of Oil to prepare a study that includes establishing a pipeline network adjacent to the development road that meets all the future strategic plans of the Ministry of Oil from the fields to the transportation process, in order to facilitate the process of transporting crude oil and gas between the north and the south, as well as export ports."
Dated June 18th 2024
The Central Bank...a new vision for its economic policy
The Iraqi government has developed an economic vision regarding borrowing policy. It consists of directing borrowing paths towards development aspects through financing strategic projects.
Youtube Transcript
0:01
[music]
0:07
A five-year financial strategy launched by the bank
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The Iraqi Central Bank aims to achieve seven goals
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Includes aspects of anti-money laundering and engagement
0:17
Within the global financial rules followed
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And banking to support monetary stability and security
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Cyber central bank is looking into these
0:26
The stage towards restoring confidence in the banking system
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Especially after the sanctions that affected some of the...
0:33
Drains
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Certainly Iraqi techniques used
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It will contribute to acceleration
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On the subject of preventing exploitation of the electronic platform
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Even direct transfer later in checkouts
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The dollar for other purposes
0:54
Iraqis specialists believe that the goals that
0:57
Iraq is working on it financially and economically and its status
1:00
Within a five-year strategy that facilitates implementation
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Besides, these are types of strategies
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Launching for the first time in the country grants for citizens
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Loans are easy, according to the bank’s statements
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The Iraqi Center spent more than 11 trillion
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Iraqi dinar for housing projects through
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My real estate and housing bank as well as these
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The plan will support small projects
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And the middle school in order to employ the unemployed
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in Iraq
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And facilitating the establishment of small projects
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And average by citizens and youth
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Graduates and the unemployed
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The work faces the financial and banking system in
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Iraq has great challenges generated by circumstances
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Political and security after a year
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2003, including money laundering and smuggling operations
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And fictitious invoices as well as the government's desire
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Central transfer of financial transactions to
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Its electronic aspect, which enhances control
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Financial inclusion are goals that take time
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And the effort that the Central Bank is trying to provide and focus
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The Central Bank of Iraq in its strategy
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New on the importance of leaving the selling window
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Foreign currency and reliance on remittances
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Foreign banking with an increase in gold reserves
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And offering new issues of high-quality currency
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O
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As well as transferring bank transactions to
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Dealing electronically from Baghdad, Sarmad Al-Qass
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The heat
Behind the scenes of an exciting session of merchants and restaurant owners who “invested” in the exchange rate difference in Iraq
A lengthy report by the American newspaper “The National” reviewed the scenes of investing in the exchange rate difference in Iraq, where businessmen, merchants, and restaurant owners benefited by operating their money in this trade, by withdrawing the dollar from the central bank and selling it on the black market, which achieved huge and rapid profits in this way, However, the recent actions of the Central Bank caused problems between these partners due to losses.
The report, translated by “Baghdad Today,” says, “Despite recent efforts for reforms, challenges remain, and well-connected businessmen are still exploiting loopholes in the foreign currency sales window managed by the Central Bank of Iraq to make obscene amounts of money.” From the margin between the official exchange rate and the black market rate.
The National spoke to dozens of businessmen who said the strict measures had helped simplify the import process and forced many to formalize their transactions, but they said there was still room for manipulation.
One of the businessmen said: “There are still ways to circumvent the procedures,” adding that “falsifying invoices and arrangements at border crossings and manipulating the prices of goods by setting inflated prices by exporters are among the common methods.”
In a room decorated with intricate tapestries and ornate tapestries, The National attended a tense meeting of businessmen, their faces etched with a mixture of frustration and resignation.
They have banded together to resolve a months-long financial crisis that has escalated beyond the bounds of legality, plunging them into the murky waters of clan diplomacy.
By accessing a government-run platform offering US dollars at the official rate, a businessman lured other traders with a deal promising them huge profits from the spread between official and black market rates, sources involved told The National.
With hundreds of millions of Iraqi dinars in circulation, traders received unexpected cash gains. But as the days and months passed, the businessman found himself unable to pay his debts, leaving the merchants in a precarious situation.
No official complaint was filed against him, and the businessman did not face any trial.
“It is clear that we have reached an impasse,” a representative of the businessman who lives in a neighboring country told the audience, who exchanged wary glances. "We can't continue down this path. It's time to cut our losses."
His proposal hung in the air, and was met with hesitant votes of approval.
Giving up half of the two billion Iraqi dinars was a bitter pill to swallow, but it seemed the only viable option in the face of mounting losses and uncertainty.
The owner of a famous restaurant chain in Baghdad told The National newspaper after the meeting: “We say that whoever loses half his money is not a loser.”
“At least I have half my capital in my hands – better than nothing,” he said.
“There is no business that allows you to hit the jackpot like taking advantage of the exchange rate margin in a short period of time, which is why we invested heavily with him.
He added: "Over the past months, he has been paying us on time, but it seems that he has been having problems recently."
Launch of new IBBC Advisory Council Report with Professor Frank Gunter and Dr Ahmed Tabaqchali.
Frank R. Gunter is a Professor of Economics, a Senior Fellow at the Foreign Policy Research Institute, and a retired U.S. Marine Colonel. After receiving his Doctorate in Political Economy from Johns Hopkins University in 1985, Frank joined the faculty of Lehigh University where he teaches Principles of Economics, Economic Development, and the Political Economy of Iraq. Dr Ahmed Tabaqchali, a Fellow at the Institute of Regional and International Studies (IRIS), is an experienced Capital Markets professional with over 25 years experiences in US and MENA markets. Currently the Chief Investment Officer (CIO) of AFC Iraq Fund, an Adjunct Assistant Professor at the American University of Iraq-Sulaimani (AUIS, and a board member of the Credit Bank of Iraq.
