IMF Discusses Strengthening Iraqi Dinar
Iraq's delegation concluded its meetings with the International Monetary Fund (IMF) in Amman (February 24-26), with participants including Minister of Finance Taif Sami and the Governor of the Central Bank of Iraq (CBI).
The video for this My FX Buddies Blogpost is below here:
Discussions focused on Iraq's economic performance and sustainable growth prospects, with the IMF acknowledging the progress made.
Key discussions included:
- Non-oil GDP growth of 5% in 2024, driven by agriculture expansion and increased public spending, with 3.5% growth expected in 2025.
- Reduced dependence on oil revenues, improving economic diversification and stability.
- Review of actual 2024 expenditures and 2025 revenue forecasts, alongside strategies for deficit financing.
- Public debt strategy update, ensuring fiscal sustainability and investor confidence in government bonds.
- Financial sector reforms, with the IMF stressing the importance of banking modernization to attract foreign capital.
- Expanded collaboration with international correspondent banks to facilitate trade financing.
- Increased use of the Iraqi dinar in major transactions to strengthen the national currency.
The IMF reaffirmed its support for Iraq's financial policy development, offering advisors and experts to assist the Ministry of Finance in public debt management and tax system improvements.
The meetings underscored Iraq's commitment to fiscal reforms, promoting economic stability and investment-friendly policies, in line with its strategic partnership with the IMF.
Central Bank Prudential Policies to Counter the Impact of Changes in the Global Economy
Samir Al-Nusairi
For several years, the global system has been witnessing complex economic, financial and security crises, the accumulated causes of which have centered on rising energy and food prices due to the Russian-Ukrainian war, US and European sanctions on Russia, and the Zionist entity's aggression against Palestine, Lebanon and Syria. The Zionist entity continues to employ a strategy of using war and its military machine, with the support of America and Europe, to draw the political, security and economic map of the new Middle East.
In addition to the impact of the US-China struggle for global economic control, the divisions in the visions and strategies of the G20, the G7, the BRICS group, and other international groups working to form new economic poles, and finally Trump's new policies of increasing taxes and tariffs on some competing industrial countries, which has led to confusion in the global economic and trade map.
The evidence is the current crises that have harmed the economies of major countries before smaller ones, and what we are currently witnessing of high stagflation in most countries of the world, most notably in the United States, the European Union countries, and countries of the geographical region, and the decline in the purchasing power of these countries' local currencies. Therefore, we believe that our economy will suffer in the near term from the negative effects of the global economic system, from the lack of control over the supplies of food and basic commodities, and oil prices may fall below what was planned in the general budget for 2025, in light of the changing circumstances. These effects will lead to negative repercussions on our economy and the methodology of financial and banking reform.
Given that economic stability is achieved through stability in the financial and monetary systems, the Central Bank's precautionary measures in 2023 and 2024, and its objectives outlined in its third strategy until 2026, in light of expected developments in future crises, require a fundamental reliance on building foreign reserves at a level that covers the local currency in circulation, imports, external debt repayments, and other international obligations. It also seeks to diversify reserves to include a basket of currencies, gold, bonds, and securities. It also adopts policies and mechanisms to regulate foreign trade financing and comply with international standards.
This is exactly what the Central Bank did during this period, as its foreign exchange reserves reached more than $107 billion and 162.7 tons of gold. The World Gold Council announced that Iraq ranks fourth in the Arab world and twenty-eighth globally. This confirms that the Central Bank is proceeding steadily to achieve the objectives of monetary policy in reducing inflation and controlling the general price level. This is what it recently announced, that the annual inflation rate reached 2.8% and the basic rate 2.5%, as well as controlling the money supply and maintaining the exchange rate of the dinar within the balanced price in the trading market, despite the fluctuations from time to time in the exchange rate of the dollar in cash on the black market.
Continuous monitoring and analysis of the interest rate set by the Central Bank. This requires fiscal policy, key economic sectors, and the ministries responsible for them to work together and in clear and specific coordination with the Central Bank's management to achieve economic stability, hedge against the global economic crisis, and mitigate its expected future repercussions over the next three years.
Al-Khazraji calls on the government to clarify the reasons for the delay in submitting the budget schedules.
MP for the State of Law Coalition, Muhannad Al-Khazraji, confirmed on Wednesday that the 2025 budget tables have not reached Parliament, despite more than a month having passed since the vote on Article (12A) on the region’s oil. He called on the government to clarify the reasons for the delay or send the tables as soon as possible.
