After rejecting Iraqi Prime
Minister Adel Abdul Mahdi's request to
begin talks on the withdrawal of American troops, there are
now more signs of the eroding ties between
the two countries.
The Wall Street Journal reports that according to
Iraqi officials (yes, Iraq has anonymous sources too), the Trump administration warned Iraq this week that it risks losing access to
a critical government bank account if Baghdad kicks out American forces.
We
are sure, to Schiff et al., that sounds a lot like 'quid pro quo', but how will
they balance the need to hammer the president with their neocon/establishment
desire to keep boots on the ground, whatever it takes?
The
warning regarding the Iraqi central bank account was conveyed to Iraq’s prime
minister in a call on Wednesday,according to an official in his office, that also touched on the
overall military, political and financial partnership between the two
countries.
When
Iraq needs hard currency, its central bank can request a shipment of bills that
it then distributes into the financial system through banks and currency
exchange houses. While the country’s official currency is the dinar, U.S. dollars
are commonly used.
“The
U.S. Fed basically has a stranglehold on the entire [Iraqi] economy,” said Shwan Taha, chairman
of Iraqi investment bank Rabee Securities.
The potential economic
and financial fallout is weighing on Iraqi officials
“Whenever
you have any amicable divorce, you still have the worry about the children,
pets, furniture and plants, some of which are sentimental,” said a senior Iraqi
politician.
The New York Fed, which can freeze accounts under U.S. sanctions law or if it has reasonable
suspicion the funds could violate U.S. law, said
it doesn’t comment on specific account holders, but as WSJ notes, this
financial threat isn’t theoretical:
The
country’s financial system was squeezed in 2015 when the
U.S. suspended access for several weeks to the central bank’s account at the
New York Fed over concerns the cash was filtering through a loosely regulated
market into Iranian banks and to the Islamic State extremist group.
The
New York Fed doesn’t publicly disclose how much money it currently holds for
Iraq’s central bank. But according to the Central Bank of Iraq’s most recent financial
statement, at the end of 2018, the Fed held nearly $3 billion in
overnight deposits.
The last few years have seen the Iraqi banking system
devastated...
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An adviser to the
prime minister, Abd al-Hassanein al-Hanein, said that while the threat was a
concern, he did not expect the U.S. to go through with it.
“If
the U.S. does that, it will lose Iraq forever,” he said.
Perhaps that is why Iraq
has been building its de-dollarizing, gold reserves for the last few years...
So, after a year of desperately proclaiming that
"The Fed is not political," it turns out that, in fact, The Fed is
extremely geopolitical - we look forward to hearing the Left defend The NY
Fed's "independent" decision to potentially cripple Iran's entire
financial system.
https://www.zerohedge.com/geopolitical/if-us-does-itll-lose-iraq-forever-trump-threatened-cut-baghdads-access-its-ny-fed-cash