Since the United States’ invasion of Iraq, the World Bank and the US Treasury have provided the necessary cash to its central bank, with monies received estimated to be worth $10 billion or more every year.
This money comes from its oil sales, therefore it is deposited in a fund at the Federal Bank, while Iraq demands one billion dollars in cash from it, which the bank rejects on the grounds that it interferes with its attempts to block the flow of dollars out of the nation.
Iraq, for its part, has stated that it requires a billion dollars in cash to stabilize its dwindling dinar, while the US Treasury is currently reviewing the proposal. In contrast, discussions continue in the Federal Bank’s internal corridors, in light of the absence of a clear and transparent financial system in Iraq, which can rely on it to receive hard currency, as large amounts of dollars flow to private banks and money exchange shops, which are subject to unclear mechanisms, and there are many suspicions of corruption, money laundering, and smuggling outside Iraq.
As US officials confirm that smuggling operations out of Iraq are carried out by corruption mafias, the US Federal Bank informed Iraq of its refusal to send a shipment of dollars because it was inconsistent with Washington’s goal of reducing Iraq’s use of the US dollar in favor of electronic transactions, which can be tracked more easily. It has a detrimental impact on the internal price of the dollar and hinders the Central Bank of Iraq’s efforts to manage its movement.
For its part, the Central Bank of Iraq is attempting to make some adjustments to the mechanisms of financial work, so it launched a rapid, phased plan, based on dealing in dinars in the internal Iraqi market, to eliminate the dollar until 2024, by controlling the efforts of sanctioned informal companies and individuals.
Government measures would limit the movement of the dollar and revitalize the dinar so that it is the only one in circulation in the market, in addition to using modern mechanisms and technologies, developing the financial system in a manner consistent with the global system’s development, and achieving monetary stability in the country.
Although there is a suspicion of a political component in the American measures, this does not negate the necessity and need for Iraq to develop and automate its financial sector, as well as prevent the smuggling of its oil imports outside its borders, as this is in its own and its people’s best interests, before the interests of any other party in the world.