Iraq in February 2023

1 February 2023

1. Eight Missiles Target the Zlikan Military Base in Iraq, Where Turkish Forces are Located (Rudaw). Several rockets targeted the Zilkan military base hosting Turkish troops in northern Iraq on Wednesday morning without resulting in any casualties, the Kurdistan Region’s counter-terrorism forces reported. The Islamic Resistance Ahrar al-Iraq Brigade, an Iran-backed armed faction, claimed responsibility for the attack through its telegram channels, saying they had fired 20 rockets at the military base, threatening to expand their operations into Turkish land.
2. Corruption Perceptions Index (CPI) for 2022 Ranks Iraq 157th out of 180 countries (Mustaqila). The Corruption Perceptions Index ranks 180 countries and territories by their perceived levels of public sector corruption on a scale from 0 (extremely corrupt) to 100 (very clean)…According to the index scale issued by Transparency International on Tuesday, Iraq scored only 28 out of a total of 100. 
3. Iraq and Syria Reach Agreement to Transport Goods Through Al-Qa’im Border Crossing (Iraqi News). The two sides agreed to let Syrian cargo trucks transporting goods enter Iraq through the Al-Qa’im border crossing, allowing the return of Syria’s most important commercial trade exchange partnerships in the region.

2 February 2023

1. Iran-Backed Group Claims Responsibility for Rocket Attack on Turkish Camp in Zilkan, Iraq (Rudaw). In a statement referring to the missile unit that targeted the Turkish military camp…the group calling itself “Liwa Ahrar al-Iraq” said that operations will continue unless “the occupier withdraws immediately and completely.”
2. Iraq Recovers $80 Million of $2.6 Billion Stolen in “Theft of the Century” Scandal (Iraqi News).  The authorities managed to recover more than $80 million from the stolen funds and return them to the state treasury, the statement mentioned. Thus, Baghdad succeeded in recovering a new batch of the funds stolen from the General Commission for Taxes in what is known as the ‘theft of the century’ involving former senior officials and businessmen.
3. Iraq’s January Oil Revenues Exceeded $7.6 billion (Iraqi News). Total quantities of crude oil exported during January from oil fields in central and southern Iraq were more than 98.46 million barrels, while the quantities exported from oil fields in Kirkuk through the port of Ceyhan were more than 2.47 million barrels. The total exports of crude oil during December exceeded 103.28 million barrels with revenues exceeding $7.7 billion, according to final statistics issued by SOMO.
4. PM Barzani:  Iraq’s Top Court Used to Undermine Agreements Between Erbil and Baghdad (Bas News). Kurdish officials have been critical of the Federal Supreme Court’s decisions in recent years, particularly the court’s ruling against the Kurdistan Region’s oil and gas law on the grounds that it contradicts the Iraqi constitution. The leaders of the Kurdistan Region argue that the Iraqi court has not been formed in accordance with the constitution; hence its decisions should not be considered constitutional.

3 February 2023

1. Election Dispute Between al-Sudani and al-Maliki Splits the Coordination Framework (Independent Press Agency). Political sources revealed that a new dispute broke out between Prime Minister Muhammad Shia’a al-Sudani and the head of the State of Law Coalition, Nuri al-Maliki, because of al-Sudani’s nomination of a leader of the League of the Righteous Movement for the upcoming provincial elections, which al-Maliki considered a rebellion as he wanted to limit the nominations to his person.

9 February 2023

1. Iraqi Central Bank Reduces Official Exchange Rate Versus the Dollar Ahead of Washington Negotiations (Al Sharq Al-Awsat). About a week after the Iraqi Prime Minister, Muhammad Shia’a al-Sudani, promised that the exchange rate of the Iraqi dinar would rise again against the US dollar, the Central Bank of Iraq decided to reduce the exchange rate of the dollar against the dinar to 1300 compared to 1450, which was decided by the previous government headed by Mustafa Al-Kazemi.

10 February 2023

1. PM Sudani Says Erbil and Baghdad Have Reached Agreement on Oil Sector Management (Al Sharq Al-Awsat). The Iraqi Prime Minister said to Asharq Al-Awsat: We started a road map to solve the problems between Baghdad and Erbil, starting with financing previous budgets. We collided with the decision of the Federal Court and headed to another procedure within the law and within the powers. We are on the cusp of presenting the budget, and we have reached an agreement with the Kurdistan region on the form of oil management and the financing of financial allocations in the budget law.

