Is the world convinced?
Washington listens to Baghdad: Ambitious financial reforms seek credible implementation and institutional change.
This week, the Iraqi delegation participated in a banking reform conference held in Washington on the sidelines of the IMF and World Bank meetings. The event is a practical test of Baghdad's ability to present a realistic picture of the results of its economic program.
The video for this My FX Buddies Blogpost is below here:
The Iraqi delegation, which included a number of advisors and financial officials, sought to highlight the reform steps achieved over the past two years as indicators of the country's transition from crisis management to building a modern economic system.
Advisor to the Prime Minister, Saleh Mahoud Salman, who presented Iraq's paper at the conference, outlined a series of measures he described as "a pivotal stage in the path of economic and financial reform." He explained that the government is "implementing a strategic banking reform package in cooperation with the Central Bank and international consulting firms," focusing on "restructuring government banks, expanding financial inclusion, and automating the customs and tax system."
However, this proposal, while important from an administrative perspective, raises broader questions about the depth of the transformation and its compatibility with the requirements of a rapidly evolving global economy.
Reform in a financial environment like Iraq's, where structural challenges intertwine with political constraints, is not measured by the number of projects as much as it is by the state's ability to change the behavior of the financial system itself.
Indicators of reform... but to what extent?
The government says the preparation of a three-year budget represents a qualitative shift in financial planning, an unprecedented step in the modern history of Iraq. However, financial economists point out that the success of this model depends on the availability of accurate data and stable monetary policy, two conditions that still face challenges in a financial environment that relies on oil revenues for more than 90% of the country's GDP.
Institutional economists believe that "budget stability does not necessarily mean stable growth," as volatility in oil prices and weak economic diversification make any long-term planning vulnerable to disruption in the event of a global crisis or a decline in demand for crude oil.
In contrast, the Prime Minister's advisor points out that the government has been able to increase customs and tax revenues by automating the customs system using the UN-approved ASYCUDA program, which reflects the beginning of bridging the gap between the formal and parallel economies.
However, economic researchers believe that the success of this step requires an effective regulatory system and a flexible administrative structure, as technology alone is not sufficient to change work culture or reduce administrative corruption, which is one of the most prominent obstacles to financial reform in Iraq.
Financial inclusion and digital transformation: between ambition and capability
Electronic payment systems are one of the areas that have witnessed the most tangible progress, with financial inclusion rising from less than 10% to more than 40% in two years, according to the government advisor.
This digital leap is an indicator of a gradual shift in citizens' financial behavior, especially with the expanding use of bank cards and mobile payment services.
However, banking observers believe that the quantitative expansion is not matched by qualitative developments in the banking structure. Banking services in most government banks remain traditional and rely on paper transactions, while the private sector suffers from restrictions in accessing external financing.
Digital economy experts point out that the transition to an e-economy cannot be complete without a comprehensive legal and legislative environment that ensures protection from financial crimes and builds trust between citizens and the banking system.
Some economists argue that Iraq, despite its relative progress in this area, is still in the "experimental" phase and needs to integrate technology into the public financial management system, not just into individual transactions.
Banking Sector Restructuring: Reform or Role Rotation?
Restructuring state-owned banks (Rafidain, Rashid, Industrial, and Agricultural) is a key pillar of the government's plan. The government announces that it has increased the operational efficiency of these banks and begun reevaluating their assets. However, financial analysts believe that true reform cannot be achieved simply through administrative restructuring, but rather through the ability of these institutions to transform into sustainable financing entities that effectively contribute to driving local production.
Rafidain and Rashid, which represent approximately 80% of the banking market, still operate according to a traditional services model, while private banks face weak confidence from investors and depositors alike.
Banking finance experts point out that structural reform in the Iraqi banking sector requires gradual liberalization of credit policies and the activation of partnerships with regional banks, as a closed economy cannot benefit from global growth or external financing.
Poor institutional continuity and changing strategies
One of the most significant structural challenges facing economic reform in Iraq is the lack of institutional continuity. Each new government tends to reformulate the economic strategy from scratch, even in areas where tangible progress has been made.
This recurring pattern of "administrative rupture" hinders the accumulation of experience and leads to a loss of the institutional foundation necessary for any genuine reform process. Instead of building on previous programs and evaluating their results, plans are replaced by new projects presented under a different title, without any scientific review or analysis of previous policies.
Institutional economics researchers point out that this behavior reflects the weakness of the Iraqi state's institutional structure, as there are no permanent planning bodies or economic councils to ensure the continuity of policies regardless of changes in government.
Thus, the reform process often becomes a short-term political project, tied to the government's cycle rather than the economic cycle, limiting its ability to produce a sustainable economic impact or build internal and external confidence in fiscal policies.
Are these steps sufficient to keep pace with global transformations?
Iraq's experience with financial and banking reform demonstrates that the problem has never been a lack of vision, but rather its frequent interruptions. Each government introduces new plans, discarding previous ones, as if the state is starting from scratch with each political cycle. This behavior reflects not only a contradiction in priorities, but also a weak institutional structure that lacks a continuous economic memory capable of transferring experience and embedding successful policies.
Public economics studies confirm that the success of any financial reform depends more on accumulated experience and continuity than on the amount of funding or international support. In the Iraqi case, reforms are still managed according to the logic of the "governmental phase" rather than the "national phase," which makes them vulnerable to disruption as soon as the political orientation shifts.
The steps presented at the Washington conference reflect a clear technical effort, but they will not translate into actual achievement unless they are linked to independent institutions capable of protecting reform from political change. Reform is not achieved by changing plans, but rather by establishing an implementation mechanism that is not affected by changes in ministers or governments.
Thus, it can be said that financial reform in Iraq is moving in the right direction in terms of form, but it still requires a permanent institutional framework that ensures sustainability and transforms reform from a government initiative into a state-led process that remains unchanged by changes in leadership.
💡 Bullet Point Summary:
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Iraq Takes the Spotlight: A high-level Iraqi delegation presented its financial reform progress at a Washington banking conference, marking a test of credibility before global institutions.
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Government’s Reform Roadmap: Advisor Saleh Mahoud Salman outlined strategic reforms — restructuring state banks, expanding financial inclusion, and digitizing customs and taxes with the ASYCUDA system.
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Progress vs. Reality: While Baghdad highlights new systems and automation, economists question whether these changes truly transform the financial culture or simply modernize old processes.
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Digital Momentum: Financial inclusion rose from 10% to 40% in just two years — a major leap — but many banks still rely on paper-based operations and face limits on global financing.
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Structural Weaknesses: Analysts warn that reforms will fail without institutional continuity — Iraq often restarts economic plans with each new government, losing long-term stability.
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Global Expectations: Experts agree Iraq’s reforms look strong on paper but must evolve from “government projects” into state-anchored institutions that outlast political shifts.
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Bottom Line: Iraq’s reform message in Washington was bold — but global investors are still asking the same question: Can Iraq finally turn reform into reality?
More for the 18th
New instructions from the Central Bank to all banks regarding customs clearance (document)
The Echo Iraq Observatory revealed on Saturday new instructions issued by the Central Bank to all authorized banks in the country regarding financial transfers and customs clearance requirements for the approval of special commercial invoices, starting November 1.
The observatory said in a statement:
The Central Bank, in Circular No. (267/4/9) dated 10/15/2025, decided to include in commercial invoices a set of basic information, including: shipping and payment terms, invoice value and currency, and the Global Harmonized System of Customs (GHS) code, adding, “as well as the importer and destination addresses, an accurate description of the goods, their origin, brand, quantity and unit of measurement, and unit and total price.”
The circular stipulates that one of the following invoices must be approved: the final commercial invoice, or the preliminary invoice attached to the sales contract, provided that the final invoice contains all the information of the preliminary invoice.
These instructions will be implemented starting November 1, 2025. The purpose of the decision is to regulate foreign money transfers and enhance transparency and accuracy in customs clearance as part of the national automation project.
This step has several positive aspects, most notably enhancing the standardization of procedures and reducing errors in commercial transactions, in addition to supporting the customs automation project.
