Key facts
- Iraq and the US have agreed to continue dollar cash shipments.
- A new shipment is expected in the coming days.
- The US had halted shipments in April, including one of about $500 million.
- The resumption of shipments is contingent on Iraq blocking dollar flows to Iran-backed militias.
- Iraq pledged to stop salary distributions to members of Iran-aligned militias.
- The US strategy aims to dismantle the economic machinery supporting these militia operations.
Iraq has reached an understanding with the United States to continue dollar cash shipments, with a new shipment expected in the coming days, according to a government spokesperson. The US had halted these shipments in April, including one of approximately $500 million, after concerns arose about the flow of dollars to Iran-backed militias. The resumption of these vital currency shipments to Baghdad is contingent upon Iraq conceding to stringent US demands to sever these dollar flows. Iraqi authorities have explicitly pledged to block Iran and aligned armed factions from extracting dollars via domestic currency-exchange networks, and the government committed to halting official salary distributions to members of Iran-aligned militias. This financial strategy by the US aims to dismantle the economic machinery supporting the operations of these groups. Iraq's cash-dependent economy requires approximately $13 billion annually in physical dollar shipments from the Federal Reserve to function, necessitated by a lack of private Iraqi financial institutions with international ties.