A report published by the Wall Street Journal on Thursday highlighted the "dollar" crisis in Iraq and the accompanying rise in the prices of food and imported goods.
Iraqis attribute this to a marked change in policy by the US Treasury Department and the Federal Reserve Bank of New York over the past weeks.
The newspaper quoted U.S. and Iraqi officials as saying that the Federal Reserve began last November to impose stricter controls on Iraqi commercial banks' dollar transactions, in a move aimed at curbing money laundering.
Since 2003, Iraqi banks have operated under less stringent rules, but nearly two decades later, U.S. and Iraqi officials say it is time to make Iraq's banking system more compliant with global controls on money transfers.
Since the new measures came into effect, about 80 percent of daily international financial transfers to Iraq, which previously totaled more than $250 million per day, have been banned.
This is due to insufficient information about the destination of the final funds or other errors, according to U.S. and Iraqi officials and official government data.
With dollars scarce, the value of the Iraqi currency has depreciated by as much as 10 percent, leading to a sharp rise in the prices of imported goods, including basic commodities such as eggs, flour and cooking oil.
"Shock Policy"
Mahmoud Dagher, chairman of the Board of Directors of the South Islamic Bank and former official of the Central Bank of Iraq, said: "For 20 years, we have followed the same system. But the Fed's shock policy has caused a crisis within the Iraqi economy."
To supply Iraq with dollars, U.S. Air Force planes deliver dollars to Baghdad every few months, according to the newspaper.
But most flows of U.S. currency flow electronically through transactions conducted by private Iraqi banks, which are processed through Iraq's official account at the Federal Reserve Bank where revenues from oil sales are deposited.
U.S. officials say strict electronic transfer rules imposed on Iraqi private banks came as no surprise to officials in Baghdad.
They said they were jointly implemented in November after two years of discussions and planning by the Central Bank of Iraq, the U.S. Treasury Department and the Federal Reserve.
U.S. officials noted that the dollar's appreciation was not due to the new measures.
The increased scrutiny of dollar transactions has led Iraqis to rush to the parallel local market to buy the US currency, amid a torrent of criticism by Iraqi officials, bankers and traders of the new regime, who said that it caused an unnecessary financial shock and exacerbated their already existing economic problems.
Iraqi delegation to Washington
The newspaper quoted Prime Minister Mohamed Shia al-Sudani as saying that the Fed's action harms the poor and threatens his government's 2023 budget.
Sudani said in an interview that "this is embarrassing and crucial" for him, and said he would send a delegation to Washington next month with a proposal to suspend implementation of the new measures for six months.
Under the new procedures, Iraqi banks must use a new electronic platform linked to the Central Bank of Iraq in order to apply for dollars, after which the application will be reviewed by the Federal Reserve.
U.S. officials say the new system aims to limit the use of the Iraqi banking system for dollar smuggling and money laundering havens across the Middle East.
Dagher says that under the old rules, Iraqis were not obliged to disclose details of who the money was being sent to until after the transfer had been made.
A spokeswoman for the Federal Reserve Bank of New York, commenting on the accounts held by foreign governments, including those of Iraq, said: "We have a strong compliance system for these accounts that speaks over time in response to new information."
A U.S. official said the new measures would limit "the ability of malign actors to use the Iraqi banking system."
The U.S. Treasury Department and Iraq's central bank declined to comment.
Iraq's central bank said in a Dec. 15 statement that the new online platform required "full details of customers who want to transfer funds," including end beneficiaries.
"A number of errors are discovered, forcing banks to re-carry out the process. These procedures will take additional time before they are accepted and passed by the international system."
Four Iraqi banks were barred from participating in the currency auction supervised by the Central Bank of Iraq: Asia Islamic, Asharq Al-Awsat, Al-Ansari Al-Islami and Al-Qaida Al-Islami, according to Iraqi officials and court documents.
Executives at Asia and Al Ansari declined to comment, while the other two banks could not be reached.
U.S. officials have been pressing Iraq for years to tighten its banking controls. In 2015, the Federal Reserve and the Treasury Department temporarily halted the flow of billions of dollars to Iraq's central bank over concerns that they were being diverted to Islamic State terrorists, officials said at the time.