On a webinar organised by the Iraq Britain Business Council (IBBC) on Tuesday, Professor Frank Gunter of Lehigh University and Dr Ahmed Tabaqchali of AFC Iraq Fund (and Expert Blogger on Iraq Business News) discussed the drivers of the Iraqi dinar exchange rate.
The event marks the official launch of the IBBC's new white paper on de-dollarisation of Iraqi economy, which can be downloaded here.
One of Biden's guards is robbed at gunpoint
Police in Tustin, south of Los Angeles, said in a press release that officers responded to a call about a possible theft, according to the American network NBC News .
Police said that the victim worked for Biden's Secret Service and that "his bag was stolen at gunpoint." Some of the agent's belongings were later found in the area, and no suspects were identified .
Anthony Guglielmi, a spokesman for the Secret Service, said in a statement that the off-duty agent was returning from a work mission at the time, and that he used his weapon during the confrontation .
"The employee fired his service weapon during the incident but it was not known whether or not the attackers were injured. We are grateful that the employee did not sustain any injuries," Guglielmi said, adding that an investigation is ongoing .
Tustin police confirmed the investigation but declined to comment .
The incident occurred on the night Biden appeared at a fundraiser in Los Angeles alongside former President Barack Obama, actors George Clooney and Julia Roberts and comedian Jimmy Kimmel, raising a record amount of more than $30 million for the Democrats' largest fundraising event, according to the Reconnaissance Campaign. Biden's election.
Iraq is the first Arab country in developing oil pipelines
Iraq ranked first, as the most developed Arab country for oil pipelines, according to data issued by the specialized Global Energy Monitor platform, until May 2024.
The Arabian Gulf is among the most important regions witnessing oil pipeline construction projects globally, in light of the leadership role it plays in the global market and its possession of huge crude reserves.
Iraq topped the list of the most developed Arab countries for oil pipelines, and the oil pipeline projects - proposed and under construction - reach 3.83 thousand kilometers, divided between 75 kilometers under construction and 3.756 thousand kilometers proposed.
The marine export pipeline project, with an investment cost of $416.9 million, is scheduled to be implemented during the years 2024 and 2025, and will be implemented by the Dutch company Royal Boskalis.
This comes as the country implements plans to increase its oil production to 8 million barrels per day by 2027, contributing to Iraq topping the list of the most developed Arab countries for oil pipelines.
It is noteworthy that Iraq has about 15 lines for transporting oil, with a length of 2.09 thousand miles, and 10 lines with a length of 1.53 thousand miles for transporting petroleum derivatives, according to data issued by the Organization of Arab Petroleum Exporting Countries (OAPEC).
An Iraqi faction “provides good news to its supporters”: We have been included on the terrorist list
The “Loyal Ansar Allah” faction commented on Tuesday, the decision to include it and its Secretary-General, Haider Al-Gharawi, on the terrorist list, by the United States of America.
A statement issued by the "Loyal Ansar Allah Movement", seen by Shafaq News Agency, stated: "We brought to our proud people the good news of the unjust designation issued by the Foreign Ministry of the Great Satan (America) against Sheikh Haider Al-Gharawi and the movement."
The statement added, "Describing them as terrorists is only an implicit acknowledgment of their heroic struggle and honorable defense of the rights of oppressed peoples and evidence that Sheikh Haidar Al-Gharawi and the loyal Ansar Allah movement represent symbols of courage and dignity, and they faced challenges and sacrifices with faithful hearts and unwavering determination, and that accusing them of terrorism is nothing but a badge." “The honor and pride that history attaches to their chests, confirming that they are on the right path in defending their nation’s just causes.”
The statement considered this designation “an acknowledgment of the strength of their influence and determination to resist injustice and tyranny,” and that “these desperate attempts to distort their reputation will only increase their determination and determination to continue their legitimate struggle.”
Basra's wish: The stability of the governorate makes it an attractive city for international companies
The security committee in the Basra Governorate Council confirmed the stability of the security situation in the governorate.
Committee member Ali Talib told Al-Furat News Agency, "The security situation in Basra has had a positive impact on its status, as it has become one of the cities that attracts diplomats and ambassadors, in addition to the presence of major international oil companies in the province, and they are now working in Rumaila."
He added, "The security situation is very good in the governorate and allows all companies to work and invest in it."
A New Era in Iraq’s Relations with the West?
Amid growing pressure to dissolve the coalition and withdraw troops, the United States and its partners should continue pursuing good relations with Baghdad—but this time with a lighter footprint and increased regional cooperation.
At Baghdad’s request, the UN Assistance Mission for Iraq (UNAMI) has been ordered to cease operations in December 2025, following a previous decision to shut down the UN team charged with investigating the Islamic State’s crimes in Iraq (UNITAD). Meanwhile, Baghdad plans to close the country’s remaining camps for internally displaced persons (IDPs), first opened at the height of the war against IS. More broadly, it seeks to normalize its diplomatic activism in the region, which recently included mediating rapprochement talks between Turkey and the Syrian regime.
Despite the international support and military cooperation that have defined Western relations with Iraq in the post-Saddam era, Baghdad has begun to reevaluate longstanding arrangements. Washington and its partners should follow suit, scrutinizing the current basis of relations with Iraq amid changes in the local and regional environment, while simultaneously preserving the relationship's most beneficial aspects.
U.S. Military Presence Then and Now
Since 2014, the U.S.-led military presence in Iraq and Syria has hinged on an invitation to support the fight against IS. Following the coalition’s success in ending IS control of Iraqi territory in 2017 and Syrian territory in 2019, discussions emerged about adapting its presence to fit Washington’s evolving priorities and Baghdad’s increased security capacity and financial situation.
