THE BILL FOR THE NEW REGIME: WILL WASHINGTON TURN DOLLAR SHIPMENTS INTO A “VETO” THAT SHAPES THE FEATURES OF THE NEXT STAGE?
Iraq is going through a critical phase regarding the risk of a disruption in the supply of US dollars, amid conflicting reports indicating that Washington has suspended shipments for security and political reasons, and official denials from government sources. The crux of the matter lies in the Iraqi market’s complete dependence on liquidity from the Federal Reserve Bank of New York, which puts the country’s financial stability at risk.
While the State of Law Coalition describes the news of the hard currency shortage as a “major rumor” aimed at political pressure, the Progress Party believes that the stability of the dollar flow is exclusively linked to the quality of the relationship with Washington, which puts the state before the challenge of balancing sovereignty and international obligations.
Big rumor
Khaled Alwan Al-Shallal, a member of the State of Law Coalition, says that “what is being circulated about the cessation of the flow of dollars from the United States to Iraq is somewhat exaggerated,” explaining that “there are strategic framework agreements between Iraq and the United States of America that guarantee the political, economic and even military situation, and therefore the country is facing a great rumor.”
He adds, “Even if there are occasional disagreements about the process of changing or delaying the flow of dollars, it does not reach the point of interrupting dollar payments or halting the wheels of the economy in Iraq to the extent that some expect.”
A senior US State Department official, as quoted by Alhurra website, said that dollar shipments to Iraq “have stopped and will not resume until the features of the new government become clear and the commitment to preventing the use of the dollar to finance attacks against Americans is verified,” stressing that what is happening “is not a break but a response.”
According to two government sources in the Iraqi cabinet, dollar shipments represent the main source of liquidity in the Iraqi market, as Iraqi oil revenues are deposited in an account with the Federal Reserve in New York. The Central Bank of Iraq and the US State Department denied that those shipments had stopped.
Advanced understandings
Al-Shallal believes that “this is like politics and its affairs are related to the existence of actual pressures on the process of forming the government and imposing external wills and agendas, but the Iraqi political situation is of a high degree of responsibility,” noting that “there are meetings between the leaders of the blocs, the latest of which was a meeting at the house of His Eminence Sayyid Ammar al-Hakim, where understandings were reached at a high level, and I expect things to proceed during Wednesday, and an agreement will be reached on a specific candidate who will be announced by the coordination framework.”
cautious anticipation
A member of the State of Law Coalition believes that “the issue of the factions comes in light of a truce between the United States and Iran, with clear anticipation and caution. If the negotiations with Iran and America succeed, the situation will move towards calming down and things will proceed correctly. But if the war returns, then every incident will have its own story.”
Sources quoted an unnamed Iraqi security minister as saying that “suspending coordination meetings is harming Iraq,” noting that Washington had stipulated that those responsible for the recent attacks on the US embassy and a base at Baghdad International Airport be identified before coordination could resume.
US Treasury Secretary Scott Bisent said that the United States “will not allow Iranian-backed militias to threaten American lives or interests,” while State Department spokesman Tommy Piot called on Baghdad to dismantle Iranian-linked groups, coinciding with the US Embassy issuing a Level 4 travel warning for Iraq.
According to the sources, “The message from Washington is clear: Iraq does not follow Iran.”
A necessary relationship
For his part, Anwar Al-Alwani, an advisor and member of the Progress Party, says that “economic alternatives and solutions between Baghdad and Washington require a good relationship with the American side,” explaining that “Washington is responsible for the flow of dollars, and therefore any dispute or setback in the relationship between Baghdad and Washington will harm the country’s interest in general, and especially the Iraqi citizen, especially in light of the financial and economic challenges that followed the events between Iran, America and Israel.”
He adds that “developing the relationship with Washington is a necessity for the Iraqi government,” expressing his hope that “there will be concrete steps taken by the Iraqi Foreign Ministry and the Baghdad government, while giving sufficient space for negotiation with the American side and presenting economic alternatives, in a way that contributes to getting Iraq and Iraqis out of any political conflict in the near future.”
Political solutions and channels
Al-Alwani points out that “Iraq’s financial situation is not good, and that imposing any economic sanctions by Washington in the event of a major dispute will harm the country’s higher interests,” stressing that “the interest requires all political blocs and leaders to work on finding solutions and opening political channels with the American side, as well as with neighboring countries such as Turkey and Iran, to get out of the suffocating financial crisis.”
Earlier, the US Embassy, in a statement, accused parties linked to the Iraqi government of providing “political, financial, and operational cover” for armed factions, renewing its Level 4 travel warning for Iraq, which states “do not travel for any reason,” and calling on US citizens in the country to leave immediately.