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Are new US financial restrictions on Iraq missing their target?


The latest restrictions are a symptom of increased US-Iran tensions. But as Iraq’s elite find ways around them, ordinary Iraqis are the ultimate victims.

Iraq has once again been hit by US financial restrictions, this time aimed at restricting specific banks and individuals from trading in the Central Bank of Iraq (CBI)’s daily currency auctions. The timing of these economic measures can in part be attributed to increased tensions between the US and Iran, that are once again being played out in Iraq. However, the elites targeted by the sanctions are finding ways around them, while the real impact is being felt by ordinary Iraqis, whose lives are made even more difficult as currency fluctuations make essential goods, like food and medicine, more expensive and less accessible.  

What has happened?

Banks such as Asia Islamic Bank, Al-Sharq Al-Awsat, Al-Ansari Islamic Bank and Al-Qabith Islamic Bank have long used CBI’s daily currency auction to gain US dollars and launder money. In fact, the governor of CBI once admitted that a majority of the money is going to neighbouring countries such as Iran via electronic transfers, often with fake invoices. These banks are also backed by political figures and are deeply entrenched in Iraq’s political elite and armed factions, and some of their partners have been targets of US sanctions in the past.

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