Last year’s outbreak of the Gaza war has lent further energy and tension to this issue, with U.S. support for Israel spurring renewed Iraqi militia attacks at a time of ongoing debate in Washington over the terms, duration, and legal authorization of regional military deployments. The Islamic Resistance in Iraq, a facade brand used by Iran-backed armed groups, has claimed at least 184 attacks on U.S. forces and interests since it emerged on October 18, including a January 28 drone strike that killed three service members (for comprehensive data on such incidents, see The Washington Institute’s militia attack tracker). The uptick in violence puts Baghdad in a precarious situation, as it seeks to remain allied with both the United States and Iran.
In January, Prime Minister Mohammed Shia al-Sudani stated that the coalition is no longer needed to ensure the country’s security. That same month, the United States and Iraq began formal talks via the Higher Military Commission (HMC) to transition the coalition mission into an “enduring bilateral security partnership.” These actions are not surprising—downsizing or ending the U.S. military presence has been regularly debated in both countries, and the Iraqi parliament was voting on bills to expel foreign troops as early as 2020.
Is Iraq’s Fight Against IS Really Over?
Although IS no longer poses an existential threat to Iraq, the country’s security forces have limited capacity to operate against the terrorist group’s remnants without coalition support for mission planning, airstrikes, intelligence operations, and other key tasks. Ongoing disagreements between Baghdad and the Kurdistan Region have left disputed areas such as Kirkuk and Diyala particularly vulnerable to IS, since the group aims to leverage governance gaps and sectarian divides to stoke violence and assert influence.
On the humanitarian front, the number of IDPs in Iraq fell from 6 million in 2014 to 1.1 million as of June 2023, but this steep decrease is largely a result of the government’s decision to close many IDP camps. These areas have now become informal settlements where IDPs remain without access to government assistance, creating potential hotspots for terrorist recruitment. The ideological legacy of IS persists in Iraq, and the group continues to exploit security gaps to wage attacks and intimidate locals.
Rocky Transition Already Underway
The coalition has been quietly pruning its active role in Iraq’s security sector for years. In December 2021, it transitioned from a combat mission to “advise, assist, and enable,” though the United States, France, and certain other members continue to participate in counter-IS raids with Iraq’s Counter Terrorism Service—a crucial task given that the IS presence in neighboring Syria often threatens to spill over the porous border.
International humanitarian efforts have likewise scaled down. According to the UN Office for the Coordination of Humanitarian Affairs (OCHA), foreign funding met 95 percent of Iraqi aid requirements from 2017 to 2020 but dropped to 67 percent in 2022. Meanwhile, the Security Council voted unanimously to end UNAMI in 2025—closing one of the longest and largest missions in the organization’s history—and UNITAD will close down this September.
Policy Recommendations
Although criticizing the Iraqi government on some of these issues is certainly warranted, Western cooperation with Baghdad on military and humanitarian issues is a major asset for both parties—one that coalition members should strive to maintain as they formulate new partnership arrangements. Iraq understandably wants to emphasize its autonomy, so foreign officials should focus more on bilateral security arrangements and development aid rather than the past model of multinational humanitarian and military assistance. These conversations must also factor in Iraq’s current political context—one torn between factions who seek good relations with the West and those who serve the Iran-backed militia agenda of rejecting the Western presence entirely.
Despite such challenges and contradictions, it is possible to plan and organize this new phase in a manner that benefits both sides, so long as they keep several key principles in mind:
- Ensure that the U.S.-Iraq HMC discussions outline an orderly transition toward a bilateral security partnership in close coordination with coalition partners. To preserve Iraq’s military ties with the West, Washington should rely on allies less exposed to the militia threat, and on multilateral frameworks other than the coalition. For example, France is still deeply engaged in the fight against IS, has begun developing a bilateral defense relationship with Baghdad, and has signaled its willingness to sell more weapons to the Iraqi military, including Rafale fighter jets. Additionally, while NATO Mission Iraq (NMI) has developed a complementary partnership with the country’s Defense Ministry, the EU’s Advisory Mission in Iraq has been less convincing—partly because of internal problems, but also because Iraq’s Interior Ministry is more deeply embedded with pro-Iran networks.
- Continue cooperating on post-IS stabilization efforts. Iraq’s IDPs are heterogeneous—they include individuals displaced by the IS conflict, Yazidi communities directly targeted by IS, and even IS-affiliated families. Addressing their needs is a huge challenge given the legal and social barriers at play. Additionally, Iraq has repatriated nearly 10,000 of its citizens from al-Hol detention camp in northeast Syria since May 2021, moving them to the Jeddah 1 transit camp in Nineveh province before reintegrating them into society. To avoid creating an “Iraqi al-Hol” ripe for IS recruitment and exploitation, Baghdad should carefully consider the effects of expanding Jeddah 1 or opening new transit camps especially for repatriated individuals affiliated with IS. For their part, Washington and its partners should ensure that Iraq is prepared to manage the repatriation and reintegration file through a human rights lens that aligns with international law. UNITAD’s decision this week to send Baghdad terabytes of data related to IS crimes is a good first step, but just one part of a broader process.
- Work more closely with regional partners. Qatar, Saudi Arabia, and Turkey have played a growing economic and political role in Iraq of late. Last year, Riyadh announced a $3 billion partnership in various sectors to help diversify Iraq’s oil-dependent economy, while Doha has signed several energy memorandums with Baghdad. Qatar and Turkey are also participating in the Development Road, a rail and road project aimed at linking Asia with Europe. Ankara’s intention to resume military operations against the Kurdistan Workers Party (PKK) and its affiliates in Iraq and northeast Syria will complicate any rapprochement with Washington, but ultimately, the West may have to choose between Iranian and Turkish prominence in Iraq.
- Carefully monitor Iraq’s political arena—but keep expectations realistic. The West may be able to play a greater role in mediating Baghdad’s disputes with the Kurdistan Region now that the UN Security Council recently adopted a resolution that removed reference to UNAMI, whose mandate previously included such mediation. Moreover, the Kurds may become closer partners with Washington if U.S. forces withdraw from federal Iraq, since Baghdad will remain divided between pro-Iranian and pro-Western spheres of influence. U.S. partners will therefore need to exercise a deft mix of targeted pressure and strategic patience with Iraq, wielding both sanctions and incentives as they try to facilitate the long-term goal of addressing corruption, federalism, lawless militias, and other structural challenges.
