US Reportedly Warns Iraq it Will Shut Down its Fed Reserve Bank Account If US Troops Are Booted Out
US Reportedly Warns Iraq it Will Shut Down its Fed Reserve Bank Account If US Troops Are Booted Out by Svetlana Ekimenko for Sputnik News
TDC Note – Federal Reserve – weapon of war. Let that sink in for a minute.
Following the US airstrike in Iraq that killed Iranian top general Qasem Soleimani, Iraq’s parliament voted on 5 January to expel the foreign military presence from the country, including US troops that it invited in 2014 to fight the Daesh* incursion.
Washington has reportedly warned Baghdad that it could lose access to its central bank account at the Federal Reserve Bank of New York if it goes through with its decision to expel US troops from the region, according to Iraqi officials quoted by The Wall Street Journal.
The publication cites other means of pressure that the US administration could resort to, such as refusing to re-issue waivers on sanctions against Iran. Washington currently allows Iraq to import Iranian gas to fuel generators that supply a large portion of the country’s power, despite sanctions, but the arrangement is set to expire in February.
An official in Adel Abdul-Mahdi’s office is cited as saying the Prime Minister received a warning regarding the bank account, which holds billions from oil revenues, during a phone call on Wednesday, 8 January.
Iraq, like numerous other countries, maintains government accounts at the New York Fed, via which it manages its national finances, including revenue from oil sales; it takes out that money to pay government salaries and contracts.
While there is no information as to how much of Iraq’s money the Fed currently holds, according to WSJ it had $3 billion in overnight deposits from the country’s central bank at the end of 2018.
The threatened measure, which could inflict significant damage to the country’s economy, is believed to have left some members of the Iraqi government stressing the need to maintain friendly ties with the US.
The officials are cited as emphasising that international pressure on Iraq’s economy would not sit well with Baghdad’s efforts to answer its citizens, as protesters gathered in Baghdad and southern Iraq on Friday to demand that both Iran and the US stop meddling in Iraqi politics.
“The US Fed basically has a stranglehold on the entire [Iraqi] economy,” Shwan Taha, chairman of Iraqi investment bank Rabee Securities, was quoted telling the publication.
Others, like the Prime Minister’s adviser Abd al-Hassanein al-Hanein, reportedly held the opinion that the Trump administration was bluffing.
“If the U. does that, it will lose Iraq forever,” the WSJ cites Mahdi’s adviser as saying.
There has not yet been any official comment from the Federal Reserve Bank of New York, or the US State and Treasury departments.
Neither has there been an official response from Iraq’s prime minister.
The currently implied move by the Washington administration is not unprecedented, writes The WSJ, recalling that in 2015, it halted Iraq’s access to its funds at the Fed for a succession of weeks amid suspicions the money was being funnelled towards funding Daesh*.
The Federal Reserve has the power to cut off access to funds for countries under sanctions or if it suspects the money could violate US law, says the publication.
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The Iraqi Parliament carried out a non-binding vote during an extraordinary session on 5 January to expel the foreign military presence from the country, including the US troops that it invited in 2014 to fight Daesh’s incursion.
“The Iraqi government must work to end the presence of any foreign troops on Iraqi soil and prohibit them from using its land, airspace or water for any reason,” the parliament’s resolution read.