AFTER WASHINGTON’S REASSURANCES, IRAQ IS CLOSE TO BYPASSING DOLLAR SANCTIONS
Al-Sudani’s statements came about a week after his visit to Washington, which included meetings with officials in the US Treasury, which had previously punished Iraqi banks and caused an imbalance in the exchange rate against the local dinar.
Today, Tuesday, Al-Sudani received a delegation from the Union of Arab Banks in Baghdad, and said, “The financial and economic reform process adopted by the government cannot occur without a solid banking system that is in harmony with the world.”
The Prime Minister explained, according to a press statement, that Iraqi banks are on the right path in their transactions related to financial transfers, and that coordination of financial and monetary policy with the Central Bank continues, while maintaining the bank’s independence.
FINANCIAL REFORM
Al-Sudani renewed his talk about “the measures taken by the government during the past period that helped identify the defects in the banking system and worked to fix them.”
(Please go see my blog sections on the “White Paper” and the “Pillars of Financial Reform”. These are the areas of concern that the US Treasury needs them to fix if they are to deal in dollars and other foreign transactions (meaning global transactions) in dealing with payments to and from Iraqi banks. In this article they are telling Iraq is NOT yet ready and there is still more work to do in financial reforms sector)
On the other hand, the delegation of the Union of Arab Banks praised “the government’s measures to reform the banking sector; These are clear measures aimed at strengthening and enhancing the work of this sector.”
The Arab delegation expressed its appreciation for the government’s steps in supporting the private sector and enhancing its role in sustainable development and international and regional partnerships.
Ali Tariq, Executive Director of the Iraqi Private Banks Association, who attended the meeting with the Prime Minister, told Asharq Al-Awsat that he “discussed the development of Iraqi Arab and foreign banking relations, which will reflect positively on local banking services.”
“Forced, not a choice.”
For his part, the professor of finance at the College of Administration at Al-Mustansiriya University, Sadiq Al-Bahadli, said that Iraq is “forced and has no choice” regarding taking the correct procedure related to foreign financial transactions.
Al-Bahadli said, “The US Federal Bank controls almost all of Iraq’s funds derived from oil revenues, and they are sold in US dollars, and the Federal Reserve does not allow the dollar to go out to other countries without verifying the destinations to which these funds reach.”
Al-Bahadli believed that “ reforms in the field of foreign transfers must be accompanied by a solid banking system, and this has not happened so far, unfortunately.” He said: “Our banking system is still significantly backward, so the new foreign transfer system has had a negative impact on the work of most local merchants and importers.” ».
“The financial and banking issue is quite complex in Iraq,” said Al-Bahadli, who cited US President Joe Biden’s recent decision to continue implementing the decision to protect Iraq’s funds that was taken by former President George Bush 21 years ago.
Biden said, during his signing of the decree in which he extended the state of national emergency related to the situation in Iraq for another year: “There are still obstacles to the orderly reconstruction of Iraq, restoring and maintaining peace and security in the country, and developing political, administrative and economic institutions in Iraq.”
The US Treasury Department has previously placed several Iraqi banks on the blacklist and banned them from dealing in the US dollar under the pretext of those banks engaging in currency smuggling and money laundering operations.
Political Discussion
A political source linked to political discussions regarding US sanctions commented, “The political forces that have financial interests linked to banks have recently reached the conviction that they must adapt to the reality of Washington’s financial influence in Iraq, so they helped mitigate the effects of suspicious transactions, including money laundering and imports.” “The phantom.”
In contrast to the Prime Minister’s talk about Iraqi banks being on the right path with regard to remittances and financial transactions, the Services Committee in the Federal Parliament expressed its surprise at what it described as “duplication of decisions” issued by the Central Bank regarding the process of foreign transfers.
The committee said in a press statement, “This policy, in all its aspects, refers to wasting public money and creating glut for a small number of beneficiaries, which in general did not achieve anything for Iraq and its people, which made Iraq lose billions of dollars annually due to differences in transferring hard currency abroad, which provided a service on a plate.” Whoever goes to the corruption mafias without any benefit for the public interest.”
The committee stated that “one of the ridiculous and crying ironies,” as it described it, is “foreign banks achieving profits amounting to billions of dinars from hard currency transfers from Iraq abroad without providing any service or benefit for the public interest.”
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