In a big move that signals a significant shift in economic policy, the Finance Committee in the Iraqi Parliament has officially called for the cessation of selling oil in US dollars, advocating instead for transactions in alternative currencies.
This historic decision, detailed in a statement issued on 31 January, aims to counteract the impact of US sanctions on Iraq’s banking sector and to assert greater financial independence.
“We believe that it is crucial to move away from the hegemony of the dollar, especially as it has become a tool to impose sanctions on countries. It is time for Iraq to rely on its local currency.”
Iraqi MP and Finance Committee member Hussein Mouanes
The committee’s announcement comes against the backdrop of ongoing sanctions imposed by the US Treasury, which cites money laundering concerns as the rationale for its actions against Iraqi banks.
These sanctions have been criticized by the Finance Committee as arbitrary decisions that necessitate a strong national response.
The committee argues that such measures not only undermine the Iraqi Central Bank’s efforts to stabilize the dollar exchange rate but also inflict significant harm on the livelihoods of Iraqi citizens.
In a firm rejection of these US practices, the Finance Committee has reiterated its call for the Iraqi government and the Central Bank to diversify the nation’s cash reserves into various foreign currencies. This step is seen as crucial for reducing Iraq’s dependency on the US dollar and mitigating the effects of American financial dominance.
The recent imposition of sanctions on Iraqi Al-Huda Bank, under allegations of laundering money for Iran, underscores the urgency of Iraq’s dedollarization efforts.
Moreover, the statement coincides with remarks from a senior US Treasury official, emphasizing Washington’s expectation for Baghdad’s cooperation in disrupting the finances of Iran-backed resistance factions within Iraq.
The narrative of US control over Iraq’s financial system is further complicated by the challenges Baghdad faces in accessing its oil revenues, which are held at the Federal Reserve Bank of New York, and in settling energy debts to Iran.
These issues highlight the broader implications of the US’s financial influence over Iraq.
In response to these challenges, the Iraqi government has been actively pursuing strategies to strengthen the national currency against the US dollar.
Measures announced include a comprehensive ban on the use of the US dollar for personal and business transactions, as reported last May. These efforts are part of a broader initiative to shift away from the petrodollar system and to promote economic sovereignty.
Iraqi MP and Finance Committee member Hussein Mouanes voiced a strong critique of the current situation, stating, “It is clear that Iraq is economically dominated by the US, and our government does not truly control or have access to its own money … We believe that it is crucial to move away from the hegemony of the dollar, especially as it has become a tool to impose sanctions on countries. It is time for Iraq to rely on its local currency.”
This declaration marks a pivotal moment in Iraq’s economic history, as the country seeks to navigate the complex landscape of international finance and sanctions.
By taking official steps towards dedollarization, Iraq is not only challenging the status quo but also paving the way for greater economic autonomy and stability in the face of external pressures.
