Reports And AnalysisBreakingLebanonCentral Bank Of IraqExchange The DollarThe Dollar Crisis
Shafaq News / The American newspaper “Final Times” reported that Iraq is still trying to control the currency crisis, which indicates that its oil-dependent economy 20 years after the US invasion, is still fragile, revealing continuous frauds to smuggle the dollar by bypass roads to Lebanon.
The US report, translated by Shafaq News, quoted Central Bank Governor Ali Al-Alaq as saying, defending the measures he took to stabilize the currency market, where there was a scarcity of the dollar and the depreciation of the dinar, explaining, “We focused on solving the roots of the problem and we are witnessing some positive indicators, after the crisis last November.”
The Iraqi authorities coordinate with the United States by applying strict rules to banks as part of efforts to eliminate money laundering and secret cash flows abroad, but these measures caused unexpected repercussions, including a significant decline in the dollar supply, which exacerbated inflation and created difficulties for Iraqis, as dealing in dollars prevails due to mistrust of the dinar.
The report pointed out that Baghdad can only access oil sales money through the US Federal Reserve, which has held Iraq’s foreign exchange reserves since the invasion, a mechanism that states that the central bank requests its dollars from the Federal Reserve and then sells them to commercial lenders and exchange companies in exchange for the dinar, in what is known as the dollar auction, but US and Iraqi officials have long complained that widespread frauds allowed the withdrawal of large sums out of Iraq, and the money reached US sanctions groups in Iran, Syria and Lebanon.
The report quoted U.S. official working in Baghdad David Burger as saying, “We have seen an increasing number of suspicious transactions. Large sums of money left through electronic transfers on clear fraudulent grounds.”
After the $2.5 billion “theft of the century” and the ban on 4 banks from transactions, the report recalled the decision to abandon paper transactions in money transfer procedures, and to implement a more transparent digital platform for transfers. But some banks and traders were unwilling to disclose the details of the final recipients, while some were late in adjusting to the new rules.
Al-Alaq was quoted by the report as saying that there are signs of progress as “we are seeing an increase in the number of transactions on the digital platform, and there are more Iraqi traders officially registering to participate.”
Among the measures followed to contain the dollar crisis and the value of the dinar, a scheme was put forward that allows travelers to exchange the dinar for up to $7,000 at airports to use abroad, which allowed cashiers to book flights that they will not use, but only to reach the US currency, and then sell them on the black market.
“We saw flights to Amman or Beirut that were completely out of the planes but the planes were empty (passengers),” the report quoted an employee of an airline at Baghdad airport as saying. The report pointed out that this gap has been narrowing since last week as the available amount was reduced to only $1.5.
Some of these dollars ended up in Lebanon, which is suffering from its own economic crisis, the report noted. The report quoted one of the tellers as saying that he was sending dozens of Iraqis daily to withdraw dollars from Baghdad airport to bring them to Lebanon, explaining, “We make about $1,200 from every 10,000 dollars we get from Iraq.”
Al-Alaq was quoted in the report as saying that “our biggest problem is that Iraqis rely on cash dollars. Isn’t it weird to pay for a foreign currency in one’s country? The whole world is moving towards giving up cash, and Iraq should do that as well.”