The more Washington puts pressure on the Central Bank of Iraq and Iraqi banks, the more advantageous it becomes to free the Iraqi economy from the grip of the US currency.
Once again, the primary player returns to govern Iraq’s economic movement, and Washington returns to impose itself as the captain and lead the match, especially because the people are fully aware of who is leading this game and directing the matches.
Sometimes we see it content with the government’s performance and the way it interacts economically with the US Federal Reserve or World Bank regulations, and other times we see it introducing additional measures to regulate the movement of the dollar and declaring new policies.
The pretext that Washington continues to cling to is that Iraq is not adhering to the controls set by the Federal Bank to limit the smuggling of dollars abroad, particularly to Iran, which is subject to severe American sanctions, and that Baghdad has not done what is required of it to stop the smuggling of currency, whether from the region, Kurdistan, or other outlets linked to neighboring Iran.
Iraq, for its part, and despite the Sudanese government’s efforts to prevent dollar smuggling abroad, pursue merchants and smugglers, control the internal market, and emphasize the use of the dinar rather than the dollar in daily commercial transactions, these efforts are still insufficient in curbing this smuggling. As a result, he sought alternative plans by dealing in currencies other than the dollar in order to reduce demand for it, open the way for trading in other currencies, and provide support to finance the country’s external dealings, such as the euro, Chinese yuan, and Emirati dirham.
Despite all of the measures taken by the Central Bank of Iraq, it still lacks a mechanism to control the movement of the dollar in the market, and all of its reform steps failed to control the exchange rate, only exacerbating the crisis and lowering trust between Iraq and the World Bank, prompting the latter to take action. Escalation and strictness toward international transaction requests from Iraq, as many of them were rejected under the guise of not meeting international economic dealing standards, as well as the inclusion of a number of banks on the blacklist suspected of carrying out unlicensed cash transactions.
The wrong monetary policy practiced by the Central Bank of Iraq would reflect the negative financial reality and the primitiveness of the financial system, as well as the control of the crime mafias over the internal Iraqi market and its control over the movement of the dollar within the market. The present government also intends to manage the dollar in order to accomplish economic development and consolidate and stabilize the dinar’s value by broadening the scope of its commercial applications, in addition to preventing the dollar from being smuggled abroad, stored, or manipulated in price.
The positive side is the endeavor to reduce the dollar’s impact on the internal Iraqi market and prohibit its circulation in order to restore the dinar’s status and control of the internal market. This means that there is a significant potential to restore the dinar’s former status and confine the dollar to overseas dealings with the rest of the globe. The good aspect of these choices is that they will cease merchants’ influence over the internal market and manipulation of regular individuals’ skills and livelihoods.
Iraq is eager to join the BRICS group in order to reduce its reliance on the US dollar, especially because the Iraqi dinar is widely accepted among its citizens. The BRICS summit is expected to occur in Cape Town, South Africa, in August 2023, and 19 official bids to join the alliance have been made. This may harm the dollar’s worth and future prospects in the face of the anticipated power of the BRICS currency, which was announced, even if it has not yet been released, but it sounds the clinical death knell for the US dollar.