Iraq Warns of "Collapse" if Trump Blocks Iraq's Access to NY Fed

World | January 13, 2020, Monday // 12:42
Bulgaria: Iraq Warns of "Collapse" if Trump Blocks Iraq's Access to NY Fed

Iraq fears an economic "collapse" if Washington imposes the promised sanctions, including blocking access to US-based accounts, in which Baghdad holds oil revenues that supply 90 percent of the national budget, according to BGNES.

US President Donald Trump has been outraged by the Iraqi parliamentary vote on January 5 to remove foreign forces that helped local soldiers fight the jihadists.

If the soldiers are forced to leave, he threatens, "we will impose sanctions they have never seen before."

The United States sent a message directly to Prime Minister Adil Abdul-Mahdi's cabinet, two Iraqi officials told AFP.

"The PMO got a call threatening that if US troops are kicked out, ‘we’ — the US — will block your account at the Federal Reserve Bank in New York,” one official said.

Parliament's vote to remove the troops was sparked by outrage over a US drone strike on Baghdad that killed top Iranian general Qasem Soleimani and Iraqi associate Abu Mahdi al-Muhandis.

The Fed's Iraqi Central Bank account was created in 2003 after the US invasion that deposed former dictator Saddam Hussein.

According to United Nations Security Council Resolution 1483, when the Council lifted trade sanctions against Iraq and terminated the Oil-for-Food Programme, all proceeds from Iraqi oil sales go into that account.

Iraq is OPEC's second-largest producer of raw materials and more than 90 percent of the state budget, which reached $ 112 billion in 2019, derives from oil revenues. To this day, revenue is paid in dollars to the Fed's account on a daily basis, with the balance now being around $ 35 billion, Iraqi officials said.

Every month or so, Iraq flies in $1-$2 billion in cash from that account for official and commercial transactions.

“We’re an oil-producing country. Those accounts are in dollars. Cutting off access means totally turning off the tap,” the first Iraqi official said, The Timesof Israel reported.

A second official said this would mean that the government would not be able to carry out daily functions or pay salaries and that the Iraqi currency would plummet in value.

“It would mean collapse for Iraq,” the official said.

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Tags: Iraq, US, Donald Trump, oil, revenue, collapse, Federal Reserve Bank
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