This article was written by IWP Doctoral Candidate Frzand Sherko.
U.S. pressure on Iraq to prevent dollar smuggling and dinar laundering can protect Iraq’s sovereignty and weaken Iran. But if executed without deliberation, this pressure could allow Russia and China to enhance their positions in the Middle East.
Since November 2022, the U.S. Department of Treasury’s Office of Terrorism and Financial Intelligence has put intense pressure on Baghdad over evidence of money laundering and dollar smuggling in Iraq. At the time, the Federal Reserve and Treasury were particularly concerned with Iraq’s dollar auctions—a system they suggested was being abused by money launderers, especially ones in neighboring countries.