The political and economic crises that beset Iraq are classified as the harshest on the level of countries in the region for more than 13 years after the invasion of the US to its territory in 2003, and the terrorism formed the first Trinity, which has plagued the country’s stability, and stood as an obstacle to any political or economic stability, and this scourge reached to the peak after that domination of the state regulation (Daesh) on the city of Mosul in June 2014, and managed to isolate it from the rest of Iraq.
Since more than two years Iraq tried with all its allies to cooperate to expel this organization and strangle it , but the economic conditions of Iraq formed another obstacle in the face of these challenges, and the financial corruption within the state institutions was of the biggest obstacles, so it was necessary to be a confrontation on two fronts; the home front (within the framework of the Iraqi government and control of the institutions and parties within the territory of Iraq), and the foreign front ( the cooperation with allied nations to confront terrorism and dry its financial activities and others), so it was necessary for Iraq to enter into bilateral and multilateral agreements to get rid of this terrorism, which introduced him in a severe economic crisis in more than a two years at least.
In this context , the US embassy in Iraq indicated to the bilateral agreement (US-Iraqi agreement) to counter the terrorism of the organization “Daesh” and drying its financial sources and all its economic activities and sources of funding, on the other hand to monitor the bodies that finance the regulation or deal with him, noting that the organization is going through a difficult financial situation which confused his calculations and could undermine its existence on the short and medium term.
Daesh in trouble
Information indicates that the state regulation “Daesh” is suffering more than ever from a severe economic crisis, squandered its efforts and its ability to withstand in any confrontation, not to mention the international restrictions on its resources and striking vital sites in areas controlled by him that formed the main source of funding for him and his operations since the more than two years.
In a new development in this context , the chief financial officer at the US Embassy in Iraq, John Sullivan, stressed that the cooperation agreement between “Washington and Baghdad to stop the financing Daesh made great strides , and that the organization, which reproduced mafia-style is passing financial crisis that undermined its preparations for the battle of Mosul and will finish it in its current form in the event of loss of the City”.
Sources and reports from the city of Mosul have already indicated that al Daesh now depends on the imposition of financial penalties because of the financial hardship experienced by him , and replace sanctions with financial fines to get the required money to be ready to face the ambient conditions, particularly the liberation of Mosul, the repercussions of the future. ” According to observers, this financial distress may cause its drain and its end more quickly.
The earlier report of the British newspaper “The Independent” said “The Daesh” were forced to cut salaries of its fighters in half because of the financial crisis experienced by the organization, after the Allied bombing oil sites and important economic centers. In addition that Daesh sought in Nineveh province, at the current stage to overcome its financial crisis depending on reducing the so-called sponsorship program for the families of his supporters in half because of a severe financial crisis experienced by the organization after the loss of most of the sources of financial funding.
Reports said that the organization has lost a lot of its financial revenues after it was fallen from eighty million dollars to fifty-six million dollars in March, after the destruction of a lot of regulation fields in Syria and Iraq because of aerial bombardments.
In February 2016, the international coalition forces destroyed the building of the branch of Iraqi Central Bank of the city , along with other banks, namely: building of the branch of Land Bank , and the building of a branch of the Rasheed Bank and the Diwan al- Zakat of the organization .As well as the financial resources of the organization in Iraq and Syria were fallen. According to a report published by the British newspaper “daily Telegraph” , in April 2016, the organization “Daesh” loses about 30% of its income following the reduction of the size of territory controlled by him , and thus the loss of revenues from taxes that were imposed in these areas.
Agreement also is the first of its kind between the Federal Reserve and the Treasury Department on the one hand, and the Central Bank of Iraq, on the other hand to monitor the dollar shipments and ensure the prevention of the arrival of these funds to illicit destinations , it is successfully applied, a turning point in this file.
And added “The Central Bank of Iraq and through close cooperation with the US side put a black list to prevent funds from reaching to the territory controlled by Daesh, and has more than 150 companies today.” Among the most important achievements of the Convention was “dramatically to reduce the dollar shipments to Iraq and replace it by dinar.”