In short, the West should continue pursuing good relations with Iraq—but this time focused on a lighter footprint and increased regional cooperation.
Selin Uysal is a visiting fellow at The Washington Institute, in residence from the French Ministry for Europe and Foreign Affairs. Devorah Margolin is the Institute’s Blumenstein-Rosenbloom Senior Fellow.
International Finance: Economic reform in Iraq is witnessing an increasing pace and we have invested about two billion dollars
The representative of the International Finance Corporation in Iraq, Bilal Zaghir, confirmed today, Tuesday, that the institution’s investment in Iraq has reached nearly two billion dollars since 2005, while indicating that economic reform is witnessing an increasing pace.
Zaghir told the Iraqi News Agency (INA): “The work of the International Finance Corporation dates back to the year 2005, and over the years we have been able to invest approximately two billion dollars in a wide range of sectors,” noting that “our work in Iraq will extend our belief in the future prospects of Iraq and the acceleration of the pace of reform.” "This will be reflected positively in creating other investment opportunities in all sectors, whether industrial, infrastructure, or in the financial and banking sectors."
He added, “The International Finance Corporation is the arm of the World Bank that is concerned with developing the private sector by providing the necessary financing for private sector projects in addition to providing advisory services. Therefore, the framework of the institution’s work expands to include a wide range of financial services to all companies operating in Iraq, in addition to providing consulting services".
Zaghir continued, “The IFC’s thinking relates to a group of sectors whose importance we believe and whose importance we share with the Iraqi government, whether investing in the Iraqi industrial sectors, where they are productive and an alternative to imports, and the second part relates to the financial sector, both its banking and non-banking parts, in addition to the importance of investing in infrastructure and improving the services provided.” For Iraqis throughout the country,” pointing out that “the main point is our work and encouraging the private sector and working with it.”
How does Iraq deal with the confrontational policy of the prospective American ambassador?
The statements of Tracy Jacobson, US President Joe Biden's nominee for the position of US Ambassador to Iraq, sparked mixed reactions on the Iraqi scene.
In a hearing before the Senate Foreign Relations Committee, Jacobson stressed the United States' readiness to launch military strikes against pro-Iranian groups in Iraq, if their attacks on American forces there continue.
These statements caused great concern in Iraq, where some saw them as a threat to national sovereignty and a violation of diplomatic norms.
Legal expert Ali Al-Tamimi explained that Iraq has the right to refuse to accept “undesirable” ambassadors, because of their statements that may threaten civil peace in the host country.
According to Al-Tamimi’s analysis, Jacobson’s statements transgressed many diplomatic norms, and accordingly, Iraq had the right to refuse to accept her as the US ambassador to Baghdad, based on Article 9 of the 1961 Vienna Convention on Diplomatic Relations. This article gives the host state the right to declare any diplomat “ Unwanted” in its territory, and requested to be summoned by the sending state.
Moreover, Al-Tamimi indicated that Iraq has the right to this file under the Vienna Agreement and the 2008 US-Iraqi Strategic Agreement, which regulate relations between the two countries.
On the other hand, some believe that Jacobson's statements reflect new shifts in American foreign policy towards Iraq and the Middle East in general, especially in light of the events of October 7, 2022, which led to the killing of a number of American forces in Iraq.
The importance of dialogue and diplomacy to deal with these sensitive issues is highlighted, as political forces believe that the United States must respect Iraq's sovereignty and not interfere in its internal affairs.
A meeting discusses the signing of a security memorandum of understanding between Iraq and France
Today, Tuesday, Deputy Commander of Joint Operations, Lieutenant General Qais Al-Muhammadawi, discussed with the Inspector of the French Armies, Lieutenant-General Marc Ouellet, the signing of a joint security memorandum of understanding.
The Operations Command said in a statement received by Al-Youm Al-Akhbariya, “Al-Muhammadawi received in his office today the Inspector of the French Armies, Lieutenant General Marc Ouellet, and discussed the joint exercises that were conducted to develop the capabilities of the Iraqi desert units, as well as the capabilities enjoyed by our security forces.”
She added, "This comes in light of the work to build a strong, sustainable security relationship to benefit from the expertise of the French army in the fields of training, advice, and empowering the units."
The leadership continued: “The mechanism and stages of signing a security memorandum of understanding between Iraq and France were also discussed, provided that it is based on respect for Iraq’s sovereignty, reliance on its capabilities, and continuous cooperation in accordance with the requirements and vision of the Iraqi government and security leadership, the provisions of which are also based on the development of our security units and important types of them, especially the force.” Air Force, Army Aviation, and Special Forces, in addition to ending reliance on international coalition forces and relying fully on the capabilities, expertise, and capabilities of all types of Iraqi security forces.”
According to the statement: “The Deputy Commander of Joint Operations discussed with his guest joint exercises between the air forces of both countries and achieving mutual interests.”
Al-Mohammadawi expressed his thanks and appreciation for “the efforts made by the French forces and their support for the security forces, especially during the fight against terrorism.”
For his part, the French Armed Forces Inspector praised “the development taking place in Iraqi security work and the security operations being implemented to enhance stability.”
The American administration: We are tired of the Middle East... and the priority is elsewhere
The American administration has begun to show signs of “fatigue” with the Middle East, not because the Middle East is witnessing huge challenges, but because the world is witnessing many huge challenges.
American officials stressed that "it is necessary to look first at American foreign policy priorities and American national security priorities." One American official confirmed that the current administration, like the previous administration of Donald Trump, “considers that the most important and greatest challenges are the rising power of China and the Russian threat that we are now seeing in Eastern Europe.”
