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.



UN Seeks $6 Billion to Ease Hunger Catastrophe in Sudan

Displaced Sudanese, who fled the Zamzam camp, gather near the town of Tawila in North Darfur on February 14, 2025. (AFP)
Displaced Sudanese, who fled the Zamzam camp, gather near the town of Tawila in North Darfur on February 14, 2025. (AFP)
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UN Seeks $6 Billion to Ease Hunger Catastrophe in Sudan

Displaced Sudanese, who fled the Zamzam camp, gather near the town of Tawila in North Darfur on February 14, 2025. (AFP)
Displaced Sudanese, who fled the Zamzam camp, gather near the town of Tawila in North Darfur on February 14, 2025. (AFP)

UN officials on Monday asked for $6 billion for Sudan this year from donors to help ease what they called the world's worst ever hunger catastrophe and the mass displacement of people brought on by civil war.

The UN appeal represents a rise of more than 40% from last year's for Sudan at a time when aid budgets around the world are under strain, partly due to a pause in funding announced by US President Donald Trump last month that has affected life-saving programs across the globe.

The UN says the funds are necessary because the impact of the 22-month war between Sudan's army and the paramilitary Rapid Support Forces (RSF) - that has already displaced a fifth of its population and stoked severe hunger among around half its population - looks set to worsen.

World Food Program chief Cindy McCain, speaking via video to a room full of diplomats in Geneva, said: "Sudan is now the epicenter of the world's largest and most severe hunger crisis ever."

She did not provide figures, but Sudan's total population currently stands at about 48 million people. Among previous world famines, the Bengal Famine of 1943 claimed between 2 million and 3 million lives, according to several estimates, while millions are believed to have died in the Great Chinese Famine of 1959-61.

Famine conditions have been reported in at least five locations in Sudan, including displacement camps in Darfur, a UN statement said, and this was set to worsen with continued fighting and the collapse of basic services.

"This is a humanitarian crisis that is truly unprecedented in its scale and its gravity and it demands a response unprecedented in scale and intent," UN Emergency Relief Coordinator Tom Fletcher said.

One of the famine-stricken camps was attacked by the RSF last week as the group tries to tighten its grip on its Darfur stronghold.

While some aid agencies say they have received waivers from Washington to provide aid in Sudan, uncertainty remains on the extent of coverage for providing famine relief.

The UN plan aims to reach nearly 21 million people within the country, making it the most ambitious humanitarian response so far for 2025, and requires $4.2 billion - the rest being for those displaced by the conflict.