SUDANI: IRAQ IS NO LONGER A BATTLEGROUND… A NEW PARTNERSHIP WITH WASHINGTON AND BILLIONS OF DOLLARS IN INVESTMENT
Prime Minister Mohammed Shia al-Sudani published an article in the American magazine Newsweek on April 17, in which he reviewed the most prominent features of the political and economic stage in Iraq, and the government’s vision to enhance internal stability and redefine international relations, especially with the United States.
Al-Sudani stressed that the election result represented a popular mandate for a difficult but necessary path to maintain Iraq’s stability in light of a very dangerous regional phase, and to build stronger institutional foundations and long-term economic renewal.
He noted that over the past two and a half years, and during three waves of regional escalation, his government had managed to keep Iraq out of the war, protect international personnel on its territory, and maintain the cohesion of the state.
He explained that the government brought companies such as ExxonMobil, Chevron, BP and GE Vernova back to Iraq through new commitments in the energy sector worth billions of dollars, in addition to attracting more than $100 billion in investments.
He explained that the current moment is the most appropriate to redefine Iraq’s relationship with the United States, noting that Iraq has always been viewed in Washington through the lens of crises, war and terrorism, while today it is a country that has proven its ability to withstand enormous pressure.
Al-Sudani spoke about the challenges his government has faced since the outbreak of the war in Gaza in October 2023, stressing that the goal was to prevent Iraq from being dragged into a conflict that was not of its choice, despite increasing pressure and escalation from multiple parties.
He added that the government has acted through direct engagement, issuing security directives and continuous political management to prevent Iraqi territory from becoming an open arena for regional war, while maintaining a firm objective of containing escalation and protecting stability.
He stressed that this position represents an exercise of sovereignty, noting that Iraq is more aware than others of the cost of becoming an arena for settling scores between others.
On the security front, he pointed out that the Popular Mobilization Forces were formed in response to the threat of ISIS, and that the government strengthened oversight and directed resources through official institutions, while refusing to turn exceptional arrangements into permanent alternatives to the state.
On the economic front, he affirmed that Iraq has rebuilt its economic position, with the return of major companies to develop oil fields and energy projects, in addition to the implementation of strategic projects such as the Total Energies and Qatar Energy project in Basra.
He stressed that Iraq has become more competitive and more attractive for investment, thanks to improved contractual terms, restored confidence, and the creation of a favorable environment for long-term investment.
He explained that Iraq possesses the fifth largest oil reserves in the world and is located in an important strategic location, which calls for dealing with it as a strategic opportunity in American policy.
He also stressed that Iraq’s partnerships will remain diverse, with continued cooperation with China alongside the United States, Europe, Turkey and the Gulf States, noting that Iraq’s geographical location and balanced relationships represent a strategic strength.
He touched on the development road project, which will make Iraq an important trade corridor and a bridge for trade, energy and diplomacy, instead of being an arena for conflict.
Al-Sudani called on the United States to adopt a more mature strategic framework towards Iraq, especially in the economic field, while protecting and encouraging American investments. He also stressed the importance of developing the security sector, enhancing intelligence cooperation, and combating terrorism, in order to support the state’s long-term capabilities.
He concluded by emphasizing that Iraq is working to strengthen its institutions, diversify its economy, and resolve the relationship between the state and armed groups in favor of the state, noting that what Iraq is proposing is based on partnership, interests, and mutual respect, and that the opportunity is available to build a more stable and interconnected future in the region.
UNITED STATES: IRAQI GOVERNMENT-LINKED ENTITIES SUPPORT MILITIAS THAT THREATEN AMERICANS
The US Embassy in Baghdad warned its citizens on Monday of continued security risks in Iraq, despite the reopening of airspace and the resumption of limited commercial flights, urging Americans not to travel to Iraq and to leave immediately if they are already there. It also accused parties linked to the Iraqi government of providing political, financial and operational cover to “Iranian-linked militias.”
The embassy said in a new security alert issued today, which was seen by Shafaq News Agency, that Iraqi airspace has been reopened, but air travelers through Iraq should be aware of the ongoing risks associated with missiles, drones and projectiles.
The embassy added that what it described as “Iraqi terrorist militias allied with Iran” continue to plan additional attacks against American citizens and US-related targets throughout Iraq, including the Kurdistan Region.
The US embassy accused “entities linked to the Iraqi government of providing political, financial, and operational cover to Iraqi militias allied with Iran,” and said they continue to plan attacks against US citizens and US-linked targets.
The embassy confirmed that the US mission in Iraq would continue to operate despite the mandatory departure order, noting that its services were limited to assisting American citizens, while warning against going to the embassy in Baghdad or the consulate in Erbil due to security risks.
The embassy renewed its Level 4 travel warning, which states “Do not travel to Iraq for any reason,” urging American citizens currently in the country to leave immediately.
Regarding exit options, the embassy noted that land routes to Jordan, Kuwait, Saudi Arabia and Turkey remain open, with long delays and local entry and exit procedures expected, as well as the possibility of higher airfares or cancellations at short notice.
