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Iraq Agrees to New Dollar Controls to Resume U.S. Cash Shipments, Report Says
Iraq has reportedly reached an agreement with the U.S. to resume physical shipments of American currency after a four-month halt, contingent on Baghdad implementing new controls to prevent dollars from flowing to Iran and its allied militias. The deal ends a suspension that cut the Iraqi government off from cash generated by its oil sales, which are held at the Federal Reserve Bank of New York.
Resumption of Shipments
According to a report from The Wall Street Journal citing U.S. and Iraqi officials, the U.S. Treasury Department stopped the banknote deliveries in late February. The halt was initiated amid a conflict with Iran that also disrupted Iraq's oil exports.
The physical cash deliveries, which are transported on cargo aircraft chartered by the Iraqi government, reportedly resumed late last month. The Federal Reserve had canceled at least two shipments on Treasury orders, including one for approximately $500 million, officials told the Journal.
Context and Financial Pressure
The suspension was part of a wider U.S. administration effort to pressure Baghdad to reduce its economic and political ties with Tehran. American officials have long been concerned that Iran uses Iraq's financial system to access U.S. dollars, thereby circumventing international sanctions.
AdBy halting the cash shipments, Washington exerted significant financial pressure on the Iraqi government, which relies on these funds to pay salaries and manage the economy. The move aimed to bring Baghdad closer to Washington's position following the regional conflict.
New Control Measures
Under the terms of the new agreement, Baghdad has reportedly committed to specific measures to block the flow of dollars to Iran. The controls will target two primary channels:
- Preventing Iran and its allies from obtaining dollars through Iraq's extensive network of currency-exchange businesses.
- Halting the use of U.S. dollars for salary payments to members of Iran-aligned militia groups.