By Ahmed Tabaqchali, for the Atlantic Council. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.
US Dollar Shipments to Iraq are a Molehill, not a Mountain
As the Iran war ramped up, it was reported that the United States halted dollar cash shipments to Iraq for about three months, before resuming them in early July. The international media coverage of both the halt and the resumption, however, reflected persistent misconceptions about Iraq's dollar accounts at the Federal Reserve Bank of New York (FRBNY).
One misconception is that the halt deprived the Iraqi government of its own oil revenues held at the FRBNY, leaving it struggling to pay public sector salaries and pensions. Another is that the shipments are needed to keep Iraq's dollar-dependent economy running or to maintain the peg of the Iraqi dinar to the dollar.
These misconceptions have their roots in the economic and financial chaos that followed the 2003 US invasion of Iraq. Yet they have persisted for years, even as the country's economy has evolved since then. In fact, Iraq has been moving toward a more formal banking system and away from the cash-based informality that once dominated its economy-a shift that has accelerated since late 2022.
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