Today, Monday 13-1-2020, the French Press Agency published a report in which it talked about Washington’s threats that imply its imposition of money flow into Iraq, including the freezing of bank accounts in the United States in which Baghdad holds oil revenues.
The report stated, “Iraqi officials express their fear of an economic meltdown if Washington imposed sanctions that it had previously hinted at, including freezing bank accounts in the United States in which Baghdad holds oil revenues that constitute 90% of the state budget.”
And US President Donald Trump expressed his anger after the Iraqi parliament voted on January 5 to expel foreign forces from the country, including about 5,200 American soldiers who had helped local forces to defeat ISIS since 2014, and he threatened that “if the soldiers are asked Leaving, we will impose on them (Iraq) sanctions they have not seen before. ”
The report quoted Iraqi officials as saying, “The United States then delivered an extraordinary indirect verbal message to the office of resigned Prime Minister Adel Abdul-Mahdi,” and one of those officials stated that “the Prime Minister’s Office received a threatening call that if American forces were expelled, then we would United, we will close your account in the New York Federal Reserve. ”
Parliament voted to end the presence of foreign forces in Iraq, due to discontent over a US air strike by a drone in Baghdad two days before the session that led to the killing of the influential Iranian general Qassem Soleimani and deputy head of the PMF Abu Mahdi al-Muhandis.
The Central Bank of Iraq account was established in the Federal Reserve in 2003, in the aftermath of the American invasion that toppled the regime of former dictator Saddam Hussein, and under Resolution No. 1483 of the United Nations Security Council, which lifted tougher international sanctions and the oil embargo imposed on Iraq after the invasion of Saddam Hussein For Kuwait, all proceeds from Iraqi oil sales go to that account.
Iraq is the second largest producer of crude oil in the Organization of Petroleum Exporting Countries (OPEC), and depends on more than 90% of the state’s budget, which amounted to $ 112 billion in 2019, on oil revenues. To this day, revenues are paid in dollars in the Federal Reserve account daily, and the balance now About $ 35 billion, according to Iraqi officials.
And Iraq pays almost every month, between one billion and two billion dollars in cash from this account, for official and commercial transactions, and the first Iraqi official says, “We are a country producing oil, and these accounts are in dollars. Freezing and blocking access to them means closing the faucet completely”, and the second indicates that that It will mean that the government will not be able to do daily business or pay salaries, and that the value of the Iraqi currency will fall, and adds that “this will mean the collapse of Iraq.”
A senior Iraqi official asserts that the United States is considering restricting access to cash to about a third of what they normally send, and the Federal Reserve has refused to comment on Trump’s threat, but a State Department official confirmed that the possibility of restricting access to the Federal Reserve account was raised with Iraq after the vote.
“You can imagine why if the forces were expelled, the banks might be concerned about sending a lot of money to Baghdad,” the official said, but the US threat remains largely unusual, as the Fed is supposed to be independent of foreign policy.
“The attempt to politicize dollar shipments raises the bank’s concern because it affects its standing and integrity in dealing with customers,” he said, adding that “it is clear that Trump is ready to politicize everything.”
Washington has considered this measure months ago, when a senior American diplomat at the US embassy in Baghdad said last July that “the United States is considering limiting the flow of money to Iraq,” adding, “This will be the nuclear option (knockout).”
And before the Iraqi parliament voted, its president, Muhammad Al-Halbousi, warned that the world might stop dealing with Iraqi banks in response to this step, and the Federal Reserve account of the Iraqi Central Bank could be frozen by placing a government agency in the blacklist, which would immediately restrict Baghdad’s access to dollars.
The United States has already imposed sanctions on Iraqi citizens, armed factions, and even banks linked to Iran, according to the report, Washington’s archenemy in the region, but it has not approached oil revenues, and former officials said that “a similar step would be very harmful to a country that is considered an ally of the United States.”
But relations have deteriorated recently, with Washington suffering frustration with Iraq’s alliance with Iran, according to the report, and the repeated missile attacks on American interests that have blamed Washington’s Iraqi factions loyal to Tehran, and relations have since witnessed a heavy blow with the assassination of Soleimani and the engineer, what Iraq considered a violation To his rule.
US and Iraqi officials point out that the United States is also studying other, less exciting options for the situation, and one of those options is that Washington refuses to renew the temporary exemption it granted to Iraq in 2018, which allows Baghdad to import gas from Iran to feed the destroyed electricity grid, despite US sanctions on the energy sector Iranian.
And in the event that Washington does not renew the exemption in February (February), the Iraqi Commercial Bank, which buys gas, may face secondary penalties for dealing with Iranian entities listed in the blacklist.
Iraqi officials say, “The American threat to deny access to oil revenues has been met with shock, anger and almost disbelief.”
“The prime minister was angry and insulted,” said one of the officials, and another considered that “the United States will lose Iraq”, adding, “They pushed us toward Russia, China and Iran, we must form a separate economy with those countries.”