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“If The US Does That, It’ll Lose Iraq Forever” – Trump Threatened To Cut Off Baghdad’s Access To Its NY Fed Cash
“If The US Does That, It’ll Lose Iraq Forever” – Trump Threatened To Cut Off Baghdad’s Access To Its NY Fed Cash
After rejecting Iraqi Prime Minister Adel Abdul Mahdi’s request to begin talks on the withdrawal of American troops, there are now more signs of the eroding ties between the two countries.
The Wall Street Journal reports that according to Iraqi officials (yes, Iraq has anonymous sources too), the Trump administration warned Iraq this week that it risks losing access to a critical government bank account if Baghdad kicks out American forces.
We are sure, to Schiff et al., that sounds a lot like ‘quid pro quo’, but how will they balance the need to hammer the president with their neocon/establishment desire to keep boots on the ground, whatever it takes?
The warning regarding the Iraqi central bank account was conveyed to Iraq’s prime minister in a call on Wednesday, according to an official in his office, that also touched on the overall military, political and financial partnership between the two countries.
When Iraq needs hard currency, its central bank can request a shipment of bills that it then distributes into the financial system through banks and currency exchange houses. While the country’s official currency is the dinar, U.S. dollars are commonly used.
“The U.S. Fed basically has a stranglehold on the entire [Iraqi] economy,” said Shwan Taha, chairman of Iraqi investment bank Rabee Securities.
The potential economic and financial fallout is weighing on Iraqi officials
“Whenever you have any amicable divorce, you still have the worry about the children, pets, furniture and plants, some of which are sentimental,” said a senior Iraqi politician.
The New York Fed, which can freeze accounts under U.S. sanctions law or if it has reasonable suspicion the funds could violate U.S. law, said it doesn’t comment on specific account holders, but as WSJ notes, this financial threat isn’t theoretical:
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Iraq Shrugs Off Low Prices, Boosts Output To Record Levels
Iraq Shrugs Off Low Prices, Boosts Output To Record Levels
Despite oil prices at their lowest levels in five years, Iraq is producing at record levels.
For the month of December, Iraq produced nearly 4 million barrels per day, according to Oil Minister Adel Abdul Mahdi, an all-time high for the war-torn country. That is critical for a government that depends on oil for more than 90 percent of its revenues. Rather than paring back production levels to stop a price slide, Iraq is doing what all rational actors are aiming to do (if they can): produce more oil to make up for lost revenues from rock bottom prices.
“Because of the new challenges, especially the price of oil, Iraq has to try its best to raise it oil production and exports,” Deputy Prime Minister Rowsch Nuri Shaways said in Davos, Switzerland on January 21.
OPEC has continuously vowed to let the market sort itself out rather than try to fix falling prices, which has the oil cartel staring down high-cost production in North America. In its latest monthly report, OPEC reported an uptick in production – the 12-member group produced an average of 30.2 million barrels per day (bpd) in December, about 142,000 bpd more than the previous month. The increase came almost entirely from Iraq, which does not operate under the OPEC quota. Iraq managed to boost monthly output by 285,000 bpd, more than offsetting a decline of 184,000 bpd in Libya.
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