Al-Khazraji said in a statement to Al-Maalouma Agency, “The House of Representatives voted to amend Article (12A) secondly of the General Budget Law, which is related to the region’s oil, but the government has not yet sent the budget tables for the current year, despite more than a month having passed since the vote.”
He added, “One of the main goals of adopting a three-year budget was to pass it smoothly without any delay, but this goal has not been achieved.” He called on the government to “reveal the reasons for the delay or send the tables as soon as possible to Parliament to ensure their approval.”
Member of the Parliamentary Finance Committee, MP Moeen Al-Kadhimi, had previously called on Al-Sudani's government, in a statement to Al-Maalouma, to expedite the submission of budget schedules, given their connection to the interests of many segments of society, in addition to providing funds for ongoing and new projects.
Through the economic paper, the Coordination Framework calls for an end to American blackmail of the Iraqi government
n Wednesday, Issam Shaker, a leader in the Coordination Framework, called for an end to Washington's repeated blackmailing of the central government through the use of economic pressure.
Shaker told Al-Maalouma, "US policy relies on repeated blackmail of the central government through economic pressures aimed at obstructing the passage of laws or policies that directly serve the people's interests." He noted that "Washington's attempt to pressure Baghdad to halt gas imports or limit its engagement with Arab and Islamic issues to serve the occupying entity's agenda is completely unacceptable."
He added, "This situation calls for a review of agreements with the United States, and efforts to achieve economic and financial independence that reduces the US Treasury's exploitation of the dollar issue and prevents Baghdad from compromising its national positions."
Shaker pointed out that "America has no right to impose restrictions on Baghdad regarding the countries from which it imports gas to operate its power plants," emphasizing that "Iraq has an independent government that determines its priorities and national interests. Therefore, American pressures that serve private agendas without regard for the grave harm they inflict on the Iraqi people cannot be accepted."
Shaker asked, “How can we replace gas imported from Iran by other countries, given that Iraq is approaching the peak summer of 2025, when demand for electricity is increasing?”
It's worth noting that "Washington is imposing economic pressure on Baghdad to halt gas imports from Iran, despite knowing that such a decision would severely impact power plant production by the summer of 2025."
The government withdraws the Popular Mobilization Law from Parliament.
A source in the Coordination Framework revealed that Prime Minister Mohammed Shia al-Sudani withdrew the Popular Mobilization Forces' service and
retirement law from the Iraqi parliament. The source said in a press interview, "Prime Minister Mohammed Shia al-Sudani ordered the General Secretariat of the parliament to withdraw the service and retirement law for Popular Mobilization Forces members from parliament."
The source added, "The purpose of withdrawing this law is to reduce political disagreement and prevent it from affecting parliament sessions, given that the convening of sessions has become contingent on adding the law to the parliament's agenda."
The source indicated that "the differences between the Coordination Framework blocs over the age clause are still ongoing and have not been resolved despite the meetings and gatherings that were held previously."
Parliamentary Finance Committee to NINA: US veto disrupts gas imports from Turkmenistan for this reason
The Parliamentary Finance Committee revealed the United States' rejection of an Iraqi plan to import gas from Turkmenistan via Iranian territory.
Member of the committee, MP Moeen Al-Kadhimi, said in a statement to the National Iraqi News Agency ( NINA ), "One of the solutions to address Iraq's energy needs, implemented during the administration of US President Joe Biden for the past two years, stipulates the supply of Iranian gas in exchange for black oil from Iraq, with US approval at the time. However, this did not last long due to complications that the US side worked hard to create by imposing new sanctions and tightening the procedures followed."
He added, "There were a group of alternative options that were proposed to proceed with the contract to import gas from Turkmenistan to Iraq, as Iraq and Iran agreed to this in agreement with Turkmenistan, but the US side's objection hindered that agreement, under the pretext that the company that will implement the gas pipeline project from Turkmenistan to Iraq via Iran is not welcome on the US side, which narrowed the options available to Iraq to secure its energy needs."
He continued, saying, "The government continues to operate its gas stations while seeking to complete contracts with the French gas company Total by 2027," noting the need to take "urgent government steps to avoid the crisis of preventing Iraq from importing Iranian gas." /End 5
Iraq is preparing to launch the digital dinar... a step towards a cashlesseconomy!
linkI don't think there is any new information in this article but they have posted it again
The Central Bank of Iraq is preparing to launch a national digital currency as part of a gradual shift toward a digital financial system aimed at reducing the use of paper money and enhancing transparency and financial inclusion. The initiative relies on modern payment technologies and seeks to reduce transaction costs and combat money laundering.