And here to point out that the federal reserve and the US Department of the Treasury took the decision last year to temporarily halt the flow of billions of dollars to the Central Bank of Iraq due to its growing concern that the currency may end up in Iranian banks, and perhaps being funneled to militants of the organization Daesh, where American finance officials are making a world track process to keep the dollar from falling into the hands of what designated by US the “enemies” who can use it to finance their activities.
Sullivan adds , that since the year and before the signing of the agreement , “militants of Daesh were dealing in dollars, and this is stopped today,” noting that “the senior leadership of the organization receives in dollars”, and speaking about the financial crisis afflicting Daesh, “and added that” the salary of the ordinary armed men fell more than 50 percent, as well as to their dealings with Dinars prevents them from making international transactions. ” He pointed out that “Iraq was one of the most countries that buy the dollar for years and there are a radical change today.”
John Sullivan added that “The organization was formerly dependent on oil and after the decline of prices , the organization began trying to swap oil with goods or services.” He revealed that “the campaign against Mosul found a lot of hidden cash .”
Here to quote what was reported by informed sources that the organization was kept getting on the hard currency through the sale of basic commodities produced in factories controlled by him , to the local distributors in dollars but pays wages in dinars to thousands of fighters and public officials.
Earlier reports revealed that the organization win up to 20 percent under the prices of preferential currency imposed by him , which raise the price of the dollar when exchanged with denominations smaller than the dinar .
With regard to the central bank , Sullivan has praised the efforts of the bank in the reform, noting that the bank has done during the year more than what has been achieved in the past 13 years. ” He added that “Washington and Baghdad will exchange the required intelligence, financial, security information to stop transfers for Daesh .”
US officials have insisted on tighter controls and exchange information on how the dollars are distributed to financial firms in Iraq, according to US officials and Iraqis.
In an article published in the Washington Institute for Near East Policy about the speech of Daniel Glaser , the assistant of US Treasury secretary for affairs of terrorist financing at the “Office of Terrorism and Financial Intelligence”: “But the main concern in Iraq is in exploiting of” Daesh “to the exchange offices that its numbers are approximately 1900 Office, the number was so huge that increases the difficulty of organizing it effectively. In the long run, Iraq needs to reduce the sector by reducing the number of exchange offices to a level that can be monitored to a reasonable extent. The inherent challenges in the short term mainly includes actions to be taken at the level of the exchange offices working within the territory of the organization. Central Bank of Iraq issued a public regulation that included more than a hundred similar institution and the Treasury ministry also put an active arrangements for the exchange of information with Iraqi officials in order to warn them from any exchange offices that raise suspicions. The entities can be added to this list or removed when the territories are liberated . And Financial institutions around the world must see this list to avoid doing any business with any exchange office included on the blacklist. So far, the central bank has prevented these offices to have access to millions of dollars, in a clear sign of Iraq’s commitment to this issue. ”
In this context, the Central Bank of Iraq has taken a decision to deny three private banks and 99 banking company from entering to the window of sale of the currency , for violating the laws and regulations on the purchase and sale of foreign currency . It is a positive step to stop the extended corruption and access to this sensitive institution .The central bank also took steps to improve the laws of financial system in Iraq adopting laws to combat money laundering and combating the financing of terrorism and the development of systems to be applied.
In conclusion, it must be noted that the Iraq war and its allies against terrorism, and specifically the organization of Daesh is not an easy task, because the expertise owned by these organizations to deal with the strategies, so it is necessary to besiege its financial resources and sources of funding and their illegal economic activities . Iraq today is in need of an international support to eradicate the sources of terrorism and draining its resources, not to mention the need for internal controls to eliminate corruption, which parallels the terrorism in its effect on the stability of the country, not to mention the follow-up to the abuses that take place in the Iraqi state institutions, and to support the Iraqi Central Bank’s efforts, which is the most important financial institution in Iraq, it is a move that will protect Iraq’s resources and contribute to save him from the clutches of corruption and terrorism which exhausted it over the past years.
Rawabet Center for Research and Strategic Studies