This decision comes as part of the efforts of the Central Bank of Iraq and government agencies to develop the financial and administrative environment and improve the level of oversight and compliance with international standards in foreign trade.
Greetings...
All authorized banks
Circular
Based on the letter from the Ministry of Finance to the General Authority of Customs regarding the National Customs Automation and Modernization Project No. (64/18/5856) dated September 2, 2025, which includes facilitating the implementation of Cabinet Resolution No. (569) of 2025, and further to our Circular No. (4/9/952) dated August 20, 2025, the following has been decided:
First: The commercial invoice for which the value is to be transferred abroad must include the following information:
Date and invoice number.
2- Payment terms.
Shipping terms.
Value and currency of the invoice.
Harmonized Universal Customs Code (HSC), which must be at least six digits long.
6- Addresses of the importer and exporter.
Accurate description of the goods.
Origin of the goods.
- Trademark.
10- Quantity and unit of measurement.
11- Unit price and total price.
Second: Approval of one of the invoices
A. The final commercial invoice.
B. The initial invoice + the sales contract, provided that the final invoice contains all the information of the initial invoice. Third: Invoices will be approved for financial transfers and customs clearance starting from November 1, 2025.
With appreciation.
On Saturday, the Echo Iraq Observatory revealed new instructions issued by the Central Bank to all authorized banks in the country regarding financial transfers and customs clearance procedures related to the requirements for approving special commercial invoices.
The Observatory said in a statement received by Shafaq News Agency, "The Central Bank, in Circular No. (267/4/9) dated 10/15/2025, decided to include in commercial invoices a set of basic information, including: shipping and payment terms, value and invoice currency, and the Global Harmonized System of Classification and Labelling of Goods (GHS) code," adding, "As well as the addresses of the importer and destination, an accurate description of the goods, their origin, their trademark, quantity and unit of measurement, and the unit and total price."
He explained that "the circular stipulates that one of the following invoices must be approved: the final commercial invoice, or the preliminary invoice attached to the sales contract, provided that the final invoice contains all the data of the preliminary invoice."
According to Echo Iraq, "these instructions will be implemented starting November 1, 2025," indicating that "the aim of the decision is to regulate foreign financial transfers and enhance transparency and accuracy in customs clearance as part of the national automation project."
The Observatory believes that "this step has several positive aspects, most notably enhancing the standardization of procedures and reducing errors in commercial transactions, in addition to supporting the customs automation project."
This decision comes as part of the efforts of the Central Bank of Iraq and government agencies to develop the financial and administrative environment and improve the level of oversight and compliance with international standards in foreign trade.
The Eco Iraq Observatory is a media research institution specializing in analyzing the country's economic performance. It focuses on oil prices and their impact on the budget, in addition to monitoring the performance of Iraqi banks and their role in supporting the economy and financing projects.
Government advisor: The Ministry of Finance has begun preparing the 2026 budget.
The Prime Minister's financial advisor, Mazhar Mohammed Salih, confirmed on Saturday that the Ministry of Finance has begun preparing the 2026 budget, while specifying the disbursement mechanism in the event that the budget cannot be approved.
Saleh said, "In accordance with the amended Federal Financial Management Law No. 6 of 2019, the Federal Ministry of Finance is proceeding with the preparation of the draft federal general budget law for the country's fiscal year 2026." He noted that "if it is not possible to approve it within the specified constitutional or legislative timeframes due to the upcoming parliamentary term, the government will undertake spending in 2026 on a monthly basis at a rate of 1/12 of the actual current expenditures for 2025, including spending on ongoing investment projects, external obligations, and other due expenditures."
He explained that "the financial activity will continue to manage revenue collection and continue disbursing through the expenditure items specified under the aforementioned Federal Financial Management Law until the 2026 budget is approved by the House of Representatives. At that point, allocations will be released for any activities required by economic growth and sustainable development, including new investment projects and other emerging commitments.
From Washington: A new banking and economic reform package for Iraq
The Iraqi delegation participating in the banking reform conference in Washington, D.C., on the sidelines of the International Monetary Fund and World Bank meetings, announced a new package of banking and economic reforms on Saturday aimed at strengthening the stability of the financial system and attracting investment.
"The government has implemented a series of steps as part of the economic and financial reform program, most notably the implementation of comprehensive strategic banking reforms in cooperation with the Central Bank of Iraq and international consulting firms, as well as the preparation of a three-year budget for the first time in Iraq's history to ensure stable financial planning that attracts investment," said Saleh Mahoud Salman, an advisor to the Iraqi Prime Minister, according to a statement received by Shafaq News Agency.
He added that "automating the customs system through the implementation of the United Nations ASYCUDA program has led to a significant increase in customs and tax revenues, the restructuring of government banks (Rafidain, Rasheed, Industrial, and Agricultural) and increased their operational efficiency, as well as the expansion of electronic payment systems and increased financial inclusion from less than 10% to more than 40% within two years."
Salman continued, "Support programs have been launched for small and medium-sized enterprises to create job opportunities and stimulate the local economy," noting that "these steps represent a pivotal stage in the economic reform process, and that the government will continue to support the development of the banking sector in cooperation with international institutions."
Prior to this, the Central Bank of Iraq announced new instructions to all authorized banks in the country regarding money transfers and customs clearance procedures related to the requirements for the approval of special commercial invoices, with the aim of curbing currency smuggling.
This measure comes as part of the efforts of the Central Bank of Iraq and government agencies to develop the financial and administrative environment and improve the level of oversight and compliance with international standards in foreign trade.
A driver was arrested for attempting to smuggle counterfeit foreign currency through the Qaim border crossing.
The Border Ports Authority announced, on Saturday, the arrest of a driver who attempted to smuggle counterfeit foreign currency through the Al-Qaim port.
The authority said in a statement, "The Al-Qaim Border Port Directorate was able to apprehend an Iraqi driver while attempting to smuggle counterfeit foreign currency, in addition to 22 ancient coins, a number of foreign passports and SIM cards."
The statement added, "The seizure operation was carried out in coordination and cooperation with the Customs Center and supporting departments at the port."
It pointed out that "a formal seizure report was prepared, and the driver and the seized items were referred to the Al-Qaim Police Station to complete the necessary legal procedures."
NOt related this is a different happening
Armed robbery in broad daylight: Employee salaries stolen in central Baghdad
A security source reported that gunmen carried out a robbery on Saturday at a salary distribution outlet in the capital, Baghdad.
The source explained that "the gang targeted a salary distribution outlet in the Yarmouk district of central Baghdad."
Pointing out that she "seized an amount estimated at 45 million Iraqi dinars before fleeing," according to local Iraqi media.
He added, "Security forces quickly cordoned off the scene and began reviewing surveillance camera footage in the area to track down and arrest the perpetrators as quickly as possible."
Al-Rafdin participates in the "Second Riyadh" project to support the national economy and empower youth
Shark Masraf Al-Rafdin, Saturday, at the second Riyadh exhibition to support the national economy and empower youth.
The expenditure is part of the second Riyadh exhibition, chaired by Prime Minister Mohammed Shia al-Sudani, he said "The government's commitment to empowering the youth and encouraging the labor market will guarantee the path of economic reform and diversification of national revenue sources.
Director General of the Bank Ali Karim Hussein al-Fatlaw said that the prime minister's vision for this incident reflects the state's vision to build a strong productive economy. Advice to Mr. Rafdeen Translates this vision into funding small and medium-sized projects and supporting small and medium-sized initiatives that contribute to job creation and motivation النشاط الاقتصادي"
In addition, the "consumer will achieve the performance of a single national financial instrument supporting the government's policy of transforming the economy towards sustainable development," he said "Al-Rafdin is an active partner in building a productive economic future that encourages innovative Iraqi youth.
Revealing the features of the 2026 budget... and two scenes to determine its path
"There are two hypothetical scenarios for the 2026 budget," Saleh said in a press statement. "The first scenario indicates a continuation of the expansionary approach to public spending, which ensures the maintenance of the momentum of investment projects and current employment rates. However, it also increases pressure on public finances through a widening deficit gap and an increased need for financing, whether through domestic borrowing, which could affect liquidity, or perhaps external borrowing, with less likelihood, which could lead to an increase in debt levels and limit future fiscal space."
