As Washington puts more pressure on the Central Bank of Iraq and Iraqi banks, it becomes increasingly advantageous to move away from the US dollar’s control of the Iraqi economy. This situation has resulted in the return of a major player on the field, who is once again controlling the economic movement of Iraq. Washington is taking charge once more and leading the match, with the people fully aware of who is controlling the game..
At times, we witness approval of the government’s economic dealings with the US Federal Bank and the World Bank, while at other times, we observe the implementation of new regulations to restrict the movement of the dollar. Additionally, there are announcements of sanctions against Iraqi private banks that violate local currency market transactions. The justification for such actions from Washington is that Iraq is not following the controls set by the Federal Bank to prevent the illegal export of dollars, particularly to Iran, which is currently under severe American sanctions. The US believes that Baghdad has yet to take appropriate action to halt currency smuggling, whether from the Kurdistan region or other outlets connected to neighboring Iran.
Despite the Sudanese government’s efforts to prevent the smuggling of dollars out of Iraq and control the internal market, it seems that these measures have not been enough to curb the issue. As a result, Iraq is exploring alternative plans to reduce demand for the dollar and open up trading in other currencies, such as the euro, the Chinese yuan, and the Emirati dirham. This move is aimed at providing support for financing external dealings and promoting the use of the dinar in daily commercial transactions.
The Central Bank of Iraq has taken numerous measures to regulate the dollar’s movement in the market. However, it still lacks a mechanism to control it effectively. Despite the bank’s reform efforts, the exchange rate remains uncontrolled, leading to a worsening of the crisis and a decline in trust between Iraq and the World Bank. The World Bank has responded by implementing stricter measures and escalating its scrutiny of international transactions originating from Iraq. Many of these transactions have been rejected because they do not meet international economic standards. Additionally, several banks suspected of conducting unauthorized cash transactions have been added to the blacklist.
If the Central Bank of Iraq implements a misguided monetary policy, it could have negative repercussions on the country’s financial reality and highlight the outdated financial system’s lack of modern tools for daily transactions. Additionally, crime syndicates may have control over the Iraqi market and manipulate the value of the dollar. The current government aims to stabilize the dinar’s value by expanding its commercial use, preventing dollar smuggling, storage, and price manipulation. This will lead to economic development and greater stability.
It is positive that there are efforts to reduce the impact of the dollar on the Iraqi market and prevent its circulation, with the goal of restoring the status of the dinar and having it control the domestic market. This presents a crucial opportunity to revive the dinar’s prestige and limit the use of the dollar to international transactions. A significant benefit of this strategy is that it will put an end to traders’ dominance over the domestic market and prevent them from manipulating the resources and livelihoods of regular citizens.
IIraq is eager to become a member of the BRICS alliance to reduce reliance on the US dollar. The citizens of Iraq already use their national currency, the dinar, in their transactions, making it an acceptable option for them. The BRICS summit is expected to take place in Cape Town, South Africa in August 2023, and 19 official requests have been submitted to join the coalition. This move could potentially affect the value and future prospects of the US dollar in the face of the anticipated strength of the BRICS currency. Although it has not been issued yet, the mere mention of it signals a potential decline for the US dollar.