The Americans describe the escalating Chinese challenge in serious terms. For them, China is a huge economic power, carries out commercial activities that are unacceptable according to international legal rules, controls many sources of raw materials, and China is building a rapidly powerful and dangerous military force, especially a nuclear arsenal, and what is worse for the Americans. It threatens to use this diverse economic and military power to impose a political reality, such as occupying Taiwan or controlling vital straits.
As for Russia, in the eyes of the Americans, it has violated many red lines. Launching an “attack” on a neighboring country, and attempting to “overthrow” the Ukrainian state by military force, is an expression of this danger that threatens the independence of neighboring countries, and threatens “free” Europe after it has been liberated from control. Communism 30 years ago.
Consumption of American power
These two dangers, the Chinese and the Russians, consume a lot of American military and diplomatic capabilities. When talking about these two dangers, the Russian and the Chinese, American officials point out that the United States is working with the countries of the Pacific Ocean and with the countries of Europe and the group of industrialized countries to stop the escalation of these risks, but this cooperation It is not a substitute for the American presence, especially the military presence.
During the past few years, the United States was forced to deploy two aircraft carriers in East Asia, and with these carriers, dozens of American warships and thousands of American soldiers. The United States was also forced to send huge quantities of weapons and ammunition to Europe to confront the Russian advance and protect NATO’s eastern front.
Americans' weapons stocks reached low levels in 2023, and the world map was full of American forces when the October 7 attack occurred.
Directing forces to the Middle East
With this attack, the United States was forced to direct squadrons of air forces to the Middle East. It also directed an aircraft carrier from the Pacific Ocean to the Middle East, and American military power reached the limits of “full use” at the beginning of the year 2024.
The Americans succeeded in putting an end to the escalation, and they worked extremely hard to prevent the spread of clashes in Iraq and Syria. They were working through contact with Iran to stop the Houthi attacks and to stop the clashes on the Lebanese-Israeli border, but these efforts failed, and worse happened when the Israelis were killed. A senior official in the Iranian Revolutionary Guard in Damascus, and Iran responded by bombing Israeli territory.
One of the American officials said when speaking to Al-Arabiya and Al-Hadath: “You must understand that our priority is elsewhere,” and he continued, “The United States is a huge power, that’s for sure, but the world is also a huge theater,” and he warned with some severity. He pointed out that "the United States' priority is China and Russia, not the Middle East."
We should not understand from the words of this American official that the Middle East is not important to Washington. Rather, the American administration stressed that the Middle East is an essential part of America’s vital interests, and the administration of current US President Joe Biden wants to establish strong relations with the countries of this region, “but we do not We want to do the job alone,” according to the American official.
Americans need to restore their military, and even diplomatic, capabilities to the Pacific region, and for regional parties to bear the direct burden of confronting the risks.
The dangers of the region are many
The Americans list a list of risks, starting with the ongoing Iranian threat, passing through the Houthis and the protection of the strategic straits, all the way to Syria and Iraq and confronting ISIS, but American officials talk about a major lack of countries in the region in possessing the necessary equipment, especially naval vessels and their radars, and marine missile defense systems, They also point to a severe lack of training in the use of the defense equipment and systems available in these countries.
By talking to American officials, the listener gets the impression that the Americans are tired, and the soldiers deployed in the region are tired, and they want an alternative in a quick time to change the map of their deployment in the Middle East, reduce American forces in this region, give the soldiers and the American treasury a break, and then return to the “most important theater.” "
Iraq's banking system blighted by corruption
Dysfunction of the sector is a stark reminder of Iraq's unfulfilled economic expectations - 21 years after US-led invasion
After decades of war and economic sanctions on Iraq, hopes were high following the 2003 US-led invasion that the nation's banking sector would play a major role in driving economic growth.
But 21 years later, Iraq's banks stand as a stark reminder of unmet expectations.
Instead of fuelling growth, the sector has become a tale of hijacked opportunities and widespread corruption, rendering development efforts futile.
“After 2003, the Iraqi economy emerged with structural imbalances amid wide destruction in the infrastructure due to wars,” Ammar Hamad Khalaf, deputy governor of the Central Bank of Iraq, told The National.
Baghdad's Central Bank destroyed by an American bomb during the US-led war on Iraq, in April 2003. Getty Images
Shortly after the invasion that deposed long-time leader Saddam Hussein, a bloody insurgency from both Sunni and Shiite militants began, plunging the country into years of instability coupled with political infighting. All economic plans – particularly those to develop non-oil sectors – were shelved, and successive governments focused only on selling crude oil to feed the federal budget.
Nothing has changed significantly since.
“The behaviour of banks in Iraq follows the structure of the Iraqi economy, which relies on imports rather than local production,” Mr Khalaf said.
“Banks have focused extensively on financing foreign trade due to weakness in the agriculture, industry, and other sectors."
During Saddam Hussein's regime, Iraq's economy experienced financial repression – a condition, according to the World Bank, where governments manipulate the financial system to direct funds towards themselves. This often aims to offer cheaper loans to businesses and governments by lowering the returns for savers, thus easing their repayment burdens. The policies involved in financial repression can include capital controls, interest rate caps and preferential tax treatment.
Baghdad residents at a football match in April 2001, two years before the US-led invasion toppled President Saddam Hussein. Photo: Newsmakers
The establishment of private banks was permitted only after 1991. As of 2003, only 17 private banks operated, with five state-run counterparts.
In late 2003, a modern banking law was introduced to conform the country’s banking regulatory structure to international standards and to foster confidence in the system by forming a safe, competitive and accessible sector.
The following year, the Central Bank of Iraq Law was approved, establishing the CBI in its current autonomous form.
Since then, the number of private banks has grown remarkably to 54, including 30 Islamic banks, as well as seven government banks. But many of the private banks are owned by companies or businessmen linked to political parties and politicians. Corruption, irregularities and embezzlement are also mired the work of state-run banks, according to findings issued by government watchdog institutions.