Saleh explained that "stabilizing the price of oil at $70 remains contingent on unstable market and international political balances, making this scenario risky."
The government advisor explained that “the second scenario, based on a price of $60 per barrel, represents a more conservative and realistic option, consistent with fiscal consolidation and sustainability-enhancing policies. It will rationalize public spending and direct it toward key priorities, while encouraging the government to expand the non-oil revenue base and activate tax collection and efficiency tools.” He stressed that “although the second scenario may limit some growth opportunities in the short term, which can be remedied through partnerships between the state, the private sector, and foreign investment, it enhances financial stability and gives fiscal policy greater flexibility in the face of shocks.”
Advisor Saleh believes that between these two paths, the importance of diversifying revenue sources and activating non-oil sectors emerges as the fundamental pillar for narrowing the deficit gap and ensuring long-term financial balance, while maintaining the hypothetical deficit ceiling of approximately 64 trillion dinars for both scenarios, for hedging purposes.
Washington sanctions expose Iraq’s shadow economy
Just five days after I warned in my article, “The Dark Side of Iraq’s Economic Boom,” that Baghdad’s skyline was rising on a foundation of dirty money, Washington confirmed it. Before the announcement, a senior US official had told me privately: “The networks behind these projects are already on our radar, and the administration is prepared to act.” I knew what was coming. That private conversation made one thing clear: enforcement was not a question of if, but when. Days later, it happened. On October 9, the US Treasury imposed sweeping sanctions on Iraq’s militia-linked business networks, exposing a financial web long hiding in plain sight. These sanctions did not just target individuals; they revealed an entire economic architecture built on militia finance, sanctioned capital and a shadow economy now embedded within the Iraqi state.
Over the past year, Iraq has presented the world with the image of renewal, a skyline rising, cranes crowding Baghdad’s horizon, and foreign investors testing the waters of a once-closed market. But beneath that narrative runs a different reality: an economy dominated by political patrons, militia financiers and networks tied to Iran’s Revolutionary Guard. Washington’s latest move exposes that reality and places Iraq squarely at the centre of a larger contest, the financial front in Washington’s campaign to dismantle Tehran’s proxy networks.
Iraq is no longer merely influenced by militias, it is being run like one. A silent merger has taken place between the state and its shadows, where ministries award contracts to frontmen and banks launder millions for Iran’s most dangerous proxies. Entire sectors, from construction to commerce, fuel the militia economy. The US Treasury’s latest sanctions offer a rare X-ray: an economy rewired for corruption, powered by militia capital and cloaked in the language of reconstruction. What began as insurgency has become infrastructure.
Iran’s proxies have learned that cement and steel can do what rockets never could: embed themselves within the machinery of the Iraqi state. And their reach does not stop at government contracts or construction sites. It stretches into hotels, restaurants, cafés, fast food outlets, fashion outlets, retail businesses and Western franchises, businesses that appear ordinary, but often serve as fronts for laundering money, building influence, and normalising control.
According to the Treasury statement: “The Iranian regime relies on various Iraqi militia proxies, including US-sanctioned foreign terrorist organisation Katai’b Hezbollah, to penetrate Iraq’s security forces and economy.
“These Iran-backed groups are not only responsible for the deaths of US personnel but also conduct attacks against US interests and those of our allies across the Middle East.
“The militias actively undermine the Iraqi economy, monopolising resources through graft and corruption, and hinder the formation of a functioning Iraqi government that would make the region safer.”
The Treasury identified specific commanders accused of intelligence gathering for Iran, including Hasan Qahtan Al-Sa’idi and his son Muhammad Qahtan Al-Sa’idi, as well as Haytham Sabih Sa’id: “Commanders from Kataib Hezbollah and the IRGC coordinated operations targeting US interests in Iraq earlier this year.”
Deputy State Department spokesman Tommy Pigott summed up the sanctions rationale on X (Twitter): “The United States is pursuing maximum pressure on Iran. We are targeting the IRGC-Qods Force, which supports Iran’s regional terrorist partners and proxies, and two Iraq-based groups, Katai’b Hezbollah and Asaib Ahl al-Haq. These militias actively undermine Iraq’s sovereignty, weaken Iraq’s economy, and conduct attacks against US personnel and interests across the Middle East.”
In a related post, Congressman Joe Wilson urged further sanctions: “Iraq must be freed from Iran’s grip.”
Treasury’s October 9 designations now also provide documentary proof of that pattern. Muhandis General Company’s “undisclosed real-estate projects,” cited in the sanctions release, mirror the very examples outlined in my earlier reporting, projects that international hotel groups quietly rejected over reputational concerns.
Among those named in Washington’s latest round were Katai’b Hezbollah’s commercial arm, Muhandis General Company, and its agricultural front, Baladna Investments, both accused of diverting Iraqi government contracts, laundering funds and supporting weapons smuggling under the guise of reconstruction. The Treasury also sanctioned Aqeel Meften, head of Iraq’s National Olympic Committee and his brother Ali Meften, for using a commercial bank to move money for the IRGC’s Quds Force.
“For decades, the Meften brothers have laundered tens of millions of dollars for Iran, and smuggled oil and drugs and abused Aqeel Meften’s position as president of Iraq’s National Olympic Committee to engage in corruption.” the Treasury Department said.
In addition to the Meften brothers, the Treasury also sanctioned Iraqi banker Ali Mohammed Ghulam Hussein Al Anssari, better known as Ali Ghulam, a pivotal player in the financial architecture supporting Iran’s militia proxies in Iraq. As a top executive at several Iraqi commercial banks, Ali Ghulam has leveraged his positions to enrich his family and provide direct financial services to the IRGC-Quds Force, Katai’b Hezbollah, and Asa’ib Ahl al-Haq. He managed Katai’b Hezbollah’s complex financial operations, including the strategic investment of the group’s wealth abroad, effectively safeguarding millions in illicit profits. Ali Ghulam also orchestrated sophisticated money-laundering schemes involving counterfeit documents, fake receipts and the use of unauthorised US dollars, evading Iraqi regulatory oversight. Despite these activities, he has avoided accountability in Iraq through systematic bribery of judicial officials.
These new actions build on the 2024 sanctioning of Hamad al-Moussawi, and his Al-Huda Bank, identified by the US Treasury as a primary money-laundering hub for the IRGC in Iraq. Their blacklisting foreshadowed this broader crackdown. Together, the Meften, Ghulam, and Moussawi networks form the architecture of Iraq’s militia finance.
In language unusually blunt for a Treasury release, US officials described these militias as “responsible for the deaths of US personnel” and accused them of “monopolising resources through graft and corruption.” The message was clear: Iraq’s supposed economic revival, its towers, malls and banks, was being built atop a structure of illicit finance.
The economic web that funds Tehran’s proxies has become indistinguishable from Iraq’s formal economy. What began as covert financing has now been institutionalised. Iran’s proxies no longer operate at the margins of Iraq’s economy, they are woven into its machinery. Contracts are awarded through ministries, funds are laundered through licensed banks and influence is legitimised through official titles. The very systems meant to regulate commerce and governance have been absorbed into the same networks they were built to restrain.
Regional intelligence assessments also point to the other side of the equation: goods moving the opposite direction. A substantial portion of Iraq’s imports, smartphones, electronics, car parts, heavy machinery, even luxury appliances, are rerouted across the border into Iran. These transfers allow Iranian entities to obtain US- or EU-restricted goods indirectly while militias inside Iraq profit from the arbitrage.
“It’s not just money-laundering any more,” said a regional security official. “It’s a full-spectrum sanctions-evasion economy.”
- Restricted banks
Since 2023, Central Bank of Iraq regulators, under US pressure, have steadily moved to blacklist and restrict dozens of domestic banks and financial companies from dealing in US dollars, citing suspected money-laundering and terror-finance violations. What began as a handful of institutions has become a downward slide.
While some smaller institutions folded or faded quietly under restriction, others tried to weather the storm, including some of Iraq’s most prominent banks.
