Iraq Dollar Ban: Tough Choices for the ‘Coordination Framework’

Currency exchange shop in the city of Najaf, Iraq (Reuters)
Currency exchange shop in the city of Najaf, Iraq (Reuters)
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Iraq Dollar Ban: Tough Choices for the ‘Coordination Framework’

Currency exchange shop in the city of Najaf, Iraq (Reuters)
Currency exchange shop in the city of Najaf, Iraq (Reuters)

Political factions involved in speculation and dollar smuggling operations have suffered a significant blow as Iraqi authorities are set to ban external transactions in the US currency starting in January.

A government official, speaking to Asharq Al-Awsat, affirmed that Washington is looking to reduce the circulation of physical dollars to prevent their use in suspicious activities, even months after the implementation of the US Federal Reserve’s restrictions.

Companies and individuals in Iraq will be required to conduct financial transactions in the local dinar at the official exchange rate.

However, this process is expected to take a considerable amount of time before the Iraqi market fully adapts, unless political forces discover new ways of circumventing these restrictions, as indicated by an Iraqi banking official.

According to journalistic and financial sources, Washington rejected Iraq’s request for a billion dollars in cash from the Federal Reserve Bank due to concerns over Baghdad’s conflicting efforts to curb the use of physical US dollars and halt illicit flows to Iran.

Washington routinely dispatches shipments of dollars to Iraq through US military aircraft, but since the end of last year, it has imposed restrictions and mechanisms to track e-transfers involving these funds.

As a result, Iraq’s Central Bank has been forced to reduce the allotments of currency exchange companies in physical US dollars by more than half.

This will have future implications on the exchange rate of the Iraqi dinar against the dollar in the parallel market, and it will almost halve Iraq’s imports from Iran.

Talk of the ban has forced political parties within the “Coordination Framework” coalition to discuss “ideas on how to swiftly change the leadership of the Central Bank,” according to Iraqi lawmakers who spoke with Asharq Al-Awsat.

However, what hinders this decision is the political timing, which raises US concerns.

The Central Bank of Iraq was supposed to succeed in channeling dollar sales through the official exchange window, but political entities with financial and commercial interests have found a way to trade dollars in an off-the-grid parallel market beyond the state’s control.



Gazans Must Return Home, EU Plans to Tell Israel 

A Palestinian man and two girls stand a mid of the rubble of homes, destroyed by the Israeli army's air and ground offensive against Hamas in in Bureij refugee camp, central Gaza Strip, Monday, Feb. 17, 2025. (AP)
A Palestinian man and two girls stand a mid of the rubble of homes, destroyed by the Israeli army's air and ground offensive against Hamas in in Bureij refugee camp, central Gaza Strip, Monday, Feb. 17, 2025. (AP)
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Gazans Must Return Home, EU Plans to Tell Israel 

A Palestinian man and two girls stand a mid of the rubble of homes, destroyed by the Israeli army's air and ground offensive against Hamas in in Bureij refugee camp, central Gaza Strip, Monday, Feb. 17, 2025. (AP)
A Palestinian man and two girls stand a mid of the rubble of homes, destroyed by the Israeli army's air and ground offensive against Hamas in in Bureij refugee camp, central Gaza Strip, Monday, Feb. 17, 2025. (AP)

The EU plans to tell Israel next week that Palestinians uprooted from their Gaza homes should be ensured a dignified return and that Europe will contribute to rebuilding the shattered territory, according to a document seen by Reuters.

That echoes Arab positions but conflicts with President Donald Trump's stated aim for the US to take over the shattered coastal strip and rebuild it into a "Riviera of the Middle East" while Gazans emigrate to other nations.

The EU, which has been a major aid provider to Palestinians, is to outline its position to Israeli officials in talks in Brussels on February 24 as part of the EU-Israel Association Council, the first such session since 2022.

A document outlining the draft EU position emphasizes both Europe's commitment to Israel's security and its view that "displaced Gazans should be ensured a safe and dignified return to their homes in Gaza".

"The EU will actively contribute to a coordinated international effort to early recovery and reconstruction in Gaza," it said, also calling for full humanitarian access.

"The EU deeply deplores the unacceptable number of civilians, especially women and children, who have lost their lives, and the catastrophic humanitarian situation notably caused by the insufficient entry of aid into Gaza, in particular in the North."

Israel launched its assault on Gaza after fighters from the Palestinian group Hamas stormed southern Israel on Oct. 7, 2023, killing 1,200 people and taking more than 250 hostages, according to Israeli tallies.

More than 48,000 people have been killed in Gaza, according to Palestinian health officials. Much of the enclave has been laid waste with most of its 2.3 million pre-war population displaced multiple times, humanitarian agencies say.

"The EU strongly opposes all actions that undermine the viability of the two-state solution," the document added, referring to its position that Palestinians should have an independent homeland alongside Israel.