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Did US Dollar Restrictions in Iraq Affect Tehran?

An exchange shop in central Baghdad (AP)
An exchange shop in central Baghdad (AP)
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Did US Dollar Restrictions in Iraq Affect Tehran?

An exchange shop in central Baghdad (AP)
An exchange shop in central Baghdad (AP)

A senior Iraqi government financial official said that the aim of the US restrictions imposed on selling dollars to banks and merchants is purely political and chiefly aims to curb the smuggling of hard currencies abroad, especially to Iran.

The New York Federal Reserve had introduced tighter controls on international dollar transactions by commercial Iraqi banks in November.

The move was designed to stop the illegal siphoning of dollars to Iran and apply more pressure along with US sanctions imposed over Tehran's nuclear program and other disputes, leaving Tehran struggling to source dollars.

“The restrictions imposed by Washington, which reduced dollar sales from $250 million to about $55 million per day, isolated financial interests that are active in the shadow of the factions and currency smugglers,” explained the official, who spoke under conditions of anonymity.

“This, however, does not mean that Iran has been greatly affected by the current situation,” they added.

“Tehran still manages its financial transactions formally with Iraqi banks,” noted the official, adding that Iran is trying to mitigate the damages sustained by some Shiite groups after they lost access to dollars due to US restrictions.

“Leaders of influential parties in Iraq believe that US restrictions were motivated by a plan to overthrow the Coordination Framework government, but Washington itself took internal measures to address the US public debt, in preparation for an expected economic recession.”

According to data leaked from Coordination Framework figures, Tehran is currently exerting pressure to help its friends affected by the dollar restrictions, but it is not very interested in opposing the restrictions themselves.

“Shiite party leaders have contacted circles in Tehran to convince them that the dollar crisis in Iraq targets Iranian national security,” a former government official revealed.

Hard currencies smuggled from Iraq often go to Iran-affiliated parties in Syria, Yemen, and Lebanon.

Observers believe that Iraqi Prime Minister Mohammad Shia al-Sudani’s decision to replace Mustafa Ghaleb Mukheef with Ali Mohsen Al-Alaq as Central Bank Governor will help those affected by the restrictions somewhat recover in the market.

Alaq enjoys close relations with former prime minister and head of the State of Law Coalition Nouri al-Maliki.

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On Lebanon Border, Israel and Hezbollah’s Deadly Game of Patience

Smoke is seen as an unmanned aerial vehicle (UAV) is intercepted following its launch from Lebanon, amid cross-border hostilities between Hezbollah and Israeli forces, at Kibbutz Eilon in northern Israel, July 23, 2024. (Reuters)
Smoke is seen as an unmanned aerial vehicle (UAV) is intercepted following its launch from Lebanon, amid cross-border hostilities between Hezbollah and Israeli forces, at Kibbutz Eilon in northern Israel, July 23, 2024. (Reuters)
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On Lebanon Border, Israel and Hezbollah’s Deadly Game of Patience

Smoke is seen as an unmanned aerial vehicle (UAV) is intercepted following its launch from Lebanon, amid cross-border hostilities between Hezbollah and Israeli forces, at Kibbutz Eilon in northern Israel, July 23, 2024. (Reuters)
Smoke is seen as an unmanned aerial vehicle (UAV) is intercepted following its launch from Lebanon, amid cross-border hostilities between Hezbollah and Israeli forces, at Kibbutz Eilon in northern Israel, July 23, 2024. (Reuters)

In deserted villages and communities near the southern Lebanon border, Israeli troops and Hezbollah fighters have watched each other for months, shifting and adapting in a battle for the upper hand while they wait to see if a full scale war will come.

Ever since the start of the Gaza war last October, the two sides have exchanged daily barrages of rockets, artillery, missile fire and air strikes in a standoff that has just stopped short of full-scale war.

Tens of thousands have been evacuated from both sides of the border, and hopes that children may be able to return for the start of the new school year in September appear to have been dashed following an announcement by Israeli Education Minister Yoav Kisch on Tuesday that conditions would not allow it.

"The war is almost the same for the past nine months," Lieutenant Colonel Dotan, an Israeli officer, who could only be identified by his first name. "We have good days of hitting Hezbollah and bad days where they hit us. It's almost the same, all year, all the nine months."

As the summer approaches its peak, the smoke trails of drones and rockets in the sky have become a daily sight, with missiles regularly setting off brush fires in the thickly wooded hills along the border.

Israeli strikes have killed nearly 350 Hezbollah fighters in Lebanon and more than 100 civilians, including medics, children and journalists, while 10 Israeli civilians, a foreign agricultural worker and 20 Israeli soldiers have been killed.

Even so, as the cross border firing has continued, Israeli forces have been training for a possible offensive in Lebanon which would dramatically increase the risk of a wider regional war, potentially involving Iran and the United States.

That risk was underlined at the weekend when the Yemen-based Houthis, a militia which like Hezbollah is backed by Iran, sent a drone to Tel Aviv where it caused a blast that killed a man and prompted Israel to launch a retaliatory raid the next day.

Standing in his home kibbutz of Eilon, where only about 150 farmers and security guards remain from a normal population of 1,100, Lt. Colonet Dotan said the two sides have been testing each other for months, in a constantly evolving tactical battle.

"This war taught us patience," said Dotan. "In the Middle East, you need patience."

He said Israeli troops had seen an increasing use of Iranian drones, of a type frequently seen in Ukraine, as well as Russian-made Kornet anti tank missiles which were increasingly targeting houses as Israeli tank forces adapted their own tactics in response.

"Hezbollah is a fast-learning organization and they understood that UAVs (unmanned aerial vehicles) are the next big thing and so they went and bought and got trained in UAVs," he said.

Israel had responded by adapting its Iron Dome air defense system and focusing its own operations on weakening Hezbollah's organizational structure by attacking its experienced commanders, such as Ali Jaafar Maatuk, a field commander in the elite Radwan forces unit who was killed last week.

"So that's another weak point we found. We target them and we look for them on a daily basis," he said.

Even so, as the months have passed, the wait has not been easy for Israeli troops brought up in a doctrine of maneuver and rapid offensive operations.

"When you're on defense, you can't defeat the enemy. We understand that, we have no expectations," he said, "So we have to wait. It's a patience game."