The US has partially resumed dollar shipments to Iraq, which it suspended in April. According to the New York Times (NYT) report based on Iraqi officials, this step signals a partial thaw in financial relations between the two countries. However, Washington continues to suspend some aspects of security cooperation.
Prime Ministry spokesman Haydar al-Abudi said, "Dollar shipments to Iraq have resumed, the problem is solved." Prime Minister's financial advisor Mazhar Muhammad Salih also confirmed that transfers have resumed.
Meanwhile, an Iraqi official who requested anonymity told the NYT that the suspension of cooperation and funding for security institutions is still ongoing. No official statement has been made by the US Treasury Department, State Department, or the White House on the matter.
Why Were Shipments Suspended?
The US administration halted the flow of dollars to the Iraqi economy last April and canceled a cash shipment of about $500 million. According to the NYT, this pressure aimed to get Baghdad to limit the influence of Iran-backed armed groups.
The suspension decision coincided with the period when Baghdad was preparing to elect a new prime minister. Washington was reportedly trying to prevent figures close to Iran from taking the helm of the government and wanted Iraq to tighten control over Iran-linked militia groups. These groups had repeatedly attacked American targets in Iraq.
Importance of Dollar Transfers
The Iraqi economy relies heavily on cash transactions. The Central Bank of Iraq holds its foreign reserves at the Federal Reserve Bank in New York and carries out daily dollar transfers for import payments on behalf of companies and individuals. Since Iraqi companies have limited international bank accounts, the continued flow of dollars is vital for foreign trade.
In recent years, the US and Iraq have begun implementing stricter banking rules to increase transparency in financial transfers. The aim was to prevent dollar smuggling and money laundering, and also to prevent the US currency from falling into the hands of sanctioned individuals or groups.
Reform Steps in Baghdad
According to the NYT, the resumption of dollar shipments coincided with steps taken by Iraq's new Prime Minister Ali al-Zaydi to limit the influence of armed groups. The prime minister ordered all militias to be brought under state authority.
Additionally, the government launched a wide-ranging corruption investigation. According to the Iraqi news agency, dozens of officials, including current and former lawmakers, have been detained. Officials announced on Sunday that 47 people were arrested, and the investigation and pursuit of other suspects are ongoing.
Although dollar transfers have resumed, the suspension of security cooperation indicates that Washington is tying full normalization in financial and security relations to the Iraqi government's performance in reducing the influence of armed groups and monitoring money flows.