But not all restricted banks appear on the Central Bank’s public lists and their absence does not mean they are untouched.
In a private conversation, the owner of a major Iraqi bank confirmed:
“International Development Bank is restricted by the federal, but the Central Bank didn’t name it on its website.”
This quiet admission reveals a deeper pattern: silent blacklisting. Banks are being cut off from US dollar access behind closed doors, without official record, without public explanation, and without legal transparency. In Iraq’s shadow economy, even enforcement is negotiated.
Once considered one of Iraq’s largest and best-connected private banks, the International Development Bank (IDB) was not immune. Despite its infrastructure, manpower and market presence, the bank has come under serious scrutiny.
According to an Iraqi security source, the Central Bank has been pressuring IDB chairman Ziad Khalaf Abed Kareem to relinquish his majority stake in the bank. What makes the situation more sensitive, the source added, is that intelligence suggests the true beneficial owner may be Ziad’s maternal uncle, a figure based in Iran, with long-standing financial and political networks.
“The structure raises red flags on multiple levels,” the security source said. “There’s a growing belief that Ziad is not the one really in control, and that makes the bank a serious exposure risk.”
Among the very few Iraqi-owned banks still operating outside formal US restrictions, the Iraqi Islamic Bank for Investment and Development—owned on paper by Ahmad Walid Ahmad, better known as “Ahmad Abu al-Fawz”—has become a lightning rod. “He was an employee making three thousand dollars a month, and suddenly he’s buying more than fifty percent of a bank. Let him show where the wealth came from,” said one rival restricted bank owner, adding that “that guy should be with the rest—no one better than the others.” The remark reflects both resentment and rivalry within Iraq’s banking elite, many of whom see little difference between those sanctioned and those spared. Ahmad Walid Ahmad (Abu al-Fawz) did not respond to requests for comment.
And when a bank is formally blacklisted or restricted for laundering and illicit activity tied to Iran, that designation is effectively an end. No serious counterparty or international institution will risk touching it. The label itself destroys credibility. But in Iraq’s opaque financial ecosystem, credibility is not required to survive, only connections are.
And in that space, the illusion of reform thrives. Under pressure from Baghdad and Washington, restricted banks have discovered a new survival tactic: appearances. They do not change how they operate, they change how they look.
Where there is desperation, there is always someone ready to sell a solution—especially when no solution is required.
For some of Iraq’s most exposed banks, sanctions didn’t just bring scrutiny—they opened the door to a new kind of exploitation.
Since the 2023 US dollar sanctions intensified scrutiny on Iraq’s restricted banks, a troubling trend has emerged among some US and international firms hired by these institutions. Many entered into contracts, took substantial upfront payments, and then simply failed to do any actual work.
A notable example is Washington DC-based lobbying firm BGR Group, hired by Elaf Islamic Bank. After receiving payment, BGR abruptly cancelled the contract without delivering any services, or even engaging with the US government as intended, and never returned the funds. What is more, BGR never registered under the Foreign Agents Registration Act (FARA), which would have been a legal requirement for any legitimate lobbying on behalf of a foreign bank.
The original contract was supposedly to help Elaf Bank navigate regulatory issues with the US government. But without FARA registration, it is highly unlikely BGR did anything beyond cashing the cheque. This case reveals a disturbing pattern of firms exploiting the sanctions-driven rush for quick money, signing contracts they never intended to fulfil, while avoiding transparency and accountability.
Sanctions turned vulnerable banks into easy prey, and firms lined up to cash in.
A senior Central Bank official told me: “Since the 2023 US dollar sanctions on banks, we’ve seen many firms like BGR Group, as well as lawyers and law firms, take payments from banks and disappear without delivering anything. We’ve had to warn the whole banking sector to beware of this scheme.”
The quote captures more than one firm’s failure, it reflects a wider game.
In Iraq’s shadow economy, even compliance has become a racket.
- Cosmetic compliance
If Iraq’s restricted banks have learned one lesson, it is this: perception buys time.
When sanctions bite and dollar access dries up, they do not reform, they rebrand. Modern, compliant, internationally-aligned, on paper.
The shift is from concealment to cosmetics: auditors, consultants, lawyers and lobbyists are brought in to build a paper trail of reform, not a real one.
In a rush to salvage credibility, restricted banks turned to an expanding market of consultants, auditors, and lobbyists offering quick reputational makeovers. Some promised access in Washington, others offered glossy compliance programs—but the results were often the same: little substance, high fees, and no real change. What emerged wasn’t reform, but the commodification of its appearance.
The Union Bank of Iraq, chaired by Ali Muften, offers a case in point. Just months before the US Treasury’s October 9 action, the bank announced a high-profile partnership with BDO Iraq, the local affiliate of the global accounting and advisory network BDO International, promoting the move as a milestone in compliance and transparency. But US officials call such “cosmetic compliance”, part of a wider strategy by restricted banks to hire international auditors, compliance consultants and public-relations advisers in an attempt to burnish their reputations.
The strategy is straightforward: dress up risk as reform. The message to regulators and foreign partners is that Iraq’s banks are modernising, professionalising and aligning with global standards. The reality, however, is that even if ownership changes on paper the same men still control the boards, the loans and the flows of money, they have simply learned how to frame it for Western eyes.
US officials are not fooled. One senior Treasury official told me: “You can hire auditors, swap boards, or repaint the façade, but once a bank is on Washington’s radar, it’s treated like a crime scene: cordoned off, evidence catalogued and there is no coming back.”
Washington the official added “could care less what’s on paper.” What matters is who directs the deals and controls the flow of money, and on that score, the Treasury’s intelligence is exhaustive.
That sentence captures the underlying flaw of Iraq’s financial “reforms”: the façades evolve, but the fate is sealed. The US government knows exactly who controls these banks and where the money truly flows. Behind every reshuffled board and repainted branch lies the same network of beneficiaries.
The illusion of reform has evolved beyond paperwork, Iraq’s banks have entered a new phase of image-laundering, one that swaps not just auditors but identities. When the façade of compliance is not enough, they begin to reconstruct the institutions themselves, replacing visible figures while the real power remains hidden.
Al-Janoob Islamic Bank and Ashur International Bank illustrate a different kind of laundering, not of money, but of image. Both institutions have been restricted from dealing in US dollars, they have resorted to a subtler strategy: repackaging themselves through new faces.
At Al-Janoob Islamic Bank, the chairman, Dr Mazin Ahmed, previously served as Director General of the Investment and Foreign Remittances Directorate at the Central Bank of Iraq (CBI), a role that gave him oversight of the very mechanisms now accused of enabling dollar smuggling and sanctions evasion. Before that, he also sat on the Board of Directors of the Arab Monetary Fund in Abu Dhabi.
At Ashur International Bank, Mohammed al-Delaimy, now CEO, built his career through senior positions at Standard Chartered, Byblos Bank, and as President of the Trade Bank of Iraq, one of the country’s most politically sensitive institutions.
In both cases, these are not random appointments, they are calculated moves. Each man brings the aura of respectability, the language of compliance and the illusion of reform.
It is a pattern increasingly visible across Iraq’s blacklisted and restricted banks: when the system comes under pressure, they do not change the practices, they change the people. They bring in frontmen with polished résumés and Western credentials, betting that titles and LinkedIn profiles can buy what sanctions have taken away: credibility.
In the case of Al-Janoob Islamic Bank, ownership traces back to Ali Zaidi, a businessman best known for securing multimillion-dollar government contracts. Likewise, Ashur International Bank is controlled by Wadih Nouri al-Hanzal and his family. As the head of Iraq’s Private Banks League, al-Hanzal holds significant interests across multiple companies, consolidating considerable economic influence. The concentration of financial authority within these powerful familial dynasties underscores a broader pattern of corruption and collusion that the US government has flagged as a serious threat to Iraq’s economic stability. Both Al-Janoob Islamic Bank and Ashur International Bank are controlled by figures deeply linked to the Popular Mobilisation Forces (PMF).
Both Zaidi and al-Hanzal have sought to shield their interests by bringing in public-facing executives with regulatory credibility. But according to an Iraqi security source, it is the owners themselves who have now disappeared, at least on paper.