Three of the seven state-run banks – Al Rafidain, Al Rasheed and Trade Bank of Iraq – still dominate the sector in Iraq, controlling about 85 per cent of deposits and 90 per cent of bank assets, said Mahmoud Dagher, former director general of the Department of Operations and Public Debt at CBI.
Ali Al Alaq was appointed governor of the Central Bank of Iraq in January 2023. Reuters
The rest of the deposits are with the private banks and "that is not sufficient to support the development process and the process of granting loans mainly to the private sector in Iraq", he explained.
In addition, the government banks, he notes, still operate under outdated systems. The only exception is the Trade Bank of Iraq, which was established after 2003 to finance government imports when Al Rafidain and Al Rasheed banks were still under UN sanctions imposed on Iraq after it invaded Kuwait in 1990.
The UN Security Council votes to sanction Iraq following the invasion of Kuwait in August 1990. Getty Images
The only way to develop the banking sector is to encourage the private sector to launch projects in industry, agriculture, services, transportation and tourism, instead of only importing goods, added Mr Dagher.
Over the past two decades, most Iraqi banks have not offered a wide range of banking products like other banks in neighbouring countries or beyond. Instead, they have focused on more profitable fields, including US dollar transactions through the government-run US dollar auction. Across Iraq, they are mockingly described as “currency exchange shops”.
Since late 2022, the Iraqi banking sector has come under heavy scrutiny from the US Treasury Department, which has accused it of money laundering and supporting Iran and other US-sanctioned countries to access US dollars.
An Iraqi man holds a sign reading 'depreciate the rate of the [US] dollar, or else...' during a protest outside the Central Bank of Iraq in Baghdad in January 2023. AFP
It has banned 32 banks from dealing in dollars and applied tight scrutiny measures on requests for foreign transactions to cover imports, such as severe examination. Seventy-five currency exchange and money transaction companies were banned.
Under pressure from Washington, Iraqi Prime Minister Mohammed Shia Al Sudani's government and the CBI introduced a series of financial and economic reforms early last year.
These include strict measures on foreign transactions in US dollars, requesting traders to file all details regarding the goods they want to import and the final beneficiary.
Others are activating the electronic payment system, encouraging banks to offer a variety of services and calling on the public and businesses to open accounts.
Iraqi Prime Minister Mohammed Shia Al Sudani, pictured in Baghdad in April 2024, and the CBI have brought in reforms to try improve the nation's economy. Getty Images
Despite the recent push for reforms, challenges persist.
Well-connected businessmen are still exploiting loopholes in the CBI-run Foreign Currency Selling Window to make obscene amounts of money from the margin between the official exchange rate and the one on the black market.
Ordinary citizens face hurdles in accessing essential banking services, from withdrawing their savings to navigating frozen credit cards and grappling with exorbitant commission rates mainly on pensions for those who live abroad.
US dollar dilemma
Every dollar Iraq gains from selling crude oil enters an account at the Federal Reserve Bank of New York, from which Baghdad makes withdrawals to pay government salaries and imports. The New York bank supplies Iraq with hard currency or foreign exchange transactions.
The Federal Reserve Bank of New York, where all of Iraq's oil revenue is sent before it can be withdrawn by the Iraqi government. Getty Images
Oil revenue makes up nearly 95 per cent of the federal budget and the country depends heavily on imports to meet demand for food and goods for key sectors of the economy.
In 2004, the CBI started selling dollars only at the Foreign Currency Selling Window as one of its policy tools to achieve monetary stability and to turn revenue into Iraqi dinars for salary payments and other needs.
For foreign currency transactions, the CBI receives requests from companies through banks to cover their imports.
Tellers help customers inside the Central Bank of Iraq in Baghdad. Aymen Al Ameri / The National
Although the government succeeded in controlling the exchange rate on the black market – at about 1,200 Iraqi dinars to $1 at that time – the process remains mired in accusations of corruption, money laundering and the channelling of dollars to Iraq’s neighbours, Iran and Syria, both under punishing US sanctions.
Much of these funds are allegedly siphoned off for illegal purposes, such as financing businesses and companies linked to the Islamic Revolutionary Guard Corps (IRGC) and sanctioned people, through counterfeit bills amid a lack of stringent oversight, according to the US Treasury Department.
Amid a liquidity crisis due to plummeting oil prices on the international market, the CBI devalued the currency in December 2020 to 1,460 dinars per dollar for banks and 1,470 dinars for individuals.
The interim government argued at the time that the move would also curb the flight of the “cheap dollar" – which is the official dollar rate – outside the country.
But that didn’t stop the outflow of the much-needed hard currency.
US officials have complained to Iraq on many occasions that dollars were still being sent to Iran.
In addition to blacklisting and banning several banks from dealing in dollars, the US authorities also started to reject suspected transaction requests. The stringent practices pushed many businesses to buy dollars on the black market. It also released less hard currency, so the government had only small amounts of dollars in cash to sell amid an increase in demand on the black market. All of this led to widening the margin between the official rate and the black market, at one point by about 30 per cent.
Iraqis buy and exchange foreign currency at an exchange office in Baghdad in January 2023. Getty Images
Since late 2022, the CBI has adopted the international financial messaging system known as Swift as part of the reforms, to help tackle money laundering and ensure respect for international sanctions.
The CBI electronic platform, which ensures compliance with Swift, has achieved a “major breakthrough in the regulatory procedures”, the bank’s deputy governor Mr Khalaf said.
“All parties involved in the financial and commercial transactions, from the Iraqi trader to the correspondent bank to the beneficiary are identified now,” while the illegal siphoning of dollars has “decreased significantly”.
A man using an ATM in Baghdad in 2012. The lack of efficient banking has held back the nation's development. Reuters
"We noticed that rejections [by the US] have decreased recently to less than 5 per cent [of the total requests raised by Iraqi banks] and the delay in some requests is because of lack of the needed supported documents,” he added.
