Iran circumvents sanctions by draining Iraq’s economy

Iran circumvents sanctions by draining Iraq’s economy

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As soon as the US sanctions on Iran entered into force, the debate on the Iraqi street began, and there was a concern similar to that of Tehran in Iraqi circles as the economic, political and even social relations require this.

The current sanctions on Tehran are the most severe in the series of US sanctions against Iran, which was referred to by US President Donald Trump, which he described as the most severe sanctions ever. He said that in November it would reach a higher level, and warned anyone dealing with Iran that he would not be able to deal with the United States.

On the other hand, the Iraqi response was expressed by the Iraqi Prime Minister Haider Abadi, where he stressed that his government “does not sympathize” with the US sanctions imposed on Iran, but will abide by them to protect its interests.
According to experts, Americans learned the lesson from past years and tried to prevent Iran as much as possible from working through a third country. Iraq was one of the loopholes through which Iran traded oil and bypassed financial constraints.
The clear position of Iraq , expressed through the visit of Iraqi Prime Minister Haider Abadi to Turkey, and during his meeting with Turkish President Recep Tayyip Erdogan, stressed the opening of Iraq to the Turkish markets, and the framing of a new phase, based on the joint economic, political and security cooperation of Iraq and Turkey .

For his part, President Erdogan expressed his country’s readiness to stand by Iraq in rebuilding the cities affected by terrorism, as well as launching its water quotas, and opening consulates in Basra and Mosul to serve as a start for joint action in all fields.
The Iraqi Central Bank, in turn, announced that Iraq will not deal with Iran in the currency of the dollar, within the trade exchange, which amounted to ten billion dollars, or any other banking transactions.
The government’s adviser on financial affairs also said that the government decided not to deal with Iran, to prevent the import of cars and consumer goods, as well as electricity and other materials, and to replace them by going to Saudi and Kuwaiti markets.
On the other hand, Iranian officials expressed their anger at the decision of the Central Bank of Iraq to abide by US sanctions, while there were Iranian demands for compensation from Iraq to the damage caused by the Iran-Iraq war in the eighties of the last century of environmental damage.
Thus, the Iranian currency is losing ground against the dollar during the past few days as the central bank sold between 150-170 million dollars a day. After declining, the demand for the dollar increased to 200 million dollars

Iraqi economists and bankers warned of suspicious operations carried out by Iran to obtain dollars from Iraq, which led to the devaluation of the dinar, after the Iranian currency became worthless, following the application of Iraqi banks to the decision of US sanctions.
Here, Iraqi economists attribute this decline in the value of the dinar to the purchase of Iranian traders through agents in Iraq, the hard currency from the Iraqi markets to counter US sanctions by banning dealing with Tehran in dollars.

They warned of the methods aimed at dumping the Iraqi market in counterfeit local currency to buy the dollar, after the Iranian riyal is worthless in transactions inside and outside Iraq.
The other method is to double the drug trade and inject large amounts of narcotics into the Iraqi market in which Iran to get the dollar.
In the same context, informed sources pointed out that several Iraqi investors in Iran suffered heavy losses after the fall of the Iranian currency, and were exposed to fraud by those banks, which announced to provide interest (15%) on fixed deposit, by promoting that Iranian banks are Islamic and not in violation of Islamic law (sharia), Hundreds of Iraqis have deposited billions of dollars in Iranian banks, through their branches inside Iraq, in addition to some other Iraqi banks.
At the same time, Iraqi government experts called on to take quick steps to prevent the decline of the Iraqi currency, and confront methods , they described it as malicious ones , aimed at harming the Iraqi economy.
The economic openness of Iraq to the Arab and international markets is the best way to replace the Iranian goods. Opening up to neighboring Arab markets, in addition to Turkey, may be one of the most important alternatives.
Iraq today sees with the interest of its people in dealing with the US sanctions on Tehran, sanctions that will have negative and catastrophic effects on the Iraqi situation in case of rejection of its application. According to experts, the most important sanctions imposed on Iraq in the case of dealing with Iran, the abstain of world countries to buy Oil, which is the backbone of the Iraqi economy , and the big companies will be forced to leave , especially as Iraq does not currently have any sources to boost its budget other than oil.

Amer Al Omran
Iraqi Studies Unit
Rawabet Center for Research and Strategic Studies