February 14, 2023

 IRAQ:  Iraqi Government Seeks to Ease US Scrutiny of Dollar Transfers to Iran

Last week the government of Iraqi PM Muhammad Shia al-Sudani took steps to try to end the crisis created by the collapse of Iraq’s currency, the dinar, in the face of US pressure for Iraq to stop allowing dollars to be channeled from its Central Bank (CBI) to Iran. The dinar lost about a quarter of its value after the US Federal Reserve put in place stricter guidelines for dollar transactions in Iraq in November, in a bid by the US to stop the fraudulent practice by which fake import transactions allowed corrupt Iraqi businesses and officials to funnel dollars to Iran’s IRGC and other bad actors. Experts have estimated that this practice has enabled tens of billions of dollars to be diverted to Iran over the years.

Facing popular unrest and raid inflation as a result of the dinar’s collapse, Sudani fired the Central Bank governor in late January and replaced him with Ali al Allaq, an ally of former PM Nouri Maliki who previously headed the Central Bank from 2014 to 2020, the period during which the CBI’s US-authorized “dollar auctions” were most subject to corruption and fraud. Last week, Allaq traveled to Washington with a senior Iraqi delegation with the task of convincing the Biden administration to ease the tighter guidelines put in place by the Federal Reserve and the US Treasury. Allaq reportedly got the administration to agree to ease the restrictions and to allow Iraq to pay the Iranian regime up to $500,000,000 in U.S. currency to partially fulfill debts Baghdad owes to Tehran for the supply of gas, electricity, and other exchange. He also seems to have gotten U.S. approval for a greater volume of “dollar auctions,” as the first daily “dollar auction” following Allaq’s negotiations saw a jump to $305 million dollars sold at the CBI, compared to an average daily auction level of under $50 million before Allaq’s Washington visit.

Sudani and Allaq will need the increased supply of dollars in Baghdad if they are to avoid disaster for another monetary policy decision made last week. After the dinar fell to about 1,700 to the dollar on currency markets, Allaq and Sudani announced that the official exchange rate would return to the pre-crisis level of about 1,300 to the dollar, and that they intended to secure US support for a dollar supply to the CBI that would enable the reduction. Since the market rate for the dinar in Baghdad is still about 1,500 to the dollar, those who can buy dollars at the official rate can sell them on the market for an instant 15 percent profit, making corruption highly attractive. Unless Allaq and Sudani can manage to unify the official and market exchange rates, the Iraqi government will effectively be subsidizing corrupt dollar sales at the cost of hundreds of millions of dollars per month–a hemorrhaging of cash the Iraqi government cannot afford for long.

15 February 2023

1. Iraqi Government Donates 90,000 Tons of Fuel to Syria (Al Iraq News). On Tuesday, the Iraqi Council of Ministers decided to donate 90,000 tons of fuel to Syria, following the devastating earthquake that struck Syria and Turkey at dawn on February 6.
2. Foreign Minister Says Washington Agreed Iraq Can Continue Buying Electricity and Gas from Iran (Al Iraq News).  Iraqi Foreign Minister Fuad Hussein announced that his country had received the green light from the United States to continue buying electricity and gas from Iran. Al-Ahed News Network [Associated with Iranian-backed militant group Asa’ib Ahl al Haqq] reported that Fuad Hussein stated that Iraq will continue to invest in the field of gas.

16 February 2023

1. Iraqi Central Bank Confirms its Intention to Stabilize Exchange Rates;
   20% of Currency Transfers Abroad are “Fake” (Al Sharq al Awsat). Mazhar Muhammad Salih, economic advisor to the Prime Minister, said…“the decrease in the sale of the currency by the Central Bank came due to old accumulations or its rejection by the electronic platform.” For the first time, the government advisor revealed the percentages of money that are being smuggled to neighboring countries through the currency auction, when he said: “There is fraud by taking the currency abroad…by importing materials that do not benefit the Iraqi people,” stressing that “the rate of counterfeiting currency transfers abroad reached 20 percent.”
2. American Resentment at the Meeting of the Australian Ambassador in Baghdad with the Terrorist Khazali; the U.S. Warns Allies Not to Repeat This (Al Iraq News). The Australian network “ABC” reported Thursday that differences have occurred between Sydney and Washington over the meeting of the Australian ambassador to Iraq, Paula Ganley, with the terrorist leader of the Asa’ib militia, Qais Khazali…American newspapers and some political officials attacked the Australian ambassador in Baghdad because of her meeting with Khazali, referring to the statements of former US Secretary of State Mike Pompeo, during which he declared the leader of “Asa’ib Ahl al-Haq” responsible for nearly six thousand attacks on US forces.
3. Iraq Will Sign an Agreement with US General Electric to Improve Electricity (Rudaw). According to the memorandum of understanding, the contract will be signed for five years, in order to continue the work of energy production units prepared by the company…to generate electricity in a phased manner that is appropriate to the amount of available fuel and resources.