“They haven’t sold. They’ve reshuffled,” the source said. “When pressure mounts, they rotate shares, rename directors and bury control behind layers of straw men. The ownership never really changes, it just hides.”
In both cases, these appointments are not reform, they are defence. The men serve as high-profile frontmen, brought in to polish reputations rather than cleanse systems. Each lends credibility without consequence.
Across Baghdad’s banking sector, this pattern has become familiar. When scrutiny intensifies, boards reshuffle. Former regulators or Western-trained executives are brought in to signal reform. Compliance departments expand, not to enforce oversight, but to perform it.
Public-relations firms draft English-language statements about “international best practices,” while the institutions quietly maintain the same opaque ownership structures and patronage networks that triggered restrictions in the first place.
Al-Janoob, Ashur and Union Bank represent three faces of the same strategy: the laundering of image, not income. Each hires credibility the way others hire security, to protect the institution from consequence.
As one US official told me, “With the October 9th designations They’re learning that you can’t audit your way out of sanctions. The façade has become part of the evidence.”
- Washington’s Turn
Under Secretary of the Treasury for Terrorism and Financial Intelligence John Hurley framed the October 9 sanctions as a defence of US national security:“Cutting off their financial flows is essential to protecting American lives.”
But the move signals something larger than a counter-terrorism measure. It’s the most significant US attempt to disrupt the broader financial ecosystem sustaining Iraq’s PMF, not just their armed wings, but the commercial networks behind them.
A senior US official involved in the sanctions process put it bluntly: “We’ve never been fooled by the cosmetic compliance moves. They can hire auditors, rebrand, bring in consultants, but it’s the same dirty money flowing through the same illicit networks.Nothing Changes”.
That now reflects the Treasury’s evolving view: the problem is not just corrupt banks, but the entire system that launders and legitimises militia wealth. From fuel contracts and construction deals to real estate developments and import businesses, much of Iraq’s formal economy is fused with informal power structures. Every tower, every mall, every logistics contract potentially runs through militia-linked capital.
Hurley later clarified the broader strategy: Treasury’s aim is to dismantle the financial architecture enabling these groups to operate with impunity. Future sanctions, officials say, will likely target the so-called “clean hands”, the bankers, contractors, business partners and intermediaries who provide the legal and financial cover for illicit networks.
What is emerging is a new phase in US financial warfare, not just chasing bad actors, but unravelling the systems that allow them to appear legitimate. For Iraq, that means a reckoning with the uncomfortable reality that shadow networks no longer live in the margins; they hace moved into the centre of the economy.
And unless that centre is challenged, any firewall between licit and illicit capital will remain dangerously thin.
Iraq’s government continues to present reconstruction as a national priority. But the Treasury’s latest designations expose the price of building without transparency. Every tower financed through front companies, every contract funnelled to PMF affiliates, and every bank shielding sanctioned money is now a potential liability under US law.
With its latest designations, Washington is no longer distinguishing between rogue militias and the state structures that enable them. By sanctioning figures like Aqeel Meften, a senior sports official with quasi-governmental status, and companies like Muhandis General that operate through official channels and government contracts, the US is now signalling that state-linked entities are fair game. This marks a significant escalation: the shadow economy is no longer treated as existing alongside the Iraqi state, but operating from within it.
For Washington, the message is clear: legitimacy cannot be laundered. And this is just the beginning. More sanctions and designations are expected to come, toppling these networks one by one.
For Iraq, this could mark the start of a new chapter, one where the economy begins to free itself from the shadows of illicit influence.
And for Baghdad’s power brokers, it is a warning, the cranes may still be moving, but the ground beneath them is beginning to shift. Judgment day is coming.
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Revealing the features of the 2026 budget... and two scenes to determine its path
"There are two hypothetical scenarios for the 2026 budget," Saleh said in a press statement. "The first scenario indicates a continuation of the expansionary approach to public spending, which ensures the maintenance of the momentum of investment projects and current employment rates. However, it also increases pressure on public finances through a widening deficit gap and an increased need for financing, whether through domestic borrowing, which could affect liquidity, or perhaps external borrowing, with less likelihood, which could lead to an increase in debt levels and limit future fiscal space."
Saleh explained that "stabilizing the price of oil at $70 remains contingent on unstable market and international political balances, making this scenario risky."
The government advisor explained that “the second scenario, based on a price of $60 per barrel, represents a more conservative and realistic option, consistent with fiscal consolidation and sustainability-enhancing policies. It will rationalize public spending and direct it toward key priorities, while encouraging the government to expand the non-oil revenue base and activate tax collection and efficiency tools.” He stressed that “although the second scenario may limit some growth opportunities in the short term, which can be remedied through partnerships between the state, the private sector, and foreign investment, it enhances financial stability and gives fiscal policy greater flexibility in the face of shocks.”
Advisor Saleh believes that between these two paths, the importance of diversifying revenue sources and activating non-oil sectors emerges as the fundamental pillar for narrowing the deficit gap and ensuring long-term financial balance, while maintaining the hypothetical deficit ceiling of approximately 64 trillion dinars for both scenarios, for hedging purposes.
Private banks in Kurdistan and Iraq face threats and difficult conditions
According to AVA, half of the private banks in Iraq and the Kurdistan Region are under threat of closure due to tough US demands and a comprehensive reform process. This issue will have a major impact on people who have bank accounts, VisaCards, or MasterCards with these banks.
Main story: There are 93 banks in Iraq and the Kurdistan Region, 42 of which are private. The United States wants only 18 to 20 private banks to remain, with five digital banks, according to international standards of one for every 2.5 million people.
Of the 42 private banks, only two to three are considered "safe" and are owned by businessmen, not political parties and leaders.
What you need to know: The Iraqi government has contracted US financial consulting firm Oliver Wyman to oversee the process. The company met with the US Treasury Department, the Federal Reserve and JPMorgan Bank in Washington on Friday to present a report on Iraqi banks. The company says Iraqi banks have begun reforms since last month and reiterates that compliance will attract more investment and international confidence in the Iraqi banking sector by 2026 to 2028. The size of the banking sector in Iraq is expected to reach more than $60 billion by
Conditions: Oliver Wyman has imposed tough demands on Iraqi banks. Within one to two months of the reform process, five Iraqi banks have withdrawn from the process due to their inability to meet the requirements, forcing them to liquidate themselves. That means only 37 banks remain, 18 of which are on the US sanctions list.
Formal demand: Each bank is required to pay Oliver Wyman $2.4 million to $2.5 million a year (Dh240 to Dh250) in exchange for consulting for rehabilitation. Banks earn between $60,000 and $240,000 a year.
0 Each bank should have 7 to 10 good owners (partners).
0 The bank should have a lot of expertise and experience.
0 The bank should be largely capitalized, rich and have good property.
0 The bank shall not be political and shall not belong to any political party or leader.
0 Must be a registered superpower, have a large financial budget, be rated and ranked among the top four banks in the world.
0 Must have an international bank account.
More information: According to a banking expert familiar with the matter, only five to six Iraqi banks meet these requirements.
Banks have only 36 months (three years) to meet these requirements, which may be extended to 48 months (four years). After this period, half of the banks are expected to close. Anyone with bank accounts, Visa cards, or MasterCards at those banks should transfer them to other banks.
Al-Salami: Private banks violate the Central Bank's instructions and waste millions of dinars daily.
Representative Hadi Al-Salami revealed, on Sunday, the existence of private banks that violate the laws and instructions issued by the Central Bank of Iraq, noting that these violations cause the daily waste of millions of dinars without effective oversight by the competent authorities.
Al-Salami said in a statement to / Al-Maalouma / agency, that "a number of private banks continue to commit serious financial violations, which leads to the waste of public money," noting that "the Central Bank has not taken firm measures despite the clarity of the violations."
Al-Salami called on the regulatory authorities to "open an urgent investigation into the dealings of these banks, hold those involved accountable, and take serious steps to limit the daily financial bleeding resulting from fictitious and commercially uncovered operations."