Despite the ambition, experts question the project's success due to challenges related to weak trust in the banking system and the lack of adequate digital infrastructure. The Central Bank, meanwhile, reiterates its rejection of cryptocurrencies, deeming them illegal, and warns against the activity of fictitious trading companies in the local market. The Governor of the Central Bank of Iraq, Ali Al-Alaq, revealed that the country's financial and banking system is undergoing fundamental transformations, most notably the gradual decline in the use of paper currency in favor of digital payments. During his speech at the Ninth Finance and Banking Conference and Exhibition, Al-Alaq confirmed that the Central Bank is working to create its own digital currency, which will be gradually introduced as an alternative to paper currency, following the experiences of several global central banks.
The Central Bank of Iraq announced on December 16 that it would not grant any licenses to stock, metals, and cryptocurrency trading companies, warning against the activity of fictitious companies claiming to have official licenses. Despite the growing global spread of cryptocurrencies, Iraq doesn't appear close to entering this high-risk digital world. According to experts, these digital assets do not represent a real addition to the Iraqi economy, which is primarily based on oil exports and dollar transactions in global markets.
Financial affairs expert Mustafa Hantoush told Al-Mada that "Iraq does not have a legislative or economic environment capable of accommodating these currencies. Rather, they could become a tool for speculation and money laundering in the absence of oversight and regulation."
He pointed out that "dealing in them is limited and informal, via external platforms and offices in neighboring countries, exposing investors to the risk of loss and fraud."
Furthermore, according to Hantoush, cryptocurrencies are not based on real reserves or bank guarantees, making them highly volatile and unreliable in fragile markets such as Iraq's. According to economic researcher Ziyad al-Hashemi, the initiative to launch the "digital dinar" is an attempt to eliminate the chronic problems plaguing the monetary system, but its success remains in doubt.
In an interview with Al-Mada, Al-Hashemi explained, "There is a fundamental difference between digital currency and cryptocurrencies. Digital currencies, such as the digital dollar or the digital dirham, are issued and regulated by central banks and are managed within an official regulatory framework. Meanwhile, cryptocurrencies, such as Bitcoin, operate within a decentralized system that is not subject to any regulatory authority and are highly volatile in value due to their dependence on supply and demand."
Bitcoin was the first cryptocurrency, emerging in 2009 as a response to the global financial crisis. It was designed to operate outside the regulatory framework of central banks, making it an attractive tool for some, particularly in digital circles and criminal networks, due to the privacy and speed of money transfers it provides, free from government restrictions. Transactions in Bitcoin are a legal violation, subjecting perpetrators to the provisions of Anti-Money Laundering and Terrorism Financing Law No. 39 of 2015. The bank issued an official statement during the recent dollar crisis, emphasizing that trading in cryptocurrencies is prohibited and not recognized in the country. Regarding the anticipated digital dinar, he points out that "the Central Bank of Iraq will be responsible for issuing and circulating it, allowing it to control and monitor financial transactions and contributing to the reduction of financial crimes and money laundering. Unlike cryptocurrencies, this currency will be fully backed by the Central Bank, giving it a degree of stability and making it similar to paper currency in terms of sovereign value, with the difference that its circulation will be electronically only through bank accounts and digital wallets." Al-Hashemi believes that "the main goal of this step is to reduce reliance on paper dinars hoarded outside the banking system and advance financial inclusion, as well as to attempt to limit the widespread use of the dollar in local transactions by enhancing confidence in using the digital dinar as an official alternative in daily transactions."
He adds that "the success of this project depends on providing an appropriate environment and strict implementation. If this is achieved, the digital dinar could effectively contribute to withdrawing stagnant cash, revitalizing banking activity, and stimulating credit, which could positively impact overall economic performance."
However, Al-Hashemi does not hide his pessimism, emphasizing that The Central Bank of Iraq currently lacks the basic components needed to ensure the success of this initiative, due to the significant flaws in its monetary policies, the lack of public confidence in the banking system, and the recurring political interference in its decisions. He believes that all of these obstacles could make the digital dinar a fragile project, suffering from the same problems as the paper dinar.
He concludes by saying, "Ambition alone is not enough. Without genuine reform of monetary policies, strengthening public confidence in banks, and distancing politics from the economy, the chances of success of the digital dinar remain extremely limited." Furthermore, Mazhar Mohammed Saleh, economic advisor to the Prime Minister, believes that "central banks around the world, including the Central Bank of Iraq, are still in the gradual preparation phase for the transition to the world of digital payments as a modern alternative to paper currencies." This shift, he explains, does not change the essence of money and its basic functions. Rather, it seeks only to improve the efficiency of dealing with it and reduce associated costs, in addition to strengthening financial oversight tools and reducing financial crime and money laundering.