17 February 2023

1. Heritage Foundation Calls on Biden to Reject Iraq’s Demands to Loosen Dollar Restrictions (Al Iraq News).  The organization called on US President Joe Biden to “politely reject” all the demands of the Iraqi delegation, stressing that the banking system in Iraq is “completely corrupt and directly harms the interests of the Iraqi and American people.” 
2. Iraqi Official Says that Under Kazemi, Iraq Made a Fake Purchase of 6,000 Housing Units in Turkiye (Al Iraqi News). The Advisor to the Prime Minister for Financial Affairs, Mazhar Muhammad Salih, revealed on Thursday that the Central Bank of Iraq, during the era of Prime Minister Mustafa Al-Kazemi, transferred funds to purchase more than 6,000 housing units in Turkey last year, indicating that all of these funds were sent on behalf of fake invoices. Saleh said in a televised interview that “Iraq bought last year about 6,000 housing units in Turkey through forged invoices and without any oversight from the Central Bank of Iraq.” 
3. Kurdistan President Joins World Leaders in Munich to Discuss Global Security (Bas News). World leaders are gathering in Munich today to highlight the latest global security challenges as the one-year anniversary of the war in Ukraine approaches, which is expected to dominate the conference agenda this year. Kurdistan Region President Nechirvan Barzani on Friday arrived in Germany, where he will be taking part in the annual Munich Security Conference to address challenges facing global security.
4. Macron receives KRG Prime Minister Masrour Barzani in Paris (Rudaw). French President Emmanuel Macron on Thursday received Kurdistan Region Prime Minister Masrour Barzani, discussing a range of topics, including trade and security, according to Barzani’s office…“Together we helped safeguard the world from ISIS,” said Barzani in a tweet, referring to the Islamic State (ISIS). “Now we’re building trade and investment ties to sustain our peoples.” 
5. Sadr Calls for Lifting “Siege” on Syria after Earthquake (Al Sharq Al Awsat). His first “regional” political position in a while, but his silence continues internally. The leader of the “Sadr movement,” Muqtada al-Sadr, announced his opposition to Western sanctions imposed on Syria, considering that “any international economic sanctions against regimes and governments have not and will not be useful in achieving the desired goal of the colonial state at all,” without specifying who he meant. Al-Sadr said in a tweet, “The Syrian people are suffering from the scourge of epidemics, diseases, hunger, poverty, terrorism, injustice, and lack of fuel, money, lives, and fruits….What kind of injustice is this that befell them? Is it for the sake of the Golan Heights and Israel, or for the sake of bringing the people to their knees and subjugating them to the colonial West with all its sects and races?”

February 21, 2023

 U.S. Scrutiny of Baghdad’s “Dollar Auctions” is Apparently Shutting off Tehran’s Illicit Access to Dollars

This week, the Iranian rial fell for the first time past the psychologically significant barrier of 500,000 rials to the U.S. dollar.  The Iranian currency has lost more than a third of its value in the past year, with the losses having begun a steep decline in early November 2022.  That timeframe is significant because in early November the U.S. Federal Reserve also instituted closer scrutiny of the daily “dollar auctions” conducted by the Iraqi Central Bank, a channel through which hundreds of billions of dollars have gone to fund Iraqi imports over the past two decades.

Before November, the daily dollar auctions often resulted in $200 million going to pay for Iraq’s foreign invoices, but growing concern in the U.S. government that the dollar auctions were enabling the Iranian regime and its allies to access large amounts of foreign currency fraudulently led to the Federal Reserve’s tighter guidelines. Since that change, the daily dollar auction results reported on the Iraqi Central Bank’s website have stayed under $100 million going to foreign invoices, with only a few exceptions.

As a result, the currency market in Baghdad has seen a tighter supply of dollars, and the value of the Iraqi dinar has fallen in the currency market. But the fact that the Iranian rial has fallen just as sharply as the dinar, and at almost the same time, indicates that the dollar auction has probably been a significant source of new foreign currency for the Iranian regime. 

An economic advisor to Iraqi Prime Minister Muhammad Shia Sudani appeared to indicate as much when he told reporters on February 16 that probably 20 percent of all foreign invoices presented at the dollar auction were fraudulent.

