In a significant diplomatic move, senior officials from Iran and Iraq convened in Baghdad following the Central Bank of Iraq’s decision to ban five additional banks from engaging in US dollar transactions. This decision comes in light of discussions with officials from the US Treasury, aiming to tackle money laundering and the smuggling of US dollars.
Iran’s Deputy Foreign Minister for Politics, Majid Takht-Ravanchi, met with his Iraqi counterpart, Mohammad Bahr al-Uloom, along with National Security Advisor Qassim al-Araji and Deputy Speaker of the Iraqi Parliament, Mohsen al-Mandalawi. Ravanchi emphasized the necessity of exchanging views on critical issues between the two neighboring countries, especially during these challenging times for the West Asia region.
The recent bans on Iraqi banks follow meetings held in Dubai involving Iraq’s central bank and US financial authorities. With over $100 billion in reserves in the US, Iraq is heavily dependent on Washington’s approval to access its oil revenue. The restrictions align with former President Donald Trump’s “maximum pressure” strategy on Iran, raising concerns about potential financial difficulties for Baghdad as it navigates its relationships with both Washington and Tehran.
Iran perceives Iraq as a vital economic partner for accessing hard currency and relies on its strong ties with Shi’ite militants and political factions within Iraq. The US has been actively working to prevent Iran from circumventing sanctions through Iraq’s financial system. While Iraqi Prime Minister Mohammed Shia al-Sudani has garnered praise for his economic initiatives, the evolving financial strain might complicate Baghdad’s efforts to maintain a balance between US expectations and its economic connections to Iran.
As the geopolitical landscape continues to shift, the outcomes of these discussions will be closely monitored by international observers.
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