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

Iraq has reportedly reached an agreement with the U.S. to implement new financial controls aimed at preventing American currency from reaching Iran, paving the way for the resumption of U.S. dollar banknote shipments to Baghdad after a four-month halt. The deal was reported by The Wall Street Journal, citing U.S. and Iraqi officials.

Details of the Agreement

Under the terms of the new agreement, the Iraqi government has committed to measures that block Iran and its allies from accessing U.S. dollars. The controls specifically target two primary channels, according to the report:

• Iraq's extensive network of currency-exchange businesses.
• Salary payments made to members of Iran-aligned militias.

This arrangement is a key component of a wider U.S. effort to curb Tehran's ability to circumvent American sanctions by using Iraq as a source for hard currency. Cash deliveries, which are transported on chartered cargo aircraft, reportedly resumed late last month.

Background on the Suspension

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The U.S. Treasury Department ordered the suspension of banknote shipments in late February. The move cut off Baghdad'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 intended to pressure the Iraqi government to reduce its financial ties with Tehran. Officials cited by the Journal said that the Federal Reserve, acting on Treasury orders, canceled at least two planned shipments, including one valued at approximately $500 million.

Market and Geopolitical Implications

The resumption of dollar shipments is critical for Iraq's economic stability, as the government relies on these funds to operate and manage its economy. The four-month freeze had placed significant financial pressure on Baghdad.

For investors and regional observers, the agreement signals a development in the U.S. strategy to strengthen its influence with Iraq and further isolate Iran financially. The effectiveness of the new controls in practice will be closely monitored by U.S. authorities.