Some Iraqi officials have supported tighter controls on Iraqi private banks, including Hadi al-Salami, a member of parliament's integrity committee, who said: "We need to stop this immediately."
The impact of the new strict controls on Iraqi banks' dollar transactions can be seen, which have fallen sharply since they came into force last November, according to data published on the Central Bank of Iraq website.
For example, on Oct. 17 last year, before the new rules went into effect, daily transfers from Iraq's official accounts at the Federal Reserve and other offshore institutions amounted to $224.4 million, compared to $22.9 million on Jan. 17, down about 90 percent.
U.S. officials say the financial turmoil will ease as Iraqis comply with disclosure requirements required by the new procedures.
Iraqi bankers and currency traders say the new rules are aimed at stopping dollar smuggling. For example, they say, importers used to forge invoices for goods that did not originally arrive in Iraq, but were paid for in dollars to unknown destinations outside the country.
Hamza al-Sarraf, owner of an exchange shop in Baghdad's Karrada district, said: "Dollars certainly go to Iran, Turkey, Syria, Yemen, Lebanon and sometimes Dubai."
Due to new compliance requests and being prevented from using banks, Iraqi importers have had to delay placing orders or finding other ways to pay suppliers such as using informal money transfer networks known as hawala. Al-Sarraf said some traders load dollars and ship them out of Iraq in cars.
Today at 7:21 am by Rocky
» utube 9/16/24 MM&C Iraq Dinar Update - #xrpripple #iraqidinar - Electronic International Payments
Today at 7:20 am by Rocky
» Market monopoly is in danger... and the Parliamentary Economic Committee leads the correction battle
Today at 7:16 am by Rocky
» Document warns of environmental danger threatening southern Iraq
Today at 7:15 am by Rocky
» Central Bank Governor: We have put in place methods to secure the provision of dollars and are subje
Today at 7:13 am by Rocky
» MP hints at corruption suspicions in $22 billion railway contract
Today at 7:12 am by Rocky
» MP holds Al-Sudani responsible for withdrawing important laws from the House of Representatives
Today at 7:11 am by Rocky
» Parliamentary Oil Committee accuses the region of smuggling oil
Today at 7:10 am by Rocky
» The Council of Ministers decides to amend the price of industrial oil
Today at 7:06 am by Rocky
» "Al-Eqtisad News" publishes the full decisions of the Cabinet session
Today at 7:05 am by Rocky
» Parliamentary moves to increase state financial revenues
Today at 7:04 am by Rocky
» New mechanism for collecting tax amounts electronically
Today at 7:02 am by Rocky
» Iraqi oil exports rose yesterday to 3.5 million barrels
Today at 7:01 am by Rocky
» South Gas: Integrated Gas Development Project is an Opportunity to Invest Local Hands
Today at 7:00 am by Rocky
» Artawi Project.. A new energy that ignites the Iraqi economy and extinguishes the fires of waste!
Today at 6:59 am by Rocky
» Al-Ghais: Taxes constitute the largest percentage of fuel prices in these countries
Today at 6:57 am by Rocky
» Is the decline in oil prices related to the rise in exchange rates? An "important" clarification fro
Today at 6:55 am by Rocky
» Iraq imports more than 722 million tons of gasoline in three months
Today at 6:54 am by Rocky
» Hermes: Gulf investors have become more selective after the flood of IPOs in the region
Today at 6:53 am by Rocky
» Real estate manipulators between the jaws of the "justice pincers"
Today at 6:51 am by Rocky
» New crime
Today at 6:50 am by Rocky
» Conference to support the private sector
Today at 6:49 am by Rocky
» After the {Sabah} report... a campaign to deport {illegal} workers
Today at 6:48 am by Rocky
» Al-Sudani: Amending the Drug Law raises the level of combating it
Today at 6:47 am by Rocky
» Numbering Nineveh buildings in preparation for the population census
Today at 6:46 am by Rocky
» Labor: Intensive campaign to deport “illegal” workers
Today at 6:44 am by Rocky
» Emaar: The residential complex for journalists will be transferred to an investor
Today at 6:43 am by Rocky
» Government organizes national conference to support private sector
Today at 6:40 am by Rocky
» Real estate inflation
Today at 6:39 am by Rocky
» {Hypermarket}.. Central markets with a new look
Today at 6:38 am by Rocky
» Iraq calls on the international community to shoulder its responsibilities and stop the massacres an
Today at 5:22 am by Rocky
» Al-Maliki's coalition explains the nature of the presence of Hamas and Houthi offices in Baghdad.. A
Today at 5:21 am by Rocky
» What are the goals of Qaani's "secret" visit to Baghdad? - Urgent
Today at 5:19 am by Rocky
» Al-Sudani: The heaviness of the energy system problem in transmission and distribution
Today at 5:18 am by Rocky
» Parliamentary message to Al-Sudani: You have the dangerous Kar file in your hands.. Save public mone
Today at 5:16 am by Rocky
» 15% tax on social media applications in Iraq
Today at 5:15 am by Rocky
» Fears of delayed salaries.. State employees face increasing financial pressures!
