Banning the dollar in Iraq: Difficult choices for the “coordinating committee”

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[size=52]Banning the dollar in Iraq: Difficult choices for the “coordinating committee”[/size]

[size=45]Political parties running dollar speculation and smuggling operations received a “major blow” after the Iraqi authorities banned foreign transfers in the American currency starting next January, while a government official confirmed to Asharq Al-Awsat that Washington wants to reduce the circulation of cash dollars “so that it does not leak into... Entities involved in suspicious acts, even months after the implementation of the US Federal Reserve’s restrictions.”[/size]
[size=45]Companies and individuals in Iraq will have to make financial transfers in local dinars at the official exchange rate, but this process will require a long time before the Iraqi market reaches the adjustment stage, unless political forces benefiting from smuggling discover a new way to circumvent it, according to an Iraqi banking official.[/size]
[size=45]According to press and financial sources, Washington rejected a request from Iraq to obtain one billion dollars in cash from the Federal Reserve Bank, against the backdrop of conflicts with efforts to curb Baghdad’s use of cash dollars and stop illicit flows to Iran.[/size]
[size=45]Washington periodically and regularly sends shipments of dollars to Iraq via US army aircraft, but since the end of last year it has stipulated restrictions and mechanisms that allow it to track transactions in them electronically.[/size]
[size=45]As a result, the Central Bank of Iraq was forced to reduce banking companies' shares of the cash dollar by more than half, which will affect the exchange rate of the dinar against the dollar in the parallel market in the future, and will reduce Iraq's imports from Iran by approximately half.[/size]
[size=45]This outcome in particular has motivated political parties in the “Coordinating Framework” coalition to discuss “ideas on how to make a rapid change in the leadership of the Central Bank,” according to Iraqi representatives whom Asharq Al-Awsat spoke with. However, what stands as an obstacle to this decision is the political timing that It will arouse American suspicions.[/size]
[size=45]The Central Bank of Iraq was supposed to succeed in restricting dollar sales through the official sales window, but political parties running banking and commercial interests found an outlet for dollar trading in a parallel market outside the control of the state, and from there smuggling operations abroad take place.[/size]
[size=45]The parallel market is a group of financial exchange houses that do not sell the dollar at the official price set by the Central Bank of Iraq at about 1,331 per dollar. While the Iraqi government is trying to find out the financial sources of this market, the banking official confirmed that “the exchanges of this market have succeeded in hoarding the dollar.”[/size]
[size=45]In this way, political parties were able to maintain their financial sources of hard currency through the parallel market, without stopping the smuggling operations, as the Iraqi banking official indicates that the American financial authorities are fully convinced that “the dollar being traded in the parallel market is a profitable source for illegal operations.” It is legitimate for politicians involved in smuggling.”[/size]
[size=45]However, Iraqi financial experts and politicians believe that the Central Bank’s recent decision reflects evasion of confronting political parties that manipulate the dollar, as they should have pursued smuggling operations without interfering in the financial interests of citizens.[/size]
[size=45]The head of the “Extended” parliamentary bloc said, in a statement, that “controlling the dollar begins from the borders and not from fighting exchange companies and confiscating citizens’ remittances and their deposits in banks,” calling on Prime Minister Muhammad Shiaa Al-Sudani to make urgent changes in the management of the Central Bank.[/size]
[size=45]Al-Salami explained that “the government is watching the collapse of the dinar, the central bank’s inability to control the dollar exchange rate, and the banks forcing citizens to receive their deposits and transfers in Iraqi dinars.”[/size]
[size=45]But the Assistant Director of Foreign Transfers at the Central Bank, Muhammad Yunus, confirmed in a previous televised statement that “the decision to prevent dealing in the dollar is not new, as the Prime Minister obligated at the beginning of this year all departments and the private and public sectors to deal in the Iraqi dinar, but there is an exception for companies and departments that have contracts.” In dollars, such as oil companies and others.[/size]
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