The latest
Iraq has agreed to tighter financial controls aimed at preventing U.S. dollars from reaching Iran and Iran-backed militias, in exchange for the Trump administration restarting cash shipments to Baghdad, The Wall Street Journal reported, citing U.S. and Iraqi officials.
Details
• Dollar shipments: The Treasury Department halted deliveries of U.S. banknotes in late February, then allowed them to resume late last month, Iraqi officials said.
• U.S. conditions: Baghdad pledged to restrict dollar access through currency-exchange businesses and salary payments to Iran-aligned militia members.
• Political pressure: The Journal said the move is part of a broader U.S. push to pull Baghdad closer to Washington after the Iran war.
• Zaidi’s dilemma: Prime Minister Ali al-Zaidi faces U.S. demands to disarm militias and keep them out of government, despite their influence in parliament.
• Dollar channels: The report said militia-linked networks used fraudulent transfers and Mastercard and Visa cards to move dollars through neighboring countries.
Background
Since the 2003 U.S. invasion, Iraq’s oil revenues have been held at the Federal Reserve Bank of New York. Washington has shipped billions of dollars in banknotes to Baghdad each year to support Iraq’s cash-heavy economy.
What to watch
The next test is Zaidi’s expected visit to Washington this month, the rollout of the new exchange and payroll controls, and whether Iran-backed factions resist steps that threaten their financial networks.
