Washington refused Iraq’s request for $1 billion in cash from the Federal Reserve, citing efforts to curb Baghdad’s use of the dollar and prevent illicit cash flows to Iran.
According to a report by “The Wall Street Journal,” the United States has been providing $10 billion or more each year to Baghdad since the American invasion of Iraq 20 years ago. This money is delivered through bi-monthly cargo flights and comes from the profits made from Iraqi oil sales that are deposited with the Federal Reserve Bank.
American officials stated that banknotes in the hands of Iraqis have become a profitable source of illicit dollars that are funneled to militias, corrupt politicians, and Iran.
Iraq has requested an additional shipment of $1 billion to support its struggling currency. A high-ranking Iraqi official stated that the Central Bank of Iraq has submitted a formal request to the Treasury Ministry, which is currently under review. This comes after an earlier request by Iraq was turned down by Washington.
Since last November, Washington has imposed stricter rules on electronic transfers in dollars from Iraqi banks, resulting in 18 banks being prevented from dealing in dollars according to a newspaper report.
Treasury officials informed Iraqi central bank governors that sending a large additional shipment would contradict Washington’s aim to restrict Iraq’s usage of US currency, as per Iraqi officials.
American officials stated that some of the dollars sent to Iraq were smuggled in cash to Iran, Turkey, Lebanon, Syria, and Jordan.
A Treasury Department spokeswoman stated that the United States still supports Iraq by providing dollar banknotes and has not limited access to ordinary Iraqis and businesses. This indicates that the Central Bank of Iraq is still working with the United States.