A senior Iraqi government delegation visited Washington earlier this month seeking a relaxation of the Federal Reserve’s guidelines to increase the supply of dollars in the Baghdad currency market, thereby driving up the value of the Iraqi Dinar. Despite statements from the Iraqi visitors that they had reached agreements on the issue with the Biden administration, the volume of the dollar auctions reported by the Central Bank has not risen significantly. Concurrently, the Iranian rial has continued its nosedive with no end in sight. One item to watch, then, is whether the Iranian regime and its Iraqi militia allies will pressure the Iraqi government to make another attempt at reopening the dollar auction floodgates, thereby expanding Tehran’s illicit access to dollars via Baghdad. For the moment, either by accident or design, the tightening of the dollar auction in Baghdad has become one of the U.S. government’s most formidable pressure tools against the Iranian regime.

22 February 2023

1. Iraq and Saudi Arabia Sign Border Security Agreement for First time in 40 Years (the New Arab). The security memorandum of understanding was signed by Saudi Interior Minister Prince Abdulaziz bin Saud and his Iraqi counterpart Abdul Amir al-Shammari in Riyadh, the Iraqi interior ministry said in a statement Sunday. Riyadh has accused Iran-backed militias of conducting attacks on Saudi Arabia from Iraqi soil.
2. Iraqi Kata’ib Hizballah Militia Distances Itself from Iran-Saudi Talks in Iraq, Calls for Attacks in Saudi Arabia (Malik). Iran-backed militant leader Abu Ali al-Askari…stated that the best way to bring peace to the region is by moving the conflict inside Saudi Arabia and further demanded that Iraq’s Shia officials end their support for parliament speaker Mohammed al-Halbousi, saying Halbousi’s fall from power was imminent.

23 February 2023

1. Iraq Adopted the Chinese Yuan in Oil Trade (Al Hadath). The Iraqi central bank announced that the financing of foreign trade from China will be regulated directly and in the Chinese yuan currency through two options. The first option includes strengthening the balances of Iraqi banks that have accounts with Chinese banks in the Chinese yuan currency.
2. Iraq Calls for Dialogue with Turkiye Regarding Water Management (Al Hadath). Iraq is suffering from a water crisis in which it blames Turkey and Iran for their “non-compliance” with international agreements and their “infringement” on Iraq’s water quotas. The Turkish Ilisu Dam is located on the Tigris River, less than 70 km from the Iraqi border. Its storage capacity is 10.40 billion cubic meters, and its hydroelectric station has a capacity of about 1,200 megawatts. Since 2003, Iraq has been suffering from a decline in the water level across the Tigris and Euphrates rivers as a result of the water policies adopted by Turkey and Iran by reducing release rates, changing the paths of tributaries and building giant dams on them.

27 February 2023

1. Kurdistan Region Delegation after Meeting PM Al-Sudani: We Reached an Initial Agreement on the Budget (Rudaw Arabia). The delegation representing the Kurdistan Regional Government met with the head of the Iraqi government, Muhammad Shia’ al-Sudani, and one of the members of the delegation announced that they had reached a preliminary agreement on the general budget. The Ministry of Finance and Economy in the Kurdistan Region announced in a statement that the meeting “discussed the Kurdistan Region’s share of the country’s general budget for the year 2023.”
2. Nearly 20 Islamic State Militants Killed in Anbar (Bas News). Iraqi security forces on Sunday killed nearly 20 Islamic State (IS) militants, including a prominent leader, during an operation in the province of Anbar, according to an official. The operation was launched in the Akashat area jointly by the Counter-Terrorism Service, the National Intelligence Service, and the Joint Operations Command, according to Yehia Rasool, a spokesperson for the commander-in-chief of the Iraqi armed forces.
3. Preparations for the Return of Another 156 Iraqi Islamic State families from Syria’s Al-Hol Camp (Bas News). Informed sources said on Sunday that a new batch of Iraqi refugees in Al-Hol camp in the Al-Hasakah countryside will be transferred to Iraq. The deputy governor of Nineveh for the affairs of the displaced, Ali Omar, previously told Bas News that the number of Iraqis in Al-Hol camp in Syria when the return process began in 2019 was estimated at 30,000 Iraqis out of the 70,000 people who lived in the camp.

28 February 2023

1. Sadrists Return to the Arena Through the Gate of the Electoral Law (Al Sharq Al Awsat). Thousands of followers of the Sadrist movement and some civil movements demonstrated on Monday in front of the gates of the Green Zone where the Iraqi parliament is located, to pressure the parliament to back down from reading the draft amendment to the election law for the second time…The parliament decided to postpone consideration of the law until next week. The Sadr movement supported the position of the Najaf religious authority, rejecting the one-district system and closed electoral lists.
2. Turkish Airstrike Kills PKK Commander in Sinjar (Bas News). A Turkish drone strike on Monday targeted a vehicle of an affiliated armed group of the Kurdistan Workers’ Party (PKK) in the predominantly Yezidi town of Sinjar, killing a military commander, according to a security source.