{"id":1927,"date":"2026-09-30T15:03:43","date_gmt":"2026-09-30T10:03:43","guid":{"rendered":"https:\/\/ipp-news.com\/?p=1927"},"modified":"2026-09-30T15:03:43","modified_gmt":"2026-09-30T10:03:43","slug":"us-retains-grip-on-iraqs-oil-money-after-troop-pullout","status":"publish","type":"post","link":"https:\/\/ipp-news.com\/?p=1927","title":{"rendered":"US retains grip on Iraq\u2019s oil money after troop pullout"},"content":{"rendered":"
\n

US forces are set to withdraw on Wednesday from their last bases in Iraq, a departure celebrated as a victory by Iran and its allies, which have deep influence in the country where 4,500 Americans died during more than two decades of war.<\/strong><\/p>\n

Still, since its 2003 \u200binvasion of Iraq, the US has held effective control of the country\u2019s oil revenue dollars, giving Washington extraordinary leverage over Baghdad\u2019s \u200caffairs, with implications for regional dynamics involving Iran.<\/p>\n

<\/a>How does US control Iraq\u2019s oil money?<\/strong><\/h3>\n

This stems primarily from the management of Iraq\u2019s oil income through the Federal Reserve Bank of New York.<\/p>\n

After the 2003 invasion, the Coalition Provisional Authority (CPA), led by the US, set up the Development Fund for Iraq (DFI), held at the New York Fed, and designed to collect \u200bthe oil revenues for use in reconstruction and development efforts.<\/p>\n

The Fund also aimed to protect the Iraqi oil revenues from lawsuits and claims \u200brelating to Saddam Hussein\u2019s rule.<\/p>\n

An executive order by then-President George W. Bush to set up the arrangement has \u2060been renewed by every president since.<\/p>\n

The DFI eventually became an account of the Central Bank of Iraq at the New York Federal Reserve, as \u200bit remains today.<\/p>\n

<\/a>Leverage to the US<\/strong><\/h3>\n

Oil is Iraq\u2019s most important revenue source, making up about 90% of the state budget.<\/p>\n

This gives \u200bWashington significant sway over the country\u2019s economic and political stability.<\/p>\n

When the Iraqi government asked US troops to leave in 2020, Washington reportedly threatened to cut Iraq\u2019s access to the New York Federal Reserve funds, with Baghdad ultimately backing down.<\/p>\n

While Iraq has gained more control over its financial affairs since the early years of the occupation, the link highlights the \u200benduring influence of the US on the economic landscape of Iraq, even as the latter seeks to assert sovereignty and independence.<\/p>\n

<\/a>Arrangement endured for so long<\/strong><\/h3>\n

The system helped anchor Iraq\u2019s financial stability and safeguards state finances, government officials told Reuters on condition of anonymity.<\/p>\n

It boosts international confidence in the management of oil \u200cincome, eases \u2060access to US dollars needed for trade and imports, and protects revenues from external claims and financial shocks, including claims by creditors and lawsuits, they said.<\/p>\n

The arrangement supports exchange-rate stability and underpins confidence in the Iraqi economy, while working to strengthen domestic financial institutions and assert greater economic sovereignty, they added.<\/p>\n

It also allows the government to push back against some actors, such as Iran-allied groups, who seek fewer curbs on dollar access.<\/p>\n

Last year, the US imposed sanctions on \u200bIraqi banks and individuals it accused \u200bof laundering money for Iran.<\/p>\n

<\/a>Implications for Iraq<\/strong><\/h3>\n

The heavy curbs on US dollar supply led to a parallel, informal market for dollars, resulting in a price spread between the official exchange rate set by the central bank and that on the black market.<\/p>\n

The \u200bprice difference is essentially a risk premium for dealing outside the formal system.<\/p>\n

In his second term, President Donald \u200bTrump has pursued a \u2060campaign of maximum pressure on Iran, with Iraq often caught in the crossfire as Tehran has used it as a vital economic lung.<\/p>\n

The war he launched with Israel against Iran on February 28 added further pressure on Baghdad.<\/p>\n

<\/a>Oil revenue management<\/strong><\/h3>\n

Iraqi oil revenues remain in the custody of the Federal \u2060Reserve Bank \u200bof New York.<\/p>\n

CBI has historically used dollar auctions, formally known as the foreign currency window, \u200bas the main mechanism to supply dollars.<\/p>\n

Private banks and exchange houses could bid daily to purchase US dollars using Iraqi dinars.<\/p>\n

Iraq formally ended the auction system at the start of 2025 after \u200bsignificant US pressure, part of a broad crackdown on alleged siphoning of dollars to sanctioned parties, especially Iran.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

US forces are set to withdraw on Wednesday from their last bases in Iraq, a departure celebrated as a victory by Iran and its allies, which have deep influence in the country where 4,500 Americans died during more than two decades of war. Still, since its 2003 \u200binvasion of Iraq, the US has held effective control of the country\u2019s oil revenue dollars, giving Washington extraordinary leverage over Baghdad\u2019s \u200caffairs, with implications for regional dynamics involving Iran. How does US control Iraq\u2019s oil money? This stems primarily from the management of…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-1927","post","type-post","status-publish","format-standard","hentry","category-english"],"gutentor_comment":0,"_links":{"self":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts\/1927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1927"}],"version-history":[{"count":0,"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts\/1927\/revisions"}],"wp:attachment":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}