Why is the American federal still controlling Iraqi money? | economy

Baghdad- Iraq is witnessing increasing American pressure related to a number of demands that Washington considers basic, foremost of which is the file of armed factions related to the Popular Mobilization Authority. These pressures have emerged remarkably recently when “KiCard” refrained from paying the salaries of the Popular Mobilization employees, amid Iraqi deputies that the reason is due to American pressure exerted on the Iraqi government. The estimates of Washington are also frequent to legalize the flow of the dollar to Iraq to reduce its smuggling.

While negotiations take place between Baghdad and Washington on these files, observers believe that the United States is still holding one of the most powerful pressure papers on Iraq: controlling its financial imports from oil exports by keeping them in the accounts of the American Federal Bank since 2003.

So why is Baghdad still subject to this financial arrangement despite the passage of two decades on the invasion? And why can’t you receive their oil revenues directly as the rest of the producing countries do? And why did the successive governments not succeed in liberating from American financial domination?

Historical background for financial domination

In May 2003, the Security Council issued Resolution No. 1483 to deposit revenues from Iraq from Iraq and gas exports in a special account with the American federalism under the name “Iraq Development Fund”.

Part of these revenues – with 5% of the total oil and gas exports – was allocated to compensate Kuwait for the damage of the 1990 invasion, which continued until 2022 when Iraq completed the payment of its compensation, which amounted to about 52.4 billion dollars.

According to Dr. Mazhar Muhammad Saleh, the economic advisor to the Iraqi Prime Minister, the rest of the funds were transferred to the account of the Central Bank of Iraq, which is funding the government and the Ministry of Finance in liquidity, given that the Iraqi dinar is a supporter of dollars.

Saleh adds, in a special statement to “Al -Jazeera Net”, that the United Nations had secured legal protection for these funds under Resolution 1483, until the implementation of it ended in 2011, after the implementation of the Security Council resolution 1956. In parallel, the US President issued an executive decision No. 13303 to protect Iraqi funds, a decision that is still valid until today despite some amendments.

The goals of American protection for Iraqi funds – according to Saleh – are to ensure the reconstruction of Iraq, and to fortify his money from compensatory demands from companies and individuals, in addition to avoiding judicial seizure of Iraqi funds in cases raised since the 1990s.

Current American pressure

Experts believe that Iraq, despite the end of many legal reasons that imposed this financial arrangement, is still subject to strict financial monitoring from Washington, different from the usual procedures in the international banking system.

Dr. Abdul Rahman Al -Mashhadani, a professor of economics at the Iraqi University in Baghdad, explains that Iraq is facing unprecedented restrictions in financial audit operations, due to the American concerns of money laundering, terrorist financing and dollar smuggling, especially since Baghdad was not committed to financial control controls during the past years.

Al -Mashhadani confirms that this scrutiny led to a significant decline in money laundering operations in recent months, citing the “theft of the century” in 2022, during which more than $ 2.5 billion was smuggled, 70% of which took place through Iraqi banks.

For his part, a member of the Parliamentary Finance Committee, Jamal Koger, notes that the majority of oil countries deposit their money in the American federal, as oil is sold in dollars, but Iraq suffers from a complete dependence on oil revenues without the presence of alternative resources.

Koger confirms that American pressure is not always practiced directly, but it focuses on two files:

• Using American weapon outside the state authority.
• Smuggling the dollar to hostile entities for the United States.

In the same context, Al -Mashhadani explains that Iraq does not have the same comfort as other countries in disposing of its revenues, and suffers from a deficit in the trade balance for its benefit, in addition to restrictions on the use of other currencies or an equal exchange system with the countries, which weakens its ability to independence.

Al -Mashhadani warns that the imposition of American economic sanctions on Iraq is not excluded, indicating that 32 Iraqi banks are subject to US sanctions until now, and Baghdad has not been able to lift any of them despite the passage of years.

Iraqi voices

The researcher in the economic affairs, Anmar Al -Ubaidi, believes that the problem is not in depositing the money of the American federal, but rather in the restrictions imposed on the possibility of disposing of them freely, in contrast to what other countries enjoy.

Al -Ubaidi says that the political fragility in Iraq and the continuing instability, preventing successive governments from settling the suspended compensation file, stressing that dealing with this file will enable Iraq to gradually liberate financially.

Al -Ubaidi notes that the government’s measures to combat money laundering and smuggling currency have achieved a remarkable improvement during the past two years, but the country still needs banking reforms and a comprehensive automation of its systems to enhance international confidence.

For his part, the economic advisor, Mazhar Saleh, believes that getting rid of American censorship is possible in the future, but it requires gradual political and economic measures that begin to restore international confidence.

Economic analyst Saman Shali, who believes that ending American guardianship needs a brave political decision from various blocs, in addition to working to rationalize spending and settle debts related to international companies compensation.

Shali proposes the use of international law firms to negotiate with these companies, similar to what happened in the file of Kuwait compensation, stressing that the process – despite its difficulty – will pave the way for Iraq to restore its financial sovereignty.

Freedom options and financial independence

Economists believe that the liberation of Iraq from the grip of the American federalism requires an integrated plan that includes:

• Fully reforming the Iraqi banking system
• Check financial and accounting procedures
• Reducing corruption in financial institutions
• Setting compensatory claims through international legal tools
• Diversifying sources of income away from oil

Analysts believe that the continued dependence of the American financial system without radical reforms will keep Iraq hostage to external agendas that restrict its ability to move.

Towards financial independence conditional on political will

Despite the end of most of the legal restrictions imposed by the international community on the money of Iraq after 2003, the country is still subject to strict financial control from the United States, which reflects the fragility of the Iraqi economic and political structure.

Experts believe that the opportunity is still possible to liberate this domination, but it is dependent on a unified political will, and a strict economic vision that rebuilds international confidence in the Iraqi financial apparatus.

The question remains: Does the Iraqi government have the will and ability to extract its financial sovereignty, or will the American influence continue to control the country’s economy for future decades?