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🇮🇱 Israel /Economy & Trade

Iraq emerges as Iran’s economic lifeline amid tighter US sanctions

From Jerusalem Post · () English

Summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources Ongoing story
  • Iraq remains a major economic and financial link for Iran as the United States expands sanctions and scrutiny of entities accused of supporting Tehran.
  • Iraqi trade routes, banks, currency markets, and armed-group networks provide channels that US authorities say are difficult to monitor.
  • Washington is pressing Baghdad to strengthen oversight of dollar transactions while Prime Minister Ali al-Zaidi faces a September 30 deadline to bring Iran-backed armed groups under state control.

Iraq has become one of Iran’s most important economic lifelines as Washington tightens pressure on Tehran. Its close political and commercial ties with Iran, combined with the influence of Iran-backed armed groups, give Tehran access to trade routes, currency markets, and commercial networks that are difficult for US authorities to track.

The issue has gained urgency as Iraqi Prime Minister Ali al-Zaidi pledges to bring the weapons of Iran-backed armed groups under state control by September 30. Iraqi officials and analysts say progress has been slow. At the same time, Washington is pressing Baghdad to tighten oversight of dollar transactions and the banking system.

Iraq and Iran share a border of roughly 1,600 kilometers, with formal crossings and long-established informal routes. US authorities have documented the use of Iraqi banks and currency-exchange mechanisms to move dollars to Iran and groups aligned with Tehran.

Daily shipments of dollars go to Iran through several border crossings, most notably the Shalamcheh border crossing between Basra and Iran, which is clearly controlled by Shia militias.

· Ali HamzaThe former Iraqi banker described alleged routes for moving dollars into Iran.

In December 2023, the US Treasury accused Al-Huda Bank of using access to US dollars to support the Islamic Revolutionary Guard Corps-Qods Force and Iraqi armed groups including Kata’ib Hizballah and Asa’ib Ahl al-Haq. Treasury also accused the bank’s owner of using front companies and forged documents to evade restrictions on currency purchases and international transfers.

US restrictions have narrowed formal dollar channels for some Iraqi banks since 2023, but they have not removed the incentive for illicit trading. Ali Hamza, a former Iraqi banker, said daily dollar shipments still move to Iran through several crossings, especially Shalamcheh on the Basra-Iran border. He said the volume had declined after the restrictions but that an unknown network of smuggled funds remained active.

There is still a network of smuggled funds whose amounts are unknown.

· Ali HamzaHe said US restrictions had reduced but not ended illicit money transfers.
About this summary

Originally published by Jerusalem Post. Summarized and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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