Today at 5:14 am by Rocky
» General amnesty.. a step to exonerate Nour Zuhair and an opportunity for terrorists
Today at 5:13 am by Rocky
» Iraq between stalled projects and postponed promises: years of endless waiting
Today at 5:11 am by Rocky
» Al-Sudani: Iraq is witnessing transformations in digital reality today
Today at 5:11 am by Rocky
» Announcing the formation of a new party in Iraq
Today at 5:10 am by Rocky
» The electricity dilemma is stifling Iraqi industry and exacerbating the losses of the local economy!
Today at 5:09 am by Rocky
» Parliament asks the Ministry of Planning to estimate revenues
Today at 5:07 am by Rocky
» Iraq and Russia sign a memorandum of understanding
Today at 5:05 am by Rocky
» Trade invites Azerbaijani companies to participate in Baghdad International Fair
Today at 5:04 am by Rocky
» New mechanism for granting national card to citizens
Today at 5:03 am by Rocky
» A scandalous scandal revealed by the Ministry of Labor
Today at 5:02 am by Rocky
» The Chairman of the Accountability and Justice Commission meets the Minister of Anfal
Today at 5:00 am by Rocky
» Al-Basri: We will announce crimes related to public money soon
Today at 4:59 am by Rocky
» Al-Sudani: The electricity projects that were opened today had been lagging behind for years
Today at 4:57 am by Rocky
» Cabinet decisions for today
Today at 4:56 am by Rocky
» Al-Khalidi talks about solving the problem of the parliament presidency
Today at 4:55 am by Rocky
» Strange statement from a former MP
Today at 4:54 am by Rocky
» Allawi: Personal status proposal will tear Iraq apart
Today at 4:53 am by Rocky
» Parliamentary Finance: No financial distress
Today at 4:52 am by Rocky
» Central Bank of Iraq: Oil price drop has nothing to do with dollar exchange rate rise
Today at 4:51 am by Rocky
» Parliamentary Oil and Gas Committee moves to host oil formations managers.. This is the reason
Today at 4:48 am by Rocky
» Al-Masari reveals to Alsumaria the reason for the delay in deciding the position of Parliament Speak
Today at 4:45 am by Rocky
» Al-Shammari: There is political collusion in the absence of a Speaker of Parliament
Today at 4:44 am by Rocky
» With documents.. Parliamentary signatures to reject the railway link with Iran
Today at 4:42 am by Rocky
» Dollar to Dinar Exchange Rates in Iraq Today
Today at 4:40 am by Rocky
» utube 9/15/24 MM&C Iraq Dinar Update - #xrpripple #iraqidinar Digital Transformation - Global Even
Yesterday at 7:01 am by Rocky
» Progress reveals new political endorsement for its candidate for parliament speaker
Yesterday at 6:57 am by Rocky
» Al-Sudani: Announcing the end of the international coalition mission soon, and we are committed to O
Yesterday at 6:56 am by Rocky
» Iraq and Austria sign a loan financing agreement to stimulate the agricultural sector
Yesterday at 6:54 am by Rocky
» Pending amnesty and complex negotiations: Justice and politics intertwine in the parliament hall
Yesterday at 6:51 am by Rocky
» Amnesty Law: A New Ticket for Corruptors or a Correction of What Politics Has Broken?
Yesterday at 6:50 am by Rocky
» Al-Sudani turns the page on the international coalition.. 2024 is not like 2014
Yesterday at 6:49 am by Rocky
» Oil moves towards generalizing electronic payment in all governorates
Yesterday at 6:48 am by Rocky
» Economist: Decongestion projects will not succeed
Yesterday at 6:46 am by Rocky
» Abu Saeeda: The government is "afraid" of Washington's demand to withdraw its forces from Iraq
Yesterday at 6:45 am by Rocky
» What is the truth of the bargain of passing the amnesty in exchange for personal status?
Yesterday at 6:44 am by Rocky
» MP confirms boycott of parliament sessions due to general amnesty law
Yesterday at 6:43 am by Rocky
» Headed by Al-Sudani.. The Council of Ministers holds its regular session
Yesterday at 6:42 am by Rocky
» Rising housing prices.. Collecting parliamentary signatures to question the head of the Investment A
Yesterday at 6:41 am by Rocky
» Al-Fath: Equipping the Peshmerga with artillery is a first step towards the region’s military secess
Yesterday at 6:40 am by Rocky
» Violations and waste of public money.. Voices calling for the need to expose port corruption are ris
Yesterday at 6:38 am by Rocky
» Currency Auction.. The Central Bank of Iraq sells more than $ 249 million in one day
Yesterday at 6:36 am by Rocky
» Parliamentary Finance Committee discusses proposal to establish sovereign fund
Yesterday at 6:34 am by Rocky
» Karbala: Violations and delays in establishing a park worth 2.4 billion dinars revealed
Yesterday at 6:32 am by Rocky
» Iraq falls to fifth place in buying real estate in Türkiye during the month
Yesterday at 6:31 am by Rocky
» Al-Sudani diagnoses the oil problem of Baghdad and Erbil.. What about the Ceyhan pipeline?
Yesterday at 5:22 am by Rocky
» 500,000 salaries registered in the “Hisabi” system in the Kurdistan Region
Yesterday at 5:21 am by Rocky
» Al-Nusairi identifies the challenges facing Iraqi private banks and opportunities for banking reform
Yesterday at 5:20 am by Rocky
» "Our Country's Dream"... Al-Sudani Sends an "Important" Message to Gulf States Regarding the Path to
Yesterday at 5:18 am by Rocky
» 110 thousand barrels is the volume of decrease in Iraqi exports since the beginning of this month
Yesterday at 5:17 am by Rocky
» Economist: Iran's exports to Iraq increased 71-fold in 20 years
Yesterday at 5:16 am by Rocky
» Pezeshkian praises the results of his visit to Iraq
Yesterday at 5:15 am by Rocky
» Al-Sudani: The government seeks to buy services from investors
Yesterday at 5:13 am by Rocky
» Real estate manipulators between the jaws of the "justice pincers"
Yesterday at 5:12 am by Rocky
» Mechanism to resolve tribal conflicts in Maysan
Yesterday at 5:11 am by Rocky
» Decline in Iraqi exports
Yesterday at 5:10 am by Rocky
» Spanish company implements Basra-Shalamcheh railway
Yesterday at 5:08 am by Rocky
» Advisor to the Prime Minister announces to {Sabah} the launch of the {Back to Education} initiative
Yesterday at 5:07 am by Rocky
» Members of the Ministry of Defense in Basra demand the implementation of the allocation of land plot
Yesterday at 5:05 am by Rocky
» The Social Protection Authority calls on its beneficiaries to expedite the issuance of the unified c
Yesterday at 5:04 am by Rocky
» Trade Bank of Iraq announces mechanism for obtaining US dollars for travel purposes abroad
Yesterday at 5:03 am by Rocky
» House of Representatives votes on agricultural land rental bill
Yesterday at 5:01 am by Rocky
» Minister of Trade arrives in Baku at the head of an investment delegation
Yesterday at 4:59 am by Rocky