US resumes dollar air shipments to Iraq following months-long freeze - EUROPE SAYS
WASHINGTON / BAGHDAD — The United States has resumed air shipments of physical US dollars to Iraq, ending a high-stakes, months-long financial freeze intended to pressure Baghdad into fracturing its ties with. . .
WASHINGTON / BAGHDAD — The United States has resumed air shipments of physical US dollars to Iraq, ending a high-stakes, months-long financial freeze intended to pressure Baghdad into fracturing its ties with regional armed groups. According to reports from The New York Times, physical cash deliveries have been reinstated after a prolonged suspension that began in the spring. Senior Iraqi officials, including aides to the prime minister, confirmed that the vital supply of greenbacks has begun flowing back into the country’s financial system. The April Freeze: Weaponizing the DollarThe disruption traces back to April, when Washington abruptly blocked a plane carrying approximately $500 million in physical banknotes bound for Baghdad. Iraq’s oil export revenues are held at the Federal Reserve Bank of New York—an arrangement established in the aftermath of the 2003 US invasion. This gives Washington unique leverage over Iraq’s domestic liquidity. By cutting off the physical supply of cash, the US sent a stark economic shockwave to Baghdad’s central bank. Simultaneously, the US paused critical components of its bilateral security cooperation. This included freezing funding for key programs like the training of the Iraqi army and joint counter-terrorism efforts against remnants of the Islamic State (ISIS). Why Washington Cut the Cash FlowUS officials linked the severe economic and military freeze to two primary geopolitical objectives:Deterring Militia Attacks: The freeze followed a spike in drone and rocket strikes by Iran-backed militias targeting American diplomatic and military infrastructure in Iraq and the broader region. This included an ambush on US diplomats in Baghdad. Political Leverage: The suspension was timed to exert maximum pressure on Baghdad’s political leadership during a delicate government-formation process. Washington demanded that the incoming Iraqi government take measurable steps to rein in and dismantle independent, Tehran-aligned factions operating within its borders. Tags:EconomyFederal Reserve System