Iraq Agrees to New Controls on Dollar Flows to Resume US Cash Shipments, Report Says

Iraq has reached an agreement with the U.S. to resume physical shipments of American currency after a four-month suspension, in exchange for implementing new controls to prevent dollars from reaching Iran, according to a report from The Wall Street Journal citing U.S. and Iraqi officials.

The deal ends a halt on banknote deliveries that began in late February, which had cut off the Iraqi government from cash generated by its oil sales.

Terms of the Agreement

Under the new arrangement, Baghdad has reportedly committed to measures aimed at stopping the flow of U.S. dollars to Iran and its affiliated militias, which is a violation of American sanctions. The controls will specifically target Iraq's currency-exchange businesses and salary payments to Iran-aligned militia members, the report said.

According to Iraqi officials cited in the report, the cash deliveries, which are transported on chartered cargo aircraft, resumed late last month. The agreement is part of a broader U.S. administration effort to bring Baghdad closer to Washington.

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Background on the Suspension

The U.S. Treasury Department ordered the Federal Reserve Bank of New York to stop the cash shipments four months ago to pressure Baghdad over its financial ties with Tehran. Iraq's oil revenues are deposited at the New York Fed, and the government relies on these physical cash shipments for its operations.

During the suspension, the Fed canceled at least two planned banknote deliveries on the Treasury's orders. One of the canceled shipments was valued at approximately $500 million, according to officials mentioned in the report.