Saleh confirms to Al-Mada that "this digital transformation in the monetary system does not mean that money will lose its function as a store of value, a means of payment and receipt, or a tool for unit of account and measurement of rights. Rather, these functions will be fully preserved, but within a more transparent, governed, and compliant environment, enhancing the monetary authority's ability to manage monetary stability using the same monetary policy tools." Saleh explains that "digital money can expand the scope of banking services to include the poorest and most vulnerable segments of society by facilitating the opening of digital bank accounts. Digital money will be available to all citizens, from the smallest monetary unit to the largest, allowing for instant settlement of transactions without delay or wasted rights or time."
He points out that "providing digital liquidity widely within the banking system, with minimal liquidity risk, will enable low-income groups to obtain immediate and affordable digital loans at a lower cost, given that the funds will remain within the banking system and will not require large reserves or financial hedges. This will optimally leverage the digital credit multiplier, enhancing financing and stimulating economic activity without compromising economic stability or causing monetary inflation, as long as monetary policy tools remain effective."
The economic advisor emphasizes that "implementing this project requires precise and extensive investments in information technology, such as smartphones and social networks, along with the necessity of an advanced digital infrastructure, most notably a reliable internet network, as it is the backbone of the success of digital payments. He also emphasizes the importance of a solid legal structure that protects the rights of users and customers and ensures the security of networks from breaches, within a comprehensive cybersecurity framework that aligns with the rapid development of digital services worldwide."
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It amounts to 216 trillion... A date has been set for submitting the budget tables to Parliament.
Deputy Chair of the Parliamentary Finance Committee, Ikhlas al-Dulaimi, ruled out the government's submission of budget schedules within the next two months on Wednesday, while confirming that the 2025 budget amounts to 216 trillion Iraqi dinars.
Al-Dulaimi said, "The Ministry of Finance has not yet sent the 2025 budget tables to the Council of Ministers, even though they were supposed to be sent in October 2024, in accordance with the Financial Management Law, for approval before the start of the new year."
She added, "The total budget amount is 216 trillion dinars, while actual spending is estimated at about 160 trillion dinars."
Al-Dulaimi ruled out "sending the tables to the House of Representatives within the next two months," noting that "the Ministry of Finance has not yet completed their preparation, which could lead to the postponement of budget approval until after the elections."
Last February, the Iraqi Parliament voted on the draft law amending the first law of the Federal General Budget Law of the Republic of Iraq for the fiscal years (2023 - 2024 - 2025) No. (13) of 2023.
Iran: Trump's message will reach us through an Arab country
Al-Fath: American companies have failed in seven vital sectors in Iraq
A leader in the Fatah Alliance, Uday Abdul Hadi, confirmed on Wednesday that American companies have failed in seven vital sectors in Iraq, most notably the electricity sector.
Abdul Hadi told Al-Maalouma, "American companies have enjoyed numerous exemptions to operate in most sectors within Iraq for many years, including seven vital sectors, including electricity. Despite the central government spending tens of billions to finance these companies' projects, they have clearly failed and have not succeeded in delivering any vital projects for Iraq, especially in the field of electricity."
He added, "All strategic projects in Iraq are being implemented by multinational companies, while American companies have not provided any real, reliable achievements." He explained that "this failure reflects the lack of a genuine agenda that seeks to build and improve the reality of basic services."
Abdul Hadi pointed out "the necessity of Iraq opening up to international companies to achieve its own interests, and not submitting to American pressure, which has not provided anything tangible for the national economy, but has contributed to delaying the development of many sectors, including electricity, through its pressures to prevent the entry of international companies, especially German companies."
It is noteworthy that American companies have obtained a large number of contracts in several vital sectors within Iraq during the past years, but they have not provided any noteworthy achievements, and have been late in implementing many of the projects assigned to them.
Kurdistan Region confirms oil sales through SOMO: We will give our money to Baghdad
The Kurdistan Regional Government (KRG) on Wednesday affirmed the region's firm position to implement an amendment to the budget law, allowing the region's oil to be exported and sold through SOMO, with the proceeds returned to the federal Ministry of Finance.
