BAGHDAD (IraqiNews.com) – The Iraqi economy faces a critical turning point as reports from Washington and Baghdad confirm that the United States has suspended shipments of physical US Dollar banknotes to the Central Bank of Iraq (CBI). This move, described by economists as a financial earthquake, is part of a broader pressure campaign by the Trump administration to force the disarmament of Iran-backed militias and influence the formation of Iraq’s next government. A detailed investigation by David Cloud in the Wall Street Journal revealed that a cargo plane carrying approximately $500 million in cash—proceeds from Iraqi oil sales held at the Federal Reserve Bank of New York—was blocked by Treasury officials.
The Second Delay: This is the second scheduled shipment to be halted since the outbreak of the regional war in late February. The Motive: Washington is demanding that the incoming government take tangible steps to dismantle armed groups accused of attacking US diplomatic and military sites, including the US Embassy and Victory Base. Security Decoupling: Parallel to the financial freeze, the US has suspended high-level security coordination and funding for several counter-terrorism training programs until the militia attacks cease.
Prominent economist Ziad al-Hashimi warns that while the cash freeze is damaging, a full suspension of the Iraqi wire transfer system (SWIFT/Platform) would be “the deadliest blow.” Draining the Reserve: To cover the needs of travelers, patients seeking treatment abroad, and students, the CBI will be forced to deplete its domestic dollar reserves. Currency Diversification: Iraq may soon be forced to pay travelers in other currencies (such as the Euro or Yuan), which will drive these groups to the black market to find dollars, skyrocketing the exchange rate. Financial Paralysis: If the electronic transfer system is targeted next, Iraq’s ability to pay for essential imports—which account for nearly 90% of its goods—would effectively collapse, leading to hyperinflation.
The parallel market has already reacted to the uncertainty. The Iraqi Dinar fell to 154,500 IQD per $100 on Tuesday, erasing the gains made during the recent ceasefire. The “Grey Market” Factor: Traders are increasingly hesitant to sell dollars, fearing that the supply of “physical cash” will remain frozen until the Coordination Framework meeting on Wednesday reaches a consensus that satisfies international demands. Government Response: While some government advisors initially denied the halt, officials at the Central Bank have privately confirmed the disruption, though they emphasize that “digital transactions for trade” are still currently being processed.