Iraq Agrees to Tighter Controls to Resume U.S. Dollar Shipments

Iraq has agreed to implement new financial controls to prevent U.S. currency from reaching Iran and its allies, paving the way for the resumption of physical dollar shipments from the United States after a four-month suspension, according to a report from The Wall Street Journal citing U.S. and Iraqi officials.

Resumption of Cash Deliveries

The U.S. Treasury Department had stopped the banknote deliveries in late February, cutting off Baghdad from physical cash derived from its oil sales, which are deposited at the Federal Reserve Bank of New York. The halt, which lasted four months, included the cancellation of at least two shipments, one of which was valued at approximately $500 million, according to the officials.

Iraqi officials confirmed that the deliveries, transported via chartered cargo aircraft, resumed late last month. The suspension was part of a broader U.S. effort to pressure Baghdad to reduce its financial ties with Tehran, which has used Iraq to access U.S. dollars in violation of American sanctions.

New Financial Controls

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Under the terms of the new agreement, the Iraqi government has committed to specific measures aimed at curbing the illicit flow of dollars. These reported commitments include:

• Preventing Iran and its allies from obtaining U.S. dollars through Iraq's network of currency-exchange businesses.
• Halting salary payments in U.S. dollars to members of Iran-aligned militias.

These controls are designed to close loopholes that have allowed U.S. currency to move from the official Iraqi financial system into the hands of entities sanctioned by the United States.