Official statement on internal and external debts
In the context of financial transparency and to clarify what is stated in the public debt and deficit statements, the Central Bank of Iraq would like to clarify what was reported in the media:
1- The planned deficit in the three-year general budget law approved by the Council of Representatives for the years (2023, 2024, 2025) amounted to 191.5 trillion dinars, while the actual deficit for the aforementioned three years amounted to 35 trillion dinars, which was covered internally through bonds and transfers, in accordance with the provisions of the budget law. This means that actual borrowing amounted to 18.2% of the planned deficit stipulated in the budget law, reflecting the high level of coordination between the government and the Central Bank of Iraq in controlling public debt and preventing it from reaching the high levels stipulated in the budget law.
2- As for the external debts that must be repaid, they do not exceed 13 billion dollars after excluding (the outstanding and unclaimed debts of the former regime), and Iraq has not defaulted on any obligation, maintaining an excellent financial reputation regionally and internationally in this regard.
3- The domestic debt, amounting to 91 trillion dinars, represents 56 trillion dinars accumulated by the end of 2022, with the additional amounts representing 35 trillion dinars of debt for the years (2023, 2024, and 2025). Most of the domestic debt is within the government banking system.
Given the presence of government accounts and deposits in government banks, specialized committees and international consulting firms are working to convert a portion of this debt into investment instruments within a national fund to manage the domestic debt, with the aim of transforming obligations into investment opportunities.4- The ratio of public debt to GDP did not exceed 43%. This ratio, according to internationally recognized classification, is considered moderate and within safe limits, and does not constitute a burden on the economy.
5- The Central Bank of Iraq is working to present a comprehensive vision for financial sustainability for the coming years, supporting the government's comprehensive reform efforts to diversify the economy and maximize non-oil revenues as an alternative to unilateral reliance on oil revenues and avoiding a fiscal deficit.
Central Bank of Iraq
Media Office
October 19, 2025
Prime Minister's Advisor: Iraq is experiencing its most stable period thanks to strong foreign reserves.
The Prime Minister's advisor for financial affairs, Mazhar Mohammed Salih, issued a clarification on Sunday regarding Iraq's internal and external debt. While noting that domestic borrowing represents only 18 percent of the total precautionary debt, he confirmed the existence of committees working with international companies to convert a portion of the domestic debt into investment vehicles.
Saleh told the Iraqi News Agency (INA): "There is a blurry picture in interpreting the issue of external debt, as the external debts due until 2028 do not exceed $9 billion, which constitutes mostly half of the country's total external debt," indicating that "there are coordinated repayment mechanisms between the Ministry of Finance and the Central Bank, which are highly governed and transparent, and are settled accurately within a strict program and allocations in the federal general budget, and are periodically extinguished with the international creditor community."
He added, "The total external debt does not exceed what was mentioned above, and the amounts mentioned in the Central Bank's letter require explanation, as Iraq is not obligated to pay them, especially the $41 billion, as they are subject to the Paris Club agreement of 2004, which wrote off 80% or more of those debts related to the Iran-Iraq war, or what are called pre-1990 debts."
He continued, "As for the domestic debt referred to in the Central Bank's letter, it is the result of the accumulation of financial, security, financial and health crises that the Iraqi economy has been exposed to over the past decade and since the war on ISIS terrorism. This has been accompanied in recent years by severe geopolitical factors that have exposed global oil markets to a decline in prices due to the decline in growth in the global economy." He explained that "the borrowing undertaken by the current government as domestic debt constitutes only 18% of the total precautionary domestic debt included in the federal general budget (the three-year budget) pursuant to Law No. 13 of 2023 for the years 2023-2025."
He stated that "the internal debt, which amounts to approximately 91 trillion dinars, is mostly held by the government banking system and under high-level financial and technical management," noting that "there are specialized committees working in cooperation with international consulting companies to convert a large portion of that internal public debt into productive investment tools within a national fund to manage the aforementioned internal debt in a manner that aims to stimulate the real economy and transform debt obligations into investment opportunities in the real sector of the Iraqi economy." He explained that "Iraq is currently experiencing the most stable period due to the strength of foreign reserves, the function of which is to stabilize the purchasing power of the Iraqi dinar and sustainable development."
The commission sets the date for the election holiday in Iraq.
The Independent High Electoral Commission announced today, Sunday (October 19, 2025), that it is coordinating with the Ministry of Education to declare a holiday starting November 5, coinciding with the handover of schools designated as polling stations.
The head of the commission's media team, Imad Jamil, said in a statement to the official newspaper, followed by "Baghdad Today," that "logistical and technical preparations for the electoral process are continuing according to the planned schedule."
He added, "The Commission is continuing to distribute biometric cards to those registered and updated, as the total number of cards has reached three million and (500) thousand. Approximately one million and (750) thousand cards have been distributed, and the distribution process is still continuing until election day."
Jamil emphasized, "The registration of observers from political entities and civil society organizations, in addition to international observers, will continue to ensure the integrity of the electoral process."
Regarding the number of excluded candidates, he revealed that “(837) candidates have been excluded so far for various reasons.”
View of the Iraqi Parliament: This session of parliament has been the worst
According to the official report of the Iraqi Parliamentary Observatory, the fifth session of parliament, which covers the years (2025-2021) had the worst legislative performance. Since 2023, the Iraqi parliament has been the weakest in terms of number of sessions, legislation, working hours and attendance.
Official publication: According to the report, the Iraqi parliament held only 148 sessions this session, the lowest number compared to the previous three sessions. Twenty sessions were adjourned, and 116 should have been held, but were not held, while an average of 156 members were absent at each session, significantly disrupting legislative and oversight sessions.
Additional information: On the legislative front, Parliament passed only 69 laws, the lowest number recorded in any previous session. Most of the laws were not directly related to the lives and welfare of citizens.
- Law on the governorship of Halabja
- General Budget Law (three years)
- Personal Status Law
- General Amnesty Act
- Anti-prostitution law
- AIDS Patients Compensation Act
- Pension and Social Security Law for Workers
- The law criminalizing the normalization of relations with Israel
The report also states:
- 175 laws have been given first reading and 116 laws have been given second reading.
- Nine parliamentary committees have failed to pass any laws for four years: Services, Electricity, Education, Transport, Investment, Integrity, Immigration, Economy and Youth. Meanwhile, 76 MPs recorded no legislative or oversight activities.
- Regarding the monitoring role, it has only hosted officials 10 times, four oral questions and two interrogations, which is less than all previous rounds.
What you need to know: In four years, parliament worked 294 hours. an average of six hours per month. While the working time in the second cycle was about 993 hours, the third cycle recorded 819 hours. This means that the current performance accounts for only about 30% of parliamentary activity in its previous sessions.
Between reform and dictate, the Central Bank leads banks toward a financial transformation with an American character.
The Iraqi banking sector stands on the cusp of a new phase, where ambitions for reform intertwine with the complex reality of external pressures. This follows the release of a report by the American firm Oliver Wyman , which predicts that the size of the Iraqi banking sector will reach $60 billion by 2035.
Although this figure may seem ambitious, it reflects the magnitude of the stakes in the Central Bank of Iraq's ability to lead a genuine banking transformation that restores confidence in the financial system. However, it also raises questions about the nature of this reform, and whether it is internally generated or externally imposed.
In this context, economic expert Abdul Hussein Al-Shammari told Al-Alam Al-Jadeed that Oliver Wyman's forecasts seem reasonable given the accumulation of assets in Iraqi banks, but they do not necessarily mean real reform.
Al-Shammari explains that "the largest Iraqi banks have assets exceeding $40 billion, so reaching $60 billion is not surprising, but they have accumulated over two decades through massive government capital movements, not through productive banking activity." He adds that "the Iraqi banking sector is witnessing what can be described as forced development, not as a result of local reforms, but rather as a result of direct ties to the American financial system."
Oliver Wyman's report expressed a highly optimistic tone, confirming that Iraq "is entering a new phase of growth thanks to comprehensive banking reforms led by the Central Bank with government support," predicting that "the banking sector will reach more than $60 billion by 2035, with returns ranging between 15 and 20 percent."
