AN ECONOMIST DETAILS POTENTIAL US PUNITIVE MEASURES AGAINST IRAQ, 30 MARCH

 AN ECONOMIST DETAILS POTENTIAL US PUNITIVE MEASURES AGAINST IRAQ

Economics professor Saleh Rashid confirmed on Wednesday (March 26, 2025) that America is trying, through its current economic war, to use all the punitive means at its disposal through its large financial and economic infrastructure, indicating that Washington has many cards to play in the Iraqi scene.

Rashid told Baghdad Today, “The American strategy after Trump’s arrival at the White House relied directly on economic sanctions as the most effective means of achieving the Greater Middle East project, which represents a lifeline for Israel by securing its influence in the region and pushing it to digest what remains of the Palestinian people’s rights.”

He added that “Washington is facing a different formulation of economic warfare, employing all the punitive means at its disposal through its extensive financial and economic infrastructure,” noting that “Washington has many cards at its disposal in the Iraqi arena, including sanctions on banks and the flow of funds. Consequently, we may witness an attempt to narrow economic paths, which will inflame the Iraqi street and put direct pressure on the Iraqi government.”

He pointed out that “Washington seeks to separate Baghdad from Iranian influence, as it views Baghdad and Tehran as one arena.” 

Noting that “if the central government does not take steps to restructure the contentious issues related to the factions and the Popular Mobilization Forces, we expect more stringent economic sanctions, which may include withdrawing companies or obstructing the operations of investment companies, especially in the energy sector.”

He explained that “if companies feel that Iraq’s environment is unsafe and unstable, they will withdraw their investments, which will have repercussions for the energy sector and other services, especially since the Iraqi people need these investments to develop their capabilities, whether in the energy sector or in other sectors.”

Rashid emphasized that “Iraq faces major challenges in the coming period, and all expectations are open,” noting that “Washington’s resort to withdrawing companies from southern Iraq and the central Euphrates is likely to achieve three goals. The first is to pressure Baghdad to continue distancing itself from Iranian interests, and to try to position Baghdad as part of its pivot in the Middle East. In addition, it is to ensure that the largest investments in Iraq are for American companies, or at least companies from countries allied with it.”

Last February, the Central Bank announced details of its meetings with the US Treasury and the US Federal Reserve.

The Central Bank of Iraq stated in a statement received by Baghdad Today that “the first quarterly meetings of 2025 with the US Treasury Department and the US Federal Reserve, held in Dubai with the participation of international auditing and consulting firms (EY, K2 Integrity, Oliver Wyman), have concluded. The meetings culminated in praise for the steps taken by the Central Bank of Iraq and the Iraqi government to reform the banking sector.”

He added that the most important steps taken were the development of the US dollar cash distribution system in Iraq, which they considered the most closely monitored and controlled system in the world, limiting manipulation and smuggling of US dollars. The qualitative shift in foreign exchange transactions and the steps taken by the Central Bank of Iraq to address the risks associated with these transactions have now risen to the level of transfers carried out by international banks.

The Central Bank explained that consulting firms EY and Oliver Wyman reviewed plans to reform and upgrade the public and private banking sectors in line with international standards and facilitate the integration of Iraqi banks into the international financial network. 

The Central Bank, according to the statement, emphasized the need to ensure adherence to the bank’s official channels for the latest news and to avoid transmitting inaccurate information, such as reports that some Iraqi banks are subject to international sanctions. This is because transactions carried out by banks operating in Iraq depend heavily on the confidence of international correspondent banks in the Iraqi banking sector.

Two informed sources reported last February that the Central Bank of Iraq would ban local banks from dealing in dollars. Reuters quoted the two sources as saying, “The Central Bank of Iraq will ban five local banks from dealing in dollars at the request of the US Treasury.” The two sources added, “Three payment services companies will be banned from dealing in dollars, in accordance with a request from the US Treasury.” They pointed out that “the US submitted its request due to serious monetary violations and the smuggling of dollars out of the country.”