The embassy also announced the suspension of all routine consular services in Iraq, including visa services, urging American citizens to communicate via email only in emergencies.
📊 Core Monetary Direction • Iraq is working to align its Real Effective Exchange Rate (REER) with global trade, inflation, and IMF-style benchmarks 🌍 • Goal: strengthen monetary stability and currency credibility through structural reform, not sudden shifts
⚠️ Eliminating Market Distortions • Long-standing black market exchange pressures are being targeted ❌ • Efforts focus on reducing:
Parallel market pricing
Currency arbitrage opportunities
Dollar auction distortions • Objective: move toward a single, official price discovery system
🏦 Structural FX Reform • Shift toward a more controlled and formal exchange architecture • Key measures include:
Better alignment of import/export pricing with REER targets 📦
💻 Digital & Financial Modernization Signals • Gradual move toward digital payment infrastructure & traceable transactions 🧾 • Aims to:
Increase transparency
Reduce leakage from informal markets
Improve global banking compliance 🌐
🪙 Reserve Strength & Stability Tools • Continued focus on asset-backed confidence mechanisms
Foreign reserves
Gold holdings
Sovereign assets diversification • Supports long-term currency stability perception 📈
🌍 International Parity Outlook • Potential gradual convergence toward fair market valuation • Driven by:
Inflation control
Fiscal discipline
Trade balance improvements
Stronger reserves
⚠️ Important nuance: • This is described as a gradual macroeconomic process, not a sudden revaluation event
💼 Market Impact Goals If successful, reforms aim to: • Restore confidence in the official exchange rate • Increase foreign investment inflows 💸
• Reduce cash hoarding behavior • Strengthen Iraq’s integration into global financial systems 🌐
📌 Bottom Line Iraq’s currency strategy is evolving toward a structured, policy-driven stabilization model, focused on aligning the dinar with real economic fundamentals, reducing market fragmentation, and improving long-term financial credibility rather than delivering abrupt currency shifts.
REVAL HUB INSIGHTS
Analyzing Iraq’s Real Effective Exchange Rate (REER) Goals and the Post-Election Currency Framework
In the post-election environment, Iraq’s monetary stability depends heavily on the Central Bank of Iraq (CBI) successfully aligning the Real Effective Exchange Rate (REER) with internationally recognized trade and inflation benchmarks. This process is not merely cosmetic; it reflects a deeper structural attempt to stabilize the dinar within a global monetary system that demands transparency, liquidity efficiency, and macroeconomic consistency.
At the core of this transition is the shift away from black-market-driven price discovery, which has historically distorted the dinar’s true value. For years, parallel market activity has created a dual-price environment, weakening policy transmission and undermining investor confidence. The current objective appears to be the gradual elimination of these distortions through tighter capital controls, improved dollar auction mechanisms, and enhanced foreign reserve management.
From Volatility to Structured Exchange Mechanisms
The technical evolution underway can be described as a migration from informal currency valuation systems toward a more structured and sovereign-controlled exchange architecture. This includes:
Reduction of parallel market dependency
Increased enforcement of official exchange channels
Stabilization of import/export pricing through REER targeting
Gradual synchronization with IMF-aligned currency valuation standards
These steps are designed to reduce arbitrage opportunities and bring the dinar closer to its fundamental value as defined by productivity, trade balance, and reserve adequacy.
Digital and Asset-Backed Transition Signals
An emerging narrative within this framework is the gradual integration of a digital monetary infrastructure, potentially including sovereign digital payment rails and enhanced traceability of cross-border flows. While not explicitly a full “digital currency shift,” this modernization signals an intent to:
Improve monetary transparency
Reduce leakage from informal markets
Strengthen compliance with global financial systems
In parallel, discussions around asset-backed stability mechanisms, including reserves diversification (gold, foreign currency holdings, and sovereign assets), contribute to perceptions of increased monetary credibility.
Implications for International Parity
If sustained, these reforms point toward a long-term convergence with international parity conditions, where the dinar’s exchange rate better reflects Iraq’s underlying economic fundamentals rather than speculative or segmented pricing systems.
However, it is important to note that “international parity” does not imply an immediate or dramatic revaluation event. Instead, it is typically a gradual convergence process, driven by:
Inflation stabilization
Fiscal discipline
Trade balance improvements
Reserve adequacy strengthening
Unlocking Liquidity and Market Confidence
A stabilized REER framework can unlock previously constrained liquidity channels by:
Restoring confidence in official exchange rates
Encouraging foreign investment inflows
Reducing currency hoarding behavior
Normalizing banking sector participation in global markets
This, in turn, supports broader economic reform objectives, including banking modernization and integration with international financial systems.
Conclusion
The post-election monetary trajectory in Iraq reflects a strategic shift from fragmented currency valuation toward a unified, policy-driven exchange rate system anchored in real economic fundamentals. While interpretations vary, the technical direction suggests a long-term effort to stabilize the dinar within global trade norms, reduce market distortion, and enhance financial system credibility through structured reform rather than abrupt revaluation mechanisms.