It's worth noting that the Central Bank of Iraq announced last April a collaboration with Oliver Wyman to modernize the banking sector, achieve attractive and sustainable returns for shareholders, enhance the protection of depositors and creditors, expand the financial infrastructure, including an increased network of branches and ATMs, and simplify and assess compliance with anti-money laundering and counter-terrorism financing measures through a digital identity system.
On August 12, the bank's governor, Ali Al-Alaq, discussed with the company the details of the banking reform plan submitted by the Iraqi Private Banks Association, as part of efforts to develop the banking sector and align it with international standards.
After decades of reliance on oil transfers and the accumulation of liquidity in government banks, the Iraqi sector remains vulnerable to any shift in US monetary policy, as nearly all transfers pass through the US federal system before being repatriated.
Although the Central Bank of Iraq speaks of a "comprehensive reform" plan, experts believe it was a response to US demands related to combating money laundering and controlling transfers, rather than a comprehensive national vision for developing the financial sector. This suggests that external pressures were the primary motivation for changing the banking structure, rather than competition or innovation related to developing the sector.
For his part, Alaa Al-Fahd, a member of the Central Bank of Iraq’s media team, confirmed to Al-Alam Al-Jadeed that “all banks have entered into the reform plan and expressed their willingness to change their plans and strategies, move from family ownership to investment partnerships, and implement the plan’s provisions, which include a shift towards a credit-based banking environment that encourages financial inclusion, combats money laundering, and adheres to international standards, as well as the implementation of modern electronic financial banking programs.”
Al-Fahd expects the plan to achieve its intended objectives, as banks have expressed their full readiness to implement the provisions comprehensively, including forming partnerships between local banks and external and foreign investors.
This transformation is part of the government's program, the twelfth axis of which includes a clear clause on "financial and banking reform," which aims to transform banks from deposit and withdrawal instruments into effective financing and investment institutions.
The first phase of the project began with the major government banks, Rafidain and Rashid, as models for structural and administrative transformation within the financial sector.
The plan also sets a central goal of "transforming from sole proprietorship to shared governance," reducing the influence of commercial families that have controlled private banks for decades. This is expected to open the door to foreign capital and Arab investors entering the Iraqi market in the coming years.
For his part, economic expert Ahmed Abdel Rabbo told Al-Alam Al-Jadeed that "Oliver Wyman's latest report is optimistic and reflects the seriousness of the Central Bank of Iraq in moving forward with reforming the financial system," noting that "the next phase requires practical measures to support this approach."
Abdul Rabbah adds, "The gradual lifting of sanctions on banks that have not been proven to be involved in money laundering operations will contribute to advancing financial reform and preparing the banking system for a new phase of stability and openness."
These calls come amid a difficult reality, as more than 30 Iraqi banks are subject to US sanctions or restrictions due to suspicions of dollar smuggling and financing illicit activities.
Although some of these sanctions were described as "precautionary" or "temporary," they undermined market confidence and forced Iraqi banks to rely on dealing in local or alternative currencies, reducing their external activity and impacting the flow of hard currency.
Reports indicate that most Iraqi banks still rely on government deposits and employee salaries, while lending to the private sector does not exceed 15 percent of total liquidity.
Moreover, citizens' weak banking culture and lack of financial awareness limit the expansion of digital banking services, despite the Central Bank's attempts to introduce financial inclusion and digital transformation programs.
Experts believe that international reports, despite their importance, do not always reflect the complex reality of the Iraqi market, where politics and finance intertwine, and banking procedures are often subject to the balance of power between Washington and Tehran rather than purely economic calculations.
According to experts, Iraqi banks' commitment to the new reform plan will have a positive impact on the overall economic situation. Some banks have liquidity exceeding $10 billion but have yet to activate it, pending the completion of Oliver Wyman's audits and the final confirmation of their legal and financial status.
Experts point out that releasing these funds will help stimulate investment and lending within the local market and restore confidence in the banking sector, which has been freezing a significant portion of its funds for fear of falling under sanctions or financial suspicion.
urgentTrump appoints special envoy to Iraq
"I am pleased to announce that Mark Savaya will serve as Special Envoy to the Republic of Iraq," Trump said in a statement.
Trump added, "Mark's deep understanding of the relationship between Iraq and the United States and his connections in the region will help advance the interests of the American people."
Donald Trump Appoints Mark Savaya as Special Envoy to Iraq
In a post on his social media platform, Truth Social, Trump said Savaya’s “deep understanding of the Iraq-U.S. relationship and his connections in the region will help advance the interests of the American people.”
U.S. President Donald Trump announced on Sunday the appointment of Mark Savaya as Special Envoy to the Republic of Iraq.
In a post on his social media platform, Truth Social, Trump said Savaya’s “deep understanding of the Iraq-U.S. relationship and his connections in the region will help advance the interests of the American people.”
The President also highlighted Savaya’s contributions during his campaign in Michigan, noting that he played a key role in engaging Muslim American voters and helping secure a record turnout.
“Congratulations, Mark!” Trump wrote, expressing confidence in Savaya’s ability to strengthen diplomatic ties between Washington and Baghdad.
Savaya is a prominent figure in the Detroit area, particularly in business and politics.
In December 2024, he hosted a Trump-themed event that was attended by Detroit Council President Mary Sheffield.
Described as a "massive Trump guy," Savaya has financially supported the former president's campaigns.
He has met with Donald Trump multiple times, visited Mar-a-Lago, and posed for photos with several members of his cabinet.
monetary dependence
With the rise of the Chinese yuan and local currency settlements, can Iraq dispense with the dollar?
The modern Iraqi economy was formed on the basis of a single-source oil rent, entirely dependent on the sale of crude oil and the settlement of revenues in US dollars. This pattern made Iraqi monetary policy directly dependent on the US financial system, with revenues deposited in accounts at the Federal Reserve Bank of New York and managed according to international regulatory arrangements linked to financial compliance and anti-money laundering programs.
According to economic studies issued by the World Bank and the International Monetary Fund, approximately 90 to 95 percent of Iraq's public revenues come from oil, making any fluctuation in the dollar or a decline in global demand for oil a direct threat to liquidity and the general budget.
Financial economists point out that the Central Bank of Iraq does not have absolute freedom to manage its reserves, as most of its transactions are restricted to US transfer networks, and the global SWIFT system closely monitors financial transfers, preventing any parallel transactions outside the dollar system.
According to recent academic estimates, excessive reliance on the dollar has created a distorted import environment, with the Iraqi market tending toward consuming foreign goods without boosting domestic production. This has deepened economic exposure and tied the domestic financial cycle to fluctuations in US monetary policy.
In contrast, China has been working for more than a decade to build a parallel financial system that would challenge the dollar's dominance, by expanding the use of the yuan in international trade and establishing alternative financial institutions such as the new Asian Development Bank and the China Payments System (CIPS).
In 2023, Beijing announced that more than 52.9 percent of its cross-border transactions were settled in yuan, surpassing the dollar for the first time in modern history. While this percentage reflects a gradual shift rather than a sudden reversal, it points to a fundamental shift in the balance of global financial influence.
International economics researchers believe that China's agreement with Australian company BHP to settle iron ore trade in yuan represents a pivotal moment in the history of global trade, as it removes one of the world's most traded commodities from the dollar. This move, along with a series of similar agreements with other countries, most notably Russia and Saudi Arabia, indicates that the yuan is beginning to transform from a local currency into a strategic settlement tool in the international trade system.
Beijing has also relied on comprehensive institutional tools to bolster market confidence in the yuan, such as linking the currency to a strong gold reserve system and ensuring its stability through prudent monetary policies. This has made it an increasingly attractive option for countries seeking alternatives to the dollar amid crises of US sanctions and restrictions.
Iraq's position in the transformation equation
Although Iraq was one of the first oil-producing countries to open up trade to China, its position in the global monetary transition remains extremely weak. Baghdad's banking structure remains traditional and relies almost entirely on dollar transfers via the US system.
Economic researcher Othman Karim confirmed to Baghdad Today that the idea of abandoning the dollar "is illogical at the present time," noting that Iraq "sells oil and receives revenues through the US Federal Reserve, and currently has no realistic mechanism for settling its transactions in another currency."