A statement issued by the Kurdistan Regional Government's Council of Ministers, seen by Al-Eqtisad News, said, "The President of the Council, Masrour Barzani, held a meeting attended by his deputy, Qubad Talabani, during which the Prime Minister instructed the Ministry of Finance and Economy to prepare a schedule for distributing salaries to Kurdistan Region employees for the month of February, after the deposit of 958 billion dinars into the ministry's account for that month."
The Council decided to begin distributing salaries starting tomorrow. All ministries and institutions were also tasked with preparing March payrolls as soon as possible and sending them to the Federal Ministry of Finance, with the goal of disbursing them before the Eid al-Fitr holiday.
The statement confirmed that "in the first part of the meeting, Kamal Mohamed Saleh, Acting Minister of Natural Resources, reviewed the latest developments in the joint meetings between the Ministry of Natural Resources and the Federal Ministry of Oil, in the presence of representatives of oil companies."
The minister explained the efforts being made to resume the region's oil exports within the framework of the federal budget law. The Council of Ministers commended the Ministry of Natural Resources' efforts to accelerate the process of resuming oil exports and its joint work with the Iraqi Ministry of Oil to resolve the obstacles related to the process.
The Council also affirmed the "regional government's firm position to implement the amendment to the budget law so that the region's oil is exported and sold through SOMO and its revenues are returned to the federal Ministry of Finance."
Important details about the 2025 budget schedules and the date for submitting them to Parliament were revealed.
Saleh said in a press statement: "The budget is based on two main wings: the first is the operational wing, which constitutes between 68 and 70% of total public spending, and covers the salaries of employees, retirees, and social care, while the second wing is allocated to investment in development and service projects.
Saleh pointed out that the budget will operate according to spending ceilings estimated at about (200) trillion dinars, with a hypothetical deficit of (64) trillion dinars. This deficit will be financed from internal sources in the event that the average price of a barrel of oil falls below (70) dollars or oil exports fall below (3.4) million barrels per day.
He stressed that the government is committed to guaranteeing the salaries of employees and retirees, pointing out that approximately (8) million citizens receive government income, which contributes to the indirect support of approximately (40) million people. He added that implementing service projects, such as water, electricity, schools, and hospitals, will be a parallel priority to securing salaries.
For its part, the Parliamentary Finance Committee confirmed that the discussion of the 2025 budget will be resolved after it reaches Parliament.
Committee member Jamal Koujar explained that the committee will hold a session to discuss the budget once the schedules are received by the parliament, and will submit a report on the matter to the parliament's presidency.
Government Advisor: We Have a Large Financial Surplus Enough for Iraq to Cover Two Years of Imports
Mohammed Al-Najjar, the Prime Minister's Advisor for Investment Affairs, confirmed that the Central Bank has a large financial surplus sufficient for Iraq to cover two years of imports.
Al-Najjar said in the program "Under Two Lines," broadcast on Al-Iraqiya News, followed by the Iraqi News Agency (INA), that "the US administration is dealing positively with Iraq, contrary to what is being circulated in the media," noting that "there is a moderate discourse from the United States because the energy market cannot bear it."
He added, "The Central Bank has a large financial surplus sufficient for Iraq to cover two years of imports," stressing that "there are mechanisms that the Central Bank is working with the US Federal Reserve to structure."
He pointed out that "the government is currently implementing the banking reforms agreed upon between Washington and Baghdad," explaining that "everyone is trying to protect Iraq because it is not in their interest for Iraq to be exposed to any crisis."
He continued, "The cost of reconstruction and bridges in the country does not exceed 12 trillion dinars."
Iran may lose Iraq." Trump and the possibility of exploiting "fear" in nuclear negotiations.
The American magazine "Foreign Affairs" reported that the Trump administration has an opportunity to expel Iran from Iraq, not through military action, but rather through "firm diplomacy, the threat of sanctions, and intelligence operations," giving the Americans greater leverage at the negotiating table with the Iranians.
After the American report, translated by Shafaq News Agency, pointed to the success of Iran's strategy since 1979, establishing a network of "agents and friends" across the Middle East, which has given Tehran influence in Iraq, Lebanon, and Syria, the report said that the events of the past year have upended this regional order, with Israel's destruction of Hezbollah in Lebanon and the control of Sunni forces supported by Türkiye over Syria.
He added that Iran is "terrified of another domino falling," with Iraq considered the most likely place for this to happen, as Tehran's allies in Baghdad are already on edge.