“Banks and traders now understand the international requirements and taking their reputation into consideration."
In another step to fight the black market, travellers to non-sanctioned countries – students, patients and pilgrims – are also entitled to buy $3,000 at the official rate.
Despite the new measures, the black market is still thriving, with the dinar being traded at about 1,460 per dollar now far from the official rate of 1,300.
Loopholes
The National spoke to a dozen of businessmen who said the strict measures helped streamline the process of importing and forced many to make their transactions official.
However, there is still room for manipulation, they said.
“There are still ways to work around the procedures,” one businessman said. “Forged bills and arrangements at border crossings as well as manipulating the prices of goods by putting excessive prices by the exporters are among the common ways,” he added.
Another loophole, which is outside the authority of the CBI, is corruption at the border crossings and tax evasion.
The Safwan border crossing between the Iraqi city of Basra and Kuwait. Some businessmen take advantage of corruption at border crossings when importing goods into Iraq. AFP
“Some importers can easily evade measures at border crossings when his bill says, for example, 1,000 pencils but in reality, only 500 enter the country,” another businessman said.
“He can register 1,000 pencils at the crossing border and can even pay taxes for them as the margin between the official and black market rate can still offer good profit."
Mr Khalaf confirmed these practices exist, saying a US company checks requests mainly in terms of prices, to make sure neither the importer nor exporter manipulates them.
Another way of gaining access to dollars is through travel money.
An audit conducted by the Federal Board of Supreme Audit (FBSA) found 151,940 people were falsely registered as travellers to gain access to dollars from February 1 to July 8 last year.
They purchased $607.76 million that ended up on the black market, according to a report the board sent to the CBI in December.
Separately, the audit also found the total amount of dollars sold to travellers from January 1 to September 19 last year was about $7.29 billion.
Tourists on Mutanabi Street in Baghdad. One of the ways people cheat the system to gain access to dollars is by falsely registering themselves as travellers. Reuters
It found irregularities in the registration process by “entering inaccurate and unclear characters in the passport number field for some travellers despite passport numbers being a key identifier for completing the dollar sale".
The FBSA also found discrepancies in the amount of dollars sold to travellers on the two CBI platforms and in some cases CBI employees purchased dollars twice a month instead of once as required.
'Hit the jackpot'
In a drawing room adorned with intricate tapestries and ornate furnishings, The National attended a tense meeting of businessmen, their faces etched with a mix of frustration and resignation.
They had come together to solve a months-long financial debacle that had escalated far beyond the confines of legality, plunging them into the murky waters of tribal diplomacy.
With access to the government-run platform that offers US dollars at the official rate, a businessman lured other merchants into a deal promising huge profit from the margin between the official and black market rates, sources involved in the matter told The National.
Iraqis buy and exchange foreign currency in Baghdad. Getty Images
As hundreds of millions of Iraqi dinars changed hands, the merchants received cash windfalls. But as days and months dragged on, the businessman found himself unable to repay his debts, leaving the merchants in a precarious position.
No official complaint was made against him and the businessman never faced trial.
“It’s clear we’re at an impasse,” a representative for the businessman, who lives in a neighbouring country, told the attendees, who exchanged wary glances. “We cannot continue down this path. It’s time to cut down our losses,” he added.
His proposal hung heavy in the air and was met with murmurs of reluctant agreement.
To relinquish half of their 2 billion Iraqi dinars was a bitter pill to swallow, yet it seemed the only viable option in the face of mounting losses and uncertainty.
Residents of Baghdad run errands at Shorja market. AFP
“We say 'the one who loses half of his money is not a loser',” the owner of a famous restaurant chain in Baghdad told The National after the meeting.
“At least I have half of my capital in my hands – better than nothing,” he said.
“There is no business that can let you hit the jackpot like benefiting from margin in the exchange rate in a short period of time, so that is why we invested heavily with him.
"Over the past months, he was paying us on time but it sounds that he has faced problems recently,” he added.
De-dollarisation
The harsh UN-imposed economic sanctions after the First Gulf War in 1991 and the 2003 US-led invasion caused a substantial devaluation of the Iraqi dinar.
As a result, Iraqis have turned to the US dollar for a wide range of transactions, from wholesale trading to retail purchases.
Iraqis try to enter a bank in Najaf to exchange 10,000 dinar bills for 250 dinar bills. The larger bills dropped in value after many were stolen from the central bank after the war began, in April 2003. Reuters
Amid the lack of dollars in its coffers last year, the CBI put restrictions on dollar withdrawal and restricted all internal trade and transactions to Iraqi dinars in an attempt to de-dollarise the economy.
That caused concern and anger among Iraqis looking to gain access to dollars amid the instability of the local currency.
To ease pressure on the government to bring dollars in cash, the CBI announced last year it was allowing the banks to bring their assets from abroad independently by plane without going through the CBI.
However, that process has added more burden on clients especially after the CBI left the banks to decide how to implement the regulations for what is locally known and described by the CBI as the “imported dollar”.
Money stacked inside Baghdad's Central Bank of Iraq. Aymen Al Ameri / The National
For all incoming US dollar transactions to Iraq, the banks have added more commissions ranging from 3 to 5 per cent. Some banks are applying the “imported dollar” regulations retrospectively, causing more challenges to Iraqis.
For those wanting to withdraw more than $10,000, they have to submit an official request, explaining why they need such a large amount, with supporting documents. Clients also need to sign a paper listing the serial number of the dollar bills and they will be responsible if these dollars are found in US-sanctioned countries.
A man uses a cash machine in Basra in December 2023 as the government imposes restrictions on withdrawing dollars. AFP
“On paper and government statements, they say ‘come and withdraw your money’, but in reality, they are putting hurdles in our way,” Ziad Mohammed Qassim, 44, told The National.
“It is as if our savings are frozen now."
Foreign investors
After 2003, Iraq tried to lure foreign and international banks to open branches in the country but the volatile security situation, red tape and corruption prevented that from happening. Some regional banks from Lebanon, Iran and Turkey have opened branches, while others have invested in local banks.
Banning 32 banks and dozens of currency exchange and transaction service companies since late 2022, according to a list published by the CBI this year, allowed a handful of private banks to have a bigger share of US dollar transactions.
These are: Bank of Baghdad, The National Bank of Iraq, Credit Bank of Iraq, Mansur Bank and the Commercial Bank of Iraq. Regional banks and financial institutions from Jordan, Kuwait and Qatar have invested heavily in these banks.
The private Bank of Baghdad in the capital's Karrada neighbourhood. Getty Images
Some banks are purely owned by Iraqi shareholders, while regional banks and financial institutions from Kuwait, Jordan and Qatar are partners in others such as the five aforementioned.
Some Iraqi politicians, mainly Iran-backed ones, have accused the US of targeting national Iraqi banks in which foreign investors have no shares, depriving them of profits after backlisting and banning them from dealing in dollars. They have said that the country's foreign exchange transactions are controlled by foreign countries they have been hostile to since 2003.
Their campaign against these banks has prompted the government, which is backed by Iran-allied political and militant factions, to ask concerned authorities to reconsider the percentage of shares that foreign investors can own in Iraqi banks, a move that could force their withdraw.
“The US Department of Treasury is fighting the banking system, they are derailing their work and sidelining all national banks in order to depend on one or two banks in neighbouring countries,” Hadi Al Amiri, a powerful Shiite politician who heads Badr Organisation, which has an influential militia, said recently.
Hadi Al Amiri, head of the Badr Organisation, at a press conference in Baghdad in December 2021. Getty Images
“I consider it as a crime against the Iraqi banks, a crime against the Iraqi economy and a crime against the Iraqi people."
He was referring to the 32 banned banks that have lost huge profits from obtaining US dollars at the official rate.
After banning these banks and applying tight scrutiny on transactions, dollar flow to Iran also decreased.
The chief executive of one of these banks hit back.
A branch in Sulaimaniyah of Erbil Bank, which is listed on the US ban list. Getty Images
“What is happening is that we have real and wide partnership with respected investors and correspondent banks globally and we are showing a great deal of discipline to local and international regulations,” he told The National on condition of anonymity in line with his bank’s regulations.
“This is a moment of truth that shows the real banks and others who are mere kiosks to skim profits from the public funds to fill the pockets of the corrupt politicians and their backers beyond the borders.
“If the Iraqi government is serious about the reforms, it has to support us for the benefit of the economy and get rid of the others who have damaged the economy over the past two decades,” he said.
Four billion Iraqi dinars in recovered government funds that had been fraudulently stolen on display at a press conference in Baghdad. AFP
Mr Khalaf, the CBI deputy governor, rejected the idea that the US was targeting the 32 banned banks deliberately.
“I don’t think there is any fear of these measures as long as they primarily serve Iraq and facilitate foreign trade,” he said.
Push for modernisation
A few years after 2003, some e-banking methods were introduced, followed by more steps to enhance these services through legislations and incentive to banks to start providing debit cards and mobile payments.
In 2016, the CBI authorised two mobile wallets run by two prominent telecom companies. Several online payment companies were also licensed.
However, these services were limited.
A woman using a cash machine in March 2008, as banks in Iraq began issuing debit and credit cards to encourage cashless payments. Getty Images
As part of the series of financial and economic reforms, the Iraqi government is pushing for the use of electronic payment systems by the government and private sectors.
However, the usage of electronic payment systems in Iraq is still in its early stages and faces several obstacles. Among the challenges is the lack of infrastructure and technical capacity to support electronic payments, mainly the need for reliable and affordable internet connectivity, ATMs and point-of-sale terminals.
Another obstacle is the low level of financial literacy and awareness among the population.
At one of Baghdad’s fuel stations, sales stopped due to an internet outage and that led to a chaotic and tense scene with hums of idling vehicles and occasional blares of car horns adding to the growing sense of frustration. Paying with bank cards was made mandatory at fuel stations this year.
Cars line up for petrol in Baghdad in April 2022 after some station owners closed their pumps to protest against government policies on fuel distribution and pricing. Getty Images
“Let’s take cash, for God’s sake,” one of the petrol station attendants told the manager who was on the phone with the service provider, trying to get an estimate on when the internet might be back up.
“No, we can’t. These are the government orders,” the manager replied.
“We are not against modernisation, but these things have to be implemented gradually and step by step to prepare the proper environment,” Muayad Hassan Jassim, 24, said as he was waiting in line.
A teller at the Central Bank of Iraq in Baghdad counts out cash for a customer. Aymen Al Ameri / The National
“They have to have backup plans and accept cash in such situations. They have to put in mind that there are elderly people who know nothing about credit cards."
At some stations, the attendants ask clients with credit cards to pay those who do not have cards and take cash from them.
Since last year, many people have reported frozen credit cards abroad that took months to be reactivated, while others have reported online fraud.
Banks across Iraq began issuing credit and debit cards in March 2008 to encourage Iraqis to move away from reliance on cash. Getty Images
The CBI has imposed limits on withdrawal from ATMs outside Iraq because it exchanged dollars at the official rate and some Iraqis would then send the dollars back to Iraq to sell on the black market.
Retired Iraqis living abroad have suffered due to restrictions on withdrawals from ATMs and having to provide a proof-of-life certificate.
They are now also paying extra commissions for transactions and withdrawals, they say.
Before the push for online payments, they had their relatives in Iraq receive their pensions and send money to them abroad. Now, they are paid by credit card and are unable to withdraw all their pensions at once.
In each withdrawal, they have to pay a commission.
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