The Facts
According to US officials, the Treasury Dept. and the Federal Reserve (Fed) Bank of New York have barred 14 Iraqi banks from conducting US dollar transactions as part of a crackdown on transferring US currency to Iran and other sanctioned countries.
The US alleged that Iran has manipulated the currency auction, in which Iraqi banks buy dollars at a fixed rate and sell them on the street at a much higher price. The dollar is the de facto Iraqi currency, as the Central Bank of Iraq requests dollars from the Fed, which it then sells to private banks and other financial institutions.
The Spin
Pro-establishment narrative
Recent US sanctions on Iraq are necessary, as the Iraqi government and its banks have both publicly and privately made deals with Iran. Hopefully, after enduring a blow to its electricity sector and announcing a deal with French energy company TotalEnergies, Baghdad will end its dangerous relationship with Tehran and pursue economic deals with non-sanctioned countries.
Establishment-critical narrative
While Iraq could eventually become a world-leading oil exporter and oblige the US' calls to become energy independent, Washington has been pushing Baghdad too hard too fast. This has led to gas shortages and a subsequent electricity crisis fueling protests in the streets. For now, Iraq still needs to import oil from Iran, or else its economic woes will continue.
