A Chamber of Commerce Member's Account: How the U.S. is Closing Off Routes to Evade Sanctions in Iraq

A member of the Chamber of Commerce has pointed out the decline in trade between Iran and Iraq, stating that the American side has told Iraqi bank heads that the issue of Iranian traders evading sanctions must be resolved. Ali Shariati, in an interview with the 'Entekhab' website, emphasized that the circulation of Iraqi dollars in the economy and the evasion of sanctions by 'semi-governmental traders' in Iran through the transfer of Iraqi asphalt swaps prompted the U.S. to intervene. Regarding the new directive from the Iraqi government prohibiting financial transactions with Iran for banks and exchange offices, he noted that this has been occurring for several months and that punitive measures became serious from January 1. This member of the Iranian Chamber of Commerce discussed the impact of these restrictions on Iranian traders, stating: 'If you are a trader in Dubai working with Iraq, the Iraqi customer pays you with cheap currency at 1320 dinars per dollar, but for Iran, since we do not have the SWIFT system, we have been removed from this system. As a result, we cannot take advantage of the opportunity of the Iraqi government dollar.' Shariati claimed that 'all Iraqi bank heads were summoned to Istanbul several months ago and were told by the American side that this issue [of evading sanctions] must be resolved. The Iraqis did not take this seriously, and the Americans put their foot on the dollar hose, creating a halt. The shortage of supply caused the dollar price in Iraq to rise.' According to this member of the Iranian Chamber of Commerce, 'the dollar rose from 1440 to 1600 and even 1700 dinars since May. The people of Iraq also asked the government to resolve this issue, leading to protests.' He continued his account by saying, 'For several months, Iraqi citizens were given government currency at airports. The government dollar in Iraq is 1320 dinars per dollar. The government [of Iraq] silenced traders with an incentive policy, saying to submit their purchase documents to the government, and once approved, they would go into the allocation queue, and within two weeks, the customer's money would be paid.' On December 12 of this year, media in Iran reported a new decision in Iraq that created an obstacle to Iran's access to dollars. According to these reports, the Central Bank of Iraq, by enacting a new law in the currency sector, prohibited official exchange offices and banks in this country from any currency exchange with five countries, including Iran, making it impossible for the Islamic Republic to obtain dollars through legal channels in this country. Shariati discussed the rising costs of trade for Iraqis with Iran, stating: 'An Iraqi who wants to return money to Turkish and Iranian traders must pay more, and Iranian goods are about 18% more expensive than goods purchased from Turkey and China. In this case, either I, as an Iranian trader, say it does not concern me, and I want dollars, or the Iraqi says I will buy goods from Turkey and pay less. As a result, the Iranian trader is suffering serious losses, and our traders are offering a 15% discount to Iraqi traders. Meanwhile, some are seeking the destruction of the dollar.' Reports from last Bahman (January) indicated that the U.S. had limited Iraq's access to dollars held in the U.S. Federal Reserve to prevent dollar smuggling to Iran. At that time, Iraqi officials announced that the U.S. wanted to eliminate 'uncontrolled money laundering benefiting Iran and Syria.' Experts predict that with the new currency restrictions in Iraq, the supply and distribution of currency in Iran will face more challenges, which could lead to turbulence in the currency market and accelerate inflation in the coming months.