The primary player has returned to the field to oversee the economic activity in Iraq. Washington has also taken charge as the “team captain” and is leading the game. It is clear to the people who is in control of the match and its rounds.
At times, we are pleased with the government’s economic dealings with the US Federal Bank and the World Bank. However, there are also instances where new measures are implemented to regulate the movement of the dollar and enforce penalties on Iraqi private banks that violate local currency market transactions.
Washington’s current justification for its actions is based on its claim that Iraq is failing to comply with the Federal Bank’s controls to limit the smuggling of dollars abroad, specifically to Iran which is under severe American sanctions. The US believes that Baghdad has not taken sufficient measures to prevent currency smuggling, whether it is from the Kurdistan region or other outlets linked to Iran.
Despite the Sudanese government’s efforts to prevent the smuggling of the dollar abroad, control the internal market, and encourage the use of the dinar in daily commercial transactions, Iraq has continued to pursue traders and smugglers. However, these efforts have proved inadequate in curbing smuggling. As a result, alternative plans have been sought, such as dealing in other currencies like the euro, Chinese yuan, and Emirati dirham to reduce demand for the dollar, open up trading in other currencies, and finance foreign dealings.
The Central Bank of Iraq has implemented various measures to regulate the dollar’s movement in the market. However, it has yet to establish an effective mechanism to control it. Despite its efforts to reform the exchange rate, the crisis has worsened, and the confidence between Iraq and the World Bank has decreased. Consequently, the World Bank has taken stringent steps towards international transaction requests from Iraq, rejecting many due to non-compliance with international economic standards. Moreover, several banks suspected of carrying out unlicensed cash transactions have been blacklisted.
If the Central Bank of Iraq implements the incorrect monetary policy, it could result in negative financial consequences. This would highlight the outdated nature of the financial system and its lack of modern financial tools for daily transactions. Moreover, crime syndicates currently have control over the internal Iraqi market and the movement of the dollar within it. The government is currently working on controlling the dollar to promote economic growth and maintain the value of the dinar. This includes expanding its commercial uses, preventing dollar smuggling and storage, and preventing price manipulation.
It is positive that efforts are being made to reduce the influence of the dollar on the Iraqi market and to limit its circulation. This will help restore the reputation of the dinar and give it more control over the internal market. It presents an excellent opportunity to restore the dinar’s prestige as it was before. Additionally, limiting the dollar to foreign transactions with the world is a positive move. Supporting the dinar means ending the traders’ control over the internal market and preventing the manipulation of simple citizens’ capabilities and livelihoods.
Iraq plans to join the BRICS bloc, aiming to reduce reliance on the US dollar and increase use of the Iraqi dinar in transactions. The BRICS summit is scheduled to take place in Cape Town, South Africa in August 2023, and 19 requests to join have been submitted. This alliance may potentially harm the value and future prospects of the dollar, as the BRICS currency gains strength. Although the BRICS currency has not been issued yet, its emergence may signify the potential decline of the US dollar.