He adds that the shift to the yuan requires "a radical change in monetary policy, the signing of direct banking agreements with China, and the development of intermediary electronic payment tools that can bypass US restrictions."
According to economists, the challenge in Iraq is twofold: technical, related to the absence of an independent financial transfer structure, and political, related to US pressure and Iraq's close ties to the Western system for managing its finances.
Trade with China, despite its size, remains settled in dollars, as Iraqi companies do not have accredited accounts with Chinese banks. Analysts believe that any serious attempt to transition to the yuan requires profound institutional reform of the central bank, enhanced financial transparency, and the establishment of a dual reserve in yuan and gold as a preliminary step toward monetary diversification.
While it is difficult to completely sever the link to the dollar, some experts do not rule out a partial move toward monetary diversification, through limited agreements with China to settle a portion of non-oil imports in yuan.
Given China's increasing openness to the Middle East and its signing of yuan-denominated settlement agreements with Saudi Arabia and the UAE, Iraq could consider establishing a trade barter mechanism under which it would import Chinese goods in exchange for oil exports, without having to use the dollar.
Some monetary researchers also suggest that Baghdad begin allocating a portion of its foreign exchange reserves in yuan, as a symbolic step to expand financial diversification, while developing banking agreements with the People's Bank of China to facilitate direct transfers.
However, these paths remain subject to complex political factors, most notably the relationship with Washington and the fear that any move toward China could be interpreted as a step toward an anti-Western geopolitical axis.
Ultimately, economic analysis shows that completely eliminating the dollar in Iraq is not possible in the short or medium term, but it remains a long-term strategic goal in light of global changes.
Iraq, as a dependent rentier economy, needs to first build its production and commercial independence before considering monetary independence. While the rise of the yuan opens a window for rebalancing the international financial system, it does not negate the fact that the dollar still holds the deepest and most widespread structure.
Therefore, in the coming period, Iraq will remain governed by the duality of monetary and political power: adopting the dollar as the primary currency for governing the state, while closely monitoring the transformations taking place in the East, where China is rewriting the equation of global financial influence, step by step.
Details of the meeting between Al-Sudani and the US Chargé d'Affaires
Prime Minister Mohammed Shia Al-Sudani discussed, today, Sunday, October 19, 2025, with the US Chargé d'Affaires to Iraq, Joshua Harris, bilateral relations between Iraq and the United States of America, and ways to enhance them.
According to a statement from the Prime Minister's Office, received by Baghdad Today, the meeting also discussed "the latest developments in the region, particularly the humanitarian situation in Gaza. The Prime Minister stressed the importance of consolidating efforts to halt the aggression and alleviate the suffering of the Palestinian people, emphasizing that reconstruction and stability in the stricken Strip represent essential steps toward achieving stability in the region."
He pointed to "the necessity of constructive communication and dialogue to ensure the continuation of advanced security and development relations, and the commitment of both sides to strengthening the strategic partnership based on mutual respect, shared interests, and constructive dialogue, and supporting diplomatic solutions to regional challenges, including relations between the United States and the Islamic Republic of Iran, as a cornerstone of sustainable stability in the Middle East."
For his part, the US Chargé d'Affaires expressed his appreciation for Iraq's effective diplomatic role and its growing contribution as a factor of stability in the region, stressing "the need to continue coordination, consultation, and cooperation, and for Iraq to participate in regional and international efforts aimed at ending conflicts."
Government source: The government has succeeded in significantly reducing the deficit in the budget law.
Iraq boosts its gold reserves to 162.5 tons
Expert Abdul Rahman Al-Mashhadani explained in a statement to Al-Furat News that: "Iraq continues to purchase gold to bolster its national reserves, although the quantities acquired remain limited compared to the ambitious plans to enhance financial stability."
He pointed out that "increasing gold reserves represents an important step towards strengthening the national economy and supporting financial liquidity, as well as being a strategic safety factor in the face of global market volatility."
Al-Mashhadani emphasized that "Iraq pays special attention to gold as part of its economic policy, as it is an important tool for diversifying assets and protecting reserves from potential economic and financial risks."
The Prime Minister announces new measures to support the private sector.
link they showed this on TV
Prime Minister Mohammed Shia al-Sudani announced on Sunday measures to support the private sector and create an attractive investment environment.
The Prime Minister's Media Office said in a statement, "Prime Minister Mohammed Shia al-Sudani launched the implementation works of the Baghdad International Hospital, which is being implemented by the Qatari Investment Holding Company, today, Sunday."
Al-Sudani, according to the statement, expressed his welcome to the brothers from the State of Qatar as they implement a large medical facility in Baghdad, which, along with previous projects, represents an image of cooperation between the two brotherly countries, recalling the visit of the Emir of the State of Qatar, Sheikh Tamim bin Hamad Al Thani, to Baghdad, during which he announced a package of projects with a financial ceiling ranging from (5-7) billion dollars in various fields.
The Prime Minister pointed out that "we are working resolutely to create an attractive investment environment by reducing red tape and addressing previous laws that hinder foreign investment, in addition to a package of government decisions and legislation."
Al-Sudani praised "the efforts of the medical, administrative, and technical staff at the Ministry of Health, the National Investment Commission, and the Baghdad Municipality in completing the requirements for granting the investment license and signing the contract," stressing that "this project will receive support, follow-up, and the necessary facilities from various relevant parties to implement it according to what was planned and designed and within the specified timeframes."
Al-Sudani said, "We have opened the doors to distinguished companies with successful experiences, which we have found in the Qatar Investment Holding Company." He emphasized, "Our government has taken measures to support the private sector and create an attractive environment for investments exceeding $102 billion."
He continued, "Despite the region's unnatural circumstances, the direction was clear toward investment in Iraq," indicating, "We have a wealth of investment opportunities in various sectors, and they will be available to businessmen, investors, and companies."
He pointed out that "the Development Road project represents another aspect of the investment opportunities being prepared by international consulting firms," noting that "the health sector is among the government's top priorities, which has achieved a qualitative shift in this sector through the implementation of the Health Insurance Law."
He stated, "We have launched work on the pharmaceutical industrial city in partnership with American and British companies," stressing, "We have worked on several tracks to advance the health sector in Baghdad, in terms of infrastructure and completing stalled projects."
He continued, "We are moving towards establishing new hospitals with varying bed capacities in the districts, and establishing and rehabilitating specialized centers in Baghdad and the governorates." He noted that "we have a package of facilities and guarantees for drug producers to advance the local pharmaceutical industry, which has witnessed an unprecedented leap over the past two years."
He continued, "We have taken effective steps to implement the health insurance law, which covers 2.3 million citizens," noting that "we have adopted a joint management and operation approach with reputable and well-known medical institutions to improve the quality of health, medical, and treatment services for citizens."
New tools for fiscal policy in Iraq
The Osool Foundation for Economic and Sustainable Development stated that the current phase requires the development of new financial policy tools capable of addressing the challenges facing this sector in Iraq without placing additional burdens on the budget.
The corporation's chairman, Khaled Al-Jaberi, said in a press statement, "This stems from the national need to address financial challenges and the Iraqi economy's reliance on imports rather than local production, which has now begun to grow after a long series of reforms, and which still requires much more."
He explained that "real financial leverage is needed. In such circumstances, it is impossible to rely on patchwork solutions such as devaluing the exchange rate or re-pricing assets and transferring them from one owner to another. These are unrealistic and serve to defer crises rather than resolve them. One of the most prominent solutions in fiscal policy is real financial levers that revitalize the economy from within."
Al-Jabri added, "Financial leverage is not additional spending, but rather the smart movement of assets and liquidity towards productive and operational objectives, such as taxes that ease the burden on the private sector and expand the production base through a series of decisions; customs that ease the burden on the private sector; public-private partnerships (PPPs) that combine government funding with the operational efficiency of the private sector; and company registration by easing procedures with incentive packages for those companies to attract employees, such as exempting those transferring from the public to the private sector through incentive packages for the company, including not registering with the Social Security Fund and calculating retirement savings for the transferred employee, among other decisions."
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