Iraq to cut off dollar flows to Iran and allied groups under US deal

Iraq has agreed to tighten oversight of its financial system and prevent US dollars from reaching Iran and Iran-linked armed groups. In return, Washington has resumed cash dollar shipments to Baghdad.

The agreement ends a four-month pause in US dollar shipments to Baghdad, according to The Wall Street Journal (WSJ), citing American and Iraqi officials.

As part of the deal, Iraq pledged to tighten controls to prevent Iran and affiliated groups from accessing dollars through the country’s currency exchange firms and salary payments made to Iran-backed militia members, the report added.

The US Treasury Department halted banknote deliveries in late February as the Iran war began. The suspension restricted Iraqi Prime Minister Ali al-Zaidi’s government’s access to cash from oil revenues, which are held at the Federal Reserve Bank of New York.

During the suspension period, the US Federal Reserve cancelled at least two shipments, including one transfer worth about $500 million.

By Jeyhun Aghazada