Report: U.S. Rejects Iraq's Request for More Cash to Combat Dollar Smuggling to Iran

The Wall Street Journal reports that Iraq is seeking an additional cash shipment of one billion dollars from the Federal Reserve Bank of New York in the U.S. However, U.S. officials have refrained from confirming this request, stating that it contradicts their efforts to curb Baghdad's use of cash dollars and combat the smuggling of cash dollars to Iran. Since the U.S. invasion of Iraq two decades ago, the U.S. has sent 10 billion dollars or more annually to Baghdad via cargo flights. This money comes from Iraq's oil sales revenues deposited in the Federal Reserve Bank of New York. In addition to cash shipments sent via cargo flights, the Federal Reserve has electronically transferred much larger amounts—up to 40 billion dollars a year—from Iraqi banks to foreign banks, mostly in Dubai, which appear to be for importing goods and services to Iraq. Iraqi officials have refrained from disclosing the extent of their cash reserves' decline. Iraq's total dollar reserves in the Federal Reserve Bank of New York exceed 100 billion dollars, primarily from oil sales. However, the Central Bank of Iraq has previously held over one billion dollars in cash in its treasuries in Iraq. Iraqi officials stated that two regular cash shipments of U.S. dollars are still planned for later this year. The unconfirmed request from Iraq is for an additional one billion dollars in cash. U.S. officials say that cash dollars have become a lucrative source for powerful militias and corrupt politicians, as well as for the illegal transfer of dollars to Iran. Iraq claims it needs the additional one billion dollar cash shipment to help strengthen its falling national currency. A senior Iraqi official stated that after Washington rejected Iraq's initial request last month, the Central Bank of Iraq submitted an official request last week that the U.S. Treasury is still reviewing. Since last November, Washington has barred 18 Iraqi banks from dealing in dollars and imposed stricter regulations for electronic dollar transfers from their banks. Iraqi officials said that U.S. Treasury officials told Iraq's central banks that sending a large additional cash shipment contradicts Washington's goal of reducing Iraq's use of U.S. banknotes. The U.S. wants transactions to shift towards electronic transactions that are easier to trace. U.S. officials have stated that there is strong evidence that for years, some of the cash dollars sent to Iraq have been smuggled into Iran, Turkey, Lebanon, Syria, and Jordan. The head of the Central Bank of Iraq: We will implement U.S. restrictions on dollar supply. Sanctioned Iraqi banks warn of the dinar's devaluation. U.S. objections to Iraq due to fraud, money laundering, and circumventing the Islamic Republic's sanctions. Combating dollar smuggling to Iran; the U.S. has limited dollar supply in Iraq. Iraqi anti-terrorism forces have acted to combat dollar smuggling to Iran. The Wall Street Journal report: The U.S. prevents the transfer of dollars to Iran by pressuring Iraq.