Sudanese concessions
According to the report, Iraqi politicians appear more eager than usual to appease the United States, noting that Prime Minister Mohammed Shia al-Sudani's team made three concessions to American officials in late January: the cancellation of an arrest warrant for US President Donald Trump for ordering the killing of Abu Mahdi al-Muhandis, deputy head of the Iraqi Popular Mobilization Forces, and General Qassem Soleimani, commander of Iran's Quds Force, in an airstrike on January 3, 2020, near Baghdad International Airport during his first presidential term.
The second concession, he noted, was agreeing to work toward the release of Israeli researcher Elizabeth Tsurkov, as well as approving a significant budget amendment long sought by the Kurds, whom the report described as "the segment of Iraqi society most closely connected to Trump."
While the report viewed these concessions as an indication that Iran's allies in Iraq feel "weak," it noted that Washington must exploit this moment to permanently limit Iranian influence in Iraq. It added that this should not be achieved through extensive military action, but rather through assertive diplomacy, the threat of sanctions, and intelligence operations.
The report considered that such measures would deprive Iran of a vital source of funding, give the United States leverage in any negotiations with Iranian leaders, and, most importantly, lead to better governance for Iraqis who have suffered under the yoke of Iran.
"The cash cow"
The report spoke of a "cash cow" and how Iran and its proxies feed off the Iraqi economy, which is why Tehran is holding on tightly to Baghdad, just as the East India Company did, plundering India's wealth to finance the British Empire for centuries.
The report addressed some of the actions of the Iranian Revolutionary Guard Corps in this context in Iraq, such as transporting Iranian oil into Iraqi waters to be falsely labeled as Iraqi and exported to global markets. Meanwhile, Iranian-backed militias, such as Asaib Ahl al-Haq and Kata'ib Hezbollah, "steal" Iraqi oil directly from wells or by establishing "front companies" that unfairly receive subsidized fuel from the government.
The report also touched on the Popular Mobilization Forces (PMF), which are nominally under the control of the Iraqi government and receive approximately $3 billion in government funding. It also touched on the state-owned Al-Muhandis Company, which cooperates with Chinese and Revolutionary Guard-run companies to receive oil and construction contracts from the Iraqi government. The report noted that the Iranian government is under immense financial pressure, with the national currency collapsing, and commodity prices rising daily, with inflation averaging 32%.
The loss of Lebanon and Syria
The report continued, stating that maintaining control over Iraq is vital for the Iranian regime after losing two Arab states, as this makes it appear vulnerable and boosts the morale of its opponents. It added that losing influence in another Arab state, namely Iraq, which is geographically and socially closer to Iran, would be devastating and could have negative repercussions domestically, as the regime in Tehran fears that if it loses control over its neighbor, it will likely lose control over its own people.
However, the report stated that "expelling Iran from Iraq is not an easy task," given its significant influence within the Iraqi government, far exceeding that of the United States. However, Washington must take steps to ensure that Iraqi leaders do not submit to Iranian demands by setting clear red lines that Iraqi leaders understand.
The report stated that Washington should hold exclusive meetings with Iraqis who serve Iraq's national interests and take a tougher stance against Iraqi elites who harm their country's interests through their alliance with Iran. It should impose sanctions on their assets, marginalize them diplomatically, and threaten the use of force against Iranian-backed "terrorists" and their financiers in Iraq.
In this context, the report noted two "steps in the right direction" taken by the Trump administration: the memorandum calling on the Treasury Department to "impose immediate sanctions or take appropriate enforcement action" against anyone violating sanctions on Iran, and Washington's refusal on March 7 to renew the sanctions waiver allowing Iraq to purchase electricity from Iran.
Although the report acknowledges that such steps may not dissuade all Iraqi leaders from coordinating with Iran, given that there is a small segment of elites who despise the United States, it states that the vast majority of Iraqis are neither loyal to Tehran nor to Washington, but are simply responding to incentives, which Iran has been adept at providing so far.
Strict diplomatic sanctions
Therefore, the report argues that sanctions and tough diplomacy could further help Washington strengthen its position with Iraq and may also help it gain an advantage over Iran during the nuclear talks.
He added that Iran fears losing its influence in Baghdad, and that the Trump administration could use this fear as leverage in negotiations.
The report continued, saying that Trump may engage with Tehran while tightening the noose on its networks inside Iraq, which would encourage Iran to come to the negotiating table rather than evade or prolong the negotiations.
The report concluded by stating that "by removing Iran from Iraq, Washington will have an opportunity to limit Tehran's global influence and enhance the chances of reaching an agreement that halts its nuclear program at the same time. The Trump administration must seize this opportunity."
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