Rising Concerns Over Potential U.S. Sanctions on Iraqi Banks and Officials
Iraqi stakeholders are increasingly alarmed by the prospect of economic sanctions being imposed by the Trump administration on influential figures, financial institutions, and both governmental and private banks in Iraq.
A member of the Parliamentary Finance Committee has indicated that “Trump will initiate an economic war across the region, particularly focusing on Iraq, to further his initial policies.” This official emphasized that Iraq’s financial vulnerabilities stem from the nation’s dependency on the U.S. Federal Reserve, as well as the control exerted by Washington over Iraq’s oil revenue streams. The recent comments made by Trump at the Davos conference, where he suggested the need to lower oil prices, are seen as alarming signals for Iraq’s economic stability.
The anticipated sanctions may encompass various private banks, including the Rafidain Government Bank. Stakeholders urge the Iraqi government to act swiftly to address these potential measures and understand the underlying reasons for the imminent penalties.
Since the U.S. invasion in 2003, American influence has dominated Iraq’s economic landscape, providing the U.S. president with significant leverage to apply economic pressure. Reports have surfaced indicating that Trump has revoked the exemptions that allowed Iraq to import electricity and gas from Iran, as part of a broader sanctions strategy targeting Tehran.
The sanctions are designed to maximize pressure on Iran, involving immediate actions in collaboration with the Treasury Department and other relevant authorities. This includes ensuring that the Iraqi financial infrastructure is not exploited by Iran to navigate or bypass existing sanctions, as well as preventing Gulf states from serving as transit points for goods to evade penalties.
Republican Representative Joe Wilson has recently advocated for sanctions against Al-Rafidain Bank, claiming in a social media post that “the U.S. Treasury and Federal Reserve under Joe Biden and his envoy Brett McGurk have permitted Rafidain Bank to serve as a conduit for money laundering operations for the Iranian regime and its affiliates to access U.S. dollars.”
Moreover, sanctions may extend to individuals and organizations directly linked to Iran and could potentially disrupt sectors linked to oil and economics, following U.S. demands for the cessation of oil smuggling to neighboring nations. Consequently, some Iraqi political factions argue that dissolving armed groups and eliminating political entities perceived as aligned with Tehran is the only viable strategy to avert economic sanctions. Meanwhile, the “Coordination Framework” expresses confidence that the return of Trump to the presidency will not pose any future risks for Iraq.
The aforementioned committee member noted, “Trump’s strategy is rooted in economic warfare rather than military engagements, which presents substantial threats of pressuring the Iraqi government and imposing sanctions on its oil sector.”
He further added that the Iraqi government has dispatched delegations to negotiate with U.S. counterparts on key issues, particularly concerning the mechanisms of currency sales and measures to protect Iraq from sanctions. Direct communications between the Iraqi government and the U.S. administration are underway, with visits scheduled to discuss the prevailing situation. This dialogue may provide an opportunity for Iraq to avoid sanctions, contingent upon guarantees extended to Washington.
In summary, the geopolitical landscape is fraught with complexities as Iraq navigates the intricacies of U.S. sanctions policy, balancing its economic needs while managing external pressures.
