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

Iraq has reportedly agreed to new financial controls aimed at preventing U.S. dollars from reaching Iran, a move that has ended a four-month halt on American currency shipments to Baghdad. The agreement was detailed in a report by The Wall Street Journal, which cited unnamed U.S. and Iraqi officials.

Details of the Agreement

Under the terms of the deal, the Iraqi government has committed to new measures to stop the flow of hard currency to Iran and its allied militias. According to the report, these controls will specifically target Iraq's currency-exchange businesses and salary payments made to Iran-aligned militia members.

As a result of the agreement, physical shipments of U.S. dollars have resumed. Iraqi officials stated that the deliveries, which are transported on chartered cargo aircraft, restarted late last month.

Background on the Suspension

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The U.S. Treasury Department ordered the suspension of banknote deliveries in late February. This action cut off the Iraqi government's access to physical cash generated from its oil sales, which are held in an account at the Federal Reserve Bank of New York.

The halt was part of a broader U.S. strategy to pressure Baghdad to curtail its financial ties with Tehran, which Washington accuses of using Iraq to circumvent American sanctions. During the suspension, the Federal Reserve canceled at least two cash shipments on Treasury's orders, including one valued at approximately $500 million, officials told The Wall Street Journal.

Implications for the Region

The resumption of U.S. dollar shipments is critical for Iraq's economy, which relies heavily on oil revenue denominated in dollars to fund government operations and maintain stability. The agreement signals an effort by the U.S. administration to bring Baghdad into closer alignment with Washington's financial and geopolitical objectives in the Middle East, particularly concerning the economic isolation of Iran.