Iraq warns US sanctions could push Baghdad to Iran, Russia, China

Iraqi officials fear economic “collapse” if Washington imposes threatened sanctions, including blocking access to a US-based account where Baghdad keeps oil revenues that feed 90 percent of the national budget.

US President Donald Trump was outraged by the Iraqi parliament voting on 5 January to oust foreign forces, including some 5,200 American troops, who have helped local soldiers beat back the Islamic State group since 2014.

If troops were asked to leave, he threatened, “we will charge them sanctions like they’ve never seen before”.

The US then delivered an extraordinary verbal message directly to Prime Minister Adel Abdel Mahdi’s office, two Iraqi officials told AFP.

“The PMO got a call threatening that if US troops are kicked out, ‘we’ – the US – will block your account at the Federal Reserve Bank in New York,” one official said.

Parliament’s vote to oust the troops was triggered by outrage over a US drone strike on Baghdad two days earlier that killed top Iranian general Qasem Soleimani and his Iraqi right-hand-man, Abu Mahdi al-Muhandis.

The Central Bank of Iraq’s account at the Fed was established in 2003 following the US-led invasion that toppled ex-dictator Saddam Hussein.

Under United Nations Security Council Resolution 1483, which lifted the crippling global sanctions and oil embargo imposed on Iraq after Saddam’s invasion of Kuwait, all revenues from Iraqi oil sales would go to the account.

Iraq is OPEC’s second-biggest crude producer and more than 90 percent of the state budget, which reached $112 billion in 2019, derives from oil revenues.

To this day, revenues are paid in dollars into the Fed account daily, with the balance now sitting at about $35 billion, Iraqi officials told AFP.

Every month or so, Iraq flies in $1-$2 billion in cash from that account for official and commercial transactions.\”We’re an oil-producing country. Those accounts are in dollars. Cutting off access means totally turning off the tap,” the first Iraqi official said.

The second official said it would mean the government could not carry out daily functions or pay salaries and the Iraqi currency would plummet in value.

“It would mean collapse for Iraq,” the official said.

Trump ‘politicises everything’

A third senior Iraqi official confirmed the US was considering “restricting” cash access to “about a third of what they would usually send.”

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3 replies

  1. Reading this article makes it absolutely clear why the oil exporting countries should back away from the dollar. An oil and gold backed GOLD DINAR IS POSSIBLE !!! Get it done !!!

  2. Believe me that there is no peace in the islamic countries as long as Saudi Arabia and Iran ( Sunni and Shiah) REJECT Human Right and Women’s Right

    Human Right is the core of God’s law ( Christian and Islam) or the core of the world peace.

    Second. As long as the extremist Intolerant Muslim exist there is no peace in Islamic countries. The extremist Muslim is the root of conflict every where, they are Muslim supremacy just like White Supremacy in the West.

    , Most Islamic scholars do not believe Jesus teaching, and God has warns Muslim as following:

    As for those who disbelieve ( Injil ) I shall chastise them with a heavy chastisement in the world and the Hereafter; and they will have no helpers. (Q3:56)

    That is the problem with Muslim to day.
    Muslim really need reformation of Islamic teaching and mind set Muslim as well.

    ❤️

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