Iraq Bans Dollar Payments

Fri 06 Oct 2023 ▪ 6 min of reading ▪ by Nicolas T.
Getting informed Payment

The Iraqi government will ban all cash withdrawals and transactions in US dollars starting from January 1, 2024.

Irak dollar

Iraq: a Dollarized Nation

For more context, it’s important to remember that Iraq has been heavily influenced by the United States since the hanging of Saddam Hussein.

The Second Gulf War is often referred to as a “war for oil.” In reality, it was a war for the petrodollar.

The goal was to remove Saddam Hussein, who had just priced Iraqi oil in euros instead of dollars. “The dollar will be replaced by other foreign currencies, including the euro,” said Finance Minister Hekmat Ibrahim al-Azzaoui at the time.

This was excellent news for the old continent, the largest importer of Iraqi oil, as it was granted the same extraordinary privilege as the United States. That is, exchanging paper (debt) for oil.

At that time, the euro was struggling, at its historic low, around 0.82 euros to the dollar. The Iraqi favor allowed it to appreciate by 30% in a matter of months.

Everyone knows the rest. Dick Cheney, Vice President under George Bush, pushed Colin Powell to lie to the United Nations about Saddam’s alleged weapons of mass destruction.

The Iraq War was a show of force to demonstrate to Europe and Gulf countries what it costs to refuse the imperial currency. Oil sales were denominated in dollars immediately after the capture of Baghdad.

The color of the bill in which energy is sold is at the root of wars that erupt around the world. The Ukraine war is no exception.

The Return of the Dinar

Twenty years after Operation Desert Storm, all Iraqi oil revenues are still deposited in an account with the US Federal Reserve. In other words, the US Treasury directly controls Iraqi foreign exchange reserves.

Iraqi Deputy Hussein Mouanes told The Cradle in May: “Iraq continues to be a slave to the US dollar. Our government doesn’t really control its own money. It’s crucial to move away from the dominance of the dollar, especially as it has become a tool to impose sanctions on countries. It’s time for Iraq to rely on its national currency.”

With over $100 billion in reserves in the form of dollars, Baghdad is at the mercy of the United States. The US Treasury has even sanctioned fourteen Iraqi private banks for doing business with Syrian and Iranian neighbors.

All of this led the US Treasury to refuse to transfer one billion dollars in cash to Iraq last month. Frustrated, the Central Bank of Iraq finally decided to ban cash withdrawals and payments in dollars starting from January 1, 2024.

After that date, dollars can only be withdrawn in dinars at the official rate of 1,320 dinars (compared to 1,560 on the black market).

“You want to transfer? Transfer. You want a card in dollars? Here you go, you can use the card inside Iraq at the official rate, or if you want to withdraw cash, you can at the official rate in dinars. But don’t talk to me about cash dollars anymore,” a representative of the central bank told Reuters.

However, some Iraqis seem to strongly prefer the occupant’s cash.

What about Bitcoin?

The land of the two rivers will take control of its destiny within three months. The goal is to de-dollarize an economy where the greenback prevailed due to recurring monetary crises caused by war.

This is the latest blow to the United States in a region where Iran, Saudi Arabia, and the United Arab Emirates have just joined the BRICS, an openly anti-dollar organization.

“There are no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro, whether it is the Saudi riyal,” the Saudi Finance Minister had already told Bloomberg in February at the World Economic Forum.

Coming back to Iraq, this is a country that should be more interested in bitcoin. Especially as its neighbor Iran is already using it to pay for part of its imports. Iran has controlled up to 5% of the bitcoin hashrate (in 2021).

Iraqis and Iraqi banks would be well advised to use bitcoin to trade without fear of US reprisals.

No one can prevent a Bitcoin transaction, which also has the advantage of being the best store of value in human history. A means of protection in the event of new American treachery.

Not to mention the constant devaluation of the dollar. As Vladimir Putin stated at the Valdai Discussion Club this Thursday, the United States has printed about $9.5 trillion since the start of the Covid hysteria…

And as US government debt soars, it’s high time to turn away from the dollar. Iraq understood this back in 2000…

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Nicolas T. avatar
Nicolas T.

Bitcoin, geopolitical, economic